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March 10, 2016
Utilities harness the power of technology
By: Stuart Brown

Accenture recently released its Technology Vision 2016, which zeroes in on the IT developments and digital trends poised to have the greatest impact on companies, government agencies and other organizations over the next three to five years. By comparing the utilities-specific findings to the findings of the entire sample of 3,000+ companies, we were able to generate insights into what utilities are doing—and what they should do—to thrive in the years ahead.

Several findings stand out. The most notable, perhaps, is that change is finally here. Whereas previous studies confirmed that utilities have been relatively slow adopters of emerging technologies, this year’s study suggests they are ready to make their moves. Nearly 90 percent of utilities anticipate that technological advances will rapidly and significantly change the industry over the next three years. In fact, nearly 30 percent expect the technology-driven change they face to be unprecedented. Nearly half of the utilities we surveyed are already making comprehensive investments in digital technologies to drive their business strategies. Another 43 percent are investing in digital in select business units.

At Accenture, we’ve certainly noticed the pace of change accelerating—particularly outside of North America, where utilities are, for example, embracing software-as-a-service models to reduce costs and improve service to customers. As capital recovery issues in the United States and other locations are resolved, such SaaS models and other digital investments will certainly pick up steam. Utilities will finally be able to extract data more efficiently and use it more effectively to meet customer demands, appease regulators, test hypotheses and stand up to the digital players that are already disrupting their deregulated businesses.

The vast majority (84 percent) of utilities we surveyed already see data evolving from being a valuable resource to being the basis of entirely new business models. But how will they harness the power of data and technological advances? 

  • Intelligent automation. 39 percent of utilities have achieved cost savings of at least 15 percent because of intelligent automation. To date, however, automation remains fairly siloed. That will change as more visionary leaders come to understand that data is the currency of the digital future. They will build on the O&M cost savings that automation delivers by applying predictive analytics, machine learning and other technology solutions to create smarter systems, generate meaningful and game-changing insights, and achieve step-change improvements in performance.  
  • Digital risk management. 76 percent of utilities indicated they now deal with at least twice as many privacy or security breaches as they did just two years ago. And 79 percent believe they are exposed to more risks than they can effectively handle. This is worrisome—especially for an industry that relies on its reputation as a trusted keeper of customer information. One breach will threaten that goodwill. In the digital age, utilities need to accept the fact that security does not just fall to the Chief Security Officer, but involves a collaborative effort among risk, security and customer teams. Further, utilities need to accept the possibility that their risk might be reduced if they host their data outside their firewalls. Providers such as Azure and Amazon offer levels of protection and reliability that few utilities can match. 
  • Platform-based business models. 40 percent of utilities believe new technology platforms will underpin their core business models in the future. Even more (43 percent) see the adoption of platform-based business models and engagement in digital ecosystems as critical to their success. These findings suggest that utilities are ready to move to large-scale application program interfaces (APIs) and make data available to people outside of IT, and even outside their own organizations. Adopting platform-based or cloud-based systems will allow them to take advantage of the scale and investments in security and computing power that others have made. Best of all, integrating systems via a platform-based model can enable utilities to analyze data, explore new business opportunities and improve performance with minimal upfront investment. This approach stands in stark contrast to the lengthy and expensive process of implementing and integrating new systems. Accenture helped a mining company get more from its existing systems and information by implementing a low-cost platform solution—and did so in just two months.

We are encouraged by the fact that utilities are paying more attention to these critical areas is encouraging. Now it’s time for them to build capabilities in each. That effort needs to start with a plan. Two plans, actually—one outlining what they need to accomplish in 100 days, and the other looking a year ahead. Over the next three months, leaders should build their understanding of the current state of digital risks they face, as well as the potential uses of intelligent automation and artificial intelligence. They should also begin to develop a comprehensive strategy that will serve as the foundation for a platform business model and ecosystem. A year from now, utilities should be at the stage of implementation. At that point, with automated processes, as well as platform and security pilots in place, utilities will be in a much better position to understand the game-changing opportunities that new technologies will present.

Accenture, along with our lead partners, are pleased to be helping so many utilities develop and implement their technology strategies. And we’re excited by the opportunity to witness, first-hand, their emergence as true “next-gen” utilities. 

Check out our new SlideShare for more insights on the Accenture Technology Vision for Utilities.

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