There’s no doubt that utilities are experiencing a time of intense disruption, including the emergence of new business models, increased distributed energy resources combined with rapidly falling technology costs, amid many other factors. The industry as a whole is pivoting toward becoming one that is more decentralized, decarbonized and digital.
In this new decentralized era, industry leaders increasingly need to embrace innovation and adapt to new commercial models. Think about the future of transportation. With ride-sharing and autonomous electric vehicles becoming ever more prevalent, and with those vehicles starting to double as energy storage units, utilities could play a central role in a converging energy-transportation industry.
And what about the smart home/office? It’s possible utilities could take on the role of technology incubators and energy managers for a future distributed residential and commercial energy ecosystem.
These are all big changes for the industry, and utilities chief finance officers are uniquely placed to bring the key insights and knowledge needed to successfully reap the benefits. Able to turn big data into big value, CFOs are transforming their role in the business, becoming innovators and disruptors as much as custodians of company finances. Accenture’s research, The CFO in Utilities, confirms that more than three-quarters of the utility executives surveyed think today’s CFO is breaking new ground by delivering valuable operational analytics to drive business decisions.
In this new era, CFOs must help their finance organizations build a data-led culture and set of capabilities that embrace disruption and maximize value. They can only do so by adopting a laser focus on the “things that matter,” training cross-functional teams in commercial and value-driven decision making, identifying new revenue streams, and adapting to a rapidly changing industry.
For example, let’s look at tariffs. Historically, finance organizations have focused on a few key price movements each year, managing a set of fixed rate and variable tariffs centered around the idea of output (taking energy from the grid).
However, the future looks to be one of increasingly personalized customer tariffs based on both output and input (supplying energy to the grid from microgeneration). That changes the role of the utility, which must become an aggregator of customer data, balancing supply and demand with agility to support a flexible and increasingly integrated value chain.
That takes cross-enterprise data management to a whole new level. And this is where finance organizations are key. They’re typically the only part of the business that has complete visibility and understanding of how the enterprise functions and how it’s performing. In fact, our research found that 80 percent of executives say their utility’s finance function is assuming total responsibility for data governance across the organization, and more than half believe finance should play a leading role in identifying which data represents the greatest potential or unrealized value for the business.
Ultimately, that’s why CFOs are so important in utilities’ distributed energy models. They’re able to take control of the data and then generate the insights that are essential to creating new business value in an increasingly flexible and decentralized energy market.