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The Power Industry is the next to feel the digital revolution wave. From distributed generation, smart grids and even renewables, there is a great demand for improved capabilities, which is the reason for the recent regulatory frameworks and business models. There is also an advancement in data collection and exchange, which in turn, create digital threats and useful opportunities. The internet is now promising more than ever of new products and management options. New comers from the digital economy are disturbing the current balance enjoyed in the industrial landscape, while government is working towards the achievement of a more efficient systems of measurement and better standards for consumption and generation.

Surviving in the face of such challenges requires a fully digitalized utility system, i.e. the current utility organizations and businesses will have to embrace digital transformation. One of the first steps in realizing this is to improve the efficiency, while expanding the customer base. With increased momentum of the transformation process, there should be the advent of in-depth digital opportunities without limits.

Every Level Holds A Potential

The power-industry value chain offers quite a lot of opportunities, from generation to customer relationship management (see table: FUTURE VALUE CHAIN OF A DIGITAL UTILITY).

The more utilities explore such opportunities, the more the retail customers feel their effects. There has been bill notification, presentment, outage management and payment application mobile apps, and such is expected to extend into smart homes and connected buildings. Also in existence is a digital management of distributed energy resources to the entire systems from individual sites. Several projects within the utility now employ digital economy techniques to drive processes, for instance, agile development.

Most times, however, the benefits these efforts hold are underestimated. From what is obtainable in other industries, it can be deduced that the realizable benefits of digitization outweighs the earlier projections of project planners. By taking a cue from other industries, the utilities can also embrace the trend of digitization, by planning confidently for transformative enhancements across productivity, safety, compliance, and customer experience as well as revenue management.

To understand the dimensions of these exciting opportunities, three developmental waves have been introduced. They are productivity and efficiency, customer experience and new frontiers.

Productivity and Efficiency

An improved operations and better flexibility are achievable throughout the value chain, by maximizing digital opportunities (see table: EBIT IMPACT ON THE ENERGY SECTOR).

Conservative estimates backed by analysis of real-life cases reveals the possibility of digital optimization upping profitability by 22 percent. To realize most of these potentials, utilities can bank on smart grid, digital productivity tools for workers, and automated back-office processes.

Smart meters and the smart grid

These are the foundations of digital utility, because they offer much data. When utilities are investing into the right analytics capabilities, they make diagnostics, planning and data-based analyses possible. There is less intensity and reduction in cost with smart grids, while smart meters can encourage advanced credit and collection algorithms to improve on revenue. A better analysis of the existing information can be achieved by using sophisticated planning instruments as well as local diagnostic tools. Such combination can optimize staffing levels at power plants, while managing the energy terrain of conventional and renewable energy sources, patterns in demand as well as trading options.

Productivity Tools for workers

Infusing mobile digitization has aided the morale boost and productivity of utility workers. With smartphones as the platform providers, it is now easier for grid companies to digitize the foundational processes of work management. This translates to improved asset management, planning, scheduling, dispatch and execution.

Unlike what is obtainable in the last century, the latest digital and mobile technology offers smoother incorporation of all works of utility companies into a single view, with a universal access.

Automation of back-office processes

There has been a massive expansion in the administrative demands of utilities, and with distributed generation and several channels come inefficient processes. However, if standardization and automation are embraced, there will be process-efficiency opportunities as shown in the significant variation among retail providers in cost per customer, the cost of resolving errors, and billing inquiries.

Advanced analytics and the multichannel customer journey

Digitization offers utilities the opportunity to improve satisfaction and reduce costs at the same time, by automating the customer experience. To achieve this, several major energy suppliers have taken interest in online and mobile channels recently. However, it has been a case of excellent results for some and little or no progress made for others.

For most customers, they prefer a multichannel platform that seamlessly connects their interactions across all channels, including mobile, online, call center and local sales. This is cheaper and satisfies the requirement for the profitable customer behavior analyses in the course of entire customer journey. Hence, utilities are employing sophisticated analytics to achieve enhanced service quality, reduction in costs, and better customer relationships.

New Frontiers

Digital capabilities make it possible for utilities to break into new business arenas, individually or in partnerships.

Distributed generation

The energy supplied through smart meters is more accurate, as it goes with the exact details of the consumption and generation of each customer. Using this as a premise, customized products can be developed to fulfill different needs. Utilities are also going into maintenance contracts to enjoy improved service based on data analysis. In the end, the utilities could become owners of the distributed facilities and utilize the same in selling optimized hours to customers and facility operators. In such situations, combining customer proximity, technological competence and digital capabilities equip utilities better for competition.

Other frontiers include

Efficiencies in energy and facility maintenanceSmart homes, connected buildings, smart cities.

Digital transformation ahead

Utilities must transform operations to realize these digital opportunities. They must first create a strategy that can be incorporated into the organization. Then projects and partnerships must be designed, which will link objectives of digitizing the important processes, upgrading IT platforms and entering new business climates. As an implication, there is bound to be a cultural shift, and with the rise of distributed generation, alternative energy sources and the data driven customer interface, there is an intersection of the information-based digital economy by utilities.

Digital vision and positioning

Digitization is changing the dynamics and boundaries of industries. To get their digital vision straight, there is the need for companies to identify what positions they want to occupy on the digital terrain, as regards to data, services, and devices.

The crucial digital transformation action areas can be seen in Table: KEY ACTION AREAS FOR DIGITAL TRANSFORMATION 4.0. Through systematic analysis, companies can learn the value opportunity of each area and the feasibility of attainment. When the expected changes are clear, then it becomes possible for companies to create a digital blue print as well as implementing foundational plans to successfully implement such blueprints.

Transformation and technique

Prioritize the importance of design

Designs must be simple and user-friendly. The success of designs are measured by the adoption and usage rates. There should be a perfect blend of strategy, technology and design as prerequisite for excellent digitization efforts. End users, whether customers, suppliers, or employees, also contributes by providing inputs into usefulness and usability of the planned digital efforts.

The agile approach

The need for an iterative agile management and development philosophy is also important. The agile approach to change is based upon a culture of sharing, open communication, and visible support from top management. By using cross-functional teams to understand end users more deeply and meet their needs more nearly, this approach brings about change.

Start with the end user

An end-user orientation supports the elevated role of design and the agile approach. Beginning with end user and working backward helps to ensure that initiatives are attended to on the basis of values and need for change. For this to work, there must be a clear understanding of the end-user journey and the potential value lying therein. With a better interaction with customers, many utilities were able to modify their management approach. On successful analysis of the customer journey,

Establish two-speed IT

Digital transformations must progress in an environment of IT architecture and processes that are not entirely new. This offers support to comprehensive transactional systems that drives daily business operations. Conversely, the agile test-and-learn approach needs an IT environment that can adapt to changes in portals, mobile apps, and other aspects of the end-user interface. Hence, to achieve a successful digital transformations, two-speed IT architecture is needed. Its creation is the most important contribution the IT department can make to the transformation.

Define targets and link budgets to progress

It is important to set clear targets for digitization. And doing this requires concrete budgets. High success rates have been recorded when approaches where short-term progress can be measured easily with performance indicators like customer growth were used. As in sectors such as private equity, the approach grants additional funding to successful projects, while identifying lagging projects for modification or termination.

Though, digital transformation programs might be difficult for some companies, the potential gains is worth all the investment. With time, digital transformation will become inevitable for all utilities. It has begun with digital forward sectors like retail and financial services industries, with enormous success recorded. For utilities, transformations can offer enhanced productivity, increase in revenue, better network reliability and safety, enhanced customer acquisition and retention, and entry into new business areas.

Ultimately, it is a needed prerequisite to face future market challenges.

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