The future of utilities is digital—from IoT product development to digital employee experience
The energy transition is driving a fundamental reset of the traditional utility business model. There is an acceleration of interconnections of distributed energy resources (DERs) and large-scale renewables, a generation of utility experts are retiring, and the pandemic shifted a largely in-person workforce to a hybrid one. Utilities have responded by starting to embrace digital as a permanent and valuable transformation.
Though a handful have momentum when it comes to embracing digital, utilities as a whole have embarked on a relatively limited set of use cases and only just started to capture the benefits from digital. To truly unlock the value potential of a digital transformation, utilities must overcome blockers and make step changes in their approach.
The business case for a utility to be digital is compelling. Utilities understand that system investments are critical to achieve the infrastructure modernization demanded by the energy transition. And these significant capital investments required can be funded in large part by expense savings realized through transforming people and process inefficiencies using digital solutions.
Utilities have sought to integrate digital solutions using IT with OT for decades, pursuing IOT product development as a means to improve reliability, customer experience, and cost efficiencies. Grid modernization solutions like Advanced Digital Management Systems (ADMS) or Advanced Metering Infrastructure (AMI) are well-known examples. But while smart grid technology such as digital sensors and distribution automation have advanced, so have customer expectations and regulatory requirements. These factors have paved the way for a digital utility future.
In recent years, innovative utilities have started to deploy IT-based solutions by leveraging an agile software development lifecycle approach. This is a departure from the traditional waterfall deployment approach employed for many utility initiatives and involves adopting a product-based mindset versus a project-based one. While a project approach is focused on a small set of major releases, the digital product lifecycle consists of multiple stages such as ideation, human-centered design, development, launch, and scaling. Over the course of these stages, a product mindset prioritizes continuous improvement and delivers outcomes and key results through iteration, testing, and learning.
Early use cases for digital products have been focused on the customer experience.
Utility customers are trending towards being more technically savvy, and demand more of a personalized and streamlined digital experience.
Catalyzed by customer expectations, utilities tend to start their digital product journey with mobile apps and web portals that enable customers to pay bills online, access energy usage information, learn about interconnecting DERs, and receive outage-related alerts. More recently, utilities have started to look at digital products as an employee experience solution. A common first use case for enhanced digital employee experience has been the development of a new employee portal that is driven by more automation and self-service.
On the organizational side, utilities who have embarked on a digital product journey have made adjustments to their operating model to deliver custom digital products more efficiently and effectively to their end users. Some utilities stand up a “digital factory”—or digital product organization—that centrally builds and allocates the specialized expertise needed to design, build, and execute on various launches of digital products. Typically, this talent is grown out of IT and deployed in close partnership with the business. With greater commitment to the digital journey, product teams eventually become more embedded in utility business units, as is the practice with more digitally mature sectors such as high tech and healthcare.
Despite such great potential, most utilities have yet to realize their desired value from digital—in fact, many utilities have encountered the same set of challenges:
Fortunately, there are sound approaches to learn from utilities that have matured their digital product journey. Utilities should adopt a formal product portfolio approach that includes:
Each element of the product pipeline requires investment within a constrained portfolio, and not all products live on to maturity. The methods above have been proven to achieve realizable value and can drive success in a digital utility framework.
Building and managing a transformative digital product portfolio is an exciting step for a utility. It can lead to significant financial value that can fund the energy transition investments, energize a utility’s employee base with the spirit of innovation, and meet the needs of a customer base with growing expectations of a seamless digital experience design. However, it also requires best practices in portfolio-based planning and execution, as well as a willingness to take risks, experiment with learning-oriented approaches to product development, and explore innovative applications of new technologies such as use cases for AI in utilities. The utilities that successfully overcome these challenges will unlock significant financial value for their customers and their shareholders, and successfully transition into a digitally-driven energy future.