Precious data from varied sources can help companies engage better with their customers, deliver better value via more effective asset management and identify opportunities for growth or regulatory outperformance.
However, data is only as valuable as the intelligence and action it creates. Rising technologies that can be used to capture and transmit data to utility companies, such as artificial intelligence and advanced telemetry, need to be backed up with systems, skills and processes that transform raw data into insights and create an impetus for change.
This was one of the overriding themes discussed at the Utility Week-Wipro Technology and Innovation Council’s annual Open Doors Dinner, which took place in London last month. The event welcomed regular attendees at Council events and other interested industry leaders with responsibility for technology and innovation in their organisations.
In three groups, guests discussed the outcomes and challenges posed by a piece of Council-led research that asked individuals how important customer engagement, skills shortages and technology adoption are to the fulfilment of organisational strategies for success in the future.
Skills crisis looms
Amid a range of other insights, the research warned that the utilities industry expects to meet a skills crisis in the next three to five years, and that the availability of data-crunching skills will sit at the heart of this.
It also highlighted customer engagement as an increasing focus for strategic innovation efforts and identified the customer-facing processes, along with asset management, as the top two business areas in utilities that are ripe for technological transformation in the near- to mid-term future.
Faced with these insights, our three discussion groups latched onto a selection of themes, some focusing more heavily on skills, talent retention and sector attractiveness issues, while others gravitated more readily towards discussion of the technology itself, or the role that regulation plays in allowing utilities to innovate freely – easing the path for technology adoption and allowing utilities the creative space they need to attract skilled innovators.
The freedom or will of utilities to offer real challenges to up and coming talent with the capabilities utilities need for the future was considered a key problem. For while many said that attracting graduate recruits with exciting new data science skills is not hard, they also admitted retaining them can be.
One delegate suggested this is because traditional utilities, especially those with asset-heavy businesses, lack imagination in the scope of the innovation challenges they set. Aspirant talent with a desire to effect real change can therefore feel suffocated, and pushed to seek a greater challenge in more liberal sectors such as tech development, manufacturing and even retail.
Another people-oriented challenge for effective technology exploitation in utilities was seen in relation to traditional team structures and one group proposed that businesses should move more assertively to group varied skills and resources around strategic challenges, rather than outdated functions. In this way, new technical capability could be paired with industry knowledge, customer focus and process efficiency expertise. Multi-skilled collaborative and flexible teams would be better faced to meet the rapidly evolving challenges of the future, they said.
Understanding future customers
Of these challenges, understanding future customers was considered core. While 69 per cent of individuals responding to the Council’s 2017 research felt their organisations already engage effectively with their customers, 81 per cent also said they see improving customer engagement as imperative to the future success of their businesses.
Discussion around this finding prompted nuanced observations about the different engagement needs of different customers. There was agreement that utilities must become more proactive, anticipating customer needs rather than responding to them.
Unsurprisingly, Amazon was referenced frequently as an engagement role model and the launch of its voice-controlled smart home technology, Amazon Echo, was seen to mark a new age in customer engagement. A future in which this kind of artificial intelligence dominates the way in which customers engage with service providers, offering simplicity of interaction and advanced sentiment recognition, was seen as inevitable, exciting – but also potentially threatening.
As customers increasingly expect new levels of sophistication, simplicity and integration in the platforms and devices they use, the market power of companies such as Amazon and Google can be seen on the ascendant. Meanwhile, the ability of utilities to provide technically innovative solutions that can maintain customer engagement in a new paradigm, seems less likely.
Importance of innovation
What does this mean for the way in which utilities must innovate for customers in the future? New models for partnership and collaboration with third parties were discussed, as were the implications for regulatory expectations of customer engagement.
But even as these considerations were exchanged, guests defended the ability of utilities to maintain and develop useful interaction with customers far into the future, refusing to be completely muscled out of the relationship by consumer tech giants.
As macro pressures such as climate change, decarbonisation and resource scarcity come to bear, utilities see scope for a rich future in which innovation and customer engagement go hand in hand – participants from power distributors in particular saw this as fundamental to their ability to manage network capacity flexibly in the future.
Coupling customers and innovation with increasing effectiveness will require an acceptance of customers as disruptors and will push more firms to become pioneers – or at least fast followers – in new technology adoption. This will mean a step change for some, since Council research suggested almost a third of companies in the sector still characterise themselves as third wave followers of technology, who wait for it to become mainstream.
Ultimately, however, guests were optimistic that utilities with the right people and cultures do have the scope to thrive in a world in which old strategic drivers are ousted by new tech capability, fresh data insight and empowered consumers.
Sarat Chand, general manager Utilities, Wipro
“It is heartening to see the innovation council evolve into a pan-utility leadership forum championing the creation of strong innovation cultures and the uptake of key technologies in the utilities sectors. We believe the constant knowledge exchange and insights will help the industry become more customer- focused and trigger widespread transformation.”
Andy Wysocki, head of IT, Bristol Energy
“Building technical teams in the energy industry is not an easy task. We ask for a lot – strong technical skills, energy experience, flexibility regarding duties, often long, unsociable hours, etc. There is a huge amount of competition in our job market, so finding people with all the necessary attributes isn’t always possible – particularly when working within tight budget constraints.”
Barry Carruthers, head of innovation, Scottish Power
“While it’s true that many services today can become attractive when wrapped together, it is worth remembering the digitally hungry generation who could thrive on energy data gamification.”
Neil Pennington, ID2020
“Our everyday reality is that people don’t think of us as a “sector”; they want seamless service across all aspects of their lives. It’s our job to make sure our regulators understand, and our people and our technology deliver that.”
Mark Smith, chief executive, WRc
Until utilities can put forward more challenge to incoming talent, they will struggle to retain it. Upcoming digital talent leaves the sector for lack of interest, not lack of money.
Key themes
1. There are many different “types” of customer, and this should be reflected in the way utility companies engage with them.
2. Data is invaluable, but it is only useful if it is translated into information that can be used.
3. Skills retention is harder than skills recruitment. While it is relatively easy to recruit graduates with digital skills, keeping them is often more difficult.
4. Bundled services are increasingly important to customers, over a set of separate services.
5. A “fast follower” position is right for a utility company, which needs to be risk-appropriate in its approach to innovation and technology adoption.