Which technologies utilities adopt – and when – is largely driven by the pressures placed upon them by regulators, governments, customers and market forces. In 2013, IT budgets in the sector are expected to grow slightly but not significantly – continuing the trend of recent years. This is not surprising, given the cost pressure the industry is facing.
However, while stable overall, IT expenditure may change substantially in terms of the technologies that are attracting investment. Top trends in 2013 are expected to be:
1. Smarten up
Regulators, customers, and utilities all are investigating smarter approaches to the energy and water value chains on the back of soaring energy prices, concerns over carbon emissions and supply security fears. IT and telecommunications technologies are critical enablers of a smart future for the industry. This will be coupled with heavy investment in renewables.
2. Hunger for knowledge
Expect the adoption of knowledge and document management systems to increase and for better use to be made of enterprise asset management and workforce management systems to improve the capture of information and knowledge. This is because an ageing workforce remains a huge problem for utilities.
Over the past two decades, the utilities industry has failed to recruit new talent to replace its ageing pool of expertise. In Europe, more than 60 per cent of the utilities workforce is over 40, and 32 per cent will retire in the next ten to 15 years. A promise of jobs for life, and specialised, non-transferable skills in engineering, has led to low levels of staff attrition, with very poor succession planning.
3. On auto
The issue of an ageing workforce has also contributed to utilities automating previously manual processes throughout the distribution network. This will continue in 2013.
4. Mob mentality
We expect a second wave of interest in mobile technology, driven by factors including device proliferation, consumerisation of applications, and continuing demand for workforce efficiency improvements. Also, by more effectively delivering information to the mobile workforce, and using collaboration tools to help break down operational silos, utilities can at least partially mitigate the issues of the ageing workforce.
5. Asset sweating
Utilities will attempt to extend the lifetime of their current technology assets and only invest in upgrades where necessary. That said, some changes may be mandated by regulation, such as those dealing with cyber security or reliability, or dictated by requirements for the integration of renewables or electric vehicles. Such solutions are likely to be prioritised over other IT investments in the short term.
Overall, utilities will remain a challenge for vendors, particularly those with few or no clients in the sector. The industry is entrenched in decades-old business processes, with cultural barriers endemic across and within different business units. It is resistant to change and slow to adopt new technologies. As they have done with their physical assets, utilities will sweat their technology assets for years, usually well past their useful lives. Replacement cycles are long and buying cycles can seem interminable. Patience, industry knowledge, a willingness to collaborate, and tried and tested technologies are critical to success.
Stuart Ravens is principal analyst in Ovum’s energy & sustainability team
This article first appeared in Utility Week’s print edition of 11th January 2013.
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