Business and technology have transformed — Utilities' IT solutions and infrastructures must also
Back in April, we discussed how utilities are transforming their customer operations in response to myriad external factors, mainly increasingly demanding customers. Driven by customer experience excellence in other industries — think of what Amazon has done in the retail industry — customers now expect a different customer service from their utility provider. They expect their interactions to be simple, timely, and homogenous across different communication channels. The end goal of utilities' customer operations transformation is to improve customer experience in order to tap into the new revenue streams of value-added services.
Patching in advanced customer experience capablities
This requires utilities to move beyond their transactional legacy systems to embrace digital solutions for real customer engagement and experience. This is easier said than done. Utilities, especially incumbents, often have large and rigid legacy systems that they would prefer to leave untouched. In such cases, utilities will add additional capabilities on top of their existing systems to enhance their customer service and engagement capabilities. This, however, limits them from having a truly holistic 360-degree view of the customer through a single central solution that has 100% visibility of all customer interactions, inbound and outbound, pre-sales and post-sales, and that can seamlessly integrate and manage all communication channels. These companies face more challenges when automating processing, which turn hinders their ability to effectively reduce costs and increase efficiency and speed. Utilities that build on top of their existing legacy systems will need to pay significant attention to disparate systems, as integrating internal and external data sources will be fundamental to unleash the potential of advanced customer analytics capabilities. It's imperative to have the right tools and capabilities in place to be able to offer the right content at the right time and at the right price.
Technology procurement and consumption habits are changing
It's not just the types of solution investments that utilities make that are changing; most importantly it's their approach to procuring and consuming these solutions and capabilities that needs to change. Long gone are the days of IT solution projects that took several years to complete. If you think about digital solutions, such as adding prepayment functionalities and options, the accepted time for execution has shortened from months to weeks. To respond to market changes, utilities are increasingly adopting a "quick win" approach that enables them to make faster, limited investments to maximize market opportunities.
Applications and infrastructures are flying into the cloud in more digitally mature utilities
Utilities look for agility and flexibility wherever possible — in their applications, infrastructure, or platforms — to respond to external market factors. This quickened pace is changing the mindset of utilities' IT organizations toward all areas of cloud (software as a service, platform as a service, and infrastructure as a service). This is especially the case in more digitally mature companies, where, for instance, data privacy and data security and regulation are no longer seen as such clear barriers to cloud. Recent IDC Energy Insights survey results revealed that twice as many European utilities (52.1%) currently use or plan to use the public cloud compared with a year ago (25.8%). While the benefits of a highly elastic and scalable cloud option can no longer be denied, many utility companies still have reservations, citing a loss of control and fears about security as their main concerns.
Utilities that have already moved applications or infrastructures into the cloud, however, have noted the additional benefits of significant transparency in actual usage, which is often not as evident in one's own datacenter. IDC Energy Insights in fact has just forecast that by 2019, to support their digital transformation agenda, 25% of the top 100 utilities will cut IT costs by at least 30% by migrating IT infrastructure into public cloud.
Partner skills and ecosystems must be revamped
As 3rd Platform technologies like cloud begin to take over utilities' traditional IT operations, companies will find themselves struggling to find the right talent and skills. Filling these skills and talent gaps will be one of the most difficult challenges for utilities over the next decade. In response, utilities have already started to look at their surrounding ecosystem to source the required skills, and in turn, the ecosystem has begun to change the way it offers them. The utility industry is opening up to collaborative innovation where gains (and risks) are shared between the various stakeholders. The fine lines between vendors, service providers, clients, and users are being smudged, with the rules of engagement changing and profitable collaboration becoming the end goal for all.
For many utilities, the next few years will be a case of sink or swim — a separation of the thrivers, the survivors, and the losers. Utilities that can transform the way digital technologies are leveraged, especially cloud and analytics, and rethink how they procure capabilities from the ecosystem, will thrive. The successful utilities will be those that can transform their operations and pass on the benefits to their end customers; those that are unable, or unwilling, to change will increasingly see their customers moving elsewhere.