Expert View: PR19 – an opportunity the water industry cannot afford to waste

Ofwat’s PR19 review might feel like another hurdle for an already heavily regulated sector, but with the right approach it can become a powerful driver of change.

The water industry is a highly capital intensive business, with perhaps 70 per cent of its annual expenditure deployed on replacing, maintaining or implementing new physical assets. Yet, in comparison with the speed of new product or service development in other industries, the established approach to asset management is slow. Water and wastewater businesses operate in long-term planning cycles, with infrastructure renewal frequently spanning decades.

Contrast this with many aspects of the digital economy, where innovation drives product renewal every year to 18 months at most. Even “old school” manufacturing such as automotive has embraced the switch to electric and autonomous vehicles at a pace that would have seemed impossible just a generation ago. It’s somewhat telling that most water companies spend more on capital in a week than they spend on IT in a year. The industry needs a step change in its approach to digital.

So how can the industry adopt, apply and evolve its operations to take advantage of new technologies such as artificial intelligence, digital twins, the Internet of Things, machine learning and robotic process automation?

Typically we’ve seen digital technologies primarily targeted at customer-facing services, but they can do much more. For example, by monitoring and analysing network and operational field data, predictive maintenance can reduce asset downtime as well as lower the risk of outages or environmental incidents. A connected workforce and supply chain can accelerate the speed of asset delivery and commissioning to the network.

Stretching the boundaries further, some asset-intensive industries are introducing 3D printing and digitalising the supply chain to lower maintenance costs, particularly for aging infrastructure.
Water is a long way from this –but with a heavy focus on maintenance in this next AMP period a more agile structure will be needed to manage the resulting, smaller incremental capital expenditure.

At its core, digital isn’t solely about the desktop, device, application or even the cloud: it’s about focusing on customers, efficiency, resiliency, security and innovation to drive game-changing business and customer outcomes.

PR19 can be seen as a challenge, as something to be dealt with, but it’s much more of an opportunity. Within it is the threat of penalties for companies that don’t deliver, but also the promise of reward for those that do. The success of an organisation’s digital strategy will determine which side of that line it ends up on.

Capgemini will be hosting a showcase on the Future of Water, at its London office on 13 June 2019. For more information please contact: Paul.Haggerty@capgemini.com