How can utilities thrive in the digital world?

As the world moves on from the era of the internet economy to a new age of digital consumerism, Satya Ramaswamy explores how utilities can reimagine themselves to survive and thrive.

The world is shifting from an internet economy to a digital consumer economy. The internet economy was characterised by an explosion of connectivity and an empowerment of the consumer with information about the enterprises that serve them. The digital consumer economy is characterised by the democratisation of information – all enterprises can access information about consumers, all the way down to the individual shopper. And companies are being empowered by digital tools that make them far more efficient than ever before.

Utility companies stand to benefit massively from this economy shift, if they can harness these tools effectively.

The digital consumer economy is being driven by five key digital technologies, which we call the “digital five forces”.

•    Mobility and pervasive computing has transformed customer services into anytime/anywhere contextual interactions. Mobility has also liberated information technology from the desktop, enabling an empowered field force.

•    Big data, by allowing businesses to process massive amounts of data at high velocity, and in formats that may not fit the fixed schema of structured data, can deliver genuine business insights that may otherwise have been entirely lost.

•    Social media mean that for the first time businesses can listen to the unfettered sentiments of millions of consumers.

•    Cloud has enabled highly scalable, fault-tolerant computing capability that is democratised and cost effective.

•    Artificial intelligence and robotics are creating a highly scalable automation of human intellect and physical dexterity.

In our research and client work around the five forces, we are seeing that digital is rapidly becoming the default. Ninety-five per cent of companies today see digital technologies as a critical way to connect with their customers. Seventy-five per cent say their digital initiatives are the most important factor for their success or of major importance.

However, it’s clear that not all digital initiatives have the same impact. Across all industries, we find three distinct categories of digital initiatives, based around different levels of maturity: digitisation, digital transformation and digital reimagination.

Digitisation includes initiatives such as taking a physical business process that may involve paper and pencil processes, and converting them to a tablet-based process.

Digital transformation typically involves transforming a company’s channels to its customers. For example, letting customers buy through mobile devices or social media.

Digital reimagination initiatives leverage a combination of the digital five forces to reimagine an enterprise along six dimensions: business models, products and services, customer segments, channels, business processes and workplaces. Here we use the term “reimagine” to denote the creation of things that are fundamentally new and not just incrementally better.

A key issue that utility companies grapple with in their reimagination is effective asset and field force management. Both have a significant impact on the customer experience and should therefore be a priority.

Let’s take a scenario when these two aspects come to the fore for electricity providers, a heavy storm. Storm management has been an Achilles’ heel for many utility companies because the specific assets that will be affected will not be known until the storm has passed. Customers in the areas affected are usually taken by surprise and service restoration is imperfectly co-ordinated because of the difficulties of communicating with the field force. Customer calls to call centres add to the already high cost of asset restoration, not to mention customer frustration about service quality.

Now, consider how a utility can reimagine storm response by embracing the digital five forces for asset and field force management.

A reimagined utility is well connected with its customers through social media. It provides mobile applications to stay in constant touch with its customers. The utility also gives its field force mobile applications that touch all facets of their work. The utility uses big data systems to monitor smart meters and to constantly monitor service status for individual dwellings. It uses an internal social network to keep in touch with its employees and spread knowledge. The reimagined utility also uses machine learning and artificial intelligence to predict storm paths and assets that will be affected.

Such a reimagined utility can handle storm response a lot better.

When a storm is predicted by weather models, artificial intelligence systems predict the assets that are going to be affected by using machine learning based on earlier storms in the area. The utility then informs the customers in the service areas about the potential for service disruption using social media and its mobile application. Any changes to previously communicated information are also shared proactively. The field force is also alerted to specific areas of impact on their mobile devices.

When the storm passes, the big data systems provide information on the specific customers who are affected. The utility proactively informs these customers via social media and the mobile application about their service condition. It also provides an accurate estimate of service restoration time by using machine learning systems that use knowledge of previous storms. This avoids the cost of call centre activity from customers with service outages.

The field force is co-ordinated through their mobile devices. Workflow approvals are automated using artificial intelligence systems so the field force does not have to wait for manual approval processes. Work simply gets done!

Storm response is just one example of how digital reimagination can transform the utilities industry.

This is a redefining moment for the industry. The utility providers that embrace the digital consumer economy, the five digital forces outlined here and the concept of digital reimagination will see rapid evolution and significant competitive advantage.

Satya Ramaswamy, global head of digital enterprise unit, Tata Consultancy Services