Northumbrian Water’s chief information officer on the potential of AI and digital twins and why the company is spending 30 per cent of its transformation budget on its people

What we’re trying to become is the fastest learning water company on the globe. And having the digital signals that allow us to quickly pick up on the effects of climate change, or the impact on customers, is why we have that ambition

Nigel Watson likes a challenge. When we spoke before Easter, he was gearing up to run the London Marathon and keeping his fingers crossed for cooler weather after an unseasonably warm spell.

“I’m not really built to run marathons, but I have trained for it, so I’m going to give it a go,” says Northumbrian Water’s chief information officer.

“It’s not going to be fast, but I’m hopeful that I’ll get round,” he says with a calm optimism. “I’m just hoping it’s not too hot!”

Near ideal weather conditions and gutsy determination saw Watson over the finishing line in a very respectable five hours and 23 minutes. But despite his aches, Watson was back at his desk in Durham the next day.

“What we’re trying to become is the fastest learning water company on the globe. And having the digital signals that allow us to quickly pick up on the effects of climate change, or the impact on customers, is why we have that ambition”

It’s this kind of conviction and energy, combined with crystal clear vision, that Watson is putting to work to make Northumbrian Water the “most digital water company in the world”.

“What we’re trying to become is the fastest learning water company on the globe. And having the digital signals that allow us to quickly pick up on the effects of climate change, or the impact on customers, is why we have that ambition.”

Watson arrived at Northumbrian Water in 2015 after seven-and-a-half years at Vodafone. He was initially brought on board as a consultant, and was then offered the CIO role when his boss departed a year later. His multi-varied career has seen him in business and operational and transformational roles, working far afield – including in California, Australia and Turkey. This breadth of experience and his rise from a Youth Training Opportunity Scheme at the age of 17 for the Eastern Electricity Board – and later in life an MBA – have furnished him with an ability to deal with people at all levels and in all cultures.

Joined-up thinking

Certainly, that is a vital asset in Watson’s role at Northumbrian Water, which has unusually wide bandwidth. The structure affords the opportunity to integrate operations that sometimes suffer the right-hand, left-hand syndrome other organisations are prone to, and harness and develop technologies that play to the strengths of more joined-up thinking. But like any change, it all requires a mixture of charm and persuasion – and a bit of stiff talking.

So, while Watson has the responsibility for all the usual IT functions and aspects such as cyber security, his domain also includes operational technology – the kit used across the business in areas such as treatment works to control and monitor water and wastewater. Bringing these two functions together brings benefits to its approach to cyber security and to collect vital data in the cloud that allows Northumbrian Water to use machine learning algorithms to learn, and to predict when bits of kit are going to fail. For example, Northumbrian can now predict sewage pump failure in eight out of ten cases, he says.

Watson retained his role of transformation programme director, and he and his team have just finished delivery of new platforms to support customer engagement. They are now about to deploy the first phase of intelligent asset management.

“The core team is 170, and then on transformation we’ve got about another 150 people. ‘Innovation’ we don’t hire people for, because we’ve made that everyone’s job,” he explains.

In addition, as the person responsible for driving innovation across the business, he instigated and is the sponsor of Northumbrian Water’s highly successful Innovation Festival at Newcastle race course, where last year 2,000 people attended from 500 different organisations. The third annual event takes place from 8 to 12 July and there are plans afoot to introduce a spin-off in September.

The festival provides an ideal vehicle for design sprints, which the organisation uses to try to solve complex problems. A proposal for a new digital underground map of utility infrastructure was one outcome from one of last year’s sprints.

“We had BT, Northern Gas Networks, Northern Powergrid and ourselves in the tent. We built three areas of Newcastle on this underground map, because we just wanted to know if we could do it. After the festival, we went out and with Sunderland City Council and Ordnance Survey built an underground map of the area. And we’ve taken that to government and we’re very pleased they are funding the next stage.” It has now been announced that the government’s geospatial commission is set to create a digital map of the UK’s pipe network.

He cites the success of the innovation festival as one of his key milestones since joining Northumbrian Water. In two events alone it has resulted in taking 76 ideas back into the business.

Another major highlight and a key staging post on the transformation programme is the rollout of a new customer system. The old one had 24 years on the clock, and while it was still functioning, the number of support staff who knew about it was rapidly diminishing.

“The catalyst was technology replacement, but we turned it into transformation of the customer experience, with a new CRM and billing system, omni-channel customer engagement platform, home calls, tweets and chat messaging,” he explains.

As a result, customers can now be offered more flexible payment options, and when they ring up their water provider it will recognise their phone number and pull up previous engagement and account history.

He admits it’s not revolutionary – but changing any billing system is a huge undertaking and it’s always a relief when it’s over and working well.

“We still have more work to do with our own internal teams, and we can go further in delivering an even better customer experience, but we absolutely have the right platforms in place to do that right now.”

But with the new system functioning well, Watson is directing efforts to the next big staging post of Northumbrian Water’s transformation – managing its assets.

“We’ve got 54,000km of pipes, several hundred treatment works, so having good network intelligence, and improving maintenance regimes, is the other big job that we do.” Here the goal is to improve the life of mobile maintenance workers, which will be brought about by upgrading the organisation’s planning and scheduling system and improving the repository for asset data to provide a basis for better collection, machine learning and analytics. By way of example, he points to the work of the ten-strong data science team, which has developed an algorithm to apply machine learning to predict problems in sewage pumping stations and leakage. “For sewage pumping stations, we can predict about eight times out of ten when there is likely to be a problem, and we’ve reduced our pollution incidents of that type by 80 per cent,” he says.

The last piece of the maintenance jigsaw, which overlaps with the customer programme that has been deployed, is to “take operational calls on the same system as the billing, meaning we’ve got a 360-degree view of all the interactions we have with the customer”.

Transformation journey

So where is Northumbrian on its transformation journey? “We started the transformation four years ago, and I think we’ve got another couple of years to go. We’ve made a significant investment in putting a new architecture in place, but we know that we can never afford to stand still. We are using agile methods to continually enhance the customer and employee experiences that we have created.”

What does he think is crucial to this successful transformation? Watson doesn’t hesitate: “Investing in our people – we’ve spent 30 per cent of the transformation budget on our people and on including our people in the programme.”

Watson says companies often make the mistake of skimping on training people properly or trying to bring existing staff on board. “It’s easy to cut that bit, or spend a bit less, but I give the board of this company a lot of credit for realising that we need to put our people into the programme.”

And the challenges going forward? “It’s about our employees getting used to doing things in new ways, quickly adapting to new tools, and getting used to the fact that change just keeps coming, and it’s normal.

“When I first arrived four years ago, people would say ‘can we just slow the pace of change down a little bit?’ But nobody is saying that any more, they’ve got used to the fact that we’re just going to have to live with it.”

What sort of technologies are you getting excited about at the moment?

The possibilities that AI brings, across our business, are big – water, wastewater, customer engagement. I’m very excited about what that can do to improve this business.

And a little bit further away is digital twins, and the ability to run simulations that allow us to make better decisions across our business.

At the moment we’re using machine learning to improve our maintenance regimes, and predict when we need to intervene in the assets in our network.

We’re increasingly looking at how to use it in the customer engagement arena – for example, could we use AI to hook up the customer with the person who would deliver them the best experience?

How far do you think AI will go?

In the medium term, I think it’s going to help people to make better decisions. We’ll be using it to supplement people and their knowledge.

In the long run though, I think it will go further. Thinking ten years ahead, will our fleet be driven by people, or will it be autonomous? I would suspect the latter. Will people be talking to people or will they be talking to machines? I think quite a lot of them will be speaking to machines, and they won’t even know it.

How much time and effort are you putting in to developing AI at the moment?

Quite a lot. I’ve got three people in my team put aside to look at this. And when I go out to conferences and things like that, that’s mostly what I’m focusing my attention on.

Any career moments that defined you or changed your outlook on the way you manage people or your ambition, or anything like that?

When I was at GE Capital in California, they put me on to a post-merger and acquisition team of six people. I was the person from technology. It was very intense, we had 180 days to integrate a business. It forces you to take a very holistic view of a business. And I learned a lot doing that. I would be redesigning a sales incentive scheme one day, writing job descriptions the next, looking at technology. And I think that kind of experience made me more rounded.

What did you take away from the experience in Turkey?

I worked in Turkey for five-and-a-half years on a transformation programme. Turkey is a very young country – the average age is 27 – so the breadth of decisions I had to make as an experienced person was a real game-changer.

Also, being able to adapt and understand, culturally, what bits you can influence and what bits you can’t was an important skill I picked up along the way. I often asked the question ‘is this Vodafone Turkey, or is this Turkey?’ Because you might be able to change the first, but you definitely can’t change the culture of the country.

So, it’s really important you can learn the context in which you’re operating and accept what you can and can’t influence. It’s important to nudge the corporate culture along, and I try to do that here.”

WHO KNEW?

What bit of tech would you like for your birthday?

I’m going to go with a bit of work tech – if someone was to deliver me a fully functioning digital twin I would embrace them, I think.

What technology couldn’t you do without?

My noise cancelling headphones. I’m up and down quite a bit on the train, and I find it really helpful being able to concentrate.

Business hero?

When I worked for GE, Jack Welch was there. And what I really admired about him was his consistency of message, and his laser focus on business improvement. Today, I can’t point to someone and say, ‘that’s my business hero’ because I think the business heroes are the ‘servant leaders’ who are quietly getting on with things and enabling their people to do great things. That’s the style I’m trying to emulate.

What did you want to be when you grew up?

I wanted to be a footballer, and then when I realised that I wasn’t fast enough for that, I wanted to be a PE teacher. Tottenham is my team.

What do you do to switch off?

I go for long runs. I’ve just run the London Marathon. I had done one before, the Stockholm Marathon, and I’ve also done a couple of triathlons.

Do you have a prized possession?

Family photos. I have four kids aged 22, twins aged 18, and 17. Three girls and a boy

This interview first appeared in Flex, issue 3. Read the full issue of Flex here