Setting the scene

Across sectors, companies large and small are nervously shuffling their feet, edging up to the start line and, perhaps, plotting where exactly they will trip their neighbours when the race for digital utilities territory begins in earnest.

It may be a messy dash. Favourites could fall and outsiders seize unexpected ground. Technology enthusiasts and futurologists will feel they have a head start, but the consensus among attendees at Utility Week and Accenture’s roundtable discussion on the opportunities and threats posed by big data, smart technology and the connected consumer was that while a lot of preparation and experimentation is afoot, definitive stakes have not yet been claimed by players old or new. Consequently, there is still everything to play for.

The debate

During an afternoon of animated discussion at Utility Week and Accenture’s roundtable, attendees identified possibilities for, and potential barriers to, optimising the connectivity of consumers, in order to carve out value-add propositions in the water and energy sectors.

The natural assumption was that energy companies understood the connected customer better, but talk of technology innovations soon revealed that water companies have a real opportunity to leapfrog them.

Jacob Tompkins, managing director of Waterwise, talked about a new Kickstarter-funded research project his organisation is involved with in Switzerland. “Rather than using smart meters, we’re experimenting with fitting smart micro-sensors into appliances,” he explained.

The data from the sensors feeds into the consumer’s mobile phone via Bluetooth, bypassing the water company and putting consumers directly in control of their data. “Soon we’ll be getting together customer forums so that the people involved can compare their data and use that to discuss how their water is managed,” Tompkins went on.

With little support for the rollout of smart meters in the UK water sector, it was agreed that this kind of technology provides a sound alternative route to smart services – and energy representatives at the meeting said it might be a better way than the technology mandated by the energy smart meter programme, which faces the danger of becoming technologically redundant before it has really begun.

An example of a challenger technology that might force this redundancy is Loop. This phone app delivers information about electricity and gas use and could potentially displace in the in-home display mandated by ~
Decc’s rollout, according to some attendees. The app also links with Uswitch, so users can quickly identify opportunities to switch.

News of Loop raised eyebrows around the table, although it was acknowledged that the ability to offer in-home displays to customers without smart phones remained important.

This recognition of different requirements from customers with different levels and means of connectivity led to further discussion of the nuances in future utility service models. Distinctly different visions were described for urban and rural communities.

In the rural environment, it is anticipated that community ownership and local interest will sway the development of infrastructure and service delivery, perhaps requiring niche bundling and collaborative partnerships. Cities are more likely to result in a marketplace for data aggregation services and the intervention of new entrants in utilities’ management. These new competitors are likely to be looking to extend existing relationships with customers, said attendees: Google, Amazon and Sky were all mentioned speculatively.

Contributors to the roundtable were keenly aware of the competitive threat this might pose to the traditional utility, distancing it from its customers and their perception of value. However, it was also pointed out that new entrants would need to have a significant appetite for brand and reputational risk in order to brave a sector in which ­mistakes are harshly punished.

“There is too much to lose in terms of reputation and not enough to be gained for the likes of Google in this market,” said Yorkshire Water director of customer service and networks Nick Topham. There was little doubt, though, that should such companies want to enter the market, they would be better trusted than utilities.

The importance of trust highlights a tricky chicken and egg dilemma for utilities. Which comes first, trust or innovation? The former is needed in order to provide the data and buy-in for the latter to be effective. But innovation is also sorely needed for utilities to change negative public perceptions.

Quote me…

“We must beware of making assumptions on the behalf of customers. It’s important to engage customers directly in the development of new services. So far our research has shown that, first and foremost, people want to feel in control. Once they feel in control, then they might think about opting in to forms of automated energy management.”

Nicola Combe, product manager, British Gas

“Digital platforms give us the opportunity to empower customers by putting information in their hands. They also enable us to deal with customers’ problems before they arise. For instance, we can use data to carry out advanced monitoring of our assets so we have greater control of them.”

“The water industry has been criticised for being inward-looking and slow to change. We have learnt a huge amount from the manufacturing industry about using data successfully to improve customer ­service and efficiency.”

Tony Conway, strategic programmes director, United Utilities

“There are plenty of examples where companies have tried to diversify and have failed. It’s not straightforward. Companies need to think strategically about where they can diversify and show competitive advantage against ­potential new entrants like online retailers.”

“If you can’t get the bill right, you can’t expect to jump to a position where people are willing to give you all their data. Gaining trust is a step-by-step journey. Get the basics right first, then you can hope to move up the hierarchy of ­permissions.”

Sanjeev Mathur, managing director of energy practice, Accenture

“After 25 years of privatisation, we’ve become reliant on Ofwat’s regulatory regime. But now ­competition is zooming in and it’s going to blow a hole in this comfortable existence. This is disturbing for some people who have become used to a world where they know the rules.”

“In some ways a smart meter runs the risk of simply becoming another thing for consumers to worry about. If we’re not careful in the way we develop smart energy services and inter­action platforms, we run the risk of going against the requirement to make people’s lives easier.”

Nick Topham, director, customer service and networks, Yorkshire Water

Five key points

• The technology mandated in the smart meter rollout could become immediately obsolete.
• Technological progress may offer the water industry the opportunity to leapfrog energy and take up a position of digital leadership in the utilities sector.
• Utilities must tread a fine line when developing their digital strategies, ensuring that while giving control to customers, they are not contravening a trend to make customers’ lives easier.
• New entrants are a real threat, although reputational risk will deter some big household names.
• Trust is key in allowing utilities to innovate with digital channels and data-reliant services.