Everywhere you look, today’s business management position pieces are framed in increasingly similar ways. Seemingly every major industry, market, and business process is facing unprecedented pressure from a multitude of forces. Change is inevitable. The stakes could not be higher. And so on. Within this backdrop, experts tend to agree on one thing: leading companies who create the right blueprint to adapt will outpace their peers. In layman’s terms: challenge creates opportunity.
Nowhere is this more apparent than within the energy industry. Terms such as the “Utility Death Spiral” and “Utility of the Future” have become ubiquitous phrases to describe energy provider livelihood—causing industry stakeholders to question whether the hype is real or overblown.
Taking a more grounded stance, utilities can start to think through a future that is becoming more commonly referred to as the “Digital Utility.” From a customer standpoint, the Digital Utility refers to an energy provider that takes a technology-centric view to delivering best-in-class experiences that help meet a rising set of customer choices, expectations, and engagement preferences.
Here are four guidelines can help initiate or accelerate the transition to a Digital Utility:
1. Focus on all customers, not just some customers. Historically, utility digital customer engagement initiatives often started with the residential sector (the ‘prosumer’), due to natural analogs drawn from other industries. The most forward-looking utilities, however, see inherent long-term benefits in investments that engage all customer classes. For example, it is non-residential customers that generally use more electricity (65 to 70 percent of total load) and represent the most lucrative opportunity for value-added services. For competitive energy retailers looking to double non-commodity sales in coming years, this segment is critical to success.
2. Change is not just about technology; it’s about people and process. Digital Utility transformation initiatives that underemphasize the impacts on existing processes and staff—at the expense of technology—will struggle to hit key business objectives. Recent studies suggest that suboptimal outcomes from software implementations occur 70 percent of the time, despite the best of intentions. Leading utilities understand this and spend as much time focusing on the impacts of digital change (e.g., how will call center staff and operations be impacted by new digital self-service tools?) than on the investment decision itself.
3. Build on what you already have. Many experts stress the importance of rethinking everything, which can lead to an inclination to start from scratch. On the other hand, leading utilities assess where existing investments can be married with new technology to bring step-changes in customer experience. This view is captured in a recent Navigant study, Utility Customer Capabilities Gap, which found that just 36 percent of utilities believed that customer information system or customer relationship management upgrades would represent their largest customer-side investments in the next three years. The balance of respondents (64 percent) are looking at how existing infrastructure can be further leveraged through verticalized investments in web self-service, billing and rate tools, and data analytics.
4. Put a premium on customer data consistency. A prerequisite of Digital Utility transitions rests on the ability to harness and capitalize on new data streams (for example, from AMI smart grid rollouts). Leading utilities are not just thinking about how to make data more available, but also how to make it consistent across key customer-facing departments. A recent Deloitte study titled The Digital Transformation of Customer Services argues that digital investments have the power to bring together previously siloed service, marketing, and sales departments. When utilities are operating off the same set of customer data, the entire approach to channel-driven engagement becomes more aligned and impactful for customers.
The challenges facing today’s utilities are certainly real and meaningful. But the future should remain bright for those that view digital transformation as a positive force for long-term opportunity and value creation. Coming to that realization, however, must be coupled with a concerted approach that delivers on the promise.
Erik Mazmanian is a clean energy professional with 12 years of experience growing organizations and managing high-impact teams. He currently serves as the director of marketing and strategy for FirstFuel Software, where he leads product marketing and corporate development efforts. Prior to joining FirstFuel, Mazmanian worked in international business development at BrightSource Energy, a solar thermal energy development company.