Digital Strategies for Energy and Utilities

Written By: Eric Kimberling
Date: October 28, 2022

Digital transformations are risky and complex in any industry but none more so than Energy and

Utilities. What  we are going to discuss in this article are the things that you need to be aware of as you embark on a Digital Transformation in the Energy and Utility space. 

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Energy and Utility Complexity

The first thing to be aware of in the energy and utility space is that this industry is very complex. There are many business and technical complexities and operational complexities that other industries and other organizations simply don't have.

Energy and Utilities areas like enterprise asset management, predictive maintenance, geospatial information systems, outage management and scada; many different sorts of technologies and processes that are meant to manage disparatehttps://www.thirdstage-consulting.com/the-last-mile-of-digital-transformation/ operations and disparate parts of the organization as far as field crews and people disperse throughout the organization.

Similarly, it's necessary to track and manage assets relating to substations, transformers, wires and poles and the last mile of getting to the https://www.thirdstage-consulting.com/is-your-legacy-system-a-cybersecurity-ticking-time-bomb/end customer. All of these things result in operational and technological complexity that can make digital transformation very difficult. Additionally, you add to the fact that most utilities businesses have legacy systems that have been around for a decades or longer, it just makes it that much more difficult to change those systems and to change the processes that go along with it. Recognizing and being aware of those complexities that your experiencing and trying to address as part of an Energy and Utility Digital Transformation is one of the first steps to success in a transformation.

Energy and Utility Tech Selection & Risks

Finding the right technology or technologies to help enable your operational improvements within your utility or your energy company is something that's very challenging because there's so many different functions and capabilities you're trying to address within the organization. Accounting for the different systems and processes these operations manage makes the right technology and prioritizing how you go about the transformation even more difficult for this industry compared to others. The key here is to evaluate and prioritize your needs as part of your digital strategy so that you know where it is to put out the fires in the short term and do so in the context of a longer term digital strategy as well as plan to help you get to where you're trying to go. 

Ad additional risk to be aware of is that most Energy and Utilities companies aren't able to leverage a single ERP system. Most ERP systems can't do all the things that utilities need them to do. We mentioned the example of GIS a couple times now, that geospatial data component is something that can oftentimes cause an ERP system to break, it's not something that ERP systems were typically designed for and so that's why utilities end up with disparate systems and more of a best of breed approach. Evaluating your options, prioritizing your options and having a clear roadmap that aligns with your risk profile and your overall strategy is something that's critical to ensuring that you're successful.

Since utilities are less likely to use a single enterprise-wide system and more likely to use best-of-breed point solutions for different parts of their business, that puts more demand and more pressure on the integration and architecture of your systems. Because of these circumstances, you're more likely to have disparate systems from different vendors that now you're trying to tie together and integrate.Additionally,  you've got data management issues because you've got different systems as well as housing different types of data. Along those same lines the business financial data, geospatial data and other rare forms of data that only utilities have, so,  making sure that you address all of this in terms of integration and architecture is super important. When you embark on your digital transformation and define your strategy for your transformation, you want to make sure that you've addressed these competencies and you have really solid independent technology agnostic architecture and integration support.

Legacy Systems of Energy & Utility Organizations

We have talked about how there's complexity in the systems and the business processes within most energy and utilities companies but there's also a different type of change complexity that comes along with this industry. This change complexity is not focused on the technology that's being replaced, it's also focused on just the history of the utility. Energy and Utility companies are historically older organizations. Typically you have a highly tenured staff, so they've worked at the organization for longer time periods and are oftentimes unionized, so you have union and labor representation that make changes a little bit more difficult. You have to be more mindful of how you navigate those changes and you have regulatory constraints that limit how you can go about your transformation. When you add all these points up and certainly when you add in the fact that your technology and data and process complexity is there too, you can see how it makes it very difficult for utility companies to change. Even with the best of intentions and with a clear vision. It's critical for all these reasons that you be realistic about how long it's going to take you because most Energy and Utilities companies are going to change at a slower pace than a lot of other industries and you just want to make sure that you plan accordingly for that reality

When you think about all of these complexities and moving parts that are unique to Energy and Utilities, it suggests that digital strategies and road maps that are aligned with your business needs and address the realities of your organization are more critical in this industry. Energy and Utilities in particular need to take the time upfront to define a clear digital strategy to have a clear and deliberate road map for how they're going to achieve their goals and objectives. This is why in some ways it's important to slow down your transformation, especially in the early planning stages. In the strategic planning phases, make sure you have a clear road map and vision for where it is you're headed what you want to accomplish, how likely it is you're really going to change within a reasonable amount of time and ultimately to define a plan that fits your goals and objectives. Additionally, account for your risk profile, your culture and your overall strategy as an organization. Making sure you have that digital strategy carved out and well defined up front is extremely important especially if you're in the Energy and Utility space so these are some points to be aware of as you go through a digital transformation within Energy and Utilities. 

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If you are looking to strategize an upcoming Energy and Utilities transformation, we would love to give you some insights. Feel free to reach out to me here with any questions you may have ryan.glisan@thirdstage-consulting.com

Be sure to download the newly released 2023 Digital Transformation Report to garner additional industry insight and project best practices. https://www.thirdstage-consulting.com/reports/2023-digital-transformation-report/

Author:
Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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