Until recently, energy and utilities (E&U) organizations had the luxury of moving slowly into the digital economy. This was due to the industry’s very regional nature, brand value acquired over the years and the fact that operating models were tightly aligned with how these companies traditionally conducted their business.
As we move beyond the early days of the digital economy, however, the timer is going off. With the increasing availability of distributed energy resources, E&U businesses face competition from new market entrants equipped with the latest digital technologies, processes and organizational models that cater to the needs of the energy consumer. E&U stalwarts also need to increase the agility of their operating models so they can offer energy choice, enable consumer self-selection, and develop new energy trading models. Success in that arena will depend on digitally enabled processes, as well as modernized IT infrastructure and data architectures.
In this newly urgent environment, crucial questions arise about how E&U businesses can move forward. What’s working? What’s not? What investments are paying off, and what are the optimal next steps?
Look to the leaders
As many E&U enterprises wonder where to start with their digital initiatives and investments, we believe the activities and investments of industry leaders provide a clear-eyed view. To that end, we surveyed 2,491 business and technology leaders from multiple industries globally (including 191 E&U organizations) that collectively account for about $21.6 trillion in annual revenue. We also interviewed senior executives who are knowledgeable about advanced technology initiatives within their companies. (To learn more about our study, including its methodology, see our white paper, “Energy & Utilities Under Pressure.”)
Using our findings, we distinguished leaders from laggards to better understand what organizations look like at any point on the digital maturity curve and what it takes to make progress on that journey. Our research reveals how much businesses should be investing in advanced technologies as a percentage of revenue today and in the near future; which investments are yielding the greatest returns; the next best areas to focus on; returns that can be expected at various points on the maturity curve; and more.
The findings reveal that while E&U organizations lag behind other industries in key measures of digital maturity, they are already seeing results from their initiatives to improve the customer and employee experience. By looking to their more mature peers, E&U businesses can determine where to invest first to gain the highest payback.
Among all respondents in our study, data management stood out as a particularly high-payback investment. Across industries, the same percentage of respondents whose organizations have made moderate or substantial investments in data management (60%) have realized moderate to high returns. E&U leaders have not yet seen these results; 45% of leaders say they’ve made high levels of investment in data management, and only 29% have realized moderate to high returns (see Figure below). That means there’s plenty of upside still to be realized.
Data is a hidden advantage that legacy companies have against digital-native competitors. Finding, mining, managing and using existing reams of market and customer data — in an ethical and transparent way — is paramount to success. It’s also the foundation for strategies pertaining to predictive maintenance of energy assets and anticipating customer needs.
