by Paul McRoberts, President
Congratulations! If you’re reading this, that means you’ve probably helped upend the utilities sector. You’re not alone—millions of people like you have a mobile energy app that tracks household power consumption, allows them to pay energy bills from the convenience of a smartphone and lets them shop the market for alternative plans.
If this is you, you’re a far cry from the passive, low-maintenance utilities customer of years past, but that isn’t a bad thing, is it? On the contrary, where many providers may have initially seen this “consumerization of utilities” as a potential threat to their businesses, it’s actually unleashing a boatload of new opportunities. Let’s take a closer look at how business models are shifting to adapt.
Where Utilities Were
Historically, utility business models have been predicable structures powered by rates of return on costs of capital. But times change. Evolving customer expectations and values coupled with the digital revolution necessitate a more diverse, less rigid structure—and it pays for utilities providers to respond. Unsurprisingly, research from McKinsey & Company even estimates that digital optimization across the utilities lifecycle can help companies boost profitability by as much as 30%.
The good news is utilities providers are responding to the changing demands of the space.
How Providers Are Innovating
Ancillary Solution Offerings
From renewable energy sources to mobile apps to multi-channel convenience, utilities customers want more. In Deloitte’s 2019 power and utilities industry outlook report, Scott Smith predicts these demands to push utilities companies into new market segments like solar, advanced analytics and even social media, areas that will fuel innovation and help drive profit. It wouldn’t be surprising to see other players enter the space as well, like tech companies or niche providers with more specialized service offerings, forcing established utilities providers to revisit their offerings.
All things considered, this heightened competition is a positive. It drives providers—no matter which segment of the utility or power generation markets they occupy—to continue to innovate and create a better experience for customers. Exciting things are on the horizon for utilities services!
In part one of our “What’s Disrupting Utility Analytics” blog series, I explored how solutions like smart technologies are equipping utilities companies to capture and leverage higher volumes of data in more impactful, forward-thinking ways. Not only do tools like machine learning (ML), artificial intelligence (AI) and predictive analytics help providers deliver utilities faster and more cost-effectively, they also open up new opportunities for business growth.
One obvious opportunity is the ability to use these smart technologies to deliver newer, more innovative services. Just look at the amount of money being spent on predictive analytics for the purposes of “customer engagement”—Navigant Research estimates these investments to eclipse $770 million by the year 2022. Using ML technology to guide customer relationships, behavior and decision making, a use case commonly seen in banking, is also an example of how utilities providers could continue to harness their data in more results-oriented ways.
Smarter technologies also create opportunities to create new intelligence-focused roles within organizations, a topic I covered in part two of our blog series. Rather than being analysis roles, we anticipate these positions being in place to guide decision making around how analytics are used to improve performance and sharpen investments.
What Are You Doing to Innovate?
Competition is high and opportunity is everywhere, so the onus is on utilities providers to identify a way forward and start moving. One of the best first steps companies can make is evaluating their existing analytics deployment—Are you capturing the right data? Are the data sets structured in a way that is usable? Where are your blind spots? The sooner companies identify their analytics gaps, the faster they can meet the needs of their stakeholders, operators and customers.