Utilities Must Transform, Not Transition

November 15, 2017

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It’s no secret that the utility industry is going through a major transformation – some would even call it a disruption. The electrification of our transportation system (cars, rail, and even freight rail), the impacts of climate change, and the increased use of sensors and wireless technology are all forcing us to change the way we operate. As a result, there’s a lot of uncertainty about what the future will demand and how we will be able to meet those requirements.

Utilities have dealt with transitions in the past, but mostly as incremental improvements that engaged a new technology while allowing us to keep doing things the same way. For instance, maps were digitized via GIS, but are often still used as if they were paper maps. We see similarities in our personal lives as well, with the transition from cassette tapes to CDs or VHS tapes to DVDs, for example. Despite the change in technology, we’re still consuming the information the same way as before.

You’ve likely heard the tale that if Thomas Edison were to look at the utility network today, he’d recognize almost all of it because little has changed in the last 100 years. But with an unprecedented amount of change on the horizon, I believe these next five years will bring more change than we’ve seen in the last 100. Utilities that are accustomed to simple transitions – adopting new tools but retaining the same workflows – will struggle to meet the needs of this new world. Utilities that choose to evolve their processes and workflows and undergo a fundamental business transformation will be the ones that succeed. But, is the information technology that utilities use today prepared to enable and support this kind of business transformation?

What’s driving the transformation?

There are three “D” megatrends having a profound impact on the electrical grid and the business of running them. The first “D” is decarbonization – for power systems, the impact of renewables is undeniable. It is predicted that over the next 15 years, growth in renewables will explode with grid-tied storage becoming a reality. The second “D” is digitization – the internet of things has reached power systems. Billions of automated grid devices gathering and integrating energy data will change the face of the future grid and transform the job of grid operators. The third “D” is decentralization - as power generation models are changing, micro-grids, small-scale solar, and storage can turn consumers into prosumers and produce energy closer to where it is used. Prosumers are individuals, campuses, and businesses that are motivated by a more locally provided, sustainable, competitive energy system.

These drivers bring new challenges and opportunities, and the potential for new levels of collaboration. The big question is whether your organization – especially your current IT landscape – is primed for the digital transformation.

Key elements of the digital transformation

There are three key elements that mark today’s shift as a transformative one rather than a transitional one.

Technology: In GIS, we’re going from desktop GIS to Web GIS and services on a platform. Now, we can create a map and instantly access it on any device, anywhere, and at any time. It’s transforming how a utility shares, collaborates, and interacts with its data.

Workflows: Utilities are starting to adopt transformations in their workflows more and more each year. Technology upgrade cycles are being viewed as opportunities not just to update software but also to investigate if years-old workflows requiring software customizations are still needed. More and more customizations are being abandoned in favor of changing workflows to match the technology. As a result, something that may have taken hours to complete in the past – like getting maps out to the right people on the right devices – can now happen in a matter of seconds with IT departments saving money at the same time.

 Business models: Transformation also means a shift in how we think about our business model. A classic case of this in our personal life would be the dominant taxi model of the past compared to the Uber or Lyft model of today. That change altered how we think about an entire industry. Utility revenue models are being challenged by the onset of renewables as well as the promises of “Smart Grid.” This changes the way utilities will collect and spend money and further fosters transformation.

GIS: The true unifier

Existing technologies, workflows, and business models simply won’t meet the demands of the future, and at the heart of this transformation to a digital utility is your GIS data.

I’m not the only one saying this; Gartner has also highlighted the importance of GIS for creating smarter utilities. In the paper, Magic Quadrant for Advanced Distribution Management Systems, analyst Zarko Sumic stated, the GIS “…application needs to extend over traditionally separated IT and OT domains, as well as support the extension of monitoring and control with Internet of Things systems.”

 In other words, we have to transform the way we think about GIS.

Technology will be central to the digital transformation, from better GIS data to embracing a new ecosystem of applications that will support your entire design and construction workflow. There are tools out there now, such as Esri’s ArcGIS Platform and Schneider Electric’s ArcFM Solution XI series, the goal of which is to provide more focused design, construction, and as-built apps so work can be done faster. The apps are tailored to a specific role or persona within your organization and allow GIS information to be shared throughout a platform – even offline – to drive even more possibilities for efficiency.

Regardless of a utility’s technology status, when such change is looming, it is important for them to control their own destiny – to have choices in order to plan, prepare, and move at their own pace toward impending change. Esri’s new Utility Network will bring great benefits but requires many changes. Technologies that allow you to retain control of when and how you implement and face this change can ensure a smoother transition and one that maximizes benefits to your organization and your customers.

Most times, business transformations are less about technology than they are about strategic partnerships, experience, and change management. Utilities will need to work with an experienced organization to help navigate them through this change; the coordination of product development, services, and the utility’s own business transformation is not trivial. Look for a partner who has done this countless time in the past, and can provide the tools and expertise to do it again. The right technology can also help with this, such as tools that allow you to work with existing technology while preparing for Esri’s Utility Network and other changes. Successfully navigating change management will mean moving at your own pace and adopting changes as you are ready, while still taking advantage of the powerful new apps available today.

Start now

Any business transformation must have an ultimate business benefit in the end – a return on investment. Start by establishing your desired outcome now and the value you want to have on the back end; without ROI, there is no organic pressure to transform. The good news is that the technology and organizations exist now that can help utilities bridge the gap between how they operate now and the transformation required of them in the near future. My advice?

  • Seek out solutions that allow you to prepare for the future while taking advantage of advanced technologies on the market.
  • Participate in a vendor’s early adopter program.
  • Start planning your data migration and configuration now with a trusted and experienced partner. 

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