is that cloud capabilities far surpass what is generally available in an on-premises data center—as shown by the pace of available data science and ML and AI capabilities that major cloud providers (such as AWS, Azure, and Google Cloud) have released in the past few years. Regarding the global utility industry in this space, an important milestone was reached in 2019 when Enel (Italy’s national entity for electricity) became first large utility to be 100 percent cloud-based.2 6. Developing stakeholder skills to enlighten and empower regulators, legislators, the workforce, and other stakeholders. Historical or legacy regulatory requirements that were mostly put in place in reaction to, or in anticipation of, historical events can hinder progress. Radical transparency is required to educate all stakeholders, partially enabled by a much more rigorous approach to data. When a utility is transformed by both digital and lean management using the principles above, three things will likely be true. First, the utility could be higher performing (for example, across reliability, resilience, customer satisfaction, safety, and compliance) and more affordable. Second, with a rich focus on data and analytics, the utility could have the ability to prove better performance and cost outcomes to third parties, which would enable an M&A strategy. Third, the digital platform and operating model will be extensible so that acquired utilities could be “bolted on” to improve the utility’s performance. The path ahead It’s not clear yet whether any utility in the North American industry has transformed enough digitally to impact the fundamental industry structure. A number of utilities have digital transformation strategies underway in various forms—some are standing-up digital units (for example, using the digital-factory concept), some are systematically
career paths linked to the opportunity to build an industry-leading digital platform that drives industry consolidation and plays a meaningful role in the energy transition. Companies could consider “acquihiring” a lot of talent at once by buying one or more small software start-ups. 3. Key differentiators that are built, not bought. Building a comprehensive digital utility platform is not just about upgrading to the latest management system. Research shows that reliability, safety, resiliency, affordability, and customer experience, among others, have to be internally developed for organizations to achieve best-in-class levels of insight and action and industry-leading differentiation. 4. Domain-based and design-led customer service and workflows. Domains need to be at customer-care level, electric-distribution asset management, workforce management, and supply chain. Core utility customer journeys (such as paying bills or reporting an outage) and utility workflows (for instance, vegetation or asset management) can be reimagined by using design thinking to create better products and service. While all domains are important, the most critical is getting supply chain right—this will enable industry consolidation. Utilities spend substantial amounts of capital on supply chain but, due to the incredibly fragmented industry, wield almost no buying power. The winning industry consolidator will most likely have a meaningfully better, digitally enabled, supply chain. 5. Recognizing the importance of cloud. A 100 percent cloud-based platform that recognizes the flexibility and AI-powered capability of cloud far outweighs any capital-expenditure or operating-expenditure accounting treatment. “The digital utility platform needs to be in the cloud,” is not a technical statement anymore. Whether the IT infrastructure is in a data center or the cloud is irrelevant—what is important
2 “Enel ‘full cloud’: All the advantages of being the pioneers,” Enel, July 11, 2019.
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