It is difficult to avoid the current hype surrounding digitization. Industry press, conferences, and webinars are all showing a tremendous amount of interest in digitization. And that is no surprise, as the end goal of a digital transformation is the complete overhaul of a business—not just IT infrastructure, but entire business processes will be transformed. Organizations are promised a digital future where they can better serve increasingly demanding customers, strip millions of dollars of cost out of existing business processes, and develop new digital products and services.
However, a full digital transformation of even a midsize utility will cost many millions of dollars and take years to complete. A huge disconnect exists between the digital nirvana painted by vendors and utilities’ current digital maturity. While many utilities recognize the benefits of digitization, most are responding with small-scale projects to address specific requirements. In 2017, few utilities have begun a wholesale transformation, and those that have soon realize the numerous difficulties they face on their digital journeys. But despite the difficulties, it is folly for any company not to plan for significant changes to IT and business processes in the future. There are significant drivers for utilities to digitize, and organizations face significant risks if they fail to act.
This Navigant Research report takes a pragmatic look at digitization in the utilities industry and what digitization means in practice. It discusses the compelling reasons to digitize (e.g., efficiency improvements), as well as the significant barriers to digitization (e.g., regulatory frameworks). The study also examines the many practical considerations that are too often overlooked in the current digitization conversation, such as data governance, data quality, model management, and master data management.
Key Questions Addressed:
- How should utilities approach digitization?
- Why is the digitization process far more prosaic than vendors suggest?
- What strategies should utilities implement during a digital transformation?
- What barriers are there to digitization?
- What can a utility do to overcome these barriers?
Who needs this report?
- IT vendors
- Systems integrators
- Government agencies
- Investor community
Table of Contents
1. Executive Summary
2. The Compelling Reasons to Digitize
2.1 The Semantics of Digitization
2.2 Significant Drivers Press Utilities toward Digitization
2.2.1 New Product Development
2.2.2 Efficiency Improvements in the Existing Business
2.2.3 Customer Experience Enhancements
3. Significant Barriers to Digitization Remain
3.1 Current Digitization Conversations Focus on the Destination, Not the Journey
3.2 Utilities Must Overcome Significant Barriers to Digitization
3.2.1 Regulatory Frameworks Discourage Innovation
3.2.2 Siloes Hinder Collaboration
3.2.3 Data Quality Issues Can Halt a Project in Its Tracks
3.2.4 Few Utilities Have Adequate Analytics Skills
4. Digitization Requires a Long-Term Technology Roadmap
4.1 Managing the Proliferation of Heterogeneous Devices
4.2 Balancing the Cost and Value of Data Storage
4.3 Taking a Strategic, Firmwide Approach to Analytics Software
4.4 Opening Access to Data, Analytics, and Processing
4.5 Managing Data Is Dull, but Essential
5. Conclusions and Recommendations
5.1 Only IT Can Deliver the Infrastructure Required for Digitization
5.2 Compete for Talent
5.3 Commit Permanently to Robust Data Management
5.4 Create a Storage Strategy That Enables Future Projects
5.5 Cut through the Analytics Hype
5.6 Analytics Strategies Must Flex with Changing Requirements
List of Charts and Figures
- All Utilities Face Competition from Falling Solar Prices
- Digitization Buzzword Bingo
- Technology Roadmap Considerations
- Technology Heterogeneity in the Smart Home