In the last few years, the volatility of fuel prices, distributed energy production, the pressure to decarbonize and the rise of renewables have shown that the utility industry isn’t as stable as it once was. As a response, utilities have slowly started to improve customer experience, provide more digital services and lower operational costs.
However, a lack of competition, inefficient legacy operations, an aging infrastructure and ever-present regulatory burdens have slowed the general response to these challenges. This could present opportunities to new market entrants, much as we’ve seen in the telecommunication industry and finance world.
Utilities themselves acknowledge a disconnect between their digital ambitions and reality. In our 2019 Next Generation Energy™ customer experience insight study, utility leaders in North America stated that new digital customer products and services were either critical (60%) or very important (30%) to the future of their utility. However, 80% of them also reported that their organizations didn’t have the maturity needed to execute their digital customer vision.
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Now, the disruption of COVID-19 has increased the incentive to initiate or complete digital transformation significantly.
While financial resources may be constrained for the foreseeable future, utilities must still meet skyrocketing customer demands for better digital services, such as bill payment, efficiency improvements, outage notifications and payment plans. Internally, they must ensure smooth operations with a remote workforce that can’t collaborate in person. All while staff are dispersing to protect employees’ health and maintain business continuity.
To prepare to confront these seemingly insurmountable business imperatives and future black swan events, utilities need to develop and mature their organizational agility.
Using our extensive experience in the industry, we’ve devised a three-part strategy to help utilities create the organizational agility they need to accomplish their strategic aims.
Timing is everything. To effectively respond to the opportunities and challenges brought by COVID-19, utilities need to deliver solutions that meet the needs customers have right now – not in six to twelve months. An agile way of working provides this rapid time to value.
While many utilities have struggled to implement agile ways of working (or have hesitated to even try), they don’t need to start out with a full-scale agile transformation to begin harvesting its benefits. Instead, utilities can jumpstart the model with a smaller team working on a single enhancement or product. The team should start by following some of the basic, agile principles. Once they really start performing well, it’s easier to scale the model to the rest of the organization at pace.
For example, we recently worked with San Diego Gas and Electric to develop iPredict, an artificially intelligent system that predicts the failure of underground assets weeks in advance, with 80% accuracy in predicting equipment failures two weeks out and 90% accuracy three days out. The utility can now focus efforts on replacing these parts well before they fail, better protecting public health and safety. By running this innovative project through Agile ways of working, it was possible to release a small, valuable part of the solution early, get customer feedback and improve the solution rapidly.
To meet customer needs, it’s necessary to talk to the customer to really understand them. Before implementing digital transformations, utilities often run broad one-off surveys and focus groups to get customer insight into the changes needed. This approach can take a lot of time and often results in insights that are out of date when the solution launches. Utilities must be closer to their customers and get input more quickly – even more so as COVID-19 changes the way we interact every day.
For new insights, utilities should select a small cross section of business and residential customers and conduct a quick digital survey that can happen within a few weeks. At the same time, it’s vital to include call-based and offline outreach to include all views, as customers who aren’t digitally connected may be more affected than others.
Customer experience teams should look for themes that emerge and pick improvements that provide the most value for customers right now. When using agile ways of working, these improvements can be easily and directly integrated into transformation efforts.
Another U.S. West Coast utility used to receive four million calls from its 1.4 million customers, many of which were inquiries about bills or basic services. We worked with them on an enterprise-wide transformation program to empower customers with digital self-service capabilities. Accurate and regular input from customers ensured solutions best met their needs. That proactive work is now paying dividends during COVID-19, as utility staff can focus on other priorities.
To complement an accurate understanding of customers and an Agile way of working, it’s critical to have a technology infrastructure that’s flexible and scalable enough to keep up with rapidly evolving customer needs.
Time to value can reduce significantly by building solutions using a modular, cloud-based infrastructure. Utilities can meet customer or market demand in a matter of weeks, instead of launching solutions well after an opportunity has passed. Cloud-based solutions can also scale up and down quickly, resulting in lower costs for both development and ongoing operations.
As an example, a large northeastern utility was building an online customer account center. While the initial set of customer-facing functions were known, additional features were anticipated but not detailed. Building the account center using a cloud-based architecture allowed new infrastructure to be added quickly to meet customer demands. This approach was also more cost efficient, enabling the utility to scale the infrastructure up and down as required by customer usage.
COVID-19 is a source of significant stress and operational challenges for utilities. But it’s also creating new opportunities to meet customer needs, increase operational efficiency and protect the public. To capture those opportunities, it’s important to increase organizational agility. Think bold. Start small. And keep moving forward.
Prevent power outages by predicting asset failures weeks in advance with iPredict™ for electricity distribution