In the age of digital transformation, the utilities sector needs to focus on cybersecurity
Digital transformation is having a unique impact on the utilities sector.
On the one hand, technology is driving a huge increase in operational efficiency for energy, power and water companies.
But while technology enables established utilities firms to improve, it also provides an opportunity for challengers to emerge. Up to five new suppliers actively enter the market every three months.
Start-ups are harnessing new technology to create fresh ways of doing business, disrupting the sector’s traditional leaders in the process. The six biggest energy suppliers lost 4.6% of market share in 2016-2017, a trend which is expected to continue.
And the landscape is shifting further with the rising value of data. Thanks to the Internet-of-Things (IoT), utilities companies can monitor the performance of their assets and gain greater insight into their customers’ consumption habits. This information is hugely valuable to the utilities companies – but it’s also valuable to hackers and individuals with malicious intent.
There have been several high profile cases of data breaches in the last year, most recently in the US where hackers reportedly attacked power suppliers. This has called the issue of data protection to the forefront of the national conversation.
In this climate, utilities organisations must strike a balance. They need to make use of digital technology to drive efficiencies and stay competitive – whilst securing the data that results from the digital transformation process.
Retain your customers by keeping their data safe
The utilities sector forms part of our critical national infrastructure. And it’s obvious why this is – you can imagine the kind of problems that would occur if a cyber criminal were to gain control of the energy supply, for instance.
When we asked consumers which organisations they see as most capable of protecting themselves from cyber-attack, 42% ranked utilities as high risk*. Clearly, the public understands the potential vulnerability in the utilities sector - and they are wary of it.
Part of this wariness stems from the fact that the amount of breaches is on the rise. The latest attack in the US is just one of many globally, which includes the likes of WannaCry damaging the National Health Service in May and ongoing speculation around the security of smart meters.
Now that cybersecurity awareness is so high, suffering a breach has the potential to fatally damage your organisational reputation. This is a dangerous position to be in today, when customers are more willing than ever to switch providers.
The number of customers switching energy suppliers in February 2018 increased 60% on the figure for last year. This can be partly attributed to regulatory changes, such as the Energy Switch Guarantee, which seeks to make it easier for consumers to change providers.
With loyalty no longer assured, a cybersecurity slip-up could be the thing that pushes customers away – even more cause to make sure you do right by your customers, and their data. In fact, we found that 43% of the citizens we surveyed who had fallen victim to cyber crime did not return to the organisation in question.
Data: the new oil
IoT enables utilities companies to place data sensors everywhere, on all their assets across a range of sites.
This has huge benefits for the operational running of the firm. It makes maintenance more efficient, since utilities managers can work out the best time to replace a piece of equipment to ensure it doesn’t break down and cause disruption. This of course results in huge savings.
IoT also presents opportunities to change the way utilities companies deliver customer experience. In capturing data on their customers’ usage habits, utilities companies can tailor their approach to each individual.
Of course the downside to this is that when personal data can be linked back to an individual it becomes incredibly sensitive.
Our research highlighted that 87% rate their bank details and 30% rate access to their utilities data as at high risk of a cyber attack – both key pieces of information for utility providers.
But it’s no easy task to keep this information secure, especially with the increased moves towards collaboration and data sharing between utility providers.
At the moment the data sharing only tends to occur between professional service providers – and at this stage it’s quite safe. But in the future we can imagine a more fragmented relationship with customers, and this is where vulnerability could creep in.
All about balance
When it comes to discussing cybersecurity, it’s difficult to avoid rhetoric.
Obviously nobody wants to experience a data breach. But this is even more important for utility companies, who provide services which are vital to our daily lives, and who hold sensitive personal data on all of us as individuals.
Connected technology is a huge opportunity. Forgoing the benefits of IoT out of fear of a potential hack can lead to your business becoming dangerously uncompetitive.
So you need to strike a balance between being cautious and taking advantage. This is the challenge that digital transformation presents to the utilities sector. If we can meet it, there’s a bright future ahead.
To read more from our report, including the threats faced by other public and private sector organisation, head over here.
*greater than seven out of 10