Utility and IT models: not quite chickens and eggs
For utility companies, both business and IT models are undergoing massive and irreversible changes. The similarities between these changes are striking.
With utility business models, we are experiencing changes from centralized to distributed models; the reality of renewables and the emergence of viable storage; and parallel changes in commercial, customer relationship and regulatory practices.
On the technological side, IT evolution shows strong decentralization: pervasive cloud delivery; the explosive growth of internet-of-things; mobile everything and a shift to open application environments and pay-per-use delivery.
These changes to utility IT and business models are not quite chicken and egg. The heritage IT architectures used in the utility sector mirrored old centralized operating models. With considerable effort and limitations, the new utility environment could probably have taken shape without the parallel IT transformation.
But one thing is for certain. From now on, any company seeking to take maximum business advantage of the new utility business model, will only be able to do so if they embrace the transforming IT landscape in parallel.
Think three themes: distributed, intelligent, open
If we think about what the new IT stack for utilities looks like from a functional rather than a technology perspective, it will show three clear characteristics – it will be distributed, intelligent and open.
Let’s take a very brief look at each of these.
- Distributed - As new electricity networks move to higher levels of decentralization, so the control intelligence needs to be similarly distributed if the network is to be optimally supervised.
This is about more than creating agile, cloud-based infrastructure models. It’s also, for example, about taking advantage of edge computing as control intelligence is required across the network, from the home or workplace, right up to a national or even continental scale.
Distribution is not just applied to the electricity network infrastructure – it’s for the workforce and customers too. People expect relevant contextual access to information and services, and these expectations become more sophisticated every day. Field engineers who have grown up with gaming, for example, will soon take augmented reality as a given in service tasks.
- Intelligent – The macro and micro management of complex utility networks demands constant adjustment and this needs data-analytics. Increasingly, this will be shaped by artificial intelligence and automation, especially as even the tiniest of devices has a contribution to make in the internet-of-things.
The continual flow of real-time data is not just essential for intelligent network management and balancing. It also becomes an asset in its own right - particularly as utilities seek to build more extended and articulate business and client relationships.
- Open – For the new utility models to deliver, openness is a prerequisite. This is true from two perspectives. At a technical level, utilities need to move away from traditional proprietary platforms if they are to achieve the interoperability demanded in new and more agile models. Electricity network management must work together with extended Internet-of-Things infrastructures.
But openness also becomes a business prerequisite. Utilities will create new business value through close working alliances with building management, with local urban authorities, with automotive companies and telcos. These new opportunities can only become reality if utilities and their new partners can learn to share a common vision and language.
Beware the beast
While the shift to distributed, intelligent and open IT models generates positive excitement and opportunity, there is inevitably a darker side.
In a massively connected world, every connection also becomes a point of potential vulnerability. Whether through accident or malice, super-connected utilities need to remain one step ahead of a volatile and continuously evolving range of security threats.
These impact every area of operations. From the dumbest sensor mounted on some remote turbine to the individual client account portal – everything becomes a potential point of malicious penetration.
Fortunately, with partner companies like us, utilities have access to the skills and experience needed to both craft overall security strategies and to implement and manage them effectively.
Nothing is static
With both utility and IT models, nothing is static. We have seen how distributed, intelligent and open become common characteristics of both, and how security must be continuously appraised and managed.
Effective partnerships with our utility clients require time and resources dedicated to anticipating new waves of innovation – and that’s why we have made innovation workshops such a central feature of our relationships with utility clients.
Take a popular emerging trend like Blockchain, a technology that can only work with decentralized models. We see a technology which may significantly impact the way utilities manage their networks and influence the ways in which they develop joint business activity with enterprises from other sectors. But also it is clearly going to raise a whole new set of security questions and challenges.
Nobody has all the answers today, but going back to chickens and eggs, the best thing we can do together in anticipation of change, is to share our experience and vision of the growing interdependence of utility business and IT models.