Recognising the need to change-but not overnight

The first step in the transformation process is to recognise what needs changing and this will take time.
Published: Thu 17 Nov 2016

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As industries like banking, insurance and retail step up their game in order to stay ahead in an increasingly competitive environment, consumers come to expect exactly the same, if not more, from their energy service provider.  

According to Sudheer Warrier, VP and Global Head Utilities at Tata Consultancy Services (TCS), the need for transformation is due to disruptions from both inside out and outside in. “Energy technologies like distributed generation and storage, as well as electric vehicles are democratizing and decentralizing energy and changing the industry inside out. Digital is blurring industry boundaries and also removing boundaries between physical systems. “

A driving need for reimagination

These pressures are forcing the utility business to transform itself in order to achieve a mix of efficiency gains, business process improvements and new capabilities. “Today, if the utility business does not provide new services and make relevant changes in accordance with customers’ needs, someone else will snap up the opportunities. ” He adds: “Because customer experience is being defined by industries like retail and banking, utilities need to think beyond commodity and infrastructure and re-imagine its services in order to be relevant to the consumer.” [Reimagining the utility.]

Says Sudheer: “There are four factors driving the need for reimagination of the utility business: digital, new energy technology, customer expectation, and regulators’ focus on efficiency and increasing competition These disruptions to the utility business model call for a greater need for agility.”

Regulators are demanding a higher level of operational and energy efficiency and the barriers to competition are coming down fast, he says. This adds to the pressure that the utility business is faced with.

But how does one identify use case scenarios that will help utilities make the necessary changes that customers and the market will recognise? Sudheer says that it is important to have a structured approach where aspects like services, products, role players, and business models are scrutinised so that shortcomings can be highlighted and then worked on. In fact, TCS is currently conducting primary research in Europe and the UK in order to understand how the utility business is approaching the emerging ‘energy value eco-system’. The research will cover 120+ utility executives’ understanding the new business opportunities for utilities and how they look to co-create value with partners and consumers. The research will also try to uncover the adjustments the utility business is making structurally and culturally to succeed in the new  environment.

“This research will help us identify scenarios and use cases, as well as create new business models leveraging technology and the experience economy. The ability to identify use cases is extremely important.”

Enhancing customer experience through digital

Sudheer highlights two approaches taken by TCS. The first of which is ‘bottom-up’ where the utility business is helped to establish a digital core.  “We help them build an intelligent enterprise on top of a digital spine. Data and analytics help decision-making to be more accurate and efficient. These affect the customer experience. By looking at the customer journey, it is possible to enhance the customer experience.”  

He adds: “Any organisation in this digital economy has to have a strong digital spine. All systems and processes should be modified to ensure that they can be agile, providing better experiences and processes for everyone concerned.”

Sudheer says that TCS is working with several customers to build this digital spine. “It is a platform on top of their system of records and legacy systems to bring in speed, automation and low entropy integration.”

The second approach is to start ‘top-down’ where the utility business decides what experiences it wants to give customers. “Once this has been decided, they can work out what needs to change in order to carry this out,” says Sudheer.   

“We have utility customers in highly competitive markets taking this approach in creating experiences in new energy businesses and are adopting a design thinking approach.”

Innovation should drive reimagination

According to Sudheer, it is not always necessary for a fundamental research  or invention to re-imagine. “The key to innovation is looking at visible adjacencies and applying them with velocity.  It is important to pilot, obtain a proof of value, scale it up and then finally implement. New processes  and  technology built for the energy industry should help utilities approach challenges efficiently and enable them to harness opportunities. It is all about using the right tools for the right job or outcome.”

Sudheer says that legacy systems and a traditional cultural mindset continue to stand in the way of change. “Change doesn’t have to happen overnight. Major system changes can be highly disruptive so these things need forward planning. Also, a shift in cultural mindset as well as training of existing staff takes time.”

Sudheer recommends that the utility business make incremental changes, working towards the end transformation goal. “You can’t make changes overnight. I suggest that the utility business identifies and focuses on simple aspects that can be changed. Also a transformation won’t always go according to plan. There are failures but it is important to learn from these. Be willing to fail.”

In conclusion, Sudheer recommends that the utility business recognises its real inhibitors and then starts to articulate real issues that prevent them from changing their models. They should soul search and look for inhibitors, highlight failures and recognise the need to change. Reimagination should be considered as an end to end process for it to work.”

Sudheer Warrier, VP and Global Head Utilities at Tata Consultancy Services will be attending this year’s European Utility Week.

 

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