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Finding Big Data utility for the Utility sector

Finding Big Data utility for the Utility sector
November 26, 2018

The utility sector plays a critical role in the life of customers for the simple reason that it is responsible for the most essential aspects of our modern life and eventually our existence. But no sector can claim to be as slow in responding to the changing landscape, especially technology, as much as utility. This is probably because economically, it has never been challenging, the players were few, and the entry barriers were high. Most of the organizations had a monopoly or proprietary attitude toward the customers. To say the least, the competition was never powerful enough for them to radically change or invest in cutting-edge technology.

Technology in this sector primarily remained a support role and can be categorized in two primary phases. The first phase revolved around creating reports, basic analytics, and complying with regulatory requirements. The next phase was one of productivity and efficiency, where the focus was on operational processes. The current ask and environment however is completely different and aims to push them towards more of “customer experience” oriented technology enablement rather than support.

The reasons for this are threefold: the rise of the connected ecosystem, massive scale, and the emergence of two-fold competition (new companies as well as sources of energy in some). It is no longer about production efficiency alone and organizations have realized that they can achieve final goals partially. However, when you combine it with the connected ecosystem, the real impact could be realized. Multiply it with the scale and you have a revenue stream and eventually, by adding an element of creativity to those insights, you can stay ahead of the competition.

Traditionally, utility sector had the best consumption patterns for any consumer but they utilized that data for one primary engagement only; billing and reporting. However, as we see most of our systems go smart and connected with sensors, gateways and this intelligence not only limits itself to B2B but eventually B2C with smart homes, devices, and cities. Utility companies now have a significant opportunity in their hands to do much more with the large volume of data flowing into their systems.

On the one hand, they have the smart metering and supervisory control and data acquisition (SCADA) technology and on the other, data generated from the connected consumer ecosystem. The exponential increase in data inflow presents a significant opportunity for real-time or near-real-time consumer insights and intelligence enabling smart business decisions.

Utility companies can look forward to three major types of data for correlation; the smart metering data, the social media (unstructured), and the geospatial data. A combination of these three can provide insights into unprecedented patterns and consumer behaviors that open up new operational efficiencies, more effective predictive maintenance cycles, and even new revenue streams (through insights shared with other industries). In all likelihood, the results may be seen in the areas of more personalized services, higher customer satisfaction ratios, efficiency in service operations, maintaining the quality of service, and better demand management.

Utility companies can look forward to three major types of data for correlation: the smart metering data, the social media (unstructured), and the geospatial data.

Big Data is already making an impact in the utility sector. Whether it’s about taking a decision about checking the viability of operations in a certain region or site through the intersection of geospatial data and consumer behavior or whether it is about monitoring and managing an oil or water well/pipeline for efficiencies or simply using metering data to analyze fraud-prone individuals or organizations or to proactively map such behaviors, Big Data is making it all possible.

As alternative forms of energy start to take over, the traditional companies will have only two options, either become more efficient and customer-centric or ride the alternative energy wave or, in some cases, both. However, this can’t be done on the back of service quality issues, inefficient customer engagement processes or poor supply chain models.

According to studies, Big Data can help streamline costs by up to 20% in the short term and up to 35% in the long term if implemented properly. This not only gives utility companies a chance to be smart and efficient in their customer engagement but also provide enough ammunition to pay for next-gen initiatives as well as new revenue streams. According to other studies, every two-point increase in efficiency leads to about six times more effective demand management.

All this can be made possible on the back of new technology and architectures. Big Data would prove useful in two ways for utility companies. The edge part of big data analytics that is nearer to the customer can result in two fold incentives of better customer engagement, more personalized services and at the same time, would equip the utility company’s field force to better manage the data collection, analysis, fraud prevention, and other aspects. The centralized Big Data analytics, on the other hand, can support larger decision-making processes such as which region to invest, how to increase profitability, or look at new streams of revenue; for instance, partnering with another consumer company to provide insights at a price. Some other examples could be leasing their infrastructure to other players (like fiber for smart grid) or starting an IT arm to lease their efficiently developed in-house code (for example, field management application) or supporting similar organizations in areas where they don’t want to invest themselves. The big data intelligence could be utilized for energy trading, a single view of a particular consumer household or simply a better asset management structure that can lead to more revenues.

The million dollar question is why and what is required to make this happen on a large scale and why it has not been executed till now? Well, the reasons can be attributed from regulatory to (high costs) economic to as simple as the OT (operational technology) and IT (information technology) being two siloed components in the utility sector that rarely work in collaboration. However, with the advent of big data centric technologies, the utility companies for the first time are at an advantage to utilize the IoT and operational system data in collaboration. All this needs to be built on the back of a robust data management and analytics strategy, one that has both long-term and short-term benefits. Data can be generated in silos but can’t and should not be used in siloes.

This would need Big Data to be an executive sponsor-level project and not remain only at the department or BU level initiatives. The ROI needs to be seen on the back of company decisions and not only the operational efficiencies. This would include a 360-degree view of the customer as well as the company’s own systems, assets, processes, and people (including managing skills through insourcing or outsourcing strategies).

The rise of big data and AI are providing excellent opportunities to utility sector to find alternative uses of their data, create new value propositions and take better decisions via pro-active rather than reactive actions. They now have a perfect opportunity to find higher utility in their data — it’s just a matter of time before unlocking the huge potential that lies unexplored.