The 2018 CGI Client Global Insights reveal that utilities are making progress in their digital transformation journeys, yet are failing to scale their digital initiatives and lagging behind other industries.
In part 1 of this blog series – Why are utilities playing catch-up in the race to digitally transform? Key considerations to keep pace. - we shared insights behind the challenges to scale digital. In this second blog, we cover the innovation priorities of utilities, and share how this compares to other industries.
The market has long anticipated the need for significant investments to transform the energy system. It has been a considerable challenge for utilities executives and regulators to determine the right pace for these investments to be made. Higher electricity rates are unpopular, yet keeping the lights on while meeting climate change targets is not up for discussion.
Utilities recognize the need to accelerate the pace of change. Executives interviewed as part of this year’s CGI Client Global Insights report a year-over-year increase of IT CAPEX budgets reaching new heights at 4.3%, and with the majority of executives reporting a minimum increase of 10%.
Mobile solutions are becoming “table stakes”
Mobile technologies have been a key area of innovation over the past years, used to improve the customer experience and reduce the cost of operations. This is the case of the MyFortum self-service mobile app for energy consumption monitoring, solar panel online selection/ROI tools, and deployment of mobile workforce solutions like CGI’s PragmaCAD — all of which offer new digital ways of engagement.
This year, however, utilities show a stagnated interest in mobile solutions, dropping from the #1 digital initiative in 2017, to third in 2018. Utilities clients tell me of the difficulty to create successful apps with rich user experiences and disappointment in low download rates or usage.
In addition, considerable progress has been made in taking into production discrete digital channels: 26% of utilities executives report to be in this stage, compared to 18% last year. However, they lag behind other industries, where 52% report to have these channels in place.
Omni and digital-only channels drive the next-generation customer experience
Many organizations have adopted siloed, bolted-on investments in mobile technologies, yet some executives are taking on a holistic digital customer engagement strategy. They are following omni-channel approaches to create digital-only channel experiences to enhance the customer experience—which is a top business priority and digital transformation focus in 2018.
Our insights reveal that utilities are making good progress in creating digital-only channels: this year 14% report having these channels in production, up from 5% in 2017. At the same time, some executives are clearly finding it more difficult to get to this stage, returning to investigating: 11% in 2017 growing to 29% this year. The same trend occurred with omni-channel approaches.
Utilities can learn a lot from more advanced industries in this area, such as retail banking: 58% of executives from retail banking report that digital-only channels implementation is in progress or done, compared to just 31% for utilities. After all, studies indicate that 46% of consumers are using only digital channels for their banking, with the digital-only banking customer quickly becoming mainstream. In line with this, Orange has launched a digital-only bank, transforming the business model at its core.
Utilities are early adopters of IoT: Is this becoming “table stakes” as well?
Long before the Internet of Things (IoT) became a popular buzzword, the utilities industry has used this technology—SCADA is a mature technology with sensors and data acquisition in place for grid remote monitoring and control. Smart metering and improved advanced metering infrastructure is also one of the earliest examples of specific Utilities IoT-enabled systems.
Unlike other industries, where IoT is moving up in executives’ list of top trends, it dropped from the top five trends for utilities executives. These technologies are becoming “business as usual” for utilities, becoming enablers for important areas such as the exploitation of data analytics to produce digital insights and support intelligent automation, which I will cover in more detail in my next blog. Automation and RPA has increased from number seven in 2017 to number 4 in 2018 as a key digital transformation initiative, selected by 59% of respondents.
While IoT may becoming table stakes, there is still tremendous opportunity for new use cases for IoT-based solutions, especially given the huge decrease in costs in sensors, the decentralization of computing capabilities “at the edge,” and the decrease in costs together with increased sophistication of communications. As the CGI MILES solution demonstrates, the data gathered is of great value enabling utilities to predict outages and improve operations and customer satisfaction—the latter two benefits being among the top three business priorities for the utilities executives interviewed. IoT is also an enabler of new energy-based services, such as for street light management for highway operators, such as with the CGI IBOR solution.
Digital employee tools to drive change and win the war for talent
Many C-level clients I meet with point out the challenge they face in recruiting digital skills, especially around advanced analytics and intelligent automation. We expect this to intensify as more organizations move to execute on their digital transformation strategies. Those organizations that fail to inhabit an internal digital savvy environment will lose in the war for talent.
In a recent survey done by Randstad in the US “72% of employees felt a company's digital leadership played an important role in their decision to join an organization” and 40% had already left a job "because they didn't have access to the latest digital tools."
Digital employee tools continue to be a top five digital transformation initiative for utilities executives, as is the case for many other industries. These tools—from collaboration to the usage of AI to well beyond apps—will drive digital employees to create a positive cultural spiral within their organization. They will push to increase adoption and investment in these tools, and to digitally transform the organization. As an example, just recently a utility client was looking to leverage the transformation of their internal IT service desk toward more digital tools, such as chatbots, as a way to drive employees to think of new ways to interact with customers.
When it comes to the adoption of emerging technologies, utilities lead the way in the IoT arena, but have a lot to gain by looking at industries in more competitive environments, especially when it comes to how they enhance the customer experience and create new services.
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