Skip to Main Content

Generative AI: Using artificial intelligence to make human impact.Learn how

Choose a Regional Site
Using Mobile Phone
Energy & Commodities

Thriving Amid Disruption: How Utilities Can Lead and Succeed With a Digital Data Platform

A utilities’ data platform is the key to success for utilities embracing change.

Supratik Chaudhuri
Supratik Chaudhuri

Disruption has long been top of mind for the energy industry, although 2020 forecasts, of course, didn’t account for the pandemic. Now, COVID-19 is accelerating utilities’ plans to change. A utilities data platform (UDP) that unifies, consolidates and standardizes customer, assets, usage and field data insights could be the linchpin. Here’s how utilities can get started with a UDP to identify new sources of value and ward off competitive threats.

Data-driven opportunities

Historically the relationship between utilities and their customers has been purely transactional. Customers paid the “rate” in exchange for a guaranteed supply of electrons. Their data was limited to account details, payment info and monthly consumption. However, today’s utilities are collecting a lot more data thanks to advanced metering infrastructure (AMI) and new digital channels. Enriching this internal data by integrating it with external data gives utilities a huge opportunity. They can leverage data in three key ways: improve customer service and operational performance, offer new value-added services around core utility services and use new business models to monetize data. A UDP can accelerate and enable success in each of these domains.

Utilities Data Platform

1. Direct-to-Consumer: Improve customer service and operational performance

Utilities are recognizing that consumers should not be treated as ratepayers, but as customers. As a result, they have started investing in their customer engagement game. Energy organisations are adopting new digital channels and implementing user-friendly designs that allow quicker transactions. As utilities continue to build their customer engagement programs, data will become the cornerstone to enable informing the customer and personalizing their experience.

Customer Using Mobile

Enhance customer experience

Contextual data-driven personalization can offer experiences aligned to the moments that matter in the customer’s journey. It develops an enriched 360-degree view of the customer by clustering data and creating personas.

Integrating customer data with asset insights and field service data can also transform the way utilities quickly respond and successfully manage customer expectations during outages.

Optimization algorithms can take data from supervisory control and data acquisition (SCADA) systems, assets, workforce management systems and other applications to accelerate repair work and updates on outage response, which can be proactively shared with the affected customers.

Lower acquisition cost

Data can help differentiate the brand from competitors, reduce customer price sensitivity, improve customer retention, set pricing premiums and drive consumer satisfaction and advocacy. Clustering and affinity analysis can surface opportunities of cross-selling and up-selling that enhances customer lifetime value by increasing switching costs and customer loyalty. Understanding the characteristics of profitable customer segments will help in driving online customer acquisition through better placed media and ad buys. In addition, it helps reduce reliance on face-to-face acquisition strategies that are limited during the COVID-19 pandemic.

Reduce cost-to-serve

Utilities invest a lot of time in serving customers but much of this time and effort boils down to just a few moments that matter in the customer’s life, such as high bills, outages and collections.

Insights from a UDP can help predict likely behaviour that can be proactively addressed through customer communications.

Using internal customer data and data from external third-party sources, utilities can predict a customer’s ability to pay, likelihood to default and proactively motivate at-risk customers to pre-pay or otherwise not default. Once behaviours are identified, utilities can automate processes to reduce the cost of manual, repetitive work.

2. Offer value-added business services

A utility’s biggest asset is the electron or gas molecule. Understanding how it is consumed can enable utilities to provide value-added business services that will make the most difference to the customer. In this context, the ability to collect the right data from the customer becomes crucial. The UDP integrates customer and usage data with third-party data sources. This can reveal value-added opportunities that expand the cost savings and lifestyle outcomes from consuming electricity and gas. One Publicis Sapient project with a North American utility found that click throughs and response uptakes were higher with contextual communication driven by customer behavior insights. The UDP integrated both third-party demographic data and meter data, as opposed to just the latter. The project also found that personalized communication helped customers sign up for programs such as time-of-use (TOU) tariff pricing or peak time rewards that reduced energy bills. Utilities that want to have a greater impact with energy efficiency programs can leverage similar models to determine the optimal program for their customers.

 

Cutomer using digitaly controlled appliances

3. Use new business models

Data monetization is at an early stage of maturity, but utilities can still leverage the data they have for new growth opportunities through a “utility data-as-a-service” model. The data can be masked to ensure privacy but can still be useful to other businesses that overlap with customers’ lives. That could range from EV charging networks looking for station locations, to businesses considering microgeneration and microgrids. In this way, data residing in a UDP can be used for opportunities that are outside traditional utility services. Some utilities, in both regulated and deregulated territories, do this through subsidiaries that focus on home services. Occasionally there are limitations to how data can be shared between the regulated and the competitive arms of the utility. This is where a UDP can be useful.

If required, the UDP can avoid non-public data, but take full advantage of public data sources to market different products and services to different customer segments.

Approaches toward establishing a UDP

Traditional utilities often find it difficult to quickly pivot towards a UDP. The decision on which approach to adopt can be dictated by both business opportunity (addressable market size, ROI or business focus) and organizational readiness (talent, technology maturity, budgets or implementation complexity).      

Here are  ways in which utilities can look outside and inside to future-proof their business with a UDP.

  • Many utilities look at analytics as a core competence and have been focused on building capabilities internally. Early UDP initiatives were often centered around in-prem Hadoop-based data lakes. Utilities are now adopting cloud platforms such as AWS, Azure, GCP and Snowflake as a platform for their UDP. For example, British Gas embarked on a digital transformation journey with an emphasis on leveraging data to help its customers transition to a lower carbon future. Being mobile-first has been a key part of this strategy and their mobile app uses data to keep customers engaged and offer new products and services based on lifestyle. Their UDP helps maintain high quality data and enables intelligence to offer a host of features like product bundling options and customer rewards that includes vouchers, discounts, and free services. Utilities in North America are following the same path and looking at UDPs as a key initiative in their overall digital transformation strategy.

  • For a few utilities, an easier approach has been to establish a new subsidiary unfettered by legacy technology. Here incumbents can start from scratch, building a new UDP that can become the blueprint for the utility of the future. One example is Meridian Energy in New Zealand, which established its subsidiary Powershop as its own competitor. Powershop offers its platforms to other utilities and operates across New Zealand, Australia and UK.

  • Utilities that may not be fully ready to develop all capabilities internally or have business pressures forcing them to a quicker time-to-market are better off adopting core systems from other players that they can further build upon. One such example is UK-based Octopus Energy, an energy retailer that has gained status of a startup unicorn. A true digital native, the company’s cloud-based platform, Kraken, uses data to interact between consumers and the industry via web, mobile and smart meters and helps customers with strategies to save money on energy. Octopus’ platform has been licensed by both E.On UK and Origin Energy in Australia. For incumbents trying to establish themselves in a competitive market against more agile retail start-ups, Kraken offers a quick road to establishing a UDP. The real value, however, comes from building further capabilities around the new system so that field insights and customer insights are integrated with each other.

  • There are not many utilities out there who do not find value in a UDP that integrates data from various sources. A few utilities that operate in a single part of the utility industry value chain may fall in this category, but even for them exploring ways to integrate their data with other utility partners in the value chain is something that should be considered. For these utilities, it may be worthwhile to find pockets of value in the enterprise where data is of value and experiment with data platforms and proofs-of-value that help build readiness and capabilities for the future.

For traditional utilities, choosing the right approach can depend on several factors. Key among these are existing industry regulations, business strategy, complexity of internal infrastructure, availability of skilled internal resources and importance of time to market. A clear strategy at the executive level will enable the integration of a UDP and allow it to achieve objectives and increase customer and business value.