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.
In the second article of our two-part series we outline the key principles and execution methodology that utilities can adopt to realize the maximum value from their UDP.