This was originally posted on LinkedIn.
The electric power and utilities sector is under pressure to both economize and to innovate. Distributed generation, renewables, smart grids, storage, and prosumers are creating complex interrelationships across the entire Electricity Value Network (EVN). Leaders are embracing digital and adapting their business and operating models to thrive in this new electric world—driving new operational efficiencies, revenue streams, and enhancing financial performance.
Others are in a state of suspended decision making—not knowing where to begin, or taking an ad hoc approach or simply waiting for others to move first. As we enter 2018, it’s critical to get started. Below are steps – including best practices discussed during a GE Digital webinar titled “Navigating Changing Dynamics in the Energy Industry with Technology”—that can help you move from digital dabbler to disruptor.
Get a foothold—and build as your digital maturity progresses
Consider a small set of use cases and how they can apply to the broader enterprise once up and running. This approach enables you to break digital down, deliver early value, and create the building blocks to pave way to broader adoption. To begin, identify a strategic problem—e.g., a singular power plant plagued by asset downtime or margins—where digital can deliver desired business outcomes quickly. Innovative solutions based on Asset Performance Management (APM) software, and real-time intraday margin management for instance, can help save millions through driving better asset performance and trading margins.
One client is starting its journey with a limited set of use cases—leveraging APM and other software and services to optimize asset performance across two plants out of a fleet of more than 20. During this phase the company is creating a foundation of standardized tools, processes, and technologies that can scale across the enterprise by 2019 and beyond. Once up and running, these types of initiatives can lead to increasingly greater optimization and innovation around new solutions—e.g., combustion optimization and business models, and tapping into customer relationships to extend revenue beyond the sale of production, transmission, and the electron.
Plan for change from the start
Digitizing core utility functions will, without doubt, disrupt traditional ways of working. Change will need to include challenging and adapting old modes of operation, cultivating new behaviors, and nurturing vastly different talent and skills. Resistance to change is common, but careful planning can deliver tangible outcomes.
One of our clients created a global task force to introduce change across process, people, and governance. With full leadership backing, the client authorized a small group within a single plant to do things differently to fully harness the power of the Industrial Internet. By creating a “mini ecosystem” around standardized solutions, the client was able to drive tangible benefits that could then be communicated and rolled out to the broader organization.
Harness your data
We hear almost universally: “We have a lot of data, but we haven’t even started to figure out what the data means.” A World Economic Forum report indicates that increasing the data mined by just 2% could drive $1.3 trillion of value for the energy sector. Strategy should include understanding what data can be leveraged, and bringing systems online to capture disparate information, drive insights, and feed back into the workflow so data becomes knowledge-based, dynamic, and learning.
Assess emerging tech carefully
Carefully consider emerging technologies in areas that will unlock new business value. Companies should be cautious of the buzz around artificial intelligence (AI), machine learning, and block chain, as while these are important and powerful, the scope is still narrow. On the other hand, generation forecasting is highly relevant in today’s power and utilities environment—collating multiple disparate data sources, and mapping real time operational data to market conditions to commit and dispatch generating resources in intra-day markets. Another area is “digital twins” that can use physics-based digital models of real machines to understand their performance in a simulated environment.
Create your workforce of the future
The mindset, behaviors, and skills of talent is critical to unlock value from digital. Leadership must drive the aspiration to change through the ranks all the way to the field and plant level. Many CEOs recognize the strategic nature of digital, and are appointing new roles with the necessary expertise such as the Chief Digital Officer.
At the plant level, the persona of the digital industrial worker is also gaining traction, with increased focus on integrative strategic thinking and collaborative product iteration as key attributes. Recognizing these emerging trends and making them part of the digital foundation will help harness the right talent critical for this maturity journey.
In the coming year, the industry will continue to shake out winners and losers. Move beyond dabbling in digital to stake your claim.