Leverage your Data with Improved Analytical Insight
To remain relevant in today’s highly-competitive utilities market, companies must make the most of the vast amounts of data that they collect. Both digital and data transformation processes are needed to set these companies along the right transitional path, as they begin to harness the power of analytics. Utilities have been comparatively slow to adopt Big Data tools and strategies, mainly due to their rather distinct role and the bespoke challenges that they face because of this.
Challenges facing the sector
Utilities face challenges that are either exclusive to them or are magnified in their market(s) to some extent. PWC point-out several key points which are currently testing the industry. Rising capital costs, increasingly stringent regulations and compliance requirements, heightened competition, and the transitioning to renewable and ‘cleaner’ energy, are all having an impact.
It has been widely suggested that the harnessing of analytic potential is the first step if companies want to remain successful in the face of ever-fiercer competition. Digital-only providers are on the rise, adding to the 60+ energy suppliers already challenging the ‘Big Six’ oligopoly in the UK. Competing companies will need to deepen their understanding of existing and prospective customers to keep up with the pace.
Capgemini detail the top challenges for utilities face when implementing Big Data analytics tools and strategies. These form some of the reasons why the sector has been a relatively cautious adopter. High data storage and manipulation costs, data complexity, as well as issues around accessibility and privacy have held adoption back. Within the industry, there has also been a skills shortage and a lack of management support for implementation; although these problems have been increasingly overcome in recent times.
Giving the green light to improving insight
With improving awareness of the benefits which Big Data and analytics can offer companies within the sector, frameworks are being formed to allow for the transition. There are now around 14 million smart meters in UK homes. The roll-out began in 2011. 2011 marked the beginning of utilities harnessing customer and usage data in a more constructive way. The plan remains to meet the very ambitious 50 million target before the 2020 deadline.
According to BizTech magazine, companies will invest heavily in data analytics in the coming years, as they look to gain an advantage over competitors and save themselves money in the process. Limitations to current industry data, practices and systems mean that a prompt transition is needed. Poor data quality and creaking infrastructure will no longer be an issue if the move towards a ‘modern grid’ is completed. For more information on the ‘modern grid’ see this article on energydigital.com.
Realising the benefits
Once the infrastructure has been updated, and the ‘modern grid’ is in place, companies will begin seeing benefits almost instantly. With data quality and accessibility improved, advanced analytics will prove crucial to success in the sector.
Much has been written about Big Data benefits, as companies and entire industries realise its full potential. Capgemini’s publication puts forward indicative use cases from two main areas which will profit most from Big Data and analytics; marketing & customer relations and operations:
- Marketing and customer care
Offer and services – tariff optimisation, energy management tools, smart home.
Proactive marketing – customer management, enhanced brand & communications.
Network and production management – customer base management, enhanced brand & communications.
- Operations
Support function optimisation – supply chain.
Asset management – real-time asset monitoring, predictive maintenance.
Demand forecast – energy consumption forecasting, trading optimisation.
Customer relations optimisation – electricity load optimisation, capacity planning.
Revenue assurance – fraud detection, network loss prevention.
According to the same article, the potential applications for advanced analytics will appear in a staged fashion, as capabilities mature. For instance, the areas of reporting and BI will be followed by more advanced areas like predictive and real-time analyses as time goes by.
By investing in Big Data and their analytical faculties, utility companies will stay ahead of the curve. These benefits will lead to improved revenues, higher customer satisfaction and retention rates, as well as more insightful decision-making.