Make no mistake: energy utilities are not immune to the powerful forces of disruption upending other industries. In fact, with advances in renewable energy, widespread innovation in home energy products from a host of large tech and consumer brands, and the growing popularity and availability of electric vehicles, energy utilities are under immense pressure.
In South Africa, challenges with energy utility Eskom’s ageing power plants and delays in construction of two new coal-fired plants has led to an undersupply – and with it the on-going threat of rolling blackouts. Many consumers are seeking more sustainable and environmentally-friendly alternatives to the coal-fired generators upon which South Africa is largely dependent.
A new generation of consumers that grew up with smartphones and other convenience-driven digital tools also want more from their utility providers than just electricity. A global IDC study found that consumers around the world are showing interest in energy-efficiency products and services, smart lightbulbs and self-generation tech such as solar panels and small-scale wind turbines. While the market in South Africa – and Africa as a whole – remains behind Europe and North America in terms of enabling consumers to generate their own electricity, there is no doubt that the trend will land on our shores soon enough, especially as energy utilities struggle to meet demand with outdated coal-fired generators.
Competition from all sides
A harsh reality for energy utilities is that today’s customer can easily become tomorrow’s competitor. Businesses no longer necessarily operate in clearly-defined silos. Innovation is the main driver of success, and it’s becoming commonplace for those that excel at the innovation game to encroach on the domains of incumbent providers operating in completely different industries.
This is no different in the energy sector: already, big brands such as Google and IKEA are entering the utility space in exciting and innovative ways, leveraging their immense brand power to create new market niches. What these brands excel at is the experience they offer consumers, who have grown accustomed to excellent customer experiences throughout their interactions with brands, and now demand the same from other service providers. Utilities are not exempt. In fact, as renewable energy technologies improve and more eco-conscious consumers can self-generate the energy they need to power their lifestyles, energy utilities will need to prioritise customer-focused innovation or risk losing market share to competitors that give consumers consistently excellent experiences.
Think customer experience doesn’t matter in the utilities sector? Consider this: some of the most innovative and exciting energy providers today are not from a traditional utilities background. Instead, they’re Tesla, breaking new ground in battery storage, electro-mobility and solar energy. They’re Shell, making big plays in the electro-mobility and home charging sectors. They’re the auto-manufacturers pioneering new electric vehicle innovations, and appliance manufacturers developing new smart home solutions.
This creates a distinct challenge for energy utilities: keep relying on outdated models of monopolised power provision and hope the prosumer trend passes them by; or start transforming their business models by building Intelligent Enterprise capabilities that prioritise customer experience and convenience through innovative value-adds.
The modern utility’s most important commodity
This approach can future-proof energy utilities’ business models, but it requires a rethink of how utilities provide services to end-consumers, what those services are, and how consumers experience such services. And it all comes down to data; in fact, I’d argue data is the modern energy utility’s most important commodity.
One of SAP’s big plays in the utility sector is SAP Cloud for Energy, powered by the SAP Cloud Platform and using data integration and business process integration to give energy utilities the power and agility to rapidly innovate, develop and implement new products and services, and help them unlock new potential revenue streams and business models. SAP’s next-generation SAP Cloud for Energy solution enables utilities to radically simplify their smart meter communication infrastructure, link it to other related assets and deploy it much faster than what has been possible up to now. With the collective data that will be received in near real-time from smart meters and related assets, utilities can access analytics that support their move towards a smart grid.
What’s more, energy utilities can optimise services for customer groups by using advanced analytics and deploy next-generation customer engagement apps to increase loyalty. It’s about more than keeping the lights on: energy utilities have an opportunity to become powerful consumer brands that touch every aspect of their customers’ lives.
The Intelligent Enterprise for Utilities
As the number of connected devices in homes grow, so too do the opportunities for service providers to offer packaged commodity and non-commodity services that add value and convenience to end-consumers’ lives. In light of this, forward-thinking utilities are reimagining their business models to become Intelligent Solution Providers, transforming from pure utilities to consumer brands. Enabling this transformation is the concept of the Intelligent Enterprise, a strategic approach that applies technology and new service paradigms to the challenges faced by modern enterprises, specifically those that relate to improved business performance.
What is the Intelligent Enterprise in the context of energy utilities? It’s the seamless integration of operational technology and IT that enable the development of new business models and energy services. It’s a rapid time-to-market for new customer-focused products and services. It’s the use of advanced analytics to not only optimise tariffs and services for customers, but to enable and encourage reduced energy consumption to help customers save money and reduce their eco footprint.
And it’s all supported by a powerful cloud platform that allow for more flexible deployments and simpler implementation of new processes across retail, distribution and consumption. Energy utilities that build Intelligent Enterprise capabilities can reimagine end-to-end processes to ensure a positive total customer experience while also achieving huge productivity gains. The world is changing at an immense pace, and the pace of change will never be so slow again. Energy utilities have to urgently rethink their business models or risk turning their biggest customers into their fiercest competitors.