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The utility industry's pursuit of digital business transformation
Paul J. Yarka
Vice President and Chief Digital Strategist
Convergent Group, 6399 South Fiddler's Green Circle, Suite 600
Greenwood Village, CO 80111
Vice President and Chief Digital Strategist
Convergent Group, 6399 South Fiddler's Green Circle, Suite 600
Greenwood Village, CO 80111
Introduction
Business transformation is on the radar screen of many utility industry executives. Their expectations are high for the redesign of their businesses and leveraging technology to support revitalized processes, thereby wringing cost from operations and creating new revenue opportunities. Beyond cost-cutting, industry executives are anticipating that utilities can leverage business transformation to better address competitive and regulatory pressures and prepare for customer, constituent, and business partner interactions with their day-to-day business processes.
Digital Business Transformation
Digital business transformation is an ongoing process, which is enabled by redefining business strategies, new technologies, and the growth of the Internet, that can convert old economy utilities to digital enterprises. Digital business transformation touches business architecture, business strategies, strategic business processes, market drivers, customer interaction, management principles, systems, systems integration, and organizational knowledge and information management and flow.
Utilities interested in gaining maximum benefit from digital business transformation can use the following approach as a high-level transformation methodology. Overall, it is important to champion the digital business transformation process from the top down. First, the methodology starts with taking inventory of strategic and tactical processes; systems and technology; people and their skills; and knowledge, information, and data owned by the enterprise. In the inventorying step, it is crucial to consider strengths and weaknesses of an organization's existing processes, how well or how poorly technology and systems support or define current business processes, process and technology optimization opportunities, and degree and quality of knowledge and information integration and flow.
The inventorying process should lead to the definition of an integrated strategic business and IT plan. It is crucial that the plan be developed on an eBusiness-based business transformation platform. In this context, eBusiness is an enabling strategic business platform and not yet another IT initiative. Components of the strategic business agenda should also include company goals, target markets, and ideas on how the Internet will potentially create clear competitive advantage.
Utilities are increasingly learning that leveraging the Internet requires quick and decisive actions. To take advantage of digital business transformation opportunities, utilities should consider partnering, buying, and lastly building as the order of their systems-related priorities. Preparing business processes and systems for exposing business processes to others, as well as optimal process and system integration, are extremely important. Critical time can be wasted by taking a "wait and see" attitude and looking for "tried and true" approaches to digital business transformation.
Once business and technology strategies are planned, utilities should focus first on creative streamlining of major internal business processes, as they now will become more widely and externally accessible. In the case of retail utility business initiatives, customer-facing processes should be prioritized first, as their optimization can bring greatest value to utilities and their customers. If an organization needs to reduce a process now requiring weeks or months to one operating at Internet speed, the organizational impacts of process redesign and operational impacts of opening new customer interaction channels must be understood well in advance.
The next step in a digital business transformation process is to leverage integration platforms, such as Enterprise Application Integration (EAI) and B2C/B2B integration platforms. EAI and B2C/B2B integration are currently viewed as a significant key to adapting a business, its processes, systems, and their integration quickly. A service-oriented architecture, such as that enabled by modern integration platforms, is needed so that a business may adapt and morph as quickly as an organization will need to in the digital economy. Scalability, reliability, and security are also important considerations. In recently merged companies, system consolidation and renewal can also provide substantial reductions in process duration and complexity.
The next step in the digital business transformation process is for the utility to better understand its customers. Detailed customer and customer process understanding are required to provide better service and end-to-end fulfillment. In addition, it is important to provide personalized customer interaction, which can be provided through the use of personalization and content management technologies. Depending on the utility's business model, a utility's customers may provide services to one or several of the following: residential customers, commercial and industrial customers, contractors, developers, constituents, business partners, and even other utilities. As a digital business strategy and enabling processes evolve, it is quite possible that the information about a utility's customers may prove even more valuable than the commodity they are selling.
Regardless of the types of customers a utility serves, externalizing well-thought-out processes will breed increasing levels of interaction. Customer interaction tools, such as eContact tools and blended media systems, will enable utilities to provide more customer communication channels, more integrated customer information, and better customer service. The better the processes and the customer interaction capabilities, the more users the utility will draw. As processes and systems improve, expectations will continue to grow making 24/7 access compulsory and downtime not a viable option. Staff must be ready to interact with customers on their terms using their favorite channel (e.g., telephone, web-chat, and email). To support a successful transition to a digital business enterprise and redesigned customer interaction, the implementation of organizational change management programs is a must.
The final step of a digital business transformation process is to keep refining, planning, and implementing strategic business and IT agendas. Old economy utility organizations will need to evolve toward a "reinvention" culture, as required. The digital business transformation must continue with a focus on increasingly open and unified technology strategies and architectures. Utilities will eventually replace back-office systems; update legacy Customer Information Systems with web-enabled systems; and implement modern deregulation-aware, web-enabled billing and settlement systems, supplemented by modern Internet-accessible, rate-handling models and web-based customer interaction platforms. As a utility transforms increasingly toward a digital enterprise, relationships with solution and technology partners should be strengthened and Application Service Provider models for utility processes and systems should be pursued, as viable options are established.
Enterprise Application Intergration and B2C/B2B Integration
EAI is an enabling business, process, and technology platform for linking IT applications into a single enterprise process. B2C integration enables customer to business process integration, and B2B integration enables business to business process and technology integration. These technologies are a response to the increasingly heterogeneous and complex hardware, operating system, software, database, and application environments that transcend a single organization, as well as industries. Modern integration platforms are acknowledgements of the rapid technology evolution that has increasingly caused more separation between islands of information and has allowed disparate systems to exchange business information in formats and contexts that other systems understand. Recently, the introduction of integrated workflow and business process modeling, automation, and analysis tools has enabled process definition, information sharing, and process optimization, thereby providing a key tool set for digital business transformation.
Process, knowledge, and information integration are of paramount current and future business importance. Integration of processes and knowledge across a utility and within the energy industry will be key to functioning as a digital enterprise (Figure 1). Information must be synchronized to eliminate redundancies and inaccuracies. Utilities sharing electric grids and gas networks must share consistent rationalized views of information across their organizations and their industry, as they move to the digital economy, which is driven by information.
The Internet Utility
Recent introductions of Internet utilities provide a glimpse of the potential digital enterprise futures for old economy utilities. Currently, some traditional utilities are investing in new dot-com utility ventures, in some cases earning preferred energy supplier relationships for their investments. Today's Internet utility provides multiple energy, telecommunications, and even Internet services in a one-stop shopping model. Although rate structure and regulatory requirements differ significantly across state boundaries, these new entities are working to serve customers online with sophisticated billing and friendly customer service functions. To rapidly gain acceptance, Internet utilities are even building their brands and marketing their services with traditional utilities.
Figure 1. Process and technology architecture of the future digital enterprise.
Summary
Digital business transformation is an ongoing process that will allow traditional utilities to survive and thrive in the digital economy. A digital business transformation process should place considerable emphasis on eBusiness-based strategy and IT planning; business process redesign and optimization; modern process-enabling integration platforms; optimized customer interaction models; and ongoing refinement, planning, and implementation of strategic business and IT goals. EAI and B2C/B2B integration platforms may prove to be a key technology ingredient assisting utilities in the transformation from old economy utilities to digital enterprises. Finally, recently established Internet utilities provide an early view of future digital enterprise opportunities and business architectures for traditional utilities.