Utility Innovation through Analytics

Advanced analytics can deliver enormous value for utilities and drive organizations to new frontiers of efficiency— but only with the right approach. There’s little to be gained from just bolting on a software solution. The real value comes from embedding data analytics as a core capability in the organization and using it to detect pain points, design solutions, and enable decision making. Conservative estimates supported by rigorous use-case analysis suggest that advanced analytics can boost profitability by 5 to 10 percent, while increasing satisfaction for customers and improving health and safety for employees. But capturing impact on this scale is no easy feat, and utilities often struggle with the same few challenges, which undermines the success of an analytics transformation

How do utilities prioritize use cases and set appropriate aspirations for business impact? Without clarity on these matters, companies can easily lay themselves open to excessive influence from external vendors or get caught up in chasing the latest viral use case. One US utility partnered with a technology supplier and invested millions in wind-forecasting software only to discover that the effort wouldn’t yield any returns. Another large utility spent years building in-house analytics capabilities and developing more than a dozen use cases before realizing it had yet to make any headway on the biggest and most valuable opportunities.

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Develop a comprehensive inventory of use cases spanning the whole value chain

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Prioritise the applications using multiple criteria, including value, feasibility, alignment with corporate strategy, and business engagement. How much weight to give each factor depends on the stage a utility has reached in its advanced analytics journey. When it is starting out, business excitement and engagement are critical to achieving buy-in. At later stages, value and feasibility become more important. By the end of the journey, analytics is so critical that priorities are dictated by overall corporate strategy.

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Converting hype into measurable bottom-line impact

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Many utilities launch use cases but struggle to capture tangible value. Success requires the coordination of a complex series of steps, and the collective impact is only as good as the weakest link. Common facets of this challenge include:

Not understanding the impact at stake and the process changes needed to capture it.We’ve seen several companies make large investments in analytics projects without a clear business case or a monetization plan. Other utilities have developed promising predictive models but failed to implement the associated process changes needed to foster adoption.

Being unable to deliver an analytics solution that works well. Adoption often suffers because of a lack of collaboration with business users during the development phase. Too often, organizations rely on senior managers or subject-matter experts from the business, but fail to involve the front-line crew members who will use the tool on a day-to-day basis.

Advanced analytics is transforming industries worldwide and enabling organizations to achieve unprecedented levels of productivity. For utilities, which lag other industries in digital maturity, the value at stake from such a transformation is substantial. However, making the leap is far from easy, and many utilities place big bets only to fall short of their objectives. By adopting best practices and defining the strategy, culture, and organization they need to achieve their analytics aspirations, utilities can maximize their odds of capturing the step-change improvements that industry leaders already enjoy.