Utility companies lack the skills to exploit Big Data to serve their customers better
Encouraged by the quality of digital experiences delivered by a growing number of retailers and service providers, as consumers, our standards are high. A new global study from Capgemini shows that the reluctance or inability of the utilities industry to turn data into value puts them seriously out of kilter with new ways of doing business and servicing customers.
Traditionally conservative and largely insulated by regulation, until recently energy companies have been protected by limited competition and predictable customer behaviour. Now, the realistic alternatives of solar energy, distributed storage and home energy management put their long-established business model, predominantly based around the grid, at risk of becoming irrelevant. Offerings such as smart thermostats from platform start-up Nest and Tesla’s sell-out home battery give the customer more power to manage their own energy, increase the likelihood of them buying ever-more customised services that could eventually see them going off grid completely.
This increase in customer choice means incumbent companies have to up their game and react to the competition, rather than simply hoping it will go away. Efficient analytics of the huge amount of data expected to be generated, for example, by the 680 million smart meters predicted to be installed globally by 2017 creates the opportunity to revolutionise the customer relationship. Insight into usage patterns and a real-time view of consumption empower a utility provider to improve reliability, troubleshoot, manage peak load through variable pricing, reduce customer bills and benefit from a smart, self-healing grid.
Considering that previous Capgemini research found that only 26%  of customer mentions on social media following outages were positive, analytics of consumer sentiment and feedback, plus the potential to turn data into a personalised market, should mean big data management is top of the priority list.
Our new research shows, however, that although more understand the importance of investing in the tools to be able to run such programs, there’s still a big gap in what the utility companies say and what they do.
This research also revealed that most utilities companies had low digital maturity, were conservative in their investment in technologies such as analytics, with less than half even considering it a major opportunity. By the end of 2014, even though this attitude had changed and 80% now consider big data analytics as a source of new business opportunities and three-quarters see it as crucial for future success, only a fifth have actually implemented an analytics initiative.
Not surprisingly, these figures are significantly lower compared to other sectors such as financial services, and the telcos. What is perhaps more surprising is of the utility companies that do use analytics, most only use it for simple reporting, with only a third focusing primarily on the customer. This presumably goes hand in hand with the fact that only 10% of senior respondents – management, C-suite and board level – see customer service as their main area of responsibility.
What’s clear from the report is that outdated infrastructure and lack of a senior chief data officer (CDO) plays a major role in holding back utility companies back from turning big data to their advantage. Overwhelmingly, though, it’s an inability to cope with what they see as unruly, siloed, ever -increasing swathes of data that’s holding them back. More than half said they were incapable of managing data due to a combination of complexity, access and privacy.
As the banks are quickly coming to understand in the rush to keep up with how their customers want to operate, engagement has a direct correlation to churn. The majority of utilities companies will recognise that they’re experiencing disruption from non-traditional providers and that they risk becoming uncompetitive if they can’t keep up. But what comes over loud and clear is that there is an implementation gap, and many are still struggling with the structure and capabilities to manage big data and turn it into the service their customers will increasingly expect.
The author is Perry Stoneman, global head of sectors & utilities global sector lead at Capgemini
Perry began his career as an IS projects manager with Metropolitan Life in Canada and then spent 10 years as CEO and Founder of Certus Concepts Online, Inc. Over the course of his career, Perry has also held executive leadership roles in delivery and sales positions across a wide range of industry sectors.
Perry joined Capgemini in 2002 managing the Canadian Outsourcing Business Project Delivery Group. He began building the practice for Capgemini’s Smart Meter and Smart Grid solutions in 2004. Under his direction Capgemini became a leader in smart grid and advanced metering infrastructure offers: today Capgemini provides Smart Energy Services to over 75 global utility clients, representing 113 million metered customers actively engaged in smart energy programs.
Between 2006 and 2008, Perry held the position of Capgemini’s Business Development practice lead for the company’s North America Energy, Utilities & Chemicals sector, where his responsibilities includeed a comprehensive portfolio of Capgemini’s strategy, sales, marketing and alliances in the United States and Canada.
In 2009, Perry took on a global role leading Smart Energy Services service line and in 2012 he was appointed Utilities Global Sector Leader.
In January 2014, Perry was appointed Global Head of Sectors in addition to his role as Capgemini’s Utilities Global Sector Leader.
Perry is a Canadian citizen who lives in Toronto with his family. He holds an Honors Bachelor of Mathematics and Honors Computer Science, Co-operative Programme from the University of Waterloo. When he is not travelling he enjoys spending time with his family.