UTILITY INNOVATION BLUEPRINT: How to Manage the Challenge of Dual Transformation The challenge facing utilities is how to maintain reliability while simultaneously creating the agility necessary for innovation. Over the past century, utilities have been optimized around reliability, but new technology, competition, and regulations are changing the industry. This new imperative to innovate requires a different set of capabilities that run counter to the conservative business culture that is common across the industry. To manage this challenge, utilities are pursuing dual innovation on two tracks, both investing in ways to optimize the core business and be able to adapt to new business models that reflect industry change. THE DUAL INNOVATION CHALLENGE THE DUAL TRANSFORMATION REQUIRES RELIABILITY • • Customer service enhancement Operational efficiency improvement • Increase profits • Free up capital for reinvestment REQUIRES AGILITY • New product and service development • New business models • New revenue streams INNOVATION Transformation Track One Transformation Track Two Automate the Core Business Develop New Business Models “Digitization is not an IT project, it’s an opening up of potential within business units.“ – Eesti Energia “We’re having to really rethink how [to] work in a much more accelerated manner… We need to be more responsive and more flexible.“ – Utility Executive
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UTILITY INNOVATION BLUEPRINT · UTILITY INNOVATION BLUEPRINT: How to Manage the Challenge ... • New product and service development • • New revenue streams INNOVATION Transformation
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UTILITY INNOVATION BLUEPRINT: How to Manage the Challenge of Dual Transformation
The challenge facing utilities is how to maintain reliability while simultaneously creating the agility necessary for innovation. Over the past century, utilities have been optimized around reliability, but new technology, competition, and regulations are changing the industry. This new imperative to innovate requires a different set of capabilities that run counter to the conservative business culture that is common across the industry.
To manage this challenge, utilities are pursuing dual innovation on two tracks, both investing in ways to optimize the core business and be able to adapt to new business models that reflect industry change.
THE DUAL INNOVATION CHALLENGE
THE DUAL TRANSFORMATION
REQUIRES RELIABILITY
•
• Customer service enhancement
Operational efficiency improvement
• Increase profits
• Free up capital for reinvestment
REQUIRES AGILITY
• New product and service
development
• New business models
• New revenue streams
INNOVATION
Transformation Track One
Transformation Track Two
Automate the Core Business
Develop New Business Models
“Digitization is not an IT project, it’s an opening up of potential within business units.“
– Eesti Energia
“We’re having to really rethink how [to] work in a much more accelerated manner… We need to be more responsive and more flexible.“
– Utility Executive
Methodology: The experts interviewed in this study represent 16 utilities on three continents, serving 42m customers, with 162,000 employees, selling electricity, water and gas.
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names may be trademarks of their respective owners. OUINFO_2017.08
THE UTILITY INNOVATION BLUEPRINT
Source: Navigant Research
UTILITY INNOVATION BLUEPRINT
LAY A FOUNDATION WITH PROCESSES
• Evaluate accountability by project type
• Balance finance with risk
• Constantly monitor progress
ACCELERATE WITH TECHNOLOGY
• Digitize then automate
• Deploy cloud and analytics
• Iterate on new services
INSTIGATE A CULTURAL SHIFT
• Secure executive sponsorship
• Embrace new organizational perspectives
• Empower your people
“Everybody is running around trying to be innovative, but no one is really sure how.”
– Utility Executive
“Our mission is to be a catalyst, a fire-starter, a spark. We want ‘innovation arsonists’ to get more fires started.”
– Utility Executive
While most utilities understand the need to transform, many find themselves ill-prepared to address this transformation. To help utilities optimize their investments in this arena, we’ve developed this Utility Innovation Blueprint. Based on in-depth industry interviews and analysis of programs worldwide, the Blueprint gives practical advice for utilities developing their own innovation initiatives.
Read the full study: www.oracle.com/UtilityInnovationBlueprint