Utilities globally prioritise AI to drive digital transformation, but lack of collaboration a key factor preventing 80% from completing journey
12/07/2024 IFS UK Ltd
Organised data holds the key to successfully adopting AI while improved asset management emerges among top drivers of transformation
AI is at the forefront of digital transformation in the utilities sector, with 82% of executives recognising it as essential to their strategy. However, despite widespread recognition of the importance of emerging technologies, only a fifth (20%) of companies have completed their digital transformation journey, with respondents split on where ownership should lie (22% reference CFO, while the same percentage cite the CTO).
That’s according to new research by IFS, the leading technology innovator in cloud and Industrial AI software, which polled 863 C-level executives and VPs from utilities companies around the world (UK, US, France, the Nordics, the Middle East, and Australia).
While 84% of organisations recognise data analytics as important to their digital transformation approach, the research highlights the complexity and challenges inherent in fully realising digital strategies. The primary obstacles include the inability to measure value accurately from investments (32%), a lack of clarity on necessary resources and skills (25%), and a lack of consensus on priorities among leadership (23%).
Asset management has emerged as a critical factor in delivering new services and outcomes as part of a digital transformation, with 36% of respondents emphasising its importance ensuring reliable and efficient service delivery. This focus is driven by aging infrastructure and increasing asset complexity. Many grid components are well past their intended lifespan and operate under conditions far more severe than they were originally designed for, while the shift to renewables and distributed energy resources adds further complexity.
Other operational areas are referenced in this context with resource optimisation cited by 39%; 38% highlighting the need for a robust customer experience strategy, and 36% mentioning field service management.
Carol Johnston, VP of Energy, Utilities and Resources at IFS, commented: "The utilities sector is at a pivotal moment, where AI-driven digital transformation and sustainability are not just trends but imperatives. Our research proves the need for robust data management and AI capabilities to ensure companies make a success of their transformation. But utilities must also embrace a holistic approach, leveraging end-to-end digital tools and fostering strong partnerships to navigate this complex landscape."
When it comes to executing on digital transformation strategies, composable enterprise platforms which empower businesses to mix and match/assemble different software modules to meet their specific needs are in high demand, with 38% of decision makers seeking such solutions to support their journey. This underlines the need for flexible and modular technology infrastructures as companies look to adapt quickly to changing requirements, while being able to integrate various applications more seamlessly.
Johnston added: "Composable platforms allow enterprises to bring in new functionality as and when required, providing a flexible approach to digital transformation. This reduces complexity and allows companies to adopt technology at their own pace, offering a streamlined solution that integrates various applications seamlessly."
The research also reaffirmed sustainability as a top priority for utilities businesses, with 46% of respondents currently at the stage of setting timelines and goals for achieving sustainability targets. However, only 31%have hit their first milestones. The key strategies for meeting these goals include improving asset efficiency (43%) and investing in energy-efficient assets (42%).
Sustainability in the utilities sector involves more than just carbon reduction. It includes revenue models, workforce retention, and safe operations. Integrating sustainability across operations ensures resilience and compliance. Johnston added: "We don’t see sustainability as a trade-off, but as an opportunity to create value for our customers and society. Utilities also increasingly understand the importance of accurate data and reliable reports in measuring progress to key sustainability goals and avoiding greenwashing. Effective strategies include optimising resource use, selecting sustainable suppliers, and engaging customers in programs like energy audits and solar panel installations."
There is significant importance in connecting four of the core themes from this research: AI, digital transformation, asset management, and sustainability. "Utilities must recognise that these elements are interconnected. By leveraging AI and digital tools to optimise asset management, they can meet sustainability goals more effectively. This comprehensive approach ensures a balanced and strategic transformation journey," concluded Carol Johnston.
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