Modern utilities must be managed like a fleet of speedboats, yachts and freighters: equally agile, flexible and stable.
The heterogeneous rates of change in organizations.
Utilities have long been aware of the pressure for change caused by the field of tension to which they are exposed and are always trying to find answers to the questions from the first part of the blog series. However, due to different working methods within organizations, the response to this pressure varies. Some teams act like speedboats: explorers, not afraid of foreign waters and constantly searching for new treasures. They ensure innovations within the company and thus a significant competitive advantage. Other teams are more like yachts: luxurious, equipped with the latest technology from start to finish and focused on demanding users. They help the company to stand out from its competitors and make its solutions more attractive. Other teams are like cargo ships: functionally oriented and hardly changing course. They are responsible for stable, standardized processes and systems and keep the core business alive
What do ships have in common with energy suppliers?
This analogy shows that the modern energy company needs its entire fleet in the dynamic-disruptive market in order not to be left behind by competition. It must be managed accordingly and underlying structures must be aligned to these different speeds. Both the integrated digital strategy and the utilities’ business and IT operating model must meet these requirements.
A “Multispeed-IT” is inevitable.
An IT is needed that can act both quickly and flexibly. Furthermore, ongoing processes must be continued in a stable and reliable manner. In order to express these conflicting working methods, a split has proved its worth: While one area is focused on supporting day-to-day business and operates in traditional development cycles, another provides an environment in which new ideas for the business can be tested, developed and brought to market by agile teams. This so-called “multispeed IT” must come with the following characteristics:
- Scalability: Easy adaptation of capacities to fluctuating requirements or user numbers.
- Flexibility: Improved response to market developments through easier integration of new functionalities.
- Agility: Increased speed-to-market for the development and use of innovations.
- Stability: Securing business processes through trouble-free operation of traditional IT infrastructure.
The development of such an IT landscape in a utility company itself usually involves high investments and ties up many resources. However, scalable capacities, access to innovations and flexible pricing models are required. The only way to do this is to make use of cloud technologies. In contrast to the tedious and expensive setup of traditional systems, IT resources from the cloud are available on demand, paid for according to use (“pay per use”) and enable highly efficient automated IT and the use of DevOps.
What does this mean in concrete terms?
To decipher these cryptic sentences, a streaming company that everyone knows can be used as an example: Netflix has similar problems as utilities. While utilities have to anticipate the daily power load peaks and control them with clever ramp up and ramp down of power plants, the streaming provider is forced to counteract the sometimes easily predictable streaming peaks with the release of new “House of Cards” episodes. In 2015, for example, these streaming peaks accounted for 37% of all North American Internet traffic. It would be extremely cost-intensive to keep these capacities available at all times – the cheaper way is to use a cloud. For Netflix, outsourcing to the cloud enabled them to increase capacities automatically when needed, shut them down when not in use and pay only for the capacity actually used.
Stumbling blocks as you walk into the cloud.
Despite the impressive advantages, many energy suppliers are still lagging behind in an industry-wide comparison. The most common reasons for the restraint in the energy sector are the lack of competence, concerns about insufficient data security, breaches of compliance and not least the non-transparent costs. Obviously, many energy companies lack an understanding of the possibilities and capabilities of modern cloud solutions and providers.
How can these risks be minimized or even eliminated? What exactly is behind the way to the cloud? And how can the presumably dead utility company be reawakened to act agile, flexible and stable on the market?
You can find answers to these questions in our 3rd part of the blog series: Cloud technologies and potentials.
In our PoV “Cloud in the energy industry – untapped potentials” we are bridging the gap from the mega trend of digitalization to a tailor-made cloud strategy for utility companies.
(PoV soon available in English, click here for German version).