WEMO Podcast: Diving into Scottish Water’s digital first strategy

The role of automation in Scottish Water’s digital transformation journey.

Vito Labate in conversation with John Cairney, Head of Strategy and Architecture at Scottish Water and Paul Haggerty, Head of Water sector at Capgemini UK, discuss the role of automation in Scottish Water’s digital transformation journey.

Transcript

Vito Labate:

Hello, and welcome to our podcast series on the transformation of Energy and Utilities companies to better service their customers in the digital age. My name is Vito Labate, and I’m really pleased today to welcome John Kearney, who is the Head of Strategy and Architecture at Scottish Water, he’s also joined on the line by Paul Haggerty Head of Water sector at Capgemini in the UK. Welcome!

Paul Haggerty:

Thanks Vito, delighted to join the call, and have this opportunity to have a chat with John and share some of our insights.

John Cairney:

Likewise, great to be here Vito.

Vito Labate:

John, you’ve done some quite interesting things with Intelligent automation at Scottish Water in particular and I’m interested to know more about your journey as a company – so if we could let’s start at the beginning – what were the strategic priorities for Scottish Water in exploiting the opportunities digital presents?

John Cairney:

Well, we set a new digital strategy back in 2018, and over recent years we’ve invested heavily to move ourselves away form a largely on-premises and heavily bespoked IT estate so that we can exploit cloud platforms and digital technologies to be able to move to a more automated environment and take advantage of artificial intelligence and a lot of the digital technologies that are on offer.

Obviously, if we persisted with a large estate, on-premises, in our data centers it was difficult to scale, difficult to adjust, and maybe we then wouldn’t have been able to capitalize on opportunities.

So, the digital strategy, which we set out last year, focuses on some of our strategic ambitions to deliver a differentiated customer experience, make sure that we keep our customer prices low, make sure that we make our underlying infrastructure – in terms of our physical assets, reservoirs etc., as well as technology resilient, reliable and also secure, and last but not least, making sure we support the circular economy in Scotland, and contribute to the Scottish economy in terms of both in its presence in the UK and also wider afield.

So, with these ambitions in mind, we applied some analysis around what are the digital priorities that we need to focus on?

And our digital strategy came up with a number of capabilities that we wanted to enhance around customer experience, efficient planning and delivery, intelligent decision making, and also, the all-important risk and security management.

And that led us then to identify a number of key objectives, in terms of supporting these capabilities, which were to anticipate and fulfil our customer’s needs, through their channel of choice, to optimize and automate repeatable processes, which in turn will unlock business value.

We also wanted to make sure that we could exploit the huge volumes and variety of data that we’ve got from our assets in order to deliver actionable insights and make sure that through all of that – whilst we’re exploiting digital technologies – we’re protecting our customers, our people, and our assets from digital stress.

Vito Labate:

Very good John, and so you talked about some of the criteria, but how did you determine and assess the criteria for this program in particular at Scottish Water?

John Cairney:

I think it’s a balance of cost, time, and benefits. When we embarked on some of the early digital translations we looked at business challenges that we could tackle quickly, and we focused in on the opportunities of release benefit early in the process.

In that way we essentially scaled our business cases only to the point that they could still deliver appropriate value and in that way we avoid spending big on initiatives that might run out of value and especially when you compare that to the world of Waterfall projects where you will look at a set of requirements up front, go away and work on them in a dark room to work on them, and come back with something a year later and only to find that the world has moved on since.

We wanted to make sure that with the digital technologies at our disposal, we were really exploiting them very, very quickly and looking to deliver value in a matter of weeks – perhaps months – rather than years.

Vito Labate:

Very good, and as you moved into, let’s call it the implementation stage, I would guess that there were some surprises that came up along the way and I guess my question is: what in your estimation worked well and what learnings did you draw from the obstacles that you encountered along the way?

John Cairney:

Ok yeah, I mean digital transformation whether we’re talking about automation, AI-driven automation or any other area – it’s still all about people, despite the name and I think it’s difficult to get every stakeholder on the same page when things are moving very quickly.

So, some people can get left behind.

Keeping everyone focused on some of our early initiatives and keeping everyone focused on the outcome was the key, regardless of organizational or process boundaries, and yes, that meant that quite often you were often breaking established processes in order to get the job done.

Now don’t get me wrong, I’m not advocating chaos.

Agile digital transformation needs quite a lot of control and governance but in my experience multi-functional teams, working hand-in-hand with a technology – whether that’s AI machine learning, process automation etc. – that these multi-function teams work best when focused on a common goal, regardless of their background, regardless of where they work.

Vito Labate:

You know, you hinted at the outcomes a little bit there in your response, I wonder what was the overall outcome of the project overall and how has it impacted the broader organization?

John Cairney:

We’ve discovered a new way-of-working and shown that we can literally transform parts of our business quickly and effectively so if I take the example of the automation of a process, where we get in touch with property developers etc. in order to make sure we can new ? connections very quickly, then that new way-of-working proved that we could transform our business really, really quickly.

We did that in ten weeks and essentially turned a very manual business into a digital business and having proven that works very, very quickly there is now a hunger from other parts of the business to share in that success, so I’m pleased to say our backlog is building up quickly.

Vito Labate:

So, what’s interesting is that, I mean, those are the benefits for your organization, earlier you hinted at the benefit this brings to the Scottish economy itself and I’m curious to know, what is the benefit to the Scottish economy overall?

John Cairney:

I mean, certainly within the things within Scottish Water’s control we play a massive part in terms of onboarding new water supplies and new waste water supplies and the quicker we can do that with better control, better quality, and better engagement with our various stakeholders in the process –  then clearly we can start to tackle some of the big problems in Scotland much more quickly such as the housing crisis.

And it also means, I think, when you’re able to deliver a digital experience to the partners who crave it because it benefits their own business model, then clearly there’s a big boost to the supply chain all the way through.

I think in terms of our customers, certainly our domestic and non-domestic customers would expect us to give them value for money so where there’s an opportunity for us to could down on the number of interventions that would be required because we are applying a more intelligent analysis of the data we’ve got in order to prevent them – then clearly there’s an impact on customer price in terms of keeping them as low as we can possibly keep them.

Vito Labate:

Wonderful story at Scottish Water John, thank you for that.

Paul, let me turn to you for a moment. I take it you work closely with John, and clearly the project was a big success. Can you share perhaps your perspective on how the Digital First agenda at Scottish Water is benefiting both the organization and their customers from your prospective?

Paul Haggerty:

Yeah sure, I mean just building on John’s point, Scottish [Water] is very clear with regards, its’ strategic objectives in regards to, you know, differentiate customer experience, keeping customer prices low, ensuring that the assets and the service the network they provides is resilient, reliable, and secure and for the betterment of the Scottish economy.

And if you look across the business, in terms of where there are opportunities to support those – let’s call them four pillars – it’s about helping drive more intelligent decision-making, it’s about helping drive more standardization and, you know work is done, processes are adopted, decisions are made.

And if you look at, just at an overall level in terms of those sort of four areas – keeping customer prices low –there’s a challenge with regard probably more demand for the likes of Scottish [Water], which are a very asset intensive business.

It looks after a massive estate both in terms of geography and physical assets and you’re dealing with quite a complex and challenging environment – not from just an environmental physical perspective, but regulatory perspective.

You get that wrong – you’re talking about drinking water quality here – you’re talking about impact on the environmental aspects of it.

So the real aspect there is about looking for how there is opportunities to support that, and if you look at the investment choices in terms of helping to maximize investments and assets, that’s always about risk management in terms of knowing about the condition of that asset, the reliability of that asset, how you maintain that asset, how do you extend the life of that asset?

And when you’re spending circa 14 million pounds a week, where then where are there  opportunities for you to help drive intelligence, as to how you can drive efficiencies and value form that – and how can you drive a level of automation to do that faster such that your management overheads, that may be associated with that, can be done through more automated processes.

So, you’re getting the benefits of optimizing the risks associated with that asset  as well as actually the speed by which that asset is delivered.

And when you’re spending on the scale of the likes of Scottish [Water] and others you know – hundreds of millions of pounds a year on assets and infrastructure then that can only benefit customers and been able to keep prices low by looking for opportunities to optimize that investment, to optimize and automate those processes.

And ultimately, drive a level of performance that helps you be faster – more accelerated – and able to release capacity to focus on other value-added things.

And if I take the customer lens, then clearly from a customer lens, then those choices – not only from a financial perspective –  because customers, when you look at the Water industry – they’re about security of service – so interruption to supply, no impact in terms of water pressure, no impact in terms of the quality of the water or any particular impact on the conditional aspects of that.

Again, getting higher levels of information.

Gone are the days when I went to school and calculators were being introduced and you were excited when you had a drawing board that you could move to 2D.

You’ve now got information sets coming from devices, assets, FuelForce, supply chain – the sheer volume of data that exists to be able to be interrogated is beyond what a human could deal with.

And being able to look at that over-arching ability to use next-generation platforms to interrogate that helps humans to correlate that and get an understanding as to where there is optimization to be driven.

It’s all about being able to deliver and protect that customer, drive the efficiencies, ensure it’s reliable and resilient and it’s secure – and that’s for the betterment of Scotland.

So, for me that’s where, when I look at what John and the wider team are really driving with their whole Digital First strategy, it’s really about looking at that end-to-end landscape and looking at those four pillars and really trying to put the customer first on that whole digital agenda.

Vito Labate:

This is really powerful, and I mean clearly benefits for a company or an enterprise as well as the public at large.

I guess where I want to move now is to some recommendations, recommendations for our listeners that they should keep in mind. John, what recommendations do you have for other Energy and Utilities executives. Based on your experience and having gone through this yourself at Scottish Water?

John Cairney:

There’s probably three things that I would say in answer to that one.

The first one, and without doubt the most important one – and Paul’s covered this already – is to start small, prove concepts early without over engineering the outcome.

We talked about multi-function teams, we talked about trying to break down the barriers that exist in large and old organizations, and I think if you are able to focus in on a particular outcome and align that outcome with a particular minimum viable product that Paul talked about then start small, get the right people involved – whatever they might be in the organization – the people who can enable things to happen – prove the concepts early and don’t over engineer the solution.

So, that would be my first recommendation.

My second recommendation would be to seek out people within your business to champion your cause.

So I’m part of a transformed IT department, but it’s still an IT department – but I’m not the one making digital transformation happen – the people  who are doing that are the Business Leaders – the people who own the business functions where there is an opportunity to inject digital transformation or where there is an opportunity to inject a technology that can make a big difference – so find those people in the business whether you call them Product Owners, Product Managers or whatever – find those people and then being them onboard to champion your cause.

So, we’ve transformed parts of Scottish Water by empowering those Business Leaders to make digital transformation happen and I would argue all Paul and I have done is be the catalyst within their organization by bringing along the skills and some of the process so that they can make a success out of it.

I think the third thing I would recommend is something that we did at the beginning of last year, is create the right digital partnerships – so make sure that you’ve got those partnerships, a place to get expert advice, and also help with delivery – making sure that you’re bringing on partners who understand how to deliver at base, how to deliver using agile techniques to get maximum outcome as early as possible.

But whilst you’re doing that, make sure you keep the business intelligence inside your organization, don’t give away the secrets to success, don’t move that intelligence out.

Whilst it’s always good to get advice and guidance from people who are doing this cross industry, and across individual industries – keep that intelligence inside your organization and that way you’ll know your own priorities and what will give the biggest benefit in the shortest time.

Vito Labate:

It’s a tricky balance for sure, but thank you that’s excellent advice for our listeners who are going forward. Paul, for those who have implemented potential solutions, how should they start proceeding to actually scale that within their enterprise?

Paul Haggerty:

I think John touched on this earlier and it’s easy to coin the phrase start small and scale but really I think that whole proof of value, proof of concept, minimum viable product – if you can rapidly establish the viability of an application of the solution, and we’re talking in weeks here – eight weeks, ten weeks.

And at the end of that eight weeks, ten weeks, you’ve developed a business case, you’ve proven the technology, you’ve got a view as to what the right delivery roadmap might be, you might look to scale up that solution within your relevant business because everyone’s at a different starting point – but fundamentally you’ve engaged the business community, the user community – the group that will gain the benefits from the potential adoption of this.

If you can cover those four things: you’ve got a business case it stacks up, you’ve got the technology – it’s validated it’s viable, it’s something that actually  compliments your estate or exploits what you’ve already got, you’ve got a business stakeholder community that absolutely buy in to what you’re going to drive, and you’ve got a roadmap that says – I’m able from minimum viable product to a pilot and a business function or maybe a pilot and a region or some broad functional area – I scale up in an incremental basis and deliver value as I go – then that model – and it tends to break conventional models because they’re not geared in that way – but that model is a way about being able to scale, that scales in a safe way, scale with an outcome, and scale that takes the business with you.

And that for me is ultimately a way of breaking down those barriers.

Vito Labate:

Very insightful, thank you Paul – John, maybe we’ll close with you. What’s next for Scottish Water?

John Cairney:

Well, as I’ve mentioned before, we’ve got our backlog building up in terms of requests for digital transformation in some of the examples me and Paul have talked about – some parts of the business have a hunger now to make the success they’ve had stick, both in terms of scaling them up but also in terms of new business areas.

So the focus for us is making sure that we can deliver that backlog without it getting too big, and without people getting too impatient about wanting to see that change happen, so that’s really a big challenges for us – making sure that we can accommodate the skill that’s needed and that’s where Capgemini helps Scottish Water – in terms of delivering that skill.

And if I think about some of the technology areas we’re working on, we’re looking at a number of initiatives just now around Robotic Process Automation for some of more complex business processes in order to really scale those up in terms of transaction volumes – taking out some of the human tasks that happen in those processes and letting those humans work on more value-add initiatives.

In the capital investment world, we’ve been looking at how can we exploit digital twins in order to have a complete copy of our assets in a digital form in order to do much better preventative, proactive maintenance, understand the impact of changes on those assets, and be able to do so in a safe environment, and also an environment that everyone form our Capital teams all the way through to our Operations teams can see before we actually stick something into the ground.

I would say that we are already quite far down the track on making sure that we’ve got eyes on all of our assets and then being able to take that data and doing something with it centrally so we’re doing an awful lot of work now around leakage prevention, so we’re capturing information on the pressure of our networks, the flow within those networks, and we’re using some really deep data analytics sets and some artificial intelligence in order to help us make much better decisions, and how we manage those networks – that’s shown some real benefits and I expect that to one of the areas we focus on over the next 3-4 years.

My ambition in this area, is that we’ve got all of our digital assets connected in a safe and controlled way, while ultimately creating an intelligent water and waste water infrastructure.

That way we get the insight that we need to shape our operational decisions and also maintenance actions going forward.

So, I think there’s certainly a plan for us to exploit future digital products and services, building up much better intelligence of our assets, getting new insights into the condition, and effectiveness of our infrastructure ultimately leading to better risk management, more efficient management of our capital investment, and delivering a much better service to our customers.

Vito Labate:

Excellent conversation everyone. Thank you to each of you for the insights and the time here on the call.

To listen to other episodes in our series, please visit Capgemini.com/WEMO that’s W-E-M-O and subscribe to the podcast. In the meantime, thank you for listening and look forward to our next conversation.

Learn more

Additional information on Scottish Water’s transformation journey can be found in Paul Haggerty’s article, How to manage digital transformation projects: the Scottish Water story.

And for more energy and utilities insights and analysis, tune into our World Energy Markets Observatory podcast.