http://www.capgemini.com/digital-utilities Perry Stoneman, Smart Energy Services & Utilities Global Sector Leader, and Philippe David, Leader of Digital Utilities Transformation, provide in this webinar the rationale for utilities to take a closer look at Capgemini Consulting’s Digital Utilities Transformation initiative. We also share key research findings from the MIT Center for Digital Business on significant trends in digital management practices. Marcus Torchia, Research Manager from IDC Energy Insights participated as a guest speaker and provided business, regulatory conditions and predictions in the North American utilities space.

1. 2013: The State of Utilities
and What Could be on the
Horizon?

2. 2Copyright © 2012 Capgemini Consulting. All Rights Reserved
DUT Why Now – The world is changing
 Cloud, the Internet of Things, mobility, social media, big data, and process digitization
are among the main ingredients of Capgemini's Digital Utilities Transformation
program, a framework created to prepare and assist utilities in reinventing themselves
via disruptive digital technologies.

3. 3
Presentation Title | Date
Copyright © 2012 Capgemini Consulting. All Rights Reserved
What if we didn’t do Smart Energy Services
SESProjects
2005 20062002 20082003 2004 2009 2010 2011 20122007 2013
NESA
Elnät
North America
Experience Reduces Risk
 First Metering strategies / AMI market assessments with
clients in 2002
 Today, we provide Smart Energy Services to over 75
utility clients around the world, representing 113 million
metered customers actively engaged in smart energy
programs including directly managing mass deployment
programs for over 23 million smart meters
 Among analysts, we are ranked as a leader in smart grid
and advanced metering infrastructure solutions

4. Marcus Torchia
Smart Grid
May 7, 2013
2013 North America Utility Market Update and
Top 10 Predictions

5. State of the Industry
 Business and Regulatory Conditions
 IDC Energy Insights 2013 Top Ten Predictions -
North America
4

6. Energy Consumption Down, Expected to Remain so in
Short Term
 Electricity: Economic recession continues to affect growth
 Natural gas: Recession effects are partly offset by greater use of natural gas for power
generation
5
Business and Regulatory Conditions

7. Natural Gas Overabundance; 2013 Gas Spot Prices
Remain Low
• Historic levels of gas in storage
• Export business not expected to take off for several years
• Customers are seeing lower bills…..
6
Business and Regulatory Conditions

8. Customer Satisfaction Mixed
 JD Powers 2012 Residential
Customer Satisfaction Survey
 Both gas and electric utility types due to
lower bills
 However, satisfaction with power
quality and reliability – the largest
factor in satisfaction scores –
declined by 13 points from 2011.
7
Business and Regulatory Conditions

9. Large Capital Project Investments are Needed
Generation:
 Aging plants at end of life
 Not economical due to low gas price relative to coal
 Higher maintenance costs for coal plants being cycled
Transmission:
 Accommodation of renewable generation sources driven by
state RPS standards
Emissions:
 Proactive investments in scrubbers and other technology
 With elections over, more regulatory certainty and
enforcement
Distribution:
 Replacement projects for pipeline integrity
 Connection to shale gas resources
 Smart grid investments in distribution automation and smart
metering integration
8
Business and Regulatory Conditions

10. Utilities Requesting More Cost Relief
Why? infrastructure investment, rising operation and maintenance costs, new
rate mechanisms, replace loss in revenue
 A mix of rate case and rate adjustment requests
 18+ states approved recovery of gas pipeline integrity through cost adjustments
• Utilities asking, and getting, less
return on equity (ROE)
• ROE 11.5% in 2000 > 9.5% 2012
• PUC reluctant to approve increases in
times of economic hardship
Source: SNL Energy, 2012, as cited in EEI monthly rate case
report.
9
Business and Regulatory Conditions

11. Natural Disasters and Extreme Weather Put
Pressure on Utilities
Hurricane Sandy:
• 8.7 million without power
• Gas distribution shut off due to flooding
Tropical Storm Irene: “[Utility] performance in the aftermath of the 2011 storms was
deficient and inadequate in the areas of outage and service restoration preparation,"
- Connecticut Public Utilities Regulatory Authority
Significant U.S Grid Weather-Related Grid Disturbances
With Inset of Non-Weather- vs. Weather-Related Outage
Comparison
Source: Electric Grid Disruptions and Extreme Weather. See
http://evanmills.lbl.gov/presentations/Mills-Grid-Disruptions-NCDC-3May2012.pdf.
Notes: Historical “Grid Disturbance” data from the U.S. Department of Energy,
Energy Information Administration. Form OE-417, “Electric Emergency Incident and
Disturbance Report” (and before 1978 from the National Electric Reliability Council,
Disturbance Analysis Working Group).
10
Business and Regulatory Conditions

12. Share of Intermittent Resources on the Grid
Increasing
 PV industry enjoying strong
growth in U.S.
 Overall PV penetration low,
pockets of high penetration
 Concern about the impacts of
high penetration PV has utilities
taking action
 Increase in wind generation
hinges on the production tax
credit
Source: Sunshot Vision Study, Department of Energy,
February 2012
11
Business and Regulatory Conditions

13. Where Does that Leave the Industry?
 Need to convince customers and regulators on rate increases for infrastructure
investments.
 Expect close scrutiny of rate increase proposals and even operating and
maintenance expenses ‒ utilities must pay more attention to efficiency.
 Rate increases will fund capital investment in infrastructure, rather than IT.
 Building owners and operators have more options for energy savings if they can
take advantage of market pricing of gas and electricity
 Distribution operations need to plan for more dynamic demand/supply
 Next stage of smart grid roll-outs underway and still tackling NERC Critical
Infrastructure Protection (NERC CIP).
 Utility IT and Lines of Business working closer together to solve challenges and
create business value with technology…..
12
Business and Regulatory Conditions

14. New Technology Playing an Evolving Role in Utilities
Big Data and Analytics
• Availability of technology pioneered by Google and Amazon
Mobility
• Consumerization of IT and the desire of employees to use smart devices
Cloud
• Services available at lower cost, quick implementation
Social Business
• The communication channel of the next generation
13
Business and Regulatory Conditions

15. North America Utility Industry 2013 Top 10 Predictions
1. Utilities Will Make Outage Prevention/Readiness/Response a
Top Priority
2. Smart Electric Meter Shipments Will Fall Below 9M Units
3. In Next 5 years, Consumer Spending Will Transform Home
Energy Mgmt
4. By 2017, 70% of AMI Systems Will Integrate to a Distribution
Control System
5. Utility Incentives will Drive $160M in Smart Building
Technology Spending
6. Utilities Have Breathing Room as PEV Penetration is Lower
than Expected
7. Security Practices in 2013 and Beyond will Center on Risk
Management
8. CIOs will Focus on Bringing Business Efficiencies through IT
Initiatives
9. Marketing & Customer Ops Will Increase Efforts in Social
Business
10. North American IT Spending will Grow at 4.92% over the Next
Five Years
15

16. Questions and Future Requests…
16
Marcus Torchia
mtorchia@idc.com
508-988-7571

17. Webinar with IDC
Digital Utilities Transformation
 May 7th, 2013

18. What is digital maturity?
18
Digital Intensity Transformation Management Intensity
Technology-enabled initiatives in:
• Customer Experience
• Internal Operations
Leadership capabilities including:
• Vision
• Governance
• Engagement
• IT-Business Relationships

19. Four levels of digital maturity
19
Digitalintensity
Transformation management intensity
CONSERVATIVES
•Overarching digital vision exists, but
may be underdeveloped
•Few advanced digital features, but
traditional capabilities may be
missing
•Strong governance across silos
•Taking active steps to build digital
skills and culture
BEGINNERS
•Management skeptical of the
business value of advanced digital
technologies
•May be carrying out some
experiments
•Immature digital culture
FASHIONISTAS
•Many advanced digital features
(such as social, mobile) in silos
•No overarching vision
•Underdeveloped coordination
•Digital culture may exist in silos
DIGIRATI
•Strong overarching digital vision
•Good governance
•Many digital initiatives generating
business value in measurable ways
•Strong digital culture

20. Digitally-mature companies have significantly better financial performance*
20
-11% +26%
-24% +9%
Basket of indicators:
• EBIT Margin
• Net Profit Margin
Profitability
-12% +12%
-7% +7%
Basket of indicators:
• Tobin’s Q Ratio
• Price / book ratio
Market Valuation
* Average performance difference for firms in each quadrant versus the average performance of all large firms in the same industry
for the 184 publicly-traded companies in our sample

21. An Industry in profound transformation
Drivers of change at play
21
EnergyTransition
Number of connected
devices (meters, grid sensors,
actuators, home connected devices, smart phone, etc.)
Digitally enabled extended event driven
business processes
BAU Utilities internal
business processes
Smart
infrastructure
& Internet of
things
Digital Utilities
Now
Regulatory push
Cost / Efficiency pressure
“Decentralized generation, prosumers – customer & communities participation, energy
storage, electric mobility, energy efficiency, passive house & building, islanding, micro-grid
and tied-micro-grid, re-municipalization, active distribution network, cloud energy,
disownership, etc."

22. The transformation of the industry will generate abundance of data comming from new
sources
Simplistic views of evolution of information and implications
22
Information Technology is not an issue
Your business processes may be redesigned using IT as an accelerator, no more as a constraint!
Human context
information
ET : Energy
Technologies
Kwh
Internet of
things : OT
IT : Information
Technology
 Big Data technologies allow you to
handle data with no limit at limited
cost
 Why shouldn’t you be able to
handle with Terabytes of data of
less?
 In-memory means performance is
no more an issue
 Why not having BI analytics during
the transactional Business
process?
 Cloud seams to be designed for Big
Data!
 Why waiting months to have new
Hardware?

23. Over-simplistic “AS IS” regarding IT in Utilities
Two separated worlds
Business managers and IT managers far apart
Data
processing
Data Persistence
Real time Near Real time Batch
Scada
Data
historian
ERP
NostorageStorage
GIS & Co

24. Future landscape leveraging key digital technologies
Integration and move toward real time operation
Data
processingReal time Near Real time Batch
Scada/
OT
Data
historian
NostorageStorage
ERP
BPMS
In Memory
Streamdata
CEP*
CEP = Complex Event Processing
Integration
OT/IT
Business managers and IT managers hand in hand
Data Persistence
Big
Data
Internet of
things : OT
Human context
informationET

25. All-Channel Experience is there not only for customer
New steps toward consumerization of IT
CollaborationInternet
Role of managers in a flat / extended organizations ?
All Stakeholders experience
Employees
experience
Customers&
Communities
experience
ATAWAD
Phone / Tablet as front end of the cloud
HtoMtoM
Open Data

26. New (not totally) ways at looking at IT system / Open Architecture « Phase 1 »
26
Orchestration & Integration Layer
BPMS BRM …. MDM
Application & DataLayer
ERP CRM Billing….
Personalisation &
Interaction layer
Channel service layer
Apps Call Web … Mail
AppsService
layer
Data
management
Agility
Experience

27. New (not totally) ways at looking at IT system / Open Architecture « Phase 2 »
27
Orchestration & Integration Layer
BPMS BRM …. MDM
Application & DataLayer
ERP CRM Billing….
Personalisation &
Interaction layer
Channel service layer
Apps Call Web … Mail
AppsService
layer
Data
management
Agility
Experience
Data access
Collaboration / Extended
Business processes
New channels
DATA
DATA
DATA
DATA
DATA
DATA
DATA
Human
context
information
ET : Energy
Technologies
Internet
of things :
OT
IT :
Information
Technology
Open data
sources
CEP / R

28. .. the Capgemini H-Model and the various options in delivery models
28
Orchestration & Integration Layer
BPMS BRM …. MDM
Application & Data Layer
ERP CRM Billing….
Personalisation &
Interaction layer
Channel service layer
Apps Call Web … Mail
Apps Service
layer
DATA
DATA
DATA
DATA
DATA
DATA
DATA
Human context
information
ET : Energy
Technologies
Internet of
things : OT
IT : Information
Technology
Open data sources
Governance
Layer
Configuration
Management
Business
Service
Management
Data governance
IT Service
Management
Security
Layer
Authorisation
Authentication
Logging &
Auditing,
Reporting
….
Speed
Value
Industrialisation
Costreduction
APPLICATIONS
LIFE CYCLE
DE-CAPEXIZATION
SaaS
PaaS
IaaS
Time To Market

29. Transform to the power of digital
Key takeaways ...
29
Key words for success
 Digital customer (30 seconds to engage &
3 seconds to pay)
 Personalization leads to loyalty
 Natural language, question driven
interface, Human to machine and
machine to machine
 Real time operation / Time is of value
 Proactivity
 Lean & ExtendedProcess Management
(breaking up silos)
 Open / Outside-in (architecture,
extended business process, etc.)
 Decapexization – disownership
 Simplicity, Simplicity, Simplicity
... and transformational impacts
 Drastic reduction of middle management
and layers in organizations (Lean)
 Business Process assembled on the fly
based on events (« Digital lean »)
 Analytics within the process (millisecond
issues)
 Field operators to become mobile
knowledge workers
 New capabilities : mathematicians for
business rule based / Data Scientist
language R
 Ecosystem – stakeholder management as
key capabilities

30. We suggest to launch a Emergence phase to structure the way to go about becoming
Digirati
Suggested content of the Emergence phase
30
Rassembling the pieces and making them fit together Confirm & launch
3 day ASE
Scan Focus Act
DIGITAL TRANSFORMATION
ROADMAP
(Vision, Organization, Governance
including IT-Business relationship,
Change Management )
Minimum 2 months
Business
driven POCs
with BCase
Digital
“Architectural
Models”
(open)
Data
Governance
Specific
Digital roles
(CDO?)
Acquisition
and
Organization
of Digital
Capabilities
Potential
Business
Impact per
core activity
Cultural
barriers &
Communities
management
Existing
Digital
initiatives /
Innovation
Disruptive IT
delivery
models
Digital
awareness for
Decision
makers
From Business
view
From IT
view

31. 31
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Copyright © 2012 Capgemini Consulting. All Rights Reserved
Questions
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32. Copyright © 2012 MIT CDB and Capgemini Consulting
Thank you for attending today’s webinar!
Learn more about Capgemini at:
www.capgemini.com/utilities
www.capgemini-consulting.com