The energy and utilities sector is keen on using real-time information, but is it neglecting the customer experience?

1. Leading in real time
An investigation of the impact of real-time business on strategy and management.
1 Cisco Technology Radar / More information at https://techradar.cisco.com
From real-time operations to
customer engagement
4. ENERGIE & UTILITIES
From the outside, it may look like an ordinary
English town. But beneath the surface Tidworth,
in Wiltshire, is on the cutting edge of technology. It is
here that environmental management company Veolia
is piloting what it calls “the smartest water network in
the UK”.
The company has installed hundreds of sensors and
smart water meters across Tidworth’s water mains
and sewers, allowing it to monitor the flow of water
throughout the town in real time. Among the many
potential benefits, this approach allows Veolia UK
to predict pipe bursts before they happen, says the
company’s COO of water, John Abraham.
“This is an ambitious project that could transform our
approach to managing water networks, saving money
and large amounts of water across the country’s
water network,” explains Mr Abraham. “This would be
hugely beneficial for consumers and the environment,
reducing the risk of hosepipe bans and the disruption
caused to homes and communities by burst water
mains.”
The Tidworth project is emblematic of the energy and
utilities sector’s approach to real-time information.
The industry has both a commercial and an
environmental obligation to be as efficient as possible,
so optimising performance and eliminating waste are
key operational objectives.
A global survey by The Economist Intelligence Unit,
sponsored by Cisco, reveals that real-time information
is already an important component of operations
management at energy and utilities companies. More
than three-quarters (77%) of the energy and utilities
executives surveyed say that real-time information
plays a major role in operations management—more
than in any other sector.
The energy and utilities sector is keen on us-
ing real-time information, but is it neglecting
the customer experience?
Written by The Economist Intelligence Unit

2. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55%
% of energie respondents
Process optimisation
Cost reduction
Competitive pressure
Customer demand
Regulatory requirements
59%
59%
43%
33%
26%
What are the key drivers behind your organisation’s
current use / planned use of real-time information
% of energie respondents
2 Cisco Technology Radar / More information at https://techradar.cisco.com
Real-time customer experiences
Compared with other sectors, for energy and utilities companies demand from
customers is a relatively insignificant driver to adopt real-time information.
Integrating real-time data into scheduled
maintenance practices, such as in-line inspections,
provides a more sophisticated view of potential risks
in the pipeline, she explains.
Furthermore, real-time information systems not only
capture operational metrics but also allow companies
to evaluate best operational practices. If one facility
is operating at 97% and another at 83%, real-time
software can capture the best practices of the
better-performing facility and share those so that
other facilities across the world can perform as well,
Ms Haynes-Gaspar explains.
This focus on efficiency is paying
off. Over seven out of ten (72%)
respondents from the energy industry
say senior management’s oversight of
operations has improved as a result
of real-time information, and 63% say
profitability has increased.
Indeed, the pursuit of efficiency is the driving force
behind adoption in the sector. Process optimisation
and cost reduction are the most common drivers for
real-time information initiatives, with each identified
by 59% of executives from energy and utilities
companies respectively (see chart).
The mechanism for this efficiency
drive is improved instrumentation.
The number of connected devices in
the utilities industry has been growing
dramatically at a 45% compound
annual rate between 2010 and 2015.
“The oil and gas industry experiences up to
10% downtime,” says Ashley Haynes-Gaspar,
general manager of software and services at GE
Measurement & Control, a US-headquartered part of
GE Oil & Gas that designs and manufactures sensing
systems and measurement devices.

3. Whereas two-thirds of respondents from
manufacturing and transport companies say that
customer demand is a key driver, only 33% of energy
executives say that this applies to them.
Similarly, just 35% of respondents in the energy and
utilities sector identify enhancing customer service
as a primary goal of their real-time information
initiatives, compared with an average of 54% across
all industries.
The low uptake of new instrumentation at the point
of consumption, such as smart meters on customer
premises, is perhaps a reflection of this lower level
of importance attached to customer demands. While
retailers, for example, are using real-time information
both to introduce dynamic pricing and to offer new
customer experiences, it appears that energy and
utility companies are more focused on internal
considerations.
This strategy could be misguided, as dynamic
pricing, among other benefits, could relieve pressure
on internal infrastructure by regulating demand.
By encouraging consumers to shift their energy
consumption out of peak hours, for example,
dynamic pricing would cut the need for power
stations to run only a few hours a day and enable
them to better control fluctuations in renewable
power supply.
Meanwhile, as household goods are endowed
with more computerised intelligence, fridges, air
conditioners and washing machines could respond
automatically to signals from smart meters, turning
themselves off or down during peak periods.
Customer-facing innovations have the potential
to drastically change the business models of the
energy industry, providing new opportunities for
intermediaries to own the customer relationship.
Numerous third-party start-ups in the field threaten
to shake things up more dramatically and from
below—from software that tracks and analyses
buildings’ energy use, to helping companies
control their energy budgets (Stem), to connecting
thermostats with real-time management control
(EcoFactor), to data platforms that analyse
structured and unstructured grid data to analyse
what is happening on the grid in real-time and make
predictions (AutoGrid).
Focusing on operational efficiency does not
necessarily mean neglecting the customer. “Using
this technology means that customer bills should
reduce over time,” says Veolia’s Mr Robinson of
the Tidworth pilot project. “Failures affecting them
will be lessened, the water shortage situation will
be eased, and generally the disruption resulting
from emergency repairs and water loss will be
dramatically cut.”
“We can also detect and measure leakage in a
customer’s own pipes instantaneously and alert them
before damage is done or their charges escalate,”
says Mr Robinson. “In broader terms, we protect
their environment from disruption and damage.”
Nevertheless, while their focus on operations is
paying dividends, energy and utilities companies
may benefit from paying greater attention to the
potential of real-time information to strengthen their
relationship with customers before someone else
does it first.
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This article, written by The Economist Intelligence Unit
and sponsored by Cisco, examines global organisations’
use of real-time information and its impact on strategy
and management. It is based on a global survey of 268
executives, just under one-third of whom hold positions
in the IT department, while 47% are members of the
C-suite. Respondents were drawn from companies in the
healthcare, transport, retail, healthcare, manufacturing
and energy sectors, 49% of which have annual revenue
over US$500m.