The ongoing COVID-19 pandemic and resulting healthcare situation have accelerated digital disruption in many areas of business. Digitalization has accelerated, and new digital-supported business models have emerged.
The new business models do not come without potential risks for companies, that need to face them as they come.
Digitalization: where does it take place?
Although digitalization is progressing in many fields, we’ll focus on the most crucial ones at the moment. Examples of transformative trends when it comes to business processes and functionalities include:
- Asset maintenance (preventive, condition-based, predictive) and maintenance schedules
- Asset monitoring/smart metering
- Uberization of the service market
- Security constraints (denial of service, ransomware attacks, vandalism)
The impact of digitalization on business
The accelerating technology and digitalization advancements have significant impact on multiple business areas.
They improve productivity and cost-efficiency in the asset management area through connectivity and remote management, automation of processes such as cloud, preventive, condition-based and predictive maintenance of assets, the development of digital twins, use of IoT and remote management, utilization of augmented reality, holograms, assisted video calling powered by knowledge sharing solutions, as well as data analytics/business intelligence.
Digitalization is triggering transformation of business models in B2B and B2C, in terms of production (centralized/decentralized, greater connectivity, more customer-centric), additive manufacturing and supply chain management (on-demand parts transfers – anytime, anywhere), customer engagement (and consequent service personalization and real-time interaction through mobile apps and Customer portals, which need to keep pace with changing client needs), risk assessment, and market access.
Technology and digitalization advancements laid new foundation and fostered new paradigms. For example, when we think about the renewables sector: a large part of infrastructure is not owned by the Utilities companies. The market is opening up to a broader range of competitors including digital solution suppliers, which aim to provide tools to manage solar and wind assets. Some of these tools offer powerful features to manage maintenance, contracts, and data analysis for O&M optimization.
Utilities, which used to be a pillar throughout the value chain, are now in competition with OEMs, which are claiming ownership of the infrastructure and data, and building end to end solutions built on data acquisition, analysis and intelligence. Competition is also on the rise from disruptive players, whose operations are based on new digital technologies such as Virtual Power Plants (VPP). These are cloud-based distributed power plants that aggregate the capacities of DERs (distributed energy resources). VPPs and remote plant monitoring offer real-time management and optimization of a virtually aggregated portfolio of generators with regard to consumers, suppliers and grid operators (operators of VPPs are called aggregators).
Digitalization is bringing new business models to life
Digital platforms are the foundation of new business opportunities, which enable provision of Utilities services in a disruptive way.
XaaS (Anything-as-a-Service) models offer companies unprecedented opportunities to scale up, provide new products and offer a better, more tailored experience to customers, therefore enabling monetization of new revenue streams. A few examples:
- Solar power-as-a-Service
- Clean water-as-a-Service
- Waste water treatment-as-a-Service
Legacy vs. Data: what’s more beneficial for Utilities?
Utilities are now facing a very complex challenge. On one hand, they need to reduce the cost structure of their legacy install-base, and optimize and rationalize their global digital footprint.
On the other hand, they should also use this unique opportunity to leverage their long operational history, acquired knowledge, and ability to utilize their most valuable digital asset: data.
On the brink of the new era, one thing that is certain is the need to form close partnerships between business and technology. Increasing technology’s impact on business requires integration, collaboration and understanding between the technologists and business executives.
Digitalization: main areas to address
As far as the discussed transformative processes go, they concern three broad themes:
Industrialization and focus on unit cost and productivity
We observe huge growth of private and public clouds. Businesses followed a journey from dispersed or fragmented data, through centralizing data in data centers, eventually moving to the cloud. According to research, out of 100 buy-side firms with AUM of $10-100 billion in Europe and North America, 52% are currently using the cloud, and 28% are considering doing so in the next 12-18 months.
Another interesting subject is the use of big data and machine learning (ML), the development of which will lead to enhanced forecasting, especially when it comes to examining patterns and trends (such as peaks and troughs in utility demand).
The initiatives that provide a more customer-centric experience (CX and hyper-personalization) are proving that, thanks to this approach, engagement is more intuitive and tailored to each customer’s specific profile.
Aside from this, the company can also benefit from a business ability to launch products more quickly and follow customers’ shifting demands.
Organizational transformation refers to the ability of companies and their workforces to adapt, learn, and respond to new opportunities, new risks, and more complex regulations. It leads to building a more agile and responsive organization that is de-layered and focused on learning.
This means that providing the education and skills training to succeed in the digital era is largely the responsibility of industry players. Improving access, opportunities, and affordability of education, learning, and training, ensures that the free enterprise system continues to meet the needs of society.
Growing customer needs, accelerating demand for digitalization, and increasing competition may sound overwhelming, but they don’t need to be. If you’re facing challenges when it comes to digitizing your business, let us help. Contact our FSM team to discover an easier way into this transformation.