How to do it? Digital transformation in Energy & Utilities

Transcription

1 How to do it? Digital transformation in Energy & Utilities Graham Butler Vice President Energy, Utilities and Environment, Europe 15 May 2017 Prepared for IBM Watson Warsaw Summit

2 Technology Disruption Utilities are disrupted by four types of technology I. Energy Technology II. Consumer Technology Distributed Energy Resources Solar PV Embedded Systems Fuel Cells Electric Vehicles Microgrids Automated Demand Response Process Equipment Storage Wind Disruption Smart Appliances Lower marginal cost of production Empowered consumers have viable alternatives at grid parity Digitally enabled business models emerge (asset-light ecosystems) LED Lighting Prosumer Enablement Social Networks Convergence of Industries Cognitive Computing Blockchain Big Data & Analytics Smart Grid/Grid Digitization Situational Awareness Internet of Things Mobile Cloud IV. Grid / Operational Technology III. Information Technology 2

3 Energy & Utilities Industry Model Shift The Energy & Utilities industry model is fundamentally shifting and becoming a decentralized one. As a result, more and more assets are stranded, raising financial pressures on incumbents Traditional Industry Model (Centralized) Today s Industry Model (Hybrid/Dual) Possible Future Industry Model (Decentralized) 3

4 Future Energy & Utilities Industry Models Emerging new business models transform the traditional utility value chain by integrating energy on the back of more flexible and digitally enabled ecosystems/business platforms Microgrids Generation Trading Transmission Distribution VPP Retail Distributed Generation Renewables Commodity Generator VPP O&M Grid Grid Developer Healthcare Elderly Care Energy Micro Generation Energy Aggregation Energy Exchange Storage Microgrid Grid Manager Metering Telco Mobility Home Experience (B2C) M&E Home Automation Gentailer Demand Response Forecasting EV DER Insurance Security Asset Analytics Energy Data Information Weather Customer Intelligence Facilities Mgt Usage Monitoring Business & City Experience (B2B/B2G) Energy Efficiency Energy Audit Optimization Marketing Traffic Information EPC Energy Mgt City 4

5 Utility Key Imperatives Focus on cost efficiency, and on redefining the future role in the transformed industry model Optimize Work & Asset Management Performance Innovate Business & Operating Models Redefine Customer Relationships & Partnerships Long-term investments into capital intense assets requires continued focus on maximizing the commercial returns from the asset base, and on striving for maximum operational efficiency across the entire enterprise. Disrupt or be disrupted incumbents must embrace the fundamental industry shifts as a strategic opportunity to innovate both their business and their operating models in a transformed industry with different market roles. Regardless of their specific market role, utilities must engage with empowered customers prosumers and partner for capabilities in a decentralized industry model to crystalize new (digitally enabled) opportunities 5

6 MOTIVATION MOTIVATION MOTIVATION MOTIVATION Energy and Utilities Business Ecosystem and Sourcing Trends Strategic Partnering and Full Alliancing are business models increasingly being adopted to build scale in order to drive innovation and deliver business outcomes Traditional Preferred (Project) Partner Strategic Partnering Full Alliancing Competition Cooperation Collaboration Coalescence Transactional Transactional Long Term Long Term Risk Transfer Little Innovation Reactive Risk Mitigation Limited Innovation Mixed Responsiveness Risk Sharing/Reward High Innovation Proactive Risk Embracing/Risk-Opportunity- Incentive Pool High Innovation Highly Proactive Each side has clearly established responsibilities Little or no trust Disputes, when they occur, often resolved adversarially Each side knows and commits to the goals of the project and to each other s goals Requires a degree of trust Disputes typically resolved in some degree of compromise One integrated team consisting of both client and vendor personnel Early involvement in design lifecycle, fosters innovation Requires high degree of trust Team has one set of goals for a successful program with shared risk/reward Integrated into whole project lifecycle Total alignment around driving mutual goals and sharing gains and liabilities for failure All sides share their goals, their cost and the profit (joint alliance profit pool) Requires extremely high trust EXTENT EXTENT EXTENT EXTENT 6

7 Business Ecosystem Example Thames Water sourced an alliance structure and capabilities focused on outcomes IA Minimum to provide the required capability TTA Enough to provide the required diversity, resilience & redundancy 7

8 Executing Strategy through Innovation Ecosystems Sourcing ecosystems around capabilities, behaviours and incentives drives innovation. Delivering innovation means strategy execution in terms of digital, disruption and customer experience Collaboration Delivering Sourcing Agility INNOVATION Outcomes Behaviour ECOSYSTEMS Incentives Capability Digitisation STRATEGY Experience Disruption 8

9 Ecosystems: Commercial & Sourcing Approach Sourcing Innovation Ecosystems requires a fundamentally different entrepreneurial approach I. Short-list Ability to Deliver Capability Track Record II. Down-select Differentiated Value Innovation Unique capabilities IP III. Select Partnerability Culture Collaboration Behaviour Leadership We re building a business not writing a contract Define outcomes not inputs / outputs Insource capability not outsource work Shared Risk / Reward Incentivise performance and behaviour Focus on governance 9

10 Thank You Page 10