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22 | 23RD - 29TH OCTOBER 2015 | UTILITY WEEK Operations & Assets Market view W ithout innovation, growth (or even mere survival) is a long slog of trying to expand market share. A recent survey commissioned by Utility Week (see 18th September issue) gathered views on the levels of innovation in utility companies, and while more than half of respondents felt enough was being invested in innovation, most respondents expressed concern about the availability of skills to support this inno- vation. So let's unpick where the investment in tools and skills to support innovation is best directed. Investment Investment in innovation by utilities is reflected in market data. Innovation of all kinds involves adopting new technologies, not least acquiring specialist engineering soware to design, manage and operate new tools and processes. Therefore track- ing investment in this technical applications soware is a useful proxy for monitoring lev- els of innovation. Chart 1 shows that across all of northwest Europe, spending on design and engineering technical applications is significant across all industries. Technical applications soware is a wide-ranging group of tools and includes: computer-aided design, engineering, and manufacturing soware; product life cycle management soware; building information modelling soware; geographic information systems; and visualisation tools. The architecture, engineering and con- struction (AEC) industry is far and away the largest investor in technical soware, but this class includes many of the engineering service providers subcontracted by utili- ties. Even so, the utility sector itself is in the top five of industries spending on technical applications across northwest Europe. In the UK the view is similar. Chart 2 shows the same information, but for the UK alone. Again, AEC is the biggest spender but the number two in the UK is utilities, with spending greater than aerospace and defence, automotive, and machinery. This is perhaps a reflection of the decline in engi- neering industries in the UK, but also of the level of investment in technical applica- tions – and therefore, we can argue, in the support of a key part of innovation, namely, maintaining and improving assets, and asset management. A different way of viewing this is to look at what proportion of value-add different industries spend on technical applications. Chart 3 takes the average proportion as 100 and shows the relative position of other industries. Utilities are just below that aver- age, but ahead of the high tech and process/ pharmaceutical industries. So, for example, the absolute spend by the automotive sector (chart 2) is less than the telecoms/utilities spend. But as a proportion of value-added, automotive spend (chart 3) is greater than tel- ecoms/utilities. This indicates the larger role of technical applications soware in automo- tive compared with telecoms/utilities. Integration Improving communications with customers is at the heart of many utility growth strate- gies. As a result, it drives much innovative change as utilities reach out to keep custom- ers informed (and therefore safe), happy (and therefore unlikely to switch supplier), and up to date with relevant offers (and therefore likely to purchase). When unplanned outages occur, as they inevitably do when winter storms hit, keep- ing customers informed about the progress towards getting the lights back on is one of the most effective ways to keep those same customers happy. Even if the power is not back on for several hours, having tools to know that and to share that information with customers enables utilities to make appropri- ate plans. If the message is "it might be any- time", it might as well be never. Those companies that are most effec- tive at communicating with their customers are those that can draw together data from multiple sources – network status, weather, Tooled-up for innovation? Utilities recognise the importance of innovation, but are they investing in the right skills and tools to support it? Christine Easterfield analyses market data to find out. CHARTS 1&2. SPENDING ON TECHNICAL APPLICATIONS CHART 3. INDEX OF TECHNICAL APPLICATIONS SPENDING AS A PROPORTION OF VALUED-ADDED AEC Aerospace and defence Automotive Consumer goods High tech Machinery Process/pharma Public sector Services Telecoms/utilities Transportation 1,500 750 0 € million € million 500 250 0 350 300 250 200 150 100 50 0 AEC Aerospace and defence Automotive Consumer goods High tech Machinery Process/pharma Public sector Services Telecoms/utilities Transportation € million Northwest Europe UK Source: Cambashi 2015