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Operations & Assets UTILITY WEEK | 15TH - 21ST JULY 2016 | 25 Market view A s we well know, the world has changed and continues to change. In business, death is coming more quickly than ever before, with the average lifespan of an S&P500 company now only 15 years. And if one looks at the BrandZ top 100 brands, only 42 remain from ten years ago. In society and in particular the UK energy sector, there's a paradigm shi occurring, as we move to a new sensory era with technol- ogy at its core. For the UK energy sector, this is impacting internally and externally. Firstly, there is the huge task of installing 53 million smart meters by 2020. Secondly, new market entrants who have created busi- ness based on innovative technology with promises of reduced costs and improvements in customer service are becoming more fre- quent, thanks to recent market deregulation. Industries such as banking, retail and media have been feeling it for a few years now, but for the utilities industry, disruption is gathering a lot of momentum. A recent Cisco report recognises this exponential opportu- nity, stating "utilities will be one of the fastest developing sectors in the next 20 years". All of which points to the need to think exponentially about digital transformation. This means thinking ten times better, faster and cheaper, in the same way the new, digital-first disruptor businesses do. It's also about re-imagining the linear process of business. The opportunities and challenges are huge, so it is far more than just adapting the model of today, it's about finding com- pletely new ways of doing things. To win, companies must have a relentless focus on the consumer. This is what the new disruptors understand. They also understand that the exponential opportunity lies with having a better relationship with technology. Beyond the technology challenge, there is the relationship with customers. Control is shiing to the consumer. UK energy retailers are losing as many customers as they gain each year (IDC Energy report). In a commod- ity market, building loyalty is a challenge to the established suppliers and leads to dis- trust and apathy from consumers – some- thing which is hard to change. With many in the energy sector claim- ing the Competition and Markets Author- ity's report will not make the energy market work any better for consumers, improving customer engagement through digital trans- formation could prove to be business critical. The digital way forward Here are our top tips for successful digital transformation: 1. Being 'in service' to your users is all about connection. Use digital platforms to not just communicate with customers but to understand their needs and the opportunities to connect. 2. Deliver an improved experience through smart environments. Raise the bar of expectations through all sorts of smarts; smart technology, smart cities, smart homes, smart meters, smart grids, big data and the Internet of Things are fundamentally chang- ing the role of utilities and how they operate. Get experts on the scene quicker with, for example, Microso's Hololens and idea of Holoportation; you don't need the expert there physically – you can give advice virtually. Next- generation artificial intelligence that combines the best of machine and human interaction can be a cheaper and more efficient way to deliver improved customer service. A key thing to consider is when to roll out innovations. Google's acquisition of Nest has come under scrutiny lately, begging the ques- tion: "Is the mass market ready?" A recent PwC study would suggest not; 72 per cent of respondents did not foresee adopting smart- home technology in the next two to five years. 3. Real-time data means real-time choice and real-time control. As smart meters roll out, consumers are able to make more informed choices about their energy use and can reduce their bills. But while delivering benefits, smart meters have not yet been a massive differentiator because it has been a challenge for people to understand the data and put it to good use – this is changing. 4. Loyalty comes from a joined-up, data- driven customer experience that is easy for customers to navigate. To act on and extract meaningful information from the mas- sive amount of data, you need a joined-up communications platform. Marketing initia- tives need to be agile to respond to customer needs and data must be shared internally to use it in the most efficient way possible. By having a smart relationship with tech- nology, suppliers will be able to add value to their existing relationship with customers. Anya Collingwood, head of digital transformation, MediaCom UK Time to digitally transform Having a smart relationship with technology allows energy suppliers to add value to their relationship with customers. Anya Collingwood offers top tips for successful digital transformation. QUARTERLY DOMESTIC INSTALLATION ACTIVITY FOR LARGE ENERGY SUPPLIERS 2012 Number of meters installed (000s) 600 500 400 300 200 100 0 Q3 2013 2014 2015 2016 Q4 Q1 Q3 Q2 Q4 Q1 Q3 Q2 Q4 Q1 Q3 Q2 Q4 Q1 Overall installations 2.61m 1.54m 1.07m Gas smart meters Electricity smart meters All smart meters Domestic installations by large suppliers Marks the inclusion of additional large suppliers to the series Source: Decc