Utility Week

Utility Week 24th February 2017

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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UTILITY WEEK | 24TH FEBRUARY - 2ND MARCH 2017 | 19 Operations & Assets UTILITY WEEK | 24TH FEBRUARY - 2ND MARCH 2017 | 19 Operations & Assets Market view T he political turmoil of 2016 has led us into 2017 as a year that holds unknowns. Forty-seven per cent of the utility and manufacturing sector does not believe their organisations will exist in their current form by 2021 in the wake of digital disruption. What is certain is that the technology landscape will continue to be a hotbed of innovation and exciting new developments, driving industry 4.0 in this digital revolu- tion. As a result, new opportunities will arise for utility companies, which can adapt their business models, enhance their value, estab- lish new services and move them into the era of "servitisation", powered by the Internet of Things (IoT). For many years we have seen an increase in the number of internet-connected devices, and by 2020 we expect to reach the 20.8 bil- lion mark. Through the adoption of IoT, utilities and manufacturing companies can harness connected elements to aid them with preventive or condition-based mainte- nance, which in turn can drive efficiencies and remove unnecessary costs. The market is incredibly competitive, with margins tight and purse strings constantly being tightened. As a result, companies have to identify new opportunities to differenti- ate themselves. This notion of servitisation will therefore increase, as IoT becomes more widespread throughout the industry. Utility and manufacturing companies must look at how they can digitally trans- form their business models to provide ser- vices that can enhance and add value to their product offerings. For example, if com- panies provide internet-connected pipes and boilers, they can monitor their efficiency in real time and automatically alert the sup- plier if they are going to fail or become inefficient, automatically calling out an engineer to repair it and alerting the cus- tomer using new devices such as Amazon Echo and Alexa. Not only does this pose an opportunity to increase revenue, it also ensures the entire service a customer needs (such as mainte- nance, spares and expertise) is delivered. Maintenance service will be performed on customers' appliances before any damage occurs, utility companies will free up time for their engineers because real-time effi- ciency will increase productivity; moving from time-based to condition-based mainte- nance in the process Today, more machines are being built with their own IP addresses, and as a conse- quence the need for tougher and more robust security measures is crucial. Although IoT offers a range of new possibilities for busi- nesses, it comes with the unavoidable expo- sure to an attack. With a need to increase cybersecurity measures, the industry will move away from home-made solutions where organisations have built their own systems for managing the remote working of IoT devices because this will not be appropriate in the future. In its place, businesses will start to adopt com- mercial platforms rather than building their own. These platforms will embed best prac- tices, meeting the scalability and security requirements that they will inevitably need to keep them secure. 3D printing The cost of mass deployment of IoT has, until now, been high because of the cost of parts. However, thanks to advances in 3D printing, manufacturers will be able to harness the technology and print electronic components, which will change the cost of producing cus- tom and low-volume IoT sensors. As a result, the variety of solutions available to manufac- turers and utility companies to implement on their products will increase, and make the move into the servitisation era much more affordable and manageable. If utility companies and manufacturers wish to capitalise on the new opportuni- ties that IoT and the increase in domestic demand have to offer , they have to be savvy to the ways in which they can adapt and advance their business. By seeking the right initiatives through harnessing IoT, they can create new business models that differentiate them from other market players and give them longevity in such a disruptive market. Ultimately, those that are agile and embrace it will reap the rewards in the years to come. Graeme Wright, associate director for manufacturing, utilities, and services, UK and Ireland, Fujitsu IoT and 'servitisation' IoT has been bubbling along for some years, but it will soon explode into action, and utilities have to be at the forefront of the revolution or they could be left behind, says Graeme Wright. Key points By 2020, it is forecast that there will be 20.8 billion IoT devices worldwide. Utilities can use IoT technology to create value-added services such as monitoring and alerts. Cybersecurity will be more of an issue as more devices go online and hacking gets more sophisticated. Utilities will have to move away from home-grown cybersecurity to employ specialist third-party suppliers. Those utilities that embrace IoT and the possibilities it offers will prosper in the new era of "servitisation". Internet of Things units installed base by category (millions) Category 2014 2015 2016 2020 Consumer 2,277 3,023 4,024 13,509 Business: Cross-Industry 632 815 1,092 4,408 Business: Vertical-Specific 898 1,065 1,276 2,880 Grand Total 3,807 4,902 6,392 20,797 Source: Gartner, November 2015

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