Utility Week

UTILITY WEEK | 2ND - 8TH MARCH 2018 | 27 Operations & Assets Market view T he utilities sector has been notori- ously slow to embrace data analytics, but the progress it has driven in other sectors has demonstrated just much of an impact it can have. Despite the restraints that a naturally monopolised market can have on its resident businesses, utility giants are increasingly turning to data analytics to drive improvement in terms of know your customer, customer service and business decision-making. Data analytics has revolutionised all man- ner of industries. Ranging from finance to beauty, the application of analytics to both new and historical datasets was initially led by businesses looking to differentiate them- selves from their competitors. The benefits of data analytics are clear: data interpreta- tion allows company leaders a much deeper understanding of the many facets within their business. This includes: the efficiency of their production processes; the behav- ioural patterns of their customers; and the efficacy of their business procedures. The impact these insights have had on operations is so critical that data analytics has become a fundamental part of running a business in a vast range of industries. The uniqueness of utilities The utilities sector has been noticeably slow to incorporate analytics into its business processes and this is most likely a result of the market's unique nature. As a sector dominated by natural monopolies, and sub- sequently subject to rigorous and compre- hensive regulation, the utilities market does not feel upward competitive pressure in the same way that others do. The finance market, for instance, saw dis- ruptive start-ups entering the market offering customers innovative solutions that chal- lenged those offered by some of the market's biggest players. As a result, market leaders had to be adaptive and react to firms who were making better use of data than they were in order to retain their competitive edge. However, the natural monopoly model leaves little room for new challenger firms and, as such, the utilities sector has not experienced the competitive pressure that has forced other industries to adapt technologically. Paradoxically, the monopolistic nature of the biggest firms in the industry means the datasets available to them are much larger, and as such much more insightful, than those accessible by firms in more contested markets. With such a large and diverse cus- tomer base, the data that the utilities sector is privy to could theoretically provide analy- sis of behavioural patterns from virtually every cross-section of British consumers. Further, the lack of competition in the market has allowed the technology these firms do implement to exist as closed-loop. Where other markets rush to develop their technology so it is compatible with the latest soware and methods, the utilities market has been able to function comfortably with dated and inflexible systems. The efficacy with which other sectors are harnessing the power of data analytics has illuminated to the utilities sector just how useful it could be to them. The data revolution is coming The industry has already started taking steps in the right direction, adopting data analyt- ics in three of the biggest areas: know your customer; customer service; and business decision-making. Understanding patterns of consumer behaviour helps businesses allocate their resources in a way that is not only the most efficient but also tailored to the needs of their customers. A leading water provider recently employed PwC to implement a data analyt- ics system to help them understand which of their customers were eligible for social tariffs, and therefore more prone to falling into debt. By understanding their customers in this way, the company can see where its resources are best allocated. Customer service is another area where utilities have been rolling out data analytics. The lack of product diversity within the industry means firms must distinguish them- selves by the quality of the service they pro- vide. Data is being used to solve individual customer problems – for example, cus- tomers can log online that their power has failed and an aggregation of similar logs in a specific geographic area will quickly flag to engineers that there is a problem that needs addressing. This allows the business to understand where best to focus its resources and, as a result, maximise the qual- ity of the service they provide. Making com- plex decisions is the final major area where pro- gress is already being made within the industry in terms of data analytics. All the sub-sectors within the utilities industry rely on machinery and hardware for the delivery of their goods and its mainte- nance is expensive. This means the decision to repair, replace and update the machinery is a complex one. Data analytics can help by providing comprehensive reporting to sub- stantiate and inform the case for a business solution. "Dumb sensors" are fitted which quantify the operational functionality of each machine and are reported to business leaders for analysis. This application of data helps businesses make decisions in con- fidence, preventing them from potentially wasting time and money. The utilities sector has been able to oper- ate with outdated technological systems for much longer than many others because of its monopolistic structures, but the benefits data analytics offers are becoming too great to ignore. With incremental but significant steps being made in the industry to incorpo- rate big data analytics into a range of busi- ness processes, the industry is finally making the changes it has long awaited. Mark Hunt, chief technology officer, Oneserve High impact data analytics The utilities sector has been slow to embrace data analytics, but the technology is already having an impact and, predicts Mark Hunt, is on the verge of revolutionising productivity and efficiency. "Paradoxically, the monopolistic nature of the big utilities means the datasets available to them are much larger, and much more insightful, than those accessible in more contested markets"

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