Transforming the power and utilities IT organization
Digital transformation is something that has become a common trend, and it is one that has reached the Power & Utilities sector moving rather quickly. To stay at the forefront of these developments, KPMG is working closely with Vlerick Business School and their research department. Through this partnership and the funding of the KPMG Energy Chair, their researchers are looking into the main drivers for digital transformation in the energy sectors, and what that will mean for companies in terms of changing roles, increased connection with other business functions, future opportunities, and an overall changing landscape for these businesses.
The 2016 Global CIO study conducted by KPMG and Harvey Nash supports the trends we see appearing from Vlerick, stating clearly that power and utilities companies are taking more interest each year in digital transformation. Even though the 2016 results do show that while most energy companies are paying attention, there is still a lack of adoption across the sector and a need for CIOs to embrace a digital strategy across the entire business. CIOs should be aware that these transformations are pushing the IT organization to undergo a significant renaissance themselves to emerge as a more agile, innovative, proactive, and consultative business partner to enable the business to navigate the new industry landscape.
The future of the Power & Utilities Sector
The changing landscape of the power and utilities industry is resulting in new expectations for IT and shifting imperatives for the Chief Information Officer as well as other C-levels across the business. Many power and utilities IT organizations have embarked on an IT transformation program.
IT transformation often begins with a core business transformation. Focusing on the core while adapting to digital trends means improving the planning and operation of distribution networks beyond traditional measurement and control actions. The greatest imperative for this change seems to be the need for cost efficiency and increased agility. The top two reasons for adopting cloud technology were for improving agility/ responsiveness and saving money. With cloud adoption growing many companies are seeing another transformation within their company. As they outsource application and infrastructure governance, they’re able to have a renewed focus on data governance.
This all comes together in a cohesive IT transformation program by setting the focus on a new target operating model: the Broker-Integrate-Orchestrate model.
Broker – IT functions as a service broker bringing buyers together with sellers (business unit and service providers). This approach is based on increasing commoditization of technology and enables IT to leverage the growing ecosystem of cloud-based services.
Integrate – Services for solutions. Brokering solutions from multiple sources shifts the focus from building to integrating. Architecture, methodologies, and standard processes will become important core competencies.
Orchestrate – In a world where services are multi-sourced and the service supply chain can be complex, IT’s responsibility changes from just delivering services to the end-to-end performance of services. IT’s role is to make complexity invisible to the business.
CIOs are managing risks as their organizations transform by providing safe, reliable, and secure service in a world with increasing threats while delivering value for every IT Euro spent. Safeguarding company assets and reputation will continue to be a high priority of importance. In order to address this emerging trend of digital disruption, most CIOs in the energy sector are responding by contracting assistance (28 percent) or partnering (27 percent); 23 percent are retraining their people, and 15 percent are hiring. The trend toward digital disruption is likely to catch fire in the power and utilities industry due to the explosive growth of digital, connected, electronic devices.
In 2017 KPMG will continue to explore these results through the next edition of the Harvey Nash/KPMG CIO Survey and the research with the Vlerick Energy Chair. You can find more information in the studies below. Interested in receiving a copy of the full Vlercik study? Contact Ingrid Stoffels: firstname.lastname@example.org.