Plugged in: Accelerating progress in P&U IT | KPMG | US
close
Share with your friends

Plugged in: Accelerating progress in power & utilities IT

Plugged in: Accelerating progress in P&U IT

Part 2: 2018 Harvey Nash CIO Survey Results on the CIO’s agenda for Power and Utilities

1000

Related content

In this edition of KPMG Global Energy Institute’s Plugged In, we asked Tim Gunter about what the recent 2018 Harvey Nash CIO survey results1 indicate about the utility CIO’s agenda. This is the second part of a two-part interview.

In last month’s edition, you discussed the survey results for utility companies compared with other industries. What do these results mean for the future of utilities IT?

The results are further evidence that traditional utilities are continuing to evolve towards a model we refer to as a network integrator. It’s familiar to many IT professionals as it emulates the platform business model that many software companies have adopted. The utility develops and maintains a network that integrates numerous energy-related products and services—including those by the utility itself—but revenue is primarily driven from fees to transact on the network.

One of the foundations of this model is digitalization—the incorporation of technologies to improve communication of data across the network—so it’s not surprising to see utilities focused on advancing their digital capabilities. Evidence of adoption of the integrator model is also seen in the areas of digital that utilities prioritize compared to other industries. For example, utilities are ahead when it comes to AI/machine learning and augmented/virtual reality and more than twice as likely to invest in Internet of Things. These results are not surprising given utilities’ long history of deploying operational technologies—such as SCADA, substation automation, and smart meters—throughout their transmission and distribution networks. But it doesn’t end with operations: Other areas of the business are benefiting from the investments in digital. P&U companies show greater digital labor penetration in Finance, HR, IT, Supply Chain, and Customer.

However, Customer is the area in general where utilities are the farthest behind compared to other industries. They report significantly lower effectiveness in, for example, enhancing the customer experience, understanding profitability by customer, and growing revenue from existing customers. These results make sense in a network integrator model in which customer relationship management is often the responsibility of other companies transacting on the network. Like other platform players, the utility should focus its investment on improving network reliability—which attracts new participants—and efficiency—which grows the bottom line—and we are seeing this emphasis in the survey results.

Utility CIOs are less optimistic about their budgets increasing over the next 12 months, but they should not be overly concerned. The investment in digital technology is not limited to the IT organization but is also spread across the enterprise as both information and operational technologies are imbedded in the back, middle, and front offices. Overall tech spending is increasing in power & utility companies; it’s just not happening entirely in the traditional IT organization.

This trend actually bodes well for the future of utilities IT. They are playing an integral and indispensable role in digitalizing the business and will evolve into their own network integrator model—one in which they connect and govern communities of technology talent from across an increasingly automated business.

Network integrator

The “transformed” distribution utility that will serve as the integrator of the diverse mix of generation entities, transmission entities, and retail and customer demand

Additional resources

 

© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS 801514

Contact us

Tim Gunter
Principal, CIO Advisory Lead for Power & Utilities
E: tgunter@kpmg.com
T: 1 704 335 5358

 

About the Global Energy Institute

The KPMG Global Energy Institute (GEI) is a worldwide knowledge- sharing forum on current and emerging industry issues. Launched in 2007, the GEI interacts with its over 30,000 members through multiple media channels, including audio and video Webcasts, publications and white papers, podcasts, events, and quarterly newsletters. To become a member, visit www.kpmgglobalenergyinstitute.com.

 

1. Now in its 20th year, the Harvey Nash/KPMG CIO Survey is the largest IT leadership study in

the world, with almost 4,000 respondents across 84 countries, representing over US$300 billion

of IT budget spend.

Connect with us

 

Request for proposal

 

Submit