Becoming Utility of the Future - Journeys and Case Studies

Introduction Several utilities envision becoming the Utility of the Future (UOTF) and has embarked on an ambitious path to realize this vision. They typically set goals to improve business operations and performance in the following six areas (Figure 1). Becoming the UOTF requires transformation in business practices and operations by leveraging innovation and technology to optimize the use and management of human, financial, and physical resources, ultimately improving organizational performance. Ambitious transformational initiatives such as UOTF begins with a clear understanding of utility objectives and their prioritization, followed by strategies and tactics to realize those objectives and outcomes. Becoming and being UOTF The utility of the future delivers safe, reliable, and affordable services. It can adapt it business operations to continually improve operations and capital efficiencies with innovative practices, technologies, and data-driven solutions. UOTF requires a paradigm shift in the strategies, approaches, and initiatives to achieve a new set of goals and objectives far beyond what has been achieved or aimed until today. These new goals must represent the needs of the organization, and the subsequent development of strategies and implementation of tactics must be based on challenges faced by the organization in advancing the UOTF vision. UOTF is an abstract concept, and every utility defines it based on their business drivers and objectives. UOTF can be defined using the characteristics and capabilities of several functions and aspects of the utility grouped under three major domains — Organizational, Process, and Technology. Figure 2 shows these major domains and the sub-domains using which the characteristics and capabilities of the future state of the utility could be defined. Utilities need several capabilities ranging from strategic management, financial management, operations and maintenance, customer service, asset planning and delivery, and human resources - among others. Becoming and being a UOTF is about increasing the maturity of the capabilities that enable and support the achievement of aspirational goals and objectives of the organization. As with any transformational program, the first step involves an assessment of the current capabilities of an organization, business unit(s) or even team(s) to establish a baseline as well as to identify the gaps and challenges with advancing the current capabilities that are necessary to meet targeted goals and metrics. Stantec's clients had provided the following (Figure 3) as list of drivers behind some of their initiatives for becoming UOTF. Assessing UOTF Capability Maturity Stantec has conducted maturity assessment to set baselines for UOTF transformation programs. Figure 4 shows a sample of one of the utilities' distribution and variation of overall maturity score under each assessment category. The review of the results suggested that there was a wide range in what the participants perceived as their current capabilities. This was quite normal and expected for water utilities of mid and large size, which is composed of several business units. Global perspective and case studies Several utilities across the globe understand that they must have a paradigm shift in how they conduct and operate their business to address existing challenges, be prepared to face future challenges, and to gain performance improvements in managing customer experience, infrastructure operations and maintenance, infrastructure planning and delivery, and investment planning. Utilities are facing these business challenges during a time of increased regulatory pressure, and significant capital improvement programs. These utilities are leveraging innovation to transform themselves and gain new capabilities to address the challenges facing their organization and meet targeted objectives and metrics. Innovation is not limited to technologies but includes how they conduct their business including performance driven procurement and delivery models. They also applied innovation in their physical (assets, machinery, equipment, and unit operations) and digital technologies to increase their business capabilities. While digital innovation enhances the collection and use of better data to make better decisions to achieve better outcomes in a timely manner, the implementation of digital technology solutions within those utilities had been based on specific list of prioritized objectives. These utilities also recognized that the transformation of their utility functions enabled by innovation and technology solutions had to be supported by organizational change management (OCM) practices that help utility workforce navigate necessary transformational initiatives. Figure 5 shows the key strategies used by these global utilities pursuing their UOTF vision. Market opportunities to enable and advance innovation The water industry is going through a transformation to move away from implementing disparate projects and solutions for infrastructure operations and improvement challenges, to a systems-approach where the solutions are developed using an integrated framework that considers the whole life cycle cost of assets. This integrated systems-based approach to managing infrastructure requires innovative technologies and business models that leverage data and empower people to improve the efficiency and effectiveness of utility functions. Innovation in digital technologies paired with continuous improvements in the engineering technologies are creating unprecedented opportunities to better manage water infrastructure, and other supporting utility functions. The good news is that the current market offers hundreds of vendors supplying both physical and digital solutions specific to the water industry. This healthy competition fuels further product and service innovation. On the other hand, new partnerships are established among technology providers to co-innovate and create cost-effective products and solutions to water utilities. In addition to leveraging the opportunities of innovative technologies, pioneering utilities are implementing innovative business models particularly in how they procure products and services to deliver their capital improvement programs. Innovation in procurement in those utilities is strongly based on meeting performance goals and managing long-term risks. These new delivery models have the potential to offset upfront capital investments and yet enable utilities to deliver desired business outcomes. Figure 6 shows the opportunities provided by the market. Lessons from utilities pursuing UOTF Review of utilities in their UOTF journey indicated that regulatory and/or financial pressures were the major factor and strong drivers that created the sense of urgency to implement and advance their transformational programs. There was also a strong and relentless attention and support from the executive leadership to drive innovation within the utility. In addition to leadership engagement, there were several champions who were responsible for spearheading several initiatives, which were predominantly related to asset management, operations and situational awareness, and customer experience. The strategies of these organizational were typically programmatic and supported by a governance structure. Leading utilities understood that transformational programs while greatly requires the support of technologies, they did not implement their initiatives as technology projects. The focus was on delivering business outcomes that were tied to specific performance metrics. Technology solutions involving data and analytics were identified based on specific use cases that were directly supporting business process improvements and enabling workforce to be more informed. These utilities also had a strong focus on making best financial decisions by employing appropriate business case evaluations of their initiatives, projects, and solutions, and their potential for a faster ROI. These utilities also recognized the importance of change management initiatives that were critical to implementing organization-wide transformational programs. Strategies also included long term alliances and partnership models to deliver multiple programs in a cost-effective way as well as to improve knowledge transfer from solutions providers to the organizational workforce. Figure 7 shows the drivers, goals, strategies, and outcomes of UOTF. Summary The presentation will provide an overview of UOTF concepts and case studies from global utilities pursuing their UOTF vision. Utilities small, mid, and large could all learn from the lessons learned from these utility case studies.