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November 4, 2014

How Smart Utilities Are Energizing For Tomorrow

Posted by Ashiss K Dash (View Profile | View All Posts) at 8:28 AM

China is leading the world in Smart Grid investment [Source: http://www.youtube.com/watch?v=igeJhClqRMU]

A few summers back, on a sunny day in Seattle, I met an influential industry analyst to catch up on various issues in the utilities industry. We spoke about how Infosys can best position our clients for success.

As we settled down for this exchange of ideas, he ordered a coffee and I got a chai. We started talking about chai and about India and the variety of chais one can find in India. Then we shifted gears quickly and started discussing our favorite topic from the industry at the time: the Smart Grid.

I always felt at the time that the hype surrounding the Smart Grid was more vendor-driven than business-driven. It was a crowded market (and it still is in some parts) and every vendor had a 'solution' that seemed to define what the Smart Grid should look like. The challenge was that many of these solutions were looking for problems. In several parts of the industry, organizations were beginning their own pilot projects. Some of those projects were funded by utilities and some were wholly funded by vendors.

Information technology and business consulting firms were pushing for their solutions to lead industry-level discussions. The lack of standards and general confusion around areas of priority were blinding the vision when it came to building the optimal utility of the future. As the analyst and I finished our beverages, we concluded our briefing by discussing how the market will consolidate significantly once projects move closer to completion within the businesses in question.

As opportunities move from PowerPoint presentations, laboratories, and pilots to real life implementations, very few vendors actually invest in building the skills and scale required to ensure successful execution of these projects. No Smart Grid project can be claimed to be successful if the business processes don't become significantly smarter. In a way, consulting firms were busy recycling their old wine in new bottles. The result? Clients started consolidating their strategic partners. Very few players emerged as serious service providers in the Smart Grid arena who will deliver dependable results.

As the industry matures further and utilities start measuring value derived from these capital investments and funding becomes harder to obtain, the consolidation will continue. Niche solutions from integrators with the right skillset and who understand business issues will continue to do well. The adoption of the global delivery model for the Smart Grid and related projects is always a hotly debated topic. However, the scale and the skillsets required to deliver some of the complex undertakings has naturally positioned the leaders in the space well ahead of the rest. In fact, recent industry reports concerning Smart Grid services clearly show the consolidation of the providers and how the market has matured over the years.

The utilities industry is going through a very interesting phase. Cost pressures, regulatory issues, consumer expectations, disruptive models in generation, and competition are driving utilities to think innovatively like never before. It is an opportune time to derive maximum value out of the investments made so far on the Grid. Not to mention, the journey to make the Grid smarter is far from over. The tools to unlock the value will be hinged on mobility, analytics, and the power of social media. It is through this culture of innovation that future investments will be well funded. And the utilities partner ecosystem will be unforgiving to vendors who don't bring innovation to the table.

I plan to head back to Seattle very soon to exchange notes and catch up on industry issues. There is something prophetic about the chai at the Starbucks on 1st and Pike! I look forward to the discussions this beverage seems to encourage.

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