by Coy Wright VP, Energy, Utilities, & Resources Industry Solutions, Rimini Street.
Coy Wright
For the UK utilities sector, the past twelve months have been turbulent to say the least. Some of the many challenges include the shifting political landscape, ever- evolving regulations, as well adapting and integrating new technological innovation in line with balancing budgets. With a growing need for cleaner energy solutions – such as electric vehicles, biofuels, solar and wind energy – utilities must also meet stricter emissions regulations and rising customer demands for sustainability.
For utility IT leaders looking to optimise their current resources and accelerate digital transformation efforts, the solution lies in reassessing current spending and identifying areas for reinvestment – including emerging, environmentally-friendly technologies. By adopting sustainable technologies and practices, utility companies can reduce costs and help fund the transition to a cleaner energy future.
Obstacles facing the UK utilities market
The myriad of challenges impacting the utilities sector stems from the need to ensure energy security, balance supply and demand, manage the costs of transitioning to renewable energy, and address fuel poverty. At the same time, the UK utilities sector must navigate the obstacles within the post-Brexit landscape.
Until 2020, the UK’s energy and climate regulations were aligned with EU policies, but since then, there has been a distinct lack of guidance. In contrast, the EU passed a significant number of laws focused on the Green Deal covering electric vehicles, biofuels, renewable energy, emissions trading, and wind energy. These regulations have set standards for the energy and environmental sectors, but since Brexit, the UK is no longer in lockstep with these regulatory changes and is searching for a sense of direction.
Regulators, such as Ofgem (Office of Gas and Electricity Markets) have been adapting their framework to allow for innovations such as smart metres, on-demand response solutions and renewable energy technologies.
The emphasis on climate change will continue and supporting the UK government’s goal to meet net zero by 2050 will not only be crucial for utilities, but for all sectors of the UK economy. It is hoped that regulations, as well as funding and grants from the UK government, will look to support and prioritise those utility companies that are developing innovative solutions and incorporate more cost-effective technologies that promote sustainability-related innovations.
What’s holding the utilities sector back?
To stay competitive and meet sustainability goals, the sector must adopt smart, flexible, more efficient technologies that support the transition to renewable energy. So, what’s holding them back?
IT departments are caught between a rock and a hard place. It’s a delicate balance between needing to keep the lights on, investing in and deploying emerging technologies, all while working with a budget and staff levels that remain static at best.
Finding a way to unlock additional resources could be the key to funding and driving utility transformation.
A tried and tested method for unlocking new opportunities for IT Teams
Starting with a review of current IT spending, the three biggest cost centres are typically:
1. Talent
2. Software, applications and infrastructure
3. Maintenance and support for software, applications and infrastructure
When budgets shrink, IT staff are often one of the first cuts made to rebalance books. Essential to the business, especially if they are gatekeepers to knowledge and expertise for specific engineering needs, finding a balance between in-house talent and outsourcing can help optimise costs and free up team members for higher-value projects. Factoring in tech talent shortages and higher wages, finding the right partner to take over day-to-day management of ERP systems can significantly improve staff retention and satisfaction while lowering overhead costs.
While many expensive software, applications and infrastructure are mission-critical to the business, not all are strategic. Buying every latest product pushed on by vendors is a surefire way to get yourself onto a treadmill of upgrades, migration, reimplementation and bigger spend, not to mention, the time it can take to realise and implement the innovation promised. It’s this length of time in particular that isn’t accounted for, often taking years and delaying the utilization of the new functions and features that were originally sought out – resulting in spiraling costs in lost productivity. However, leveraging existing systems and taking on a composable ERP strategy that allows the IT team to choose best-of-breed solutions and deploy them almost immediately, can help reduce the time and effort, not to mention cost, to transform and modernise their business.
A great deal of maintenance costs for those applications and systems is linked to this strategy. Annual support fees for these mission-critical systems are often 22 percent tacked on top of licensing costs that often produce a hefty 90 percent plus margin for the vendor. And this doesn’t include maintenance for custom code, a cost that must be absorbed by the business with additional staffing.
With the right third-party support partner, you can achieve significant cost savings, benefit from expert software support, and get off the upgrade treadmill to nowhere. More importantly, it can provide you with the control and flexibility to innovate boldly, focusing on sustainability and smart technology and processes that further drive efficiencies for the business.
Adapting for an agile future
Investing in grid modernisation, launching energy efficiency programmes, improving customer service platforms, or complying with new regulations are just a few of the many ways the utilities sector can make strides in meeting government and consumer demands.
Education and upskilling the workforce in advance will also play a huge part with adapting and embracing new and emerging technologies, without impacting on output and productivity.
Success in this competitive market will require utilities to prioritise building agile IT operations that accommodate the evolving regulatory landscape and support new technologies without further delay. In doing so, utility enterprises stand to gain new opportunities that build customer confidence and allow for strategic investments, creating a win-win-win for consumers, government and IT leaders.
