How are utilities thinking about digital transformation?

Among the major challenges utilities face is the need to modernize their aging infrastructures, invest in renewable energy, and compete with new market entrants. I recently sat down with Accenture Managing Director Ismail Syed Mohammad to discuss these and other challenges as well as how the industry is starting to apply advanced technology to position their businesses for resiliency and growth. Here’s what he had to say.

Tell me a little bit about the utilities industry today and some of the most salient trends that are top of mind for your customers.

Ismail Syed Mohammad: When I think about the utilities industry—energy, water, and gas—I think the industry is going through a huge transformation—and it's not a cliche. Look at electric: We all talk about the energy transition, green energy. Take the gas business: There is a huge impact from a hydrogen perspective. We see that coming. And then a lot of mergers and acquisitions are happening in that space too. And if you look at the water and wastewater businesses, it's all about water conservation right now. There’s a big push politically: It has a climate imperative, and it also has geopolitical and policy [implications].

So these are the big things that are impacting how businesses are thinking about how they want to run for the next five years. Really, it is all about those external factors pushing the industry in one way or the other—and they are pushing it much faster than they have in the past.

How do you talk to your customers about technology within the context of these changes? Some of these changes are tectonic.

Ismail Syed Mohammad: If I talk to a CEO, I get the answer that the CEO has a simple [way to] address energy transition. Now what that means is, How should I be thinking about cloud, how should I be thinking about interoperability? Because you're going to talk about many devices talking to many systems, and then the idea of AI and data. All these things are very much tools to help businesses deliver integral systems. And the interconnectedness, that's something we've always talked about in industry.

Why is that interconnectedness more important now?

Ismail Syed Mohammad: All of our customers are on the cloud journey in some shape or form. But a huge part of their operations are still on-premises or hosted. And multicloud is a reality. We have Oracle, and then we've got Azure and AWS and others. But here's the thing: In addition to all these things, consumers have various types of devices behind the meter, such as solar or their own energy systems. And in the hydrogen or gas business, there are a lot of sensors and devices that keep the operation safe. When we talk about cloud, we need to talk about a system or a platform that connects all these things in a way that is seamless, real time, or near real time—and more importantly, safe and secure.

We’ve had this discussion around security in the cloud for maybe a decade now, but with AI and GenAI, how should we be thinking about the security of that data?

Ismail Syed Mohammad: Now it is all about data insights: How do I make sure that the finance folks, or the procurement folks, or the supply chain folks are thinking about how to make decisions based on data? We get there by making sure that we get all the data into a platform that is managed in a way that an AI engine can sit on top of their ERP or supply chain applications, and then make sure that those models are providing the right set of insights to make decisions.

Now, can I compromise on access rules, on the segregation of duties? Probably not. This brings in the aspect of security: what the data is, where you post it, and how you control it. People generally think that they are secure if [their systems] are on-premises. Actually, we have statistically proven that hosted solutions or SaaS solutions are probably more secure when it comes to data, because they're continuously updated for vulnerabilities.

Scale matters, especially in the utilities industry. Even with the scale of your own utility, there's still opportunity to leverage your own data to greater effect, correct?

Ismail Syed Mohammad: Absolutely. You should not be comparing yourself with retail or dot-com companies because you are not in that business. They crunch a lot of customer data, behavioral data, things like that. But you also have a version of that: your customers, their consumption behavior, and the programs they are participating in. Are they buying an EV? Are they thinking about solar panels? Are they thinking about collaboration? Are you letting customers choose the energy source, whether wind, solar, or nuclear, where such choices are available? So this is a huge data set that you need to deal with at the end of the day.

You have also spoken about the “digital core.” What does that mean?

Ismail Syed Mohammad:People are thinking about doing things faster than ever and thinking about wanting to be more modular and agile than ever. The only way you can get to that is to have an agile digital core. What this means is thinking about your business functions as a combination of human-enabled decision-making, automated transactions, and enforced security and control—also automated. When you think about this combination as a part of your digital core, you're breaking your business into segments where technology takes care of the role functions, like transactions, security, and integration, while ensuring that humans can make the decisions that make a huge difference. That is the core principle behind the digital world.

With respect to applications, it means that you have to keep things modular. Yes, you have to align with industry practices. You should not overly customize your applications because you don’t differ from other businesses in how you transact, but your strategic objectives may differ drastically. We believe modularity is the way in which platforms need to evolve. It sounds very similar to how Oracle has been thinking about its Fusion Cloud products. All these are very modular. That's how we think about digital products.

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