Utilities face a complex set of challenges during seasons of change. In both the power and water sectors, utilities are confronted not only by aging infrastructure — and the resulting requirements for large-scale investment — but also an unsettled regulatory environment, growing cyber and physical security concerns, and other complications that arise from major transformations within the industry at all levels.

Utilities are seeking to address these concerns in an environment characterized by heightened customer expectations for quality service and increasing resistance to rate increases. Adding to this unique environment are the impacts of uncertainties around the macroeconomy, such as disruptions to the global supply chain and the impacts of increasing interest rates.

The energy sector is in the midst of a major global transformation. Massive disruption across the entire energy supply chain looks to continue over the next decade and beyond. Changes in the energy sector in reaction to this disruption are being fueled by a shift toward an increasingly clean, intelligent, mobile and distributed energy ecosystem with an underlying focus on sustainability and decarbonization.

Meanwhile, water utilities are also seeking methods to fundamentally transform legacy ways of working. A recent study by Global Water Intelligence confirmed that leaders across the water utility sector are doubling their commitment to digital transformation: Technology is seen as central to increasing efficiency and enabling better decision-making through data and analytics, which will be critical in an facing challenges related to supply chain disruptions, regulations and rising inflation.

Two Agendas: Utilities Looking to Transform and Drive Efficiency

Two agendas are being pushed inside utilities: Drive efficiency throughout the existing business — realized through verifiable reductions to operations and maintenance costs — and transform the operating model for the business of tomorrow. Delivering on both objectives creates a challenging environment for decision-makers, as pursuing strategic transformation and operational efficiency necessarily impacts and redefines a utility’s way of working. How these dual objectives are achieved is critical, given so many of utility's fundamental elements — core services, its stakeholders, business processes, organizational design, workforce and talent management and other facets of human capital — are all altered as a result of these efforts.

Crucial Program-Level Prioritization and Line of Sight

Utilities require the ability to continuously improve performance while also identifying and successfully delivering on programs that achieve the desired transformation across all planning horizons. When designing a programmatic approach to achieving desired results, with line of sight into performance versus key objectives, the following questions must be considered:

  • Identification: What set of efficiency and transformation initiatives should be pursued to advance achievement of future-state vision?
  • Prioritization: Which initiatives are most critical? And delivered in what sequence?
  • Coordination: How do we synchronize decision-making across all of the projects?
  • Interaction: What is the portfolio-level impact of the collection of projects being pursued, in terms of achievement of top-level goals?
  • Integration: How can new and ongoing initiatives be integrated, particularly in an environment of constant change and change fatigue?

The most successful utilities in this environment will tap into existing capabilities to achieve the desired results in both efficiency and transformation efforts. For instance, continuous improvement will play a significant role in helping utilities do more with less. This discipline will also help utilities transform to address new technologies, regulations and other disruptive forces. In addition, strong program management, stakeholder awareness and change management will be central as utilities evolve to new operating models and ways of working.


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Chuck Tooman is a senior change management lead at 1898 & Co. He has broad experience assessing, developing and implementing comprehensive transformation programs for utilities and other capital-intensive businesses around the world.