Smart Grid focuses on technology, process, and organization, but a fourth element – data – is changing the way power companies operate. Not to be overly dramatic, but the explosion of data could transform the entire industry. As Financial Executive reported in July, “Data is a new class of economic asset, like currency or gold.” Utilities, like other industries, are trying to get in on the action.
In the next 5-10 years, we anticipate billions of dollars will be spent on Smart Grid and data analytics. As of January of this year alone, 27 million smart meters have been installed. As such, utilities already contend with exponentially more data than ever before. But the key is what to do with all that data. We believe that data analytics must first align with the strategies and goals of the business.
Power and gas utilities should benefit from the experience of other industries, such as telecommunications, retail, and banking. They survived their data revolution and now thrive by incorporating data analytics into their core business processes, infrastructure and business strategies. This concept is still new to power and gas companies, which are going through their own data revolution today. The data is flowing, but making intelligent decisions about how to extract value from it might take some time. The leading utilities of the future will be those that drive innovation throughout their organizations and in their service/product offerings through the effective use of business analytics.
Data analytics must be driven by the overall business strategy and vision, aligned to customer and industry needs, and enabled through the effective use of technology. Power companies must tie their data to specific business efforts, use it to gain insights, and then take action. Companies can utilize demand patterns, for example, to facilitate greater efficiencies in energy procurement and to optimize rate structures. Simple data-related questions make all the difference:
- What are our strategic goals?
- What are we trying to achieve?
- What business value are we trying to create?
- How do we quantify the value of the data and the success of the analytics?
- How will I leverage the data for actionable intelligence?
Smart companies can leverage Oracle solutions with pre-built accelerators and tools to turn vast amounts of data into a more intelligent enterprise. These include Oracle Utilities Applications, integrated Data Schemas and Prebuilt Extractors, Oracle Business Intelligence 11g, and OBIU Analytics.
Of course, some data is structured, some isn’t. Endeca Information Discovery helps integrate both data sets. Combining OBIEE/OBIU and Endeca can provide a single robust platform to leverage operational, customer and financial data from structured and unstructured sources. Management can then make informed, data-driven decisions to deploy resources while managing costs.
The power company of the future is taking shape today. The trick is to capitalize on the influx of data and closely tie it to the goals of the larger organization. In short, power companies with an eye toward the future should:
- Leverage successes and lessons from other utilities and other industries
- Implement BI and data analytics initiatives in stages with clearly defined objectives
- Employ enabling technologies and system implementations to streamline processes and break down silos
- Reduce or eliminate multiple sources of data and cleanse them
- Develop metrics, KPIs and analytics to meet strategic, operational and tactical needs.
For more information visit the KPMG Global Energy Institute.
Todd Durocher, Managing Director, Advisory, KPMG LLP (US)
Ron Clanton, Partner, Advisory, KPMG LLP (US)