Sections

IoT, Renewables, And Storage: A Perfect Storm For Utilities [VIDEO]

Tom Raftery

It is a time of great turbulence in the electric utilities space.

In most regions globally, wind and solar are now our cheapest sources of electricity generation, even without subsidies.

As a consequence, wind has overtaken nuclear, hydro, and coal to become the second-largest source of electricity generation in EU in 2016. And at the same time in the U.S., the solar market is smashing records, growing 95% in 2016 alone.

Then there is storage. Costs here have been tumbling too; so much so that Morgan Stanley predicts the storage market to grow from roughly $400 million in 2016 to $2-4 billion by 2020. This will have big implications for utilities’ ability to add more variable generators (renewables) to their mix without destabilising the grid.

Speaking of grid stabilisation, the refrain until now has been that for every MW of renewables built, a MW of gas had to also be built as a backstop (for days with no wind, overcast days, and nights). However, this too has changed. Last August First Solar ran a tests with CAISO (the California grid operator) to test a solar farm’s ability to smooth out grid fluctuations. The results of the test demonstrated that solar farms are able to meet, and sometimes exceed, the frequency regulation response usually provided by natural-gas-fired peaker plants.

Things are also changing on the consumption side:

solarinstall2016

Source: GTM Research/SEIA U.S. Solar Market Insight report

As shown in the chart above, installations of residential PV are rising, as is home storage. And another form of potential consumption and storage (v2g), the electric car, saw sales rise by 37% in the US in 2016.

Then there is the whole digitisation of the grid. Now all new equipment is being built with inbuilt “smarts” and connectivity, and even older infrastructure can be retrofitted, so with the advent of the smart grid, we will finally have the possibility of the Electricity 2.0 vision I was talking up back in 2008/09.

This is a smart grid where appliances in the commercial or residential worlds can “listen” for pricing signals from the grid and adjust their behaviour accordingly, taking in electricity when it is plentiful and switching to alternative sources/lowering consumption when electricity is in high demand.

With the cost of generation dropping with no end in sight, and the cost of storage similarly falling, as I have posited previously, there is a strong possibility that utilities will have to switch to broadband-like “all-you-can-eat” business models, with the utilities differentiating and making their revenue on added services.

Everything is changing for the electric utility industry. Inspired by that fact and my presentation on IoT and Utilities at the upcoming International SAP for Utilities Conference in Lisbon, I decided to have a chat with IDC research director Marcus Torchia about the implications for utilities of these huge changes. We had a great discussion, and many of the themes we touched on, I will be discussing at the utilities event in Lisbon.

Check out our chat in the video above, or listen to it on the IoT Heroes podcast site.

Blog first published on TomRaftery.com

Comments

About Tom Raftery

Tom Raftery is VP and Global Internet of Things Evangelist for SAP. Previously Tom worked as an independent analyst focussing on the Internet of Things, Energy and CleanTech. Tom has a very strong background in social media, is the former co-founder of a software firm and is co-founder and director of hyper energy-efficient data center Cork Internet eXchange. More recently, Tom worked as an Industry Analyst for RedMonk, leading their GreenMonk practice for 7 years.

Differentiating Products With Data-Based Services

Don Gordon

Ever since Steve Jobs revealed the first iPhone, people have come to associate big tech launches with physical products. So when SAP chairman Hasso Plattner, Prof. Dr. h.c. mult., unveiled the new SAP digital innovation system last month, many people in the SAPPHIRE NOW audience reflexively looked around for a nonexistent device.

The fact is, value and differentiation are migrating away from physical products like devices and toward data-based services that fundamentally change the way consumers interact with those products. For consumer products (CP) companies, adapting to this change is imperative because today, even new and highly sought-after products become commoditized more quickly than ever before. For CP companies, this means they need to:

  • Innovate ways to be more efficient using IoT and analytics across lines of business (for example, in manufacturing and supply chain operations to increase efficiency as a way to lower costs)
  • Create innovative data services around products – for example, by building sensors into products. In this case, the data is what allows for differentiation. It’s what makes the product more valuable to the customer. And it’s how CP companies can increase market share, customer retention, and margins.

So where does a digital innovation system come in? It is, as Plattner explained, a “digital innovation system that enables customers to rapidly innovate and scale that innovation to redefine their business for the digital world.” You might think of it as a digital services innovation platform that brings together the power of machine learning, IoT, analytics, and Big Data in ways that were previously not possible.

With all of these technologies unified, it’s much easier to harness data to drive process, value, and customer experience transformation. Consider this: When customers – both B2B and B2C – purchase and use connected, self-aware products, they can passively send product and usage data in the course of daily activities and work (for example, usage levels, wear and tear rates, maintenance information, and functionality used and not used).

This data can be used to inform every aspect of the product value chain. For example, when a customer purchases a smart refrigerator, they agree to passively stream product and usage data from that refrigerator on a continuous basis. Sensors can be built into it to capture and send performance and operations data useful to every player in the product value chain. As an interactive product, the refrigerator can send data (or alerts) when compressors are overheating, vibrations or temperatures are exceeding desired maximums, or Freon levels are low.

The value of this data can extended to a CP manufacturer’s entire extended value chain. For example, a refrigeration manufacturer with commercial and consumer product lines could include B2B traditional suppliers that enable the manufacturer to make better products, as well as involve other providers of data-based services around the product to expand the customer value proposition, as shown in the illustration below.

transformation of the refrigeration value chain

Transformation of the refrigeration value chain

So from this perspective, the future of CP lies in harnessing new kinds of data – and IDC appears to agree. In a May 2017 Analyst Connection, Simon Ellis, program vice president at IDC, forecasted that 90% of the growth in the CP industry over the next decade will go to companies that successfully engage directly with consumers. “While this may mean direct-to-consumer selling, it is most likely to be about a ‘brand relationship.’ The successful engagement will be one that turns data and information from consumers into product and service offerings that meet or even exceed consumers’ expectations. The 90% is a projection, of course, and the actual results may be higher or lower, but the point is that to succeed in the future, CP companies will need to engage with their consumers in a new way.”

I invite you to read Ellis’ paper, “Using Data to Digitally Transform Consumer Products,” He provides valuable insights into how untapped digital technologies have the potential to harness data to drive new capabilities and data-driven services, deliver totally new insights into the changing behaviors and needs of customers, and more.

 

Comments

About Don Gordon

Don Gordon leads global Consumer Products industry marketing for SAP. Previously he led global Retail industry marketing for IBM. He lives in Philadelphia, considered by many to be the finest city on earth.

Your Walls Can Talk – Find Out What They’re Saying

Stephanie Reshel

The growing use of technology and its resulting data are having a significant impact on energy and utility companies worldwide. In fact, the utility sector is forecast to experience 93% data growth since 2015, with 84% of it being unstructured, according to the SAP and IBM paper “Digital Transformation in Energy and Utility Companies.”

Industry convergence is playing a big role in the increased use of data. Converging industries and disruptive technology are redefining multiple industries globally and forcing the creation of innovative business models. The energy and utility sectors are experiencing this through the increased use of smart appliances, energy monitoring systems, net metering, mobile technology, cognitive applications, the Internet of Things (IoT), and cloud computing.

If your walls can talk – what are they saying?

The marriage of technology companies with traditional energy and utility companies is creating fascinating systems that enable operating technology (OT) systems and information technology (IT) systems to automatically talk to each other. Until recently, these systems could not share information or communicate with one another.

So in essence, now your walls really can talk thanks to wall-mounted smart-grid metering – and what they’re saying is that cognitive computing will change the future of the energy and utilities sectors even more. When OT and IT systems share a common database with near-real-time cognitive computing and data utilization capabilities, they can provide a stronger understanding of what is currently happening and what is most likely to happen in the future.

Innovative real-world examples

Here are some practical examples of how innovative technology is redefining traditional energy and utility procedures:

  • Asset responsiveness: Equipment sensors (OT) can set off a high-temperature alarm, which can automatically send a work order (IT) to a technician’s mobile device
  • Information accessibility: Service orders can be more efficient when cognitive computing provides data about customers, work orders, equipment details, and site history to field technicians
  • Predictive maintenance: Solutions using IoT sensors, predictive analytics, and even weather forecasts can be used to help predict maintenance patterns, schedules, and potential damage to equipment

What else is altering the energy and utility landscape?

Disruptive technology is just one of the elements contributing to the considerable transformation in the energy and utility industries. According to the SAP and IBM paper, the following three elements all play a role:

  • Evolving markets
  • Changing customer expectations
  • Disruptive technology

Evolving energy and utility markets, changing customer expectations, and disruptive technology are all creating a perfect environment for new business models such as self-service and subscription-based models that enable new revenue streams.

Business innovation lead by “prosumers”

Alternative energy sources like geothermal, wind, and solar are also driving an increase in the number of “prosumers” – companies or individuals that act as both consumers and microsuppliers of energy. As renewable energy gains popularity, more people are using and providing energy in this way, and, as a result, their impact on the utility market increases and new business models emerge.

Not only that, smart devices enable greater control over energy consumption, so technology is also making it easier for consumers to make smarter choices about how they use energy. These efficiencies are making it harder for energy companies to maintain the same amount of revenue per customer. As a result, traditional energy and utility companies are being pushed to provide a more personalized experience by offering more connected home products and a more retail-like customer experience. CenterPoint Energy is one example of an energy company that has made significant digital changes to create a more personalized customer experience.

Using data to your advantage

The energy and utility industries are not the only sectors undergoing massive digital transformation. Whether your business is in the energy sector or not, you can use cognitive solutions and data utilization to your advantage. Here are some steps you can take to make significant progress on your digital journey:

  1. Assess your company’s current digital readiness
  1. Develop a digital strategy and reimagine business models and processes
  1. Assess and prioritize opportunities based on value, benefits, ROI, and total cost of ownership
  1. Develop a roadmap that considers cloud and cognitive technology, services, and user experience
  1. Use design thinking to refine, explore, and prototype solutions
  1. Implement solutions on time and on budget
  1. Maximize investments with continuous innovation

The blend of technology with any type of traditional company can create opportunities for innovative business models and emerging revenue streams that could prove to be very lucrative going forward. How can you reimagine your business?

Learn more about Digital Transformation in Energy and Utility Companies.

Find out more about Digital Transformation with IBM and SAP.

Comments

Stephanie Reshel

About Stephanie Reshel

Stephanie Reshel is senior director for Strategic Ecosystem Marketing at SAP. She drives joint marketing strategies globally with the top strategic services partners. Follow her on @SReshel.

Taking Learning Back to School

Dan Wellers

 

Denmark spends most GDP on labor market programs at 3.3%.
The U.S. spends only 0.1% of it’s GDP on adult education and workforce retraining.
The number of post-secondary vocational and training institutions in China more than doubled from 2000 to 2014.
47% of U.S. jobs are at risk for automation.

Our overarching approach to education is top down, inflexible, and front loaded in life, and does not encourage collaboration.

Smartphone apps that gamify learning or deliver lessons in small bits of free time can be effective tools for teaching. However, they don’t address the more pressing issue that the future is digital and those whose skills are outmoded will be left behind.

Many companies have a history of effective partnerships with local schools to expand their talent pool, but these efforts are not designed to change overall systems of learning.


The Question We Must Answer

What will we do when digitization, automation, and artificial intelligence eject vast numbers of people from their current jobs, and they lack the skills needed to find new ones?

Solutions could include:

  • National and multinational adult education programs
  • Greater investment in technical and vocational schools
  • Increased emphasis on apprenticeships
  • Tax incentives for initiatives proven to close skills gaps

We need a broad, systemic approach that breaks businesses, schools, governments, and other organizations that target adult learners out of their silos so they can work together. Chief learning officers (CLOs) can spearhead this approach by working together to create goals, benchmarks, and strategy.

Advancing the field of learning will help every business compete in an increasingly global economy with a tight market for skills. More than this, it will mitigate the workplace risks and challenges inherent in the digital economy, thus positively influencing the future of business itself.


Download the executive brief Taking Learning Back to School.


Read the full article The Future of Learning – Keeping up With The Digital Economy

Comments

About Dan Wellers

Dan Wellers is the Global Lead of Digital Futures at SAP, which explores how organizations can anticipate the future impact of exponential technologies. Dan has extensive experience in technology marketing and business strategy, plus management, consulting, and sales.

Tags:

Why Millennials Quit: Understanding A New Workforce

Shelly Kramer

Millennials are like mobile devices: they’re everywhere. You can’t visit a coffee shop without encountering both in large numbers. But after all, who doesn’t like a little caffeine with their connectivity? The point is that you should be paying attention to millennials now more than ever because they have surpassed Boomers and Gen-Xers as the largest generation.

Unfortunately for the workforce, they’re also the generation most likely to quit. Let’s examine a new report that sheds some light on exactly why that is—and what you can do to keep millennial employees working for you longer.

New workforce, new values

Deloitte found that two out of three millennials are expected to leave their current jobs by 2020. The survey also found that a staggering one in four would probably move on in the next year alone.

If you’re a business owner, consider putting four of your millennial employees in a room. Take a look around—one of them will be gone next year. Besides their skills and contributions, you’ve also lost time and resources spent by onboarding and training those employees—a very costly process. According to a new report from XYZ University, turnover costs U.S. companies a whopping $30.5 billion annually.

Let’s take a step back and look at this new workforce with new priorities and values.

Everything about millennials is different, from how to market to them as consumers to how you treat them as employees. The catalyst for this shift is the difference in what they value most. Millennials grew up with technology at their fingertips and are the most highly educated generation to date. Many have delayed marriage and/or parenthood in favor of pursuing their careers, which aren’t always about having a great paycheck (although that helps). Instead, it may be more that the core values of your business (like sustainability, for example) or its mission are the reasons that millennials stick around at the same job or look for opportunities elsewhere. Consider this: How invested are they in their work? Are they bored? What does their work/life balance look like? Do they have advancement opportunities?

Ping-pong tables and bringing your dog to work might be trendy, but they aren’t the solution to retaining a millennial workforce. So why exactly are they quitting? Let’s take a look at the data.

Millennials’ common reasons for quitting

In order to gain more insight into the problem of millennial turnover, XYZ University surveyed more than 500 respondents between the ages of 21 and 34 years old. There was a good mix of men and women, college grads versus high school grads, and entry-level employees versus managers. We’re all dying to know: Why did they quit? Here are the most popular reasons, some in their own words:

  • Millennials are risk-takers. XYZ University attributes this affection for risk taking with the fact that millennials essentially came of age during the recession. Surveyed millennials reported this experience made them wary of spending decades working at one company only to be potentially laid off.
  • They are focused on education. More than one-third of millennials hold college degrees. Those seeking advanced degrees can find themselves struggling to finish school while holding down a job, necessitating odd hours or more than one part-time gig. As a whole, this generation is entering the job market later, with higher degrees and higher debt.
  • They don’t want just any job—they want one that fits. In an age where both startups and seasoned companies are enjoying success, there is no shortage of job opportunities. As such, they’re often looking for one that suits their identity and their goals, not just the one that comes up first in an online search. Interestingly, job fit is often prioritized over job pay for millennials. Don’t forget, if they have to start their own company, they will—the average age for millennial entrepreneurs is 27.
  • They want skills that make them competitive. Many millennials enjoy the challenge that accompanies competition, so wearing many hats at a position is actually a good thing. One millennial journalist who used to work at Forbes reported that millennials want to learn by “being in the trenches, and doing it alongside the people who do it best.”
  • They want to do something that matters. Millennials have grown up with change, both good and bad, so they’re unafraid of making changes in their own lives to pursue careers that align with their desire to make a difference.
  • They prefer flexibility. Technology today means it’s possible to work from essentially anywhere that has an Internet connection, so many millennials expect at least some level of flexibility when it comes to their employer. Working remotely all of the time isn’t feasible for every situation, of course, but millennials expect companies to be flexible enough to allow them to occasionally dictate their own schedules. If they have no say in their workday, that’s a red flag.
  • They’ve got skills—and they want to use them. In the words of a 24-year-old designer, millennials “don’t need to print copies all day.” Many have paid (or are in the midst of paying) for their own education, and they’re ready and willing to put it to work. Most would prefer you leave the smaller tasks to the interns.
  • They got a better offer. Thirty-five percent of respondents to XYZ’s survey said they quit a previous job because they received a better opportunity. That makes sense, especially as recruiting is made simpler by technology. (Hello, LinkedIn.)
  • They seek mentors. Millennials are used to being supervised, as many were raised by what have been dubbed as “helicopter parents.” Receiving support from those in charge is the norm, not the anomaly, for this generation, and they expect that in the workplace, too.

Note that it’s not just XYZ University making this final point about the importance of mentoring. Consider Figures 1 and 2 from Deloitte, proving that millennials with worthwhile mentors report high satisfaction rates in other areas, such as personal development. As you can see, this can trickle down into employee satisfaction and ultimately result in higher retention numbers.

Millennials and Mentors
Figure 1. Source: Deloitte


Figure 2. Source: Deloitte

Failure to . . .

No, not communicate—I would say “engage.” On second thought, communication plays a role in that, too. (Who would have thought “Cool Hand Luke” would be applicable to this conversation?)

Data from a recent Gallup poll reiterates that millennials are “job-hoppers,” also pointing out that most of them—71 percent, to be exact—are either not engaged in or are actively disengaged from the workplace. That’s a striking number, but businesses aren’t without hope. That same Gallup poll found that millennials who reported they are engaged at work were 26 percent less likely than their disengaged counterparts to consider switching jobs, even with a raise of up to 20 percent. That’s huge. Furthermore, if the market improves in the next year, those engaged millennial employees are 64 percent less likely to job-hop than those who report feeling actively disengaged.

What’s next?

I’ve covered a lot in this discussion, but here’s what I hope you will take away: Millennials comprise a majority of the workforce, but they’re changing how you should look at hiring, recruiting, and retention as a whole. What matters to millennials matters to your other generations of employees, too. Mentoring, compensation, flexibility, and engagement have always been important, but thanks to the vocal millennial generation, we’re just now learning exactly how much.

What has been your experience with millennials and turnover? Are you a millennial who has recently left a job or are currently looking for a new position? If so, what are you missing from your current employer, and what are you looking for in a prospective one? Alternatively, if you’re reading this from a company perspective, how do you think your organization stacks up in the hearts and minds of your millennial employees? Do you have plans to do anything differently? I’d love to hear your thoughts.

For more insight on millennials and the workforce, see Multigenerational Workforce? Collaboration Tech Is The Key To Success.

Comments