Accelerating digital transformation: an instruction booklet for Utilities

Utilities are trying to reinvent themselves as digital companies. Adopting digital ways of working, finding talent and modernizing IT will increasingly accelerate the transformation.

For utilities, transforming operations and systems through digital technologies could create significant value: a reduction in operating costs of up to 25 percent and performance gains of 20 percent to 40 percent in areas such as safety, reliability, customer satisfaction and regulatory compliance. Many utilities have also begun these efforts toward digitization by starting with larger ambitions, such as creating a new way of operating based on agile management methods and integrating digital technologies throughout the enterprise, including interactions with customers, employees, suppliers, regulators, and partners.

The research by
McKinsey Global Institute
has highlighted three problems that appear to be inhibiting digital transformation in utilities. First, the working methods of the typical utility company. Because of this mindset, utilities are generally more cautious in embracing new digital working methods that instead involve constant experimentation. Second, the traditional perception of utilities as analog-era companies makes it difficult to attract the right resources to positions dedicated to digital innovation.

Third, utilities have complex operations and IT environments that inhibit rapid innovation. None of these conditions are easy to remove, but some utilities are demonstrating that this can be accomplished by accelerating transformation in 3 main areas: adopting new digital work methodologies; attracting digital talent and professionalism to corporate departments; andmodernizing IT infrastructure.