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Press Release -- October 1st, 2014
Source: Verizon

Energy & Utilities Firms Gain Competitive Advantage with Tech Investments

Utilities are adopting Internet of Things, cloud and data analytics technology at a faster rate than many private firms

by Martin Uczen

The notion of utility companies searching for a competitive advantage within a regulated monopoly environment may seem like a contradiction. After all, until recently these firms had no competition from a traditional sense.

However, according to a new study from Harvard Business Review Analytic Services, “The Digital Dividend: First Mover Advantage,” market leaders within the energy and utility industry are adopting new technologies [such as Internet of Things (IoT), cloud and data analytics] at a faster rate than many firms in competitive markets.

Martin Uczen, Director of Corporate Strategy, Energy & Utilities, Verizon Enterprise Solutions

Why would an industry that is widely viewed as being “cautious” now appear to behave like a “follower” or even a “pioneer?” What do they have to gain?

The answers lies in the future benefits they will gain by making strategic decisions today and how these decisions will allow them to position and respond to potential threats to their existing business model.

Creating value today by investing in the Internet of Things (IoT): Investing in capital assets to maintain a reliable network is how regulated distribution firms are financially incentivized. Minimizing operational expenses is also a priority — energy and utilities are measured to the extent they provide customers reliable service in a cost effective manner.

In the case of IoT, such as advanced metering infrastructure (AMI), early adopters found that investing in emerging technologies can address both reliability and cost efficiency. By replacing analog meters with digital two-way AMI devices, utilities can remotely aggregate usage data for billing that is more accurate and cost effective than traditional meter reading.

In this case, utilities that invest in IoT technologies are able to make an earlier rate of return by reducing operational costs and create value for the customer in terms of more accurate billing.

Positioning for the future: Distributed solar energy, demand response and storage technologies will continue to develop and reshape the 21st century power system. Market leaders recognize the developing trend in which consumers are satisfying energy demand beyond traditional utility provided kilowatt hours.

This trend does not displace the utility but rather reinforces the need for a reliable and resilient grid to react to and incorporate these new approaches to meeting the demand for electricity.

IoT devices (such as AMI) will play an integral role in enhancing the communications capabilities of the distribution grid but also create useful data for utility operators to capture, dissect and analyze. This data can create additional operational efficiencies and provide a path forward for utilities that seek to pivot from a traditional utility company selling a commodity, to one that provides energy and energy-related services.

Therefore those who pursue data management, cloud adoption and advanced analytics strategies will be better positioned to respond to potential threats to their existing business model in the future.

To learn more about how these enabling technologies are changing the energy and utilities industry, download the Energy & Utilities vertical market insights.

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