Andrew Quail reveals how SGN works with regulators on digital strategy

As Director of IT and Innovation at gas firm SGN, Andrew Quail has to carry out a difficult balancing act between the dependable and the experimental.

SGN manages a natural and green gas distribution network that covers 5.9 million homes and businesses so any IT capabilities have to adhere to the utmost safety standards of a highly regulated industry.

“We have to respond to 90% of all gas escapes within a licence condition of one hour, and we have a highly automated and responsive set of technology services to support that,” Quail tells CIO UK.

“We also need to control and manage and run our high-pressure transmission network and have a lot of critical IT services supporting that.”

To meet these needs while finding new efficiencies and building better services, Quail oversees an innovation team that is currently working on around 70 projects.

Their ideas bid for funding from energy regulator Ofgem, which has introduced two innovation stimulus packages to encourage the network companies to experiment with tech.

SGN’s winning bids include an IoT monitoring platform called Real-Time Networks, which uses sensors and monitoring technology to manage and forecast the company’s low-pressure distribution network by analysing customer gas demand more accurately and in real time.

Another winner is an advanced gas detection system, which enables engineers to drill probes into the ground that remotely capture gas readings and registers them on a mobile platform. The reading is then displayed on a map and linked to the relevant asset.

“Because engineers will pass work between each other, they may have to go back to that site the next day or the next week to recheck if there are indeed any leaks. With the system, the data’s already available, and all tagged geospatially to the location and the asset.

“It replaces what is essentially a largely paper-based and manual process at the moment, which could be prone to error and is more work to do generally.”

Regulation for innovation

Quail’s IT strategy is driven by both the business needs of SGN and the requirements of government policy. The sector’s high safety standards mean that SGN needs Ofgen’s support for Quail’s digital experiments.

“The regulator has created this innovation stimulus with very strict governance with very detailed and well-defined criteria for what can be construed as innovation and why it would be innovative,” explains Quail.

“Fundamentally, it’s about checking the boxes in terms of improvements to customers’ experience, reduction in cost to customers, pushing forward the decarbonisation agenda or improving the availability and resilience of our network. That is very tightly governed by the regulator, and that’s how we ensure that we’re in line keeping with their requirements.

“Another thing the regulator’s got to be commended on is that the nature of the innovation within our industry is it’s something that has to be and it is shared. It’s all public, so at the end of the day, the benefits to our company specifically also benefit all gas networks and potentially electricity networks, and ultimately all UK customers benefit from that.

“That’s another key feature of the innovation team and the innovation stimulus that we have in the gas network industry. It is entirely public and shared, which is great. We also learn from the other networks as well.”

Ofgen’s stimulus packages also allow large utility companies to work with smaller startups and niche vendors. The result is a wider ecosystem of suppliers and partners, which Quail’s team can draw on for its experiments.

In November, they won £6.3 million of Ofgen funding for a Robotic Roadworks and Excavation System (RRES) developed in collaboration with ULC Robotics, a New York-based company which had been encouraged to explore the UK market by the regulator’s proven support.

RRES uses a robotic arm and various sensor technologies to excavate roads without the need for dangerous manual work. Artificial intelligence allows the system to learn on the job.

“It’s high-risk and low technical readiness,” says Quail, “but it’s really cool because it’s a technique that, if proven, can be used by multiple utilities: electricity networks, the telecoms industry, the water industry – and not just in the UK but around the world. It’s genuinely, if you pardon the pun, ground-breaking.”

Journey to the cloud

SGN also wants to expand into unregulated activities such as smart metering. Quail believed this objective could only be achieved by moving the company’s infrastructure to the cloud. He devised a strategy to create a cheaper, more scalable, more agile and more secure IT estate, by moving it to the public cloud and using best-in-class tools to automate services.

He earned the board’s support for his plan by communicating it in general business terms.

“The word cloud was rarely used,” he says. “It was very much about what the IT department needs to do to support broader business strategy.

“That strategy was signed off and we are partway through that journey,” he says. “It’s been pretty challenging but very exciting, and I am absolutely confident that it’s going to be worth the effort and worth the challenge.”

The challenges have included migrating old services, building new ones, revising the organisational strategy and adopting a different target operating model to support the changes.

All of these had to be overcome within a new vendor landscape. Quail ensured that he was getting the right services from these suppliers through an emphasis on mutual benefits.

“People often talk about ecosystems or partnerships,” he explains. “We genuinely have an environment now where strategic members have to work together for shared success. If they don’t, we all fail.

“We have regular, frequent joint calls with very senior executives to ensure that this transformation journey is successful, and the parties are working together because there are a lot of challenges.

“There’s a lot of new technology being used and different ways of working. I would say all organisations, all of the industry vendors in my landscape are having to learn and having to adjust in order to support what we’re doing here, and I have to say they are.

“It’s quite different from the go to market, find a contract, sign the contract, let it run model. It’s much more iterative, much more – dare I say – agile, and much, much more engaged.”