Tapping innovation while keeping the lights on: changing the culture of utilities

As they strive to innovate and digitally transform their organisations, utilities are hitting a major barrier: their cultures.

More than half of utilities CIOs named culture as the biggest hurdle in scaling their digital transformation efforts in an October Gartner survey.

Energy and water companies often have long histories, and everything they build is built to last. And usually does. Which makes moves towards fail fast and agile all the more difficult.

But there is an opportunity to shake off the approach of decades or more, and nurture innovation, by bringing different parts of the business together.

Especially fruitful is collaboration between those working in information technology and their peers in operational technology, as four prominent utilities tech chiefs described at the Gartner Symposium/ITxpo on the Gold Coast today.

“Just sharing each others’ experience and understanding each others’ part of the business, I think is the first step,” said Deanne McDonald, general manager of digital transformation.

Water Corporation of Western Australia is the principal supplier of water and wastewater services to over two million people across the state.

It recently established a digital transformation group to bring together the IT group and SCADA group with other business units.

“This was the first time, often, they’d ever spoken to each other. Which was quite bizarre,” McDonald said.

“There are some really good disciplines that they both have and ingenuity around problem solving that sits in the OT group that often isn’t as strong in the IT group. So I think just getting people together and sharing some of the things that they do and they don’t do is helpful,” she added.

The groups have been asked to solve each others’ problems, such as the OT group sharing their knowledge about communications in remote areas (which “can sometimes be quite fraught,” McDonald said) with IT.

Mixing the respective skillsets of IT and OT can help change an organisations culture, said chief information officer of Victorian Government owned corporation South East Water, Peter O’Donoghue.

“I think OT is actually good for IT. I think IT are very disciplined whereas OT are in someway the cowboys! They like to go out there and play,” he said. “It’s good for our culture of innovation. Getting that information from the OT world into the IT world is really exciting for us.”

Innovation at South East Water, such as moves around smart meters, predictive maintenance and alerting customers of faults, will demand even greater collaboration.

“As an organisation we not looking at investing in IT or OT, we’re investing in the business outcomes,” O’Donoghue added.

Having separate groups for IT and OT was fast becoming a thing of the past anyway, said Barbara-Anne Bensted, who was appointed chief digital officer of Energy Queensland in January.

“The generations coming behind us don’t see the separation. It’s just part of the world,” she said.

Luke Barlow, group manager information and architecture at the Australian Energy Market Operator (AEMO) said new IT recruits at the body are encouraged to spend time with operations.

“It’s now pretty much mandatory for graduates on our rotation program to do a stint in the OT area,” he said.

“The OT seems to be, they’re tinkerers and are out there trying new things in their own time. People coming from an IT degree they bring in a lot to the people in the OT area as well.”

Tapping innovation

The cross-disciplinary collaboration is part of a bigger effort for utilities to become more agile and innovative, the panelists agreed. But this had to be balanced against, literally in the case of energy companies, keeping the lights on.

A key finding of Gartner’s 2018 CIO Agenda: Utility Industry Insights was the need for tech chiefs to “master bimodal operations mdash; balancing the need for transformational initiatives mdash; while maintaining the integrity and security of critical infrastructure”.

“I think our industry has traditionally been conservative,” Bensted said. “[We’re changing] to be that more agile organisation, bring in that fast to fail culture and actually change the way we do things…Making it okay for people to try things out.”

Energy Queensland was formed in June 2016, following the Queensland Government’s decision to merge government-owned electricity companies, Ergon Energy and Energex.

Despite the legacy of the two organisations (Energex can trace its history back to 1922) the new company is pushing to innovate and transform.

“We have to get into that culture as quickly as we can. And also take away the fear factor,” Bensted added.

Failing fast does not come naturally to the sector, McDonald said.

“Certainly in the water sector we build assets for 100 years, so fast to fail is not something we do particularly well,” she explained.

However, people’s experience with mobile phones and home computers receiving regular operating system updates, was helping to change this thinking.

“So we are starting to get much more comfortable with that biterative approach to things. It is challenging when you build large pieces of infrastructure. But the management and operating systems that control them are something that we need to be much better at iterating,” she said.

“It is enormous to move even a little bit beyond the 100 year thinking, but we do have an accountability and responsibility to communities to make sure these assets do last 50 years. They’re embedded into our communities. It’s a balancing act and there’s a cultural component to feel comfortable with change,” McDonald added.