The global energy and utilities sector is making increasing use of intelligent automation, including a significant rise in the use of Artificial Intelligence (AI) since 2017, but executives are underestimating its full potential with large scale projects taking a back seat, according to new research from the Capgemini Research Institute.
The “Intelligent Automation in Energy and Utilities:The next digital wave” study found that nearly half of respondents have under-estimated the benefits they derived from their intelligent automation initiatives, while only 18 per cent of organisations are deploying quick-win use cases, and just 15 per cent of those surveyed said their company is deploying multiple intelligent automation use cases at scale.
The report highlights that the traditional energy and utilities business model is under pressure worldwide, with technological changes and increased competition making their presence felt. It cites that automation and AI will also be instrumental in helping these companies to meet climate change goals and the growing demand for clean, cheap, reliable energy.
The report also shows significant regional and sub-sector disparities in the scaling of automation:
- In the United States, 23 per cent of energy and utility companies have deployed intelligent automation initiatives widely at scale, as have 16 per cent in both France and India, compared to just 8 per cent in the UK.
- Meanwhile, a fifth (20 per cent) of oil and gas executives reported multiple use cases at scale, compared to just 6 per cent from water companies.
While the sector is deriving significant value from intelligent automation compared to other industries, scaling, seizing quick-wins and overcoming the critical digital skills gap will be key to bringing it into the mainstream.
Key findings of the study, which surveyed 529 leaders at manager level or above in energy and utility companies, include:
Intelligent automation is delivering significant benefits to the sector
The report finds that the sector is already seeing significant value from automation, in terms of boosting operations, top-line growth and engaging customers, compared to other industries. A consistently higher percentage of executives in the energy and utilities sector said they’d achieved benefits from their intelligent automation initiatives compared to the response for ‘all sectors’. Example areas of benefit included:
- 40 per cent of executives said they had seen an increase in operations quality (30 per cent for all sectors)
- 45 per cent had seen an increase in inbound customer leads (27 per cent for all sectors)
- 81 per cent had improved the customer experience through faster responses (60 per cent for all sectors)
- 78 per cent saw a reduction in the number of processes relating to queries and purchases (61 per cent for all sectors)
- 32 per cent had seen an increase in staff productivity (26 per cent for all sectors).
Figure 1: Percentage of executives saying that they achieved operational benefits from their intelligent automation initiatives (top three benefits ranked)
In terms of the benefits, 47 per cent have underestimated the cost savings, 48 per cent the customer satisfaction, and 45 per cent the impact on net and incremental revenue.
Abhijeet Bhandare, Chief Automation Officer at GE Power, explains, “We have a very clear filtering criteria defined for automation use cases. We have close to 200 automation ideas in the pipeline, and on average about 50 per cent to 60 per cent of them will be rejected. It is important to focus your attention on the remaining 50 per cent, as they will give you the most value. And you must have the right criteria – whether it is value, efficiencies, cost savings or the opportunity cost. Organisations should focus on quality over quantity of use cases.”
Figure 2: Percentage of executives saying that they achieved revenue growth benefits from their intelligent automation initiatives (top three benefits ranked)
80% of organisations are missing out on quick wins for critical use cases
In core functions, only 18 per cent of energy and utility organisations are deploying quick-win use cases (those that are low on delivery complexity but high in terms of benefits achieved such as forecasting, energy trading, yield optimisation, grid behaviour interfaces and complaints management). Instead, just over a third of the energy and utility organisations (38 per cent) are focusing their efforts on use cases that are easy to implement but which have a low-benefit upside.
Business related challenges and skills gap hamper deployment at scale
While overall adoption of AI has matured in the sector, with the majority (52 per cent) of respondents having deployed a number of use cases (compared to 28 per cent just deploying pilots two years ago), only a small minority (15 per cent) of executives said their company was deploying multiple intelligent automation use cases at scale.
Business-related challenges were cited by respondents as barriers to scaling including a lack of co-ordination across different business units (37 per cent), a lack of leadership commitment (35 per cent), and an organisational reticence to experimenting with technology that could replace human workers (34 per cent).
Many executives also pointed to a shortage in skills as a challenge. A majority (55 per cent) cited a lack of talent skilled in automation technologies, with 47 per cent identifying limited efforts to reskill employees, 42 per cent the difficulty of retaining employees with the right skills, and 41 per cent employee resistance to learning new skills.
Philippe Vié, Global Head of Energy & Utilities at Capgemini, comments, “The energy and utilities sector is already seeing the difference that intelligent automation can make in improving business efficiency, customer satisfaction, and revenue. Executives are quite rightly making the deployment of automation one of their top priorities.”
He adds, “Now the focus must shift to the factors that will enable the scaling of multiple use cases including an investment in specialist talent, more integrated co-ordination between business units, and a stronger commitment from leadership. Having tasted the benefits of automation, energy and utility companies must now redouble their investment to reap the full rewards.”