Industry Impact - The Utility Operations Value Chain

HfS is expanding its industry coverage in 2018 to include detailed IT and business process research on 11 core sectors, powered by extensive buyer research with Global 2000 firms. The transformation and challenges posed by digital disruption and changing competitive environments differ by industry. Subsequently, the solutions and services enterprises in different industries need to cope with change and to shape transformation journeys differ as well. Over the past few years, HfS has created in-depth industry research coverage that focuses on the rapidly changing needs of buyers and the ability of service providers to meet these needs with services built on domain expertise, industry talent, intellectual property, solutions that tackle sticky industry problems, and investments in industry-specific practices, startup ecosystems, and partnerships. We will build on this foundation in 2018, bringing expanded industry coverage, focused on key industry-specific processes and change agents, updated annually.  Our coverage sectors include:

Exhibit 1: HfS Industry Coverage 2018

Source: HfS Research, 2018

In order to give you a taste of what to expect for research in the telecommunications sector, this Point of View report previews our telecom-specific value chain and the in-scope processes and change agents we’ll be examining throughout 2018. We will release telecom-focused Blueprint Spotlight reports in Q2 on business process services and in Q4 on IT services; these will be supplemented by periodic voice of the customer case studies, point of view analyses on change agents, and buy-side research. For more insight into our master research agenda for 2018, please refer to our  report on planned blueprint research.

The Utilities Operations Value Chain

HfS developed the industry value chain concept to graphically depict our understanding of the processes and functions that specific industries engage in to operate their businesses. To truly understand the services needs of an industry, you must understand its industry-specific and horizontal processes and the relevant change agents enabling transformation. 

The industry value chain for utility operations provides a comprehensive overview of services for the utilities industry focused on generation, transmission, distribution and metering, marketing and retail, and market operations. We’ll be including these utilities sub-sector elements in our Global 2000 survey research this year, which will help us gain a more granular understanding of buyer behavior.

Exhibit 2: The Utility Operations Value Chain

Source: HfS Research, 2018

Utility Industry-Specific Processes

Industry-specific processes are categorized under different buckets and include specific value chain functions such as generation, market operations, transmission, distribution and metering, and marketing and retail as outlined in Exhibit 2. These functions represent the range of unique processes undertaken by Utilities to conduct their core business.

• Generation—Processes for generation of power, engineering, maintenance, and management of power generation assets like power plants and distributed renewable assets. Processes also include asset management, production forecasting, data management, and integration of renewable energy resources.
  
  
• Market operations—Processes related to wholesale trading, trading and risk management, market systems, portfolio strategy, asset optimization, and supply planning and sourcing.
  
  
• Transmission—Processes related to the functioning of the transmission grid—infrastructure planning, maintenance, asset performance management, optimization, and load balancing of energy supply. Integration of energy storage, grid aggregation, and smart grid services are also part of this industry value chain function.
  
  
• Distribution and metering—Processes for delivery of products to end-users, including distribution management, smart meter operations, asset performance management, meter data management, and demand response management.
  
  
• Marketing and retail—Customer-facing processes focused for the marketing and sales of power and gas and related services (such as energy efficiency services, beyond the meter services). Processes include customer acquisition, digital marketing, sales channel management, customer service, billing, collections, and customer management.

Our research will evaluate the depth and breadth of service providers offering industry-specific services in these categories and the impact of critical change agents such as blockchain and intelligent automation.

Horizontal IT and Business Processes

Enterprises in all sectors have a range of consistent business and IT processes that are essential to running their businesses but are executed similarly regardless of industry. We refer to these as horizontal processes and have segmented them by IT and business functions as outlined in Exhibit 2. Horizontal business processes include elements such as customer engagement and HR. IT processes include functions such as application development and maintenance and infrastructure management. Our industry-specific coverage of these areas will focus on instances where something unique has been developed for the industry such as cloud-based application. In addition to industry coverage of these horizontal topics, they will also be well covered as part of our functional research dimension.

Enabling Technologies

Lastly, but of vast importance, we have included a value chain section dedicated to enabling technologies, depicted in Exhibit 2. So much of the innovation and change taking place in utilities is driven by these technologies. They include elements such as RPA and AI, blockchain, and smart analytics. We view them as horizontal as they can be used across utilities and leveraged for both horizontal and industry-specific processes. Our research on these topics will focus on how they are being utilized within utilities, which service providers are bringing them to the table, and what real business impact is being realized.

Bottom Line: Enhanced Utilities Research to Help Make an Impact

HfS’ enhanced research coverage of major business operations trends by industry will help identify and articulate business impact in motion. Our coverage of the utility sector will examine core value chain processes across industry-specific and horizontal functions with an emphasis on the impact of critical change agents and partnerships that are focused at solving the complexities and sticky problems the industry faces.