The 2016 Guide to IoT and M2M for the Utilities IndustryFebruary 2016

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ABOUT CHAIONE

Founded in 2008, ChaiOne is an Enterprise Design and Innovation Firm helping the largest enterprises innovate and run effectively. Through ChaiOne’s mobile digital transformation process, they help to unlock untapped opportunities.

INTERACTION DESIGN

USER EXPERIENCE RESEARCH

DEVELOPMENT

DIGITAL TRANSFORMATION

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

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AUTHOR

RACHEL NITSCHKE

Rachel Nitschke is the Content Marketing Specialist at ChaiOne. After graduating with a degree in

journalism, she worked in nonprofit communications before landing at ChaiOne to focus on demand

generation and content marketing.

DESIGNER

LALI LOBZHANIDZE

Lali Lobzhanidze is a Senior Interaction Designer at ChaiOne. In her 10+ year design career, she has designed several innovative digital products for Fortune 500 companies in the Oil and Gas,

Utilities and Retail industry.

05 Introduction

10 Generation

16 Transmission and Distribution

20 Retail

25 Conclusion

The 2016 Guide to IoT and M2M for the Utilities Industry

Introduction

06THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

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INTRODUCTIONHurricane Sandy has just hit the East Coast. Your utility provider has sent out push notifications alerting you of possible outages, promoted preparedness tips on social media and reassured you that extra teams will be on staff in the aftermath— everything they can do to make sure that you and your family feel both well-informed and safe.

When it does hit, you can log onto your utility provider’s mobile website and report outages, and then get estimates on time frame for repair. The utility provider has streamlined the repair process to be as efficient as possible with mobile and Machine to Machine (M2M) communication to enhance the efficiency of the field worker and the information flow back to central command. Their apps also incorporate weather and traffic reports to keep technicians out of the way of residual flooding and downed trees. The team at headquarters is able to get a real-time picture of the grid and assess where resources should be prioritized. The load demand forecast is generated from a real-time picture.

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In normal times, “prosumers” are also equipped with the crucial information they need as well by using a mobile app to see analytics on their power use. Your connected home platform enables those users to manage all of their internet of things-connected devices.

The picture above is not a moonshot for utilities in the next ten years. This transformation is happening now. Consumers have dramatically changed what they want from their utilities. The kilowatt-hour is becoming commoditized and the utilities in deregulated markets who compete on price are emerging into a downward spiral of profits. “Prosumers” want more information and communication from their utility provider in order to make more informed decisions about their electricity use at home. As the use of connected appliances grows, the competition to become the “central hub” for consumers to manage all of the connected devices in the home multiplies.

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Become the central hub and you will be so immersed in your consumers’ decisions and actions that they will never leave. It’s the ultimate opportunity for brand loyalty and consumer stickiness.

“Digital innovation will drive efficiency, engagement

and profits in the utilities industry in 2016.”

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For the utilities operations themselves, companies are staying ahead of their competitors by investing in the fully transformed digital plant, equipped with the full range of M2M, IoT and mobile connectivity. The field worker can become more informed and connected than ever before; long gone are the days of paper work change orders and inefficient manual processes. Data becomes a crucial enabler of streamlining operations. With a real-time picture of grid, assets and people, the decision-making process becomes scientific.

In this guide, we outline the key areas for efficiency for each business line: Generation (including Nuclear and Hydro); Transmission and Distribution; and Retail. For many utility companies, these digital products will grant the most payback in the shortest amount of time in 2016 and lead to a more profitable 2017.

“This revolution is not about utilities companies replacing workers with machines; it’s about enhancing the skills for the workforce with digital products.”

Generation

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GENERATION

Load demand forecasts are highly informed hypotheses, but ones that could dramatically improve with real-time data. If digital plant operators have a real-time picture of the load demand, forecasts become minute-by-minute, significantly decreasing the impact of an increase in demand. The ability to forecast demand and integrate weather forecasts even goes a step further in providing benefit to operators by making the incorporation of renewable energy sources more feasible. Even minor disruptions in cloud cover can affect the energy output of solar; gaining a clear picture of that output and the current load demand minimizes the risk and variability of tapping that energy source.

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

For nuclear generation, the key area to streamline is also the most difficult: complying with government regulations and procedures. Obviously, there are parts of this process that will never be able to be completely efficient and the goal for these processes is safety, not efficiency. There is a way, however, to improve both the safety and efficiency of nuclear generation by focusing on how communication flows between key stakeholders in the regulations process and switching out paper forms for mobile applications.

Consider how much delay is a part of the regulations process. Now, put a number on how much each minute costs. A major part of this delay is the communications between different stakeholders who are required for approvals. For many operating plants, this is done via telephone, requiring the initial inspection officer to go back to central command, use the phone and then wait to get a hold of the stakeholder to move the material to the next stage.

NUCLEAR

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

Now, imagine if this was fully mobilized: the initial inspection officer checks the material in, alerting the stakeholder that an approval would be needed in a certain number of minutes. When the time does come for the approval, the initial inspection officer is able to send a push notification directly from a mobile app that asks the stakeholder to click ‘yes’ or ‘no’ on the approval.

Even just measuring the time associated with the different stages of the inspections process will provide important clues as to the key issues with efficiency. Often, business leaders make incorrect assumptions about the issues with the process and assign blame to the wrong processes or people. Communication during these inspections process is a major bottleneck, but many executives will jump first to the time associated with performing the inspection.

Another key area to mobilize is the process for adherence to health and safety norms.

Using geofencing and contextually aware technologies, companies can deliver the crucial health and safety procedures to employees at the exact time required instead of relying on the employee to review procedures before going onto the work site. Communicating this information right before the employee works with hazardous equipment will dramatically decrease the incidents on plants. A 1913 landmark psychology study showed that for memory, people remember the first (primacy effect) and last items (recency effect) the best, and the middle portions in between the worst. Flooding employees with a whole series of steps before they do a crucial process is in direct opposition to this research, but is often necessary if the entire process is not fully mobilized. An Apple Watch or other wearable technology enables smaller chunks of information at the exact moment needed to maximize the primacy and recency effects, resulting in better adherence to crucial safety procedures and fewer incidents.

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

HYDRO

Hydroelectric power plants can also benefit from enabling more precise information and data flow between machines and people. Automation of the processes of plant operations has long been a key area for efficiency increases for this business. Now, with more situationally appropriate mobile and digital products, field and headquarters workers can become more efficient.

By digitally transforming their plants, hydroelectric power generators gain a critical advantage over competitors in the area of maintenance, which typically represents 5 to 15 percent of expenditures. Connecting plant assets and enabling them to communicate powers a streamlined, data-driven maintenance strategy that goes beyond a sensor sounding an alarm every time an asset fails. Digital plants are able to pull historical and real-time data

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

from sources across the system to decipher why an asset is failing regularly and provide possible solutions— all without an analyst stepping foot into a plant. This root cause analysis is just one part of the transformation the IoT provides; sophisticated digital plants can also customize a maintenance approach for each asset and system. Diagnosing the issue is the first part of the process. It falls on the company to decipher the most efficient route of communication. The information reaches the right person at the right time in a way that makes immediate action feasible. For example, companies may set up push notifications from a mobile app to communicate when action is needed or an asset needs monitoring. “The result: A reduction

in labor costs, asset downtime and catastrophic failures, ultimately increasing the efficiency and ROI of plant assets and reducing failure sources.”

Transmission and Distribution

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

With aging grids and workforce assets, utilities companies need to manage assets more efficiently. The Industrial Internet of Things (IIoT) can have a huge impact on operational efficiency and productivity gains for the utilities industry. According to a report by Accenture, investing in the IIoT in areas such as automation and more flexible production techniques in manufacturing can boost productivity by 30 percent. Being able to connect the data from sensors on machines out in the field such as meters to programs back in an office is huge. Workers will be able to analyze data coming from these machines remotely, saving them time that would have normally been wasted from driving out to different sites.

TRANSMISSION AND DISTRIBUTION

“The #IIoT can boost productivity by 30 percent

by enabling automation and flexible production.”

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

Field workers already have mobile devices, which for many companies, is where mobilization and optimization of these tasks ends. This is a key missed opportunity and one that will generate losses of crucial competitive advantage in the next two to five years. Forward-thinking companies need to go beyond field workforce communication and empower more connection between every participant in the transmission and distribution process.

For 2016, the most crucial investments to make will be to streamline the field worker process. Many companies with mobilized forms have failed to conduct appropriate user research on the processes for field work, exposing the company to risk that the mobilized forms actually decrease

efficiency and safety out in the field. For example, one utility company required transmission line repair employees to use smartphones to log data on asset performance during the process, using a difficult pinch-and-zoom user interface to see the fields on the form. The problem: these users are up on a ladder and potentially in direct sunlight. Asking them to perform this difficult task with one hand and often shielding the screen in order to see it leaves zero hands to hold on to the ladder and requires complete focus on the screen. This application actually endangered the safety of the workers. Going out into the field to see how users actually perform the tasks on their tablet or smartphone with ethnographic and human factors researchers will yield these important insights— before the product launches and fails, losing potentially millions of dollars.

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

Another factor that can dramatically increase the efficiency of the transmission and distribution remote worker process is controlling the communication flow between workers and health and safety coordinators. Before a worker goes into work on live production equipment or confined spaces, phone calls and forms go back and forth in order to authorize the worker to perform the task. Inject push notifications, automated robocalls, mobilized forms and real-time information on time estimates; this process becomes much more efficient and targeted.

Retail

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

RETAILFor many utility providers, consumer-facing applications are their go-to project for mobility to meet business KPIs around customer retention and engagement. The issue is that this first mobility project is much more critical than utility providers expect; nearly one-third of smartphone users will delete or stop using an app after trying it once. It’s critical to get the mobile user experience right the first time, which requires an upfront investment in user experience research to determine what, exactly, your users want from their mobile app experience. Yes, consumers want to pay bills online, but what is the best user pathway for the payment process? Is your payment process missing out on opportunities for engagement with customers?

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As you can see in the chart above, making changes to adjust the user experience for consumers after the app has launched is much, much more expensive than performing the contextual inquiries, task flow analyses and other data-driven research on user behavior before writing code.

Incorporate users into your process when their changesare still possible to implement. Every stage generates a ten-fold increase in the cost to make changes.

Cost of Requirement Correction $10,000

forResearch

phase

$1

forInteraction

Designphase

forDevelopment

phaseforQA

phase

forUser Feedback

phase

$10

$1,000

$100

ProjectTimeline

Chart from “Error Cost Escalation Through the Project Life Cycle.” NASA, 2008.

Retrieved from http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/20100036670.pdf

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

Consumers are also looking to their energy providers for education around their energy use. In a 2013 report, Accenture found that small- to medium-sized businesses expected more from their energy providers to help conserve energy. Of the 2,200 businesses surveyed, about 52 percent in non-competitive markets and 37 percent in competitive markets said that they believe that utilities should help them better manage energy costs. The same report also found that these consumers are a flight risk; about 35 percent were considering switching energy providers.

50 percent of 2,200 small businesses surveyed said

that utilities should help them better manage energy costs.

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THE 2016 GUIDE TO IOT AND M2M FOR THE UTILITIES INDUSTRY

As connected appliances and devices in the home proliferate with all of their separate apps for management, a new battlefield for becoming the “central hub” is emerging. Utility companies, hardware providers (Nest, Apple), cable companies, telecommunications providers, and others are all trying to serve consumers as the central dashboard to control all of the connected devices in a home. Utility companies have the advantage: your products are integral to day-to-day life. Provide your consumers with a platform to manage devices and integrate with common IoT household appliances.

Consider why: a consumer will be much less likely to switch providers if it also means going through another rigorous and difficult integration with a different central hub, especially if their new provider does not have the capacity or features to serve as the central hub.

Conclusion

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Utilities companies are facing a very different reality in 2016. According to Cisco Systems, by 2020, the amount of Internet-connected things will reach 50 billion, with $19 trillion in profits and cost savings coming from IoT over the next decade. For the utilities industry, investing in digital transformation will generate serious payback and ROI by improving efficiency, safety and customer engagement.

CONCLUSION

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