At the moment, adopting an agile framework is a must for organizations that want to respond rapidly to internal and external changes (technologies, government regulations, reorganizations) without losing momentum. According to a McKinsey report, going agile involves striking a balance between speed and stability. Companies that have been able to achieve this balance show strong performance and organizational health.
Electric utilities like Kenergy, discovered the importance of agility early and has been able to adapt to the rapid changes in its business environment: the company reports being able to quickly deploy resources’ on-demand’ to emerging projects and to adjust priorities to meet its current and future business needs.
In this article, we will explore the opportunities inherent in adopting agility in the utility sector and key aspects of the agile journey.
The Need For Energy and utility organization to embrace agile transformation
The agile approach to organizational operations is critical to every industry, and the energy and utility sector is no exception. Agile is an interactive, incremental technique that enables companies to quickly and effectively respond to market upheavals such as technology shifts, new demands, and socio-political changes. In the utility industry, agility is imperative to ensure the adoption of digital transformation. Digital technology is the future of utilities, and only companies that rapidly embrace it will reap the benefits. According to McKinsey, by embracing digital technologies to transform operations and systems, utilities can reduce operating expenses by up to 25 percent and achieve performance gains of 20 to 40 percent in areas such as safety, reliability, customer satisfaction, and regulatory compliance.
A big part of embracing digital transformation is embracing cloud computing and migration – moving legacy application systems to the cloud. Cloud technology enables utility companies to adapt to market conditions by featuring flexibility. Besides adapting to external situations, this virtual solution also facilitates quick responses to internal requirements. If consumer demand increases, cloud services can be advanced to meet the demand and be easily modified as demand falls. Thus, enabling faster and easier scalability.
Agility can also facilitate improved employee productivity and efficiency. By using cloud technologies, for instance, utilities can promote real-time collaboration and communication among employees, regardless of their location.
Cloud-based platforms also offer document storage, enabling faster access and transfer of team information. A study conducted by Cisco suggests that these collaboration technologies allow companies to increase productivity by 400%. Agility breaks down organizational silos and fosters creativity and innovative problem-solving thanks to the cross-pollination of ideas and a supportive environment. Customer expectations of utility companies have drastically changed. Long gone are the days where the contact between utilities and customers only involved sending and paying a monthly bill. Today, utility consumers expect to have the ability to use a mobile device to interact with the utility, access information about their account on a website, and a more personalized experience. Utilities with an agile mindset can leverage new technology such as big data and artificial intelligence to not only gain insights on consumer behavior and patterns but also to positively affect it. In other words, agility can foster improved customer satisfaction, which translates into increased business revenue.
The four keys to the agile journey
Experiment: Start with customer-focused initiatives and scale gradually
At the beginning of your agile journey, the first step to take is selecting a division, location, or set of functions, to try out the new way of working. For instance, pilot testing on a small portion of the company to determine the effectiveness of the new approach. However, ensure that your company starts with areas closest to the customer – either a flagship customer journey or customer service, as this route offers a wealth of benefits. Next, scale-up gradually across the organization.
Orient: Change culture by changing behaviors and develop T-shaped skills
One of the biggest barriers to adopting agile in companies today is general organizational resistance to change, research says. To create an Agile organization, particularly its leadership needs to engage, empower, and inspire employees to new ways of working. The executives must act as role models – displaying openness to change and adopting new behaviors. Employees should also be encouraged to develop T-shaped skills – this means that although they have defined areas of specialization, they can adapt to work broadly across other aspects of a project.
Govern: Link agile portfolio planning and operations with business strategy.
Governing entails revisiting the management of strategic portfolios. Portfolio management in an Agile world should involve the connection of business strategy with the delivery of value across different layers of the organization much more dynamically. This is crucial in optimizing performance across the enterprise portfolio.
Accelerate: Modernize IT with DevOps and microservices.
To prepare for the new economic era, where industry sectors will be replaced by new ecosystems, and data will be the currency, organizations need to modernize their monolithic IT infrastructure by boosting their resilience through new collaborations – combining Agile and DevOps efforts. Introducing agility to DevOps initiatives offers a wealth of advantages. Agile DevOps enable faster software development, promote collaboration, share responsibility, and, most importantly, ensure improved quality, faster time to market, and enhanced customer experience.
Benefits of Adopting Agile
Improved Quality: One of the essential benefits of an Agile framework is improved product or service quality. Unlike traditional methods, where testing only starts once the product is finished and collaboration is limited, in Agile, the project is broken down into manageable parts, allowing the Agile team to focus on high-quality development, testing, and collaboration. Developing frequent builds and conducting testing and reviews during each iteration allows companies to find and fixing defects quickly and identifying expectation mismatches early, thus optimizing quality.
Customer Satisfaction: This is another crucial advantage of embracing Agile. In fact, a recent report reveals that 58% of industry professionals believe customer satisfaction to be the greatest benefit of improving business agility. With Agile, the customer is always involved in the decision-making process, which leads to greater customer retention. Whereas in the traditional framework, the customer is only involved in the planning phase and does not influence execution, affecting flexibility and adaptability. By keeping the customer in the loop and using their feedback to implement changes, Agile enables organizations to deliver value to the customer and ensure that the final product is truly according to their requirements. Reduced go-to-market time is yet another benefit of Agile that impacts the customer experience. Faster time to market allows many companies to enjoy the first-mover advantage. A recent client story cited on Insights, a utility company with over 5 million customers achieved higher customer satisfaction and engagement by adopting an Agile framework.
Project visibility: According to a new report by Digital.ai, 65% of professionals surveyed identified project visibility as one of the top benefits of Agile implementation. Visibility is essential to allow leaders and teams to adapt quickly to changes–without project visibility; it is difficult to monitor and measure productivity improvements–teams and leaders of an organization need to know where they are focusing. By establishing and implementing an Agile approach, companies can increase team and leadership visibility, thus achieving customer value.
Enhanced team morale: In an Agile environment, agile teams self-organize and self-manage themselves, thus giving them increased autonomy and authority over their decisions. On the other hand, the project manager shields the team from disruptions from sponsors and management. With the cross-functional nature of the teams, members learn new T-shaped skills and grow in their current roles. The team holds frequent meetings to discuss challenges and statuses, letting them collaborate better. By providing an environment where teams are close-knit and can have flexible team structures, agile significantly improves employee morale, boosting their productivity
Competitive advantage: Agile companies can harness short-term opportunities, giving them the ability to be first movers. They can learn from their mistakes and drawbacks, readjust trajectories quickly and deviate from plans. And they can confidently react proactively to keep pace with (or surpass) the competition.
Organizations still using legacy systems may find going agile as a paradigm shift initially but the industries direction is unmistakable. Especially those in the utility sector, to scale fast and maintain high customer experience, Agile approach to transformation becomes inevitable for long-term success. Agile Product Engineering offers a wide range of possibilities and opportunities, and first-mover utilities are already seizing them. Studies reveal that large agile utilities are breaking from the fortress mentality that inhibits the adoption of new ideas and moving towards investments that allows them to search for new ideas and tap information flows from energy start-ups.