“It’s an exciting time for the utility industry as companies look to accelerate investments in infrastructure, a more diverse energy generation mix, and improved services for their customers” said Regina Mayor, National Sector Leader, Energy, Natural Resources and Chemicals. “This has meant that companies are focusing more strongly on next generation talent, technology investment, and innovation while they shift their organizational and asset portfolios.” 

Top Risks:
A top strategic priority over the next three years for utility CEOs is minimizing cyber security risks. To address cyber risks, 44 percent plan to devote significant investments or resources to cyber security solutions over the next three years. This is important as only ten percent of utility CEOs believe their organizations are fully prepared for a cyber event.

Another strategic priority over the next three years for utility leaders is responding effectively to regulatory change. Compared to U.S. CEOs in other industries, leaders of utilities are slightly more concerned that regulations will inhibit their growth (93% vs 84% total U.S. CEOs). Regulatory risk was even considered a greater concern than environmental and cyber security risks to CEOs.

Top Priorities:
CEOs of utility companies indicated plans to devote significant investments or resources over the next three years to cyber security solutions. They also believe that automation and machine learning is likely to replace at least five percent of their workforce in the next three years in manufacturing/operations, engineering and technology.

“Declines in overall energy consumption over the past several years and a constrained outlook for demand are forcing electric utilities to seek new avenues for growth,” said Matt Smith, Advisory Practice Leader, Energy, Natural Resources and Chemicals. “As non-traditional entrants take advantage of opportunities created by changing market dynamics, utilities are taking steps to respond by deploying smart grid and other grid-monitoring solutions, developing D&A capabilities, and also by building partnerships to bring new products to the grid.”

Utility CEOs also report that their organizations are using disruptive technologies most often to improve service offerings and non-financial reporting, as well as to increase sales. In fact, many utility companies seem to be leveraging data and analytics (D&A) to drive business efficiencies, with CEOs noting that their organizations are using D&A to improve financial reporting (63%) and manage risk (61%).

They also characterized their organizations as being highly capable of fostering a culture of innovation more than other CEOs. This may be due to the fact that over three quarters of them approach innovation as one of the top three issues on their personal agenda. They also characterize their organizations’ approach to innovation as being accelerated, or regularly occurring with a defined approach, tools, processes and resources available to aid employees innovate with some direction from leadership.

“Despite consumers’ perception that utilities are a less nimble, more regulated type of business, savvy executives are realizing the importance of innovation and the need to develop leading-edge products that are responsive to customer needs,” said Mayor.