The global energy and utilities sector is increasingly using intelligent automation, which also includes the use of Artificial Intelligence (AI), with a significant increase since 2017. New research from the Capgemini Research Institute also shows that, however, the executives of these companies are vastly underestimating the potential of this technology, so much so that many large-scale projects are being sidelined.
The research, entitled "Intelligent Automation in Energy and Utilities: The next digital wave" found that nearly half of respondents underestimate the benefits of their intelligent automation initiatives, while only 18% of companies are developing case studies use that can quickly deliver benefits, and only 15% of survey respondents say their company is implementing several large-scale use cases involving intelligent automation.
The report points out that, around the world, the traditional business model adopted by energy and utilities companies is currently under pressure, due to technological changes and increased competition. According to the report, automation and AI will also play a key role in helping these companies meet their climate change goals and meet the growing demand for clean, affordable and reliable sources of energy.
The report also highlights the scalability of automation exhibits significant regional differences and sub-sector:
· In the US, 23% of energy and utilities companies have implemented large-scale intelligent automation initiatives, compared to 16% in France and India and only 8% in the UK.
· At the same time, one-fifth (20%) of oil and gas executives said they have implemented multiple use cases at scale, as opposed to 6% of water companies.
The industry is still benefiting from the use of intelligent automation compared to other industries, but it will be necessary to focus on scalability, immediate benefits and bridging the digital gap for this technology to become widespread.
The main findings of the study follow, in which 529 executives in managerial or higher positions of companies in the energy and utilities sector participated.
Intelligent automation offers significant benefits to the industry
The report highlights that, compared to other industrial sectors, the energy sector is already reaping a strong advantage from automation, in terms of greater operational efficiency, profit growth and customer engagement. Furthermore, the sector, compared to all the other sectors considered by the study, has a higher percentage of executives who affirm that the initiatives implemented by their companies in the field of intelligent automation are already giving the first benefits. In particular:
40% of executives said they saw an increase in the quality of operations (30% for all sectors)
45% reported an increase in inbound customer leads (27% for all industries)
81% improved customer experience through faster response time (60% for all industries)
78% saw a reduction in the number of processes related to queries and purchases (61% for all sectors)
32% noticed an increase in staff productivity (26% for all sectors)
In terms of benefits, 47% of respondents underestimated the cost reduction, 48% the customer satisfaction and 45% the impact on revenues, both net and incremental.
Abhijeet Bhandare, Chief Automation Officer at GE Power, said, “We have a very strict selection process for automation use cases. We have almost 200 new automation projects in the pipeline but, on average, around 50-60% of these are rejected. It is important to focus attention on the remaining 50%, because this is precisely the group from which it is possible to derive the greatest benefits. But you also need to use the right criteria – value, efficiency, cost reduction or opportunity cost. Companies should focus on the quality rather than the quantity of use cases."
80% of companies are not reaping the most immediate benefits of strategic use cases
In critical functions, only 18% of energy and utilities companies are implementing use cases that allow immediate benefits (which basically have a low execution complexity but, in return, offer important benefits, such as scheduling, energy trading, efficiency optimisation, grid behavior interfaces and complaint management). Instead, just over a third of companies in the sector (38%) focus primarily on use cases that are easy to implement but do not bring high benefits.
Business challenges and the skills gap hinder large-scale deployment
If on one hand the overall adoption of AI has grown across the industry – with the majority of respondents (52%) stating that they have implemented a certain number of use cases (compared to 28% who, on the other hand, had only implemented pilot projects two years ago), on the other hand, only a small minority of executives (15%) said their company is committed to implementing many intelligent automation use cases at scale.
For respondents, business-related challenges represent barriers to scaling projects, and include a lack of coordination between different business units (37%), lack of commitment from management (35%) and a reticence at the level company to experiment with technologies that could replace workers (34%).
For many managers, skills shortages also pose an additional challenge to implementing intelligent automation. The majority (55%) cited a lack of skilled talent in automation technologies, while 47% said little effort was made to upskill employees. Additionally, 42% of respondents highlight the difficulty of retaining workers with the right skills, while 41% highlighted employees' reluctance to learn new skills.
“The energy and utilities sector – commented Andrea Falleni, Managing Director of Capgemini Business Unit Italy – is starting to understand the real benefits that intelligent automation can bring to improve business efficiency, customer satisfaction and revenues. Executives are correctly placing the implementation of automation among their top priorities. The focus now needs to shift to factors that enable scaling for more use cases, such as investments in specialized talent, more integrated coordination across business units, and increased management commitment. After having tasted the benefits of automation, companies in the energy and utilities sector must now double their investments in order to enjoy all the benefits brought about by this technology”.
