Priorities for Adopting an Exponential IT Mindset in the Utilities Industry

Adopting Exponential IT is critical for risk, resiliency, and sustainability.

Analyst perspective

Enable value creation through Exponential IT.

Many utilities have embraced digital transformation as a strategic response to industry disruptions that demand deeper insights from data and faster delivery of value-added services. The rapid influx of generative AI technologies has left technology leaders within utilities struggling to keep pace with emerging digital opportunities while managing the associated risks.

As technological disruption accelerates exponentially, every utility organization will inevitably transition into a digital utility. At this crucial inflection point, technology leaders must shift their mindset to embrace Exponential IT. To capitalize on this upcoming opportunity, IT leaders must evolve into business leaders who unlock advanced value for the organization while mitigating exponential risks effectively.

The utilities industry urgently needs to adopt Exponential IT to counter industry disruptions and embrace opportunities. Recognizing and integrating core foundational capabilities are considered crucial initial steps in starting a successful Exponential IT transformation, resulting in the generation of value in the industry.

Jing Wu
Principal Research Director
Utilities, Industry Practice
Info-Tech Research Group

Executive summary

Your challenge

Current IT practices are being left behind in the wake of rapid disruptions happening across the utility organization, driven by unprecedented changes, such as the fast-approaching net-zero timeline and the aggressive adoption of renewables.

IT leaders struggle to have highly specialized knowledge of emerging technologies and trends to drive this rapid shift.

IT faces challenges in establishing necessary guardrails ahead of technically astute businesses adopting new technologies.

Common obstacles

The organization lacks clear direction in striking a balance between embracing the benefits of emerging technologies and effectively managing the risks involved.

The ability to rapidly deliver services and stay ahead of industry trends and business demands is becoming increasingly critical to keep pace with the evolving technology landscape.

IT and OT are grappling with existing technical debt, diverting focus from maximizing the value of new technologies.

Info-Tech's approach

Recognize the urgency of adopting Exponential IT within the utilities industry to combat industry disruptions.

Comprehend the four priorities of Exponential IT transformation in the utilities industry that are being adopted today to elevate IT's value proposition to the organization.

Acknowledge the foundational capabilities and maturity required to begin an effective Exponential IT transformation, resulting in value creation.

Info-Tech Insight

Utilities face challenges in providing safe, clean, and reliable essential services while ensuring affordability, keeping pace with technological advancements, and managing associated risks. IT leaders must no longer be spectators of rapid disruptions; they must become strategic business partners to the organization's success. Through visionary guidance, Exponential IT should be explored and adopted to secure IT a strong position within the evolving business and technological landscape.

What is Exponential IT?

Exponential IT is a framework defined by Info-Tech Research Group.

The technology curve has recently bent exponentially.

Generative AI has been the catalyst for this sudden shift, but there are more and more new technologies emerging (e.g. quantum computing, 5G), putting significant pressure on all organizations.

Speed is now imperative. All IT leaders and organizations are at risk of falling behind if they do not adopt new technologies fast enough.

Our framework instructs all IT leaders on how to transform their organization and elevate their value-creation capabilities to close the gap between the exponential progression of technological change and the linear progression of IT's ability to successfully manage that change.

This research provides IT leaders with industry-specific priorities for Exponential IT and how to begin an effective Exponential IT transformation, resulting in value creation.

Your Exponential IT journey

To keep pace with the exponential technology curve, adopt an Exponential IT mindset and practices. Assess your organization's readiness and embark on a transformation journey. This report will provide greater insights to help you build your Exponential IT Roadmap.

To access all Exponential IT research, visit the Exponential IT Research Center

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The pace of technological change will continue to increase exponentially in Utilities

IT must solve the problem of rapidly and exponentially increasing expectations.

Organizations are adopting exponential technologies at an accelerated rate due to the rapidly changing landscape. Traditional linear IT is no longer viable to sustain IT's place as the leading technology provider for their organization.

Failure to launch will leave you far behind. The chasm between the organization's desire to harness technology and IT's ability to deliver it will continue to widen.

The challenges with traditional linear IT:

1. Slow to adapt to more modern service delivery models
2. Processes and decision-making that can't accelerate to meet demand
3. Transactional arms-length relationships with organization units and vendors
4. Insufficient funding and focus on technology innovation
5. Locked into a siloed and hierarchical operating model

The Case for Exponential IT

IT needs to fundamentally transform the way it is operating in the following ways:

1. Build an Adaptive Delivery Model: Enable flexible and efficient delivery of products and services.
2. Optimize & Autonomize Operations: Maximize efficiency while mitigating risks through intelligent automation and data-driven decision-making.
3. Broker Strategic Relationships: Strengthen and build both external and internal relationships to better align IT capabilities to organizational goals.
4. Embrace Digital Innovation: Evaluate and adopt solutions that drive consumer value, enterprise growth, and innovation.
5. Cultivate Workforce Flexibility: Dismantle traditional jobs and hierarchies, normalize new collaborative ways of working, and adopt a federated and hybrid IT operating model.

The utilities industry has significant challenges in adopting Exponential IT

Industry changes outpace business practices and technology delivery:

• Business capabilities and services are evolving to address industry disruptions. However, business processes, technological advancements, and employee readiness are lagging due to the risk-averse mentality entrenched in the utilities industry's traditional methods of delivering essential services.
• The pace of change in IT practices has not kept up with the demand for rapid service delivery. The infusion of digital technologies, accelerated by exponential technologies such as AI, challenges the status quo of IT strategy and operating models.

Maintaining IT expertise amid rising business tech-savviness:

• IT and business leaders struggle to obtain highly specialized knowledge of emerging technologies and trends to drive this rapid shift. A deep understanding of Exponential IT is required to enable the utilities industry to accelerate its digital transformation, leveraging the power of exponential technologies.
• Businesses are becoming increasingly tech savvy, and IT departments are no longer the sole providers of technology solutions. How can IT maintain its reputation as subject matter experts (SME) in areas where businesses still require assistance without being seen as roadblocks?

IT/OT capability is misaligned with risk appetite:

• The need for continuous improvement and digital transformation propels businesses to rapidly adopt technology with growing accessibility, unintentionally introducing inherent risks associated with emerging technologies. In some cases, involving the IT department is an afterthought.
• The risk profiles and risk management practices of IT and OT are not at the same level of maturity. The increasing technical debt in both domains may not align with the risk appetite of the organization.

Imperatives for Exponential IT adoption in Utilities and how to navigate disruption

Industry expectations and obstacles

1. Balance between risks and rewards of emerging technologies in your digital transformation efforts
   • The ability to strike a balance between the rewards and risks associated with emerging digital technologies will be highly sought-after among utilities leaders, who have adopted a digital transformation strategy to address industry disruptions.
   • Data and analytics, cybersecurity, cloud technologies, and AI and automation are the most impactful technologies on business from 2021 to 2023, according to a global executive survey (KMPG, 2023).
   • Cybersecurity is the number one risk organizations want to mitigate by adopting AI within their organization in 2022 (Stanford University and McKinsey & Company, 2023).
2. Rapid technological advancement and widening gaps in knowledge and skills
   • Utilities are still navigating through the IT/OT convergence journey. IT/OT technology leaders and experts are striving to bridge the knowledge and skills gaps among these two domains. The rapid adoption of emerging technologies further complicates the situation.
   • Cloud computing security, AI/ML, and zero trust implementation are the leading skills gaps among global cybersecurity teams in 2023 (Veeam, 2022).
3. Technical debt and legacy system modernization efforts hinder progress in digital transformation
   • Lack of IT skills or transformational expertise and dependence on legacy systems and technology are the top two factors preventing digital transformation progress, according to a 2021 global IT leader survey (ISC2, 2023).

Info-Tech Insight

The utilities industry is experiencing disruptions, prompting an urgent need for digital transformation through exponential technologies. The rising expectations of customers in the digital age and the regulatory focus on energy transition and sustainability underscore the necessity of embracing an Exponential IT mindset.

Utilities opportunities are developed from industry disruptions