| | OCTOBER - NOVEMBER 20178The utilities industry is quickly becoming very dynamic and fast moving like never before. Digital disruption impacts all lines of business, bringing with it opportunities and challenges.Utilities have been affected by the expansion of renewable energy, a surplus of distributed generation and advancements in battery storage. In addition, new customer engagement behavior and disruptive business models have been accelerated by the Internet of Things (IoT) which are now affecting how utilities will power the next generation.Imagine a young, 26 year old executive sitting in their office overlooking the New York City skyline admiring a clear day in Manhattan. Below, almost all of New York City's taxi cabs are electric vehicles. A new type of energy source is a few blocks away providing abundant electricity to power transportation in a city where the ever growing population is driven by urbanization. Some experts also say the electric taxi prevented a catastrophic environmental disaster from occurring in New York City. Does this story take place 20 years into the future? It's hard to believe, but it actually took place over 100 years ago in 1899. And the catastrophic environmental disaster? Solid waste from thousands of horses used for transportation in New York City at the turn of the century. In 1899 and 1900, electric cars outsold all other types of automobiles, such as gas and steam powered vehicles. Ironically, an electric invention called the electric starter, propelled gas powered vehicles to the forefront and signaled the disappearance of the electric car for more than 100 years. But during that time, even without the need for electrified transportation, electric utilities grew and prospered globally. Until recently, not much changed in the last 100 years for the Utility business model. But now, some argue that another environmental disaster­global warming is bringing back the electric car along with a series of simple inventions which could spell the end of the traditional utility business model as we know it today. However, advanced technology can help enable a "Digital Utility" to address changing business models and business processes, moving forward to inspire and shape a digital strategy powering the next generation.The Digital Energy NetworkThe consequences of changing business models are dramatic. Established utilities based on trillions of dollars in infrastructure collapse. New market entrants, such as Google, Amazon and Tesla, disrupt the value chain. Rapid technical and social innovation puts new capital investments at risk. Consumers, communities, and companies go "off the grid" with new wind, solar, water and storage technology.The industry is currently balancing the efficient operations of its existing infrastructure with the need to adapt to the volatile market environment. Leading utilities are re-evaluating their physical assets and customer relationships to:· Reimagine business models to find new revenue and profit sources by offering The Digital Utility Powering the Next GenerationBy Henry Bailey, Global VP, Utilities IBU, SAP [NYSE: SAP]CXO INSIGHTS
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