The right kind of transformation is vital for energy sector survival

Moving to a low carbon future means ‘business as usual’ doesn’t exist in the energy sector. Climate change necessitates a fundamental shift, which will be underpinned by digitization – but how should firms approach transformation, when its benefits have so far failed to land?

Energy markets are becoming less predictable. Greater competition, complexity, and regulatory oversight also mean technological evolution is necessary today to enhance efficiency and meet the need for more capacity tomorrow.

The Department for Business, Energy and Industrial Strategy, in the UK, estimates that by 2050, improved flexibility with digitalization could reduce overall costs by up to $14 billion annually.

With profits under pressure across the sector, the margin for error is shrinking fast. Whether a business survives may depend on its ability to embrace digitization.

“Energy companies have failed to achieve substantial business value from digital because their approaches do not account for the unique challenges of being an energy company, which create extraordinary inertia,” says McKinsey.

“Breaking that inertia will require far bolder action than energy companies have been comfortable taking to date. They must commit to transformation.”

Commitment is one thing, but you also need to know what to transform. So, what do energy business need to do to reduce operating costs and get ahead in the global electrification race?

Data analysis is fundamental. Understanding customers will help create new products and services to match demand. Accelerated adoption then requires partnerships around new ecosystems that facilitate the exchange of services, data, and insight through the optimized use of open-source technologies.

Thirdly, energy businesses need to acquire new skills and knowhow. That means developing a talent pipeline based on exciting new applications of technology.

With these elements in place, that inertia highlight by McKinsey can be replaced by digitized production, supply, maintenance, and customer interaction. Providers can become truly customer-centric and retain and build loyal bases with convenience and personalization. Energy can become less about moving fuel enabling investment to shift to new operational use cases for optimization and efficiency.

The final piece of the jigsaw will be artificial intelligence solutions to see through the increasing complexity of a market awash with alternative fuels, distributed energy sources, and uncertain demand – and ensure disaster readiness with capabilities like weather event modeling. Incorporation of digital technologies such as AI into the energy sector, predicts PwC, could boost global GDP by $5.2 trillion and help reduce global carbon emissions by up to 4%.

Yet, much of this is only achievable when specialist open-source software partners provide solutions to enable vital agility gains, create new tools, and meet the demand of a “prosumer” future. By managing all edge and embedded devices from a single location, energy businesses will be able to deliver greater consistency, performance, reliability, and security.

That means onboarding cloud capabilities to support hybrid working environments. Elevated CX and emergency contingencies for customers. And edge AI capabilities for faster reporting, automated workflows, and to reduce time-to-value for critical issues.

As a leader in intelligent edge computing solutions, SUSE is perfectly placed to enable hybrid cloud IT, cloud-native transformation, and SAP usage.

SUSE offers the most adaptable Linux operating system and the only open Kubernetes management platform. Together with our edge solutions, you can transform according to your own priorities and in any environment – multi-cloud, on-prem or hybrid cloud.

If you would like to talk to one of our experts or discover how SUSE can enable the right kind of digital transformation for long-term success, please get in touch.