The Will and the Way: How Public Utilities Can Overcome Common Transformation Challenges

What you need to know: Aging systems, data silos, regulatory pressures and talent gaps complicate enterprise transformation for public utilities. A strategic, future-focused approach to change is the key to overcoming these hurdles.

Why it matters: Public utilities need to modernize their operations to remain competitive, compliant and resilient. Overcoming transformation challenges allows them to adapt to industry shifts, take advantage of new technologies and improve service delivery.

Bottom line: Proactive strategies — focused on intent, modernization, integration, security and talent — can help public utilities navigate transformation complexities and build a sustainable, efficient future.

___  ____  ___

Enterprise transformation is a significant undertaking for any organization, but it can be particularly challenging for public utilities. An array of obstacles, from aging infrastructure to talent gaps, complicate these organizations’ efforts to modernize their operations so they can adapt to changing regulations and market dynamics more nimbly and operate sustainably for the long term.

As they seek to navigate these diverse issues and prevent them from sidelining their transformation goals, it can benefit public utilities to keep an old saying in focus: “Where there’s a will, there’s a way.”

We know from Protiviti’s Top Risks survey for 2024 that the will to evolve and become more future-ready is already present in many of these businesses. For the first time in many years, energy and utilities industry leaders did not rank resistance to change in their organization as a key concern. Less resistance to change suggests these companies are more open to change and may even have a propensity to change.

As for the way, public utilities will need to consider taking multiple approaches to overcome barriers to progress. With that in mind, here’s a look at several common issues that can hinder enterprise transformation in public utilities, followed by five actionable strategies to help organizations move past these issues and drive positive, purposeful change.

Legacy Systems and Point Solutions

The first challenge is not breaking news to anyone familiar with the public utilities sector. These businesses have long relied on legacy systems and custom-built solutions tailored to their unique operational needs. While these systems have supported decades of operations in many cases, they lack the interoperability and scalability necessary to enable modern transformation initiatives.

Meanwhile, the limited availability of enterprise-grade solutions for niche processes, like energy trading, has led to a proliferation of point or custom solutions. This, in turn, has led to fragmented IT landscapes, where isolated systems create inefficiencies and challenges in adopting new technologies.

Disparate Data Sources

Public utilities must manage data from a multitude of sources, including operational systems, customer databases and regulatory platforms, each with unique formats and standards. Reconciling these disparate data streams is an arduous task that can lead to missed insights and delayed responses.

Data silos not only hinder efficiency. They also limit an organization’s ability to make the most of AI and advanced analytics tools and enable timely, data-driven decision-making.

Limited Scalability and Maintenance Challenges

Aging infrastructure struggles to scale with growing operational demands, and maintaining these systems is a resource-intensive commitment for public utilities. Outdated tools, insufficient documentation and a shrinking pool of skilled professionals who know how to “keep the lights on” contribute to the risk of downtime and other operational disruptions.

Regulatory and Security Pressures

Public utilities must navigate stringent regulatory requirements while defending against escalating cybersecurity threats. (The latter is a risk that many E&U leaders see as a top concern for their business this year and looking out over the next decade, by the way, according to our 2024 Top Risks survey.)

Ensuring compliance and safeguarding sensitive data from cyberattacks require significant resources, and adds yet another layer of complexity to enterprise transformation projects.

Talent Gaps and Outdated Structures

Workforces inside public utilities that are aligned with legacy systems and dated methodologies often lack the skill sets required to adapt to and innovate effectively in modern IT environments. Many organizations face “single points of failure,” where critical expertise is concentrated among only a few individuals.

This is a precarious position for any company attempting to modernize and optimize their operations and become more future-focused.

Strategies for Tamping Down Common Transformation Hurdles

Enterprise transformation in public utilities is undeniably complex, but the rewards of modernization —enhanced efficiency, improved resilience and long-term sustainability — are well worth the effort. By addressing the common challenges outlined above head-on, organizations can position themselves as leaders in an increasingly competitive and environmentally conscious industry. Here are five actionable strategies to help them achieve that:

1. Transform with intent: Enterprise transformation must begin with a clearly defined strategy that is aligned with the company’s long-term objectives and industry and global trends. Revisiting and refining this strategy regularly will help ensure transformation projects remain relevant in a rapidly evolving business and regulatory environment.
2. Modernize core systems: Replacing legacy infrastructure with modern, cloud-based solutions is also critical to enterprise transformation success. Modular architectures and microservices offer scalability and flexibility, enabling smoother integration of emerging technologies — from generative AI to Internet of Things solutions — and new operational models.
3. Enhance data integration and governance: By implementing robust integration tools and data governance frameworks, public utilities seeking to transform can break down data silos, streamline data flows and generate actionable insights faster and more accurately. Adopting advanced analytics platforms will enable more informed, data-driven decision-making, too.
4. Fortify cybersecurity measures: Adopting a multilayered approach to security, including encryption, advanced threat detection and incident response protocols, is vital for public utilities to protect their sensitive data and ensure compliance with increasingly stringent regulatory standards around data security and privacy.
5. Invest in talent development: The people factor in enterprise transformation should never be overlooked or underestimated. To build a future-ready workforce, public utilities should step up targeted training, professional development and certification opportunities to empower employees to adapt to new technologies like AI and embrace innovative methodologies.

With these proactive strategies and a commitment to continuous improvement, public utilities can turn their will to change into action — and pave the way to a more efficient, resilient and sustainable future.

Protiviti’s global energy team partners with power, utilities and renewables leaders to help understand market trends and opportunities. By combining the right expertise across various disciplines, we ensure our clients have holistic solutions to enable their future success. Learn more about how we’re different.