electricity-pylons
Infrastructure Management

Utilities need to heed lessons from Google to add value

When considering the impact technology is having on the utilities industry, the most obvious topic is data. Not only do power and water companies create a great deal of data, but they also have a reputation of not being very good at managing it. This is to the extent that a few years ago, some wag called utilities companies self-regulating due to their inability to do anything untoward, or indeed anything at all, with the information they held about their customers. 

Perhaps rightly therefore, utilities are worried about losing control of their data to cloud-based behemoths such as Google/Alphabet, who do appear to have the necessary platforms to do something with all the bits and bytes being generated by, well, generators and indeed, from across the grid.

“Right before our eyes, the search giant is weaving a web of services and applications aimed at collecting more and more data about everyone and every activity,” wrote industry observer Frederic Filloux. “Google will soon be in the best position to provide powerful predictive models that aggregate and connect many layers of information.”

To add insult to injury, such upstart start-ups have had the audacity to step onto utility companies’ core turf — that of power generation. Last year Google made a major investment into wind and solar plants, ostensibly to power its own data centres. And meanwhile, car manufacturer (or is that what the company is?) Tesla recently announced a battery pack for the home, which can charge from the grid while energy is cheaper, then discharge during peak times. As companies like renewable power company Good Energy illustrate, the nature of the power grid itself is changing. 

But neither data management nor a changing grid is the big whammy. A power-grab is taking place right under the noses of the traditional resource providers, and they are either too busy or distracted to do anything about it. One perpetrator is, indeed, Alphabet: when the company formerly known as Google acquired smart thermostat vendor Nest, this was seen as a foray into the world of smart devices and, indeed, the data they generate. 

Read between the lines however, and it becomes clear that Nest’s aspirations are far bigger than that: the goal is to position the Nest brand itself as the preferred platform for the connected home. Or, as Greg Hu, who is running the Works with Nest program puts it, the ‘conscious' home. Let’s consider the evidence: for a start, the brand. Apart from the “We’ve been bought for $3.2B” blog, there’s no mention of either Google or Alphabet on the Nest site. 

Second, we can consider the Works with Nest program itself. This now involves over 12,000 developers from a wide variety of companies, both new startups and established brands including Yale, Whirlpool and ADT. To coin a phrase, if “it’s the ecosystem, stupid,” then Nest is looking to position itself at its plumb centre. The spin-off benefit is that the program gives new companies something to plug into, and older companies something new to offer. 

Third, we can consider Google’s role as a platform provider. The company’s attempts to compete against social sites Facebook and Twitter may have had sub-optimal results, but they have given the company an infrastructure that can cope with multiple updates from, well anything. The fact that Nest and Google have currently independent efforts to create an IoT platform is largely irrelevant; more important is that the drive to create such platforms is relentless. 

Quietly but quite intentionally, this is a brand-grab, a first move into brand familiarisation such that the term ‘Nest’ becomes synonymous with the social network of stuff we are creating in our daily lives, and thus becoming the platform du choix for the smart home. The Internet of Things may have barely got off the ground, but savvy strategists know that the real value lies not in devices, nor in the data per se, but in the relationship between a trusted brand and what the data represents.

It’s not just Google/Alphabet doing it, either. Look at Xively, Zatar or Samsung’s SmartThings, all of whom would give their right arms to take a default position in the connected homes of the near future. The telcos are on to it: in January, O2 announced it would be launching AT&T’s ‘digital life’ service in the UK, for example. But utilities companies, who arguably are already well established in the home, are lagging well behind the curve. 

Utilities companies are, indeed, getting smarter about using data, but data ownership is only one facet of what they need to worry about. If anything, the data is a symptom of the trust relationship between brand and consumer. By not targeting the home automation market directly, utilities companies are consigning themselves to be resource providers only, with business models driven by efficiency rather than any particular value-add. While we will always need people to run our power and pumping stations, these are unlikely to be the greatest sources of future ROI. 

 

(Additional research by Ben Collins)

 

Related reading:

Lessons from Nest

Google is the mammoth vampire squid of tech

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Jon Collins

Jon Collins is an analyst and principal advisor at Inter Orbis. He has over 25 years in experience of the tech sector, having worked as an IT manager, software consultant, project manager and training manager among other roles. Jon’s published work covers security, governance, project management but also includes books on music, including works on Rush, Mike Oldfield and Marillion. See More

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