In our experience, most utilities are approaching smart too cautiously. With smart, as in every other large-scale change, it's important to identify the risks from both action and inaction.

Power and utilities (P&U) is a sector in transformation.

Among the pressing challenges the P&U sector faces are an increasing demand for power while resources become increasingly scarce, an urgent need to build or improve infrastructure, and the shift away from fossil fuels to cut carbon emissions.

Smart meters, grids and homes are part of the solution, as they bring better utilization of IT, new communication structures and the active participation of consumers. With smart, for example, it becomes much easier to connect and integrate renewable energy sources to the grid.

But winning in smart will require utilities to partner with organizations beyond their traditional base as they are asked to do new things, such as manage huge volumes of smart meter data or become much more customer focused.

Ernst & Young is helping companies across the P&U sector to assess opportunities and revise strategies in light of the potential transformation that smart brings with a portfolio of smart services.

In our experience, most utilities are approaching smart very cautiously — too cautiously perhaps. With smart, as in every other large-scale change, it's important to identify the risks from both action and inaction. For example, how is your business going to:

Manage transformational risks

• Making sure your strategy keeps pace in a rapidly changing market
• Transforming customer experiences and perceptions to build trust
• Gaining the new skills and experience needed to exploit the value of smart, particularly through joint ventures on smart home services
• Assessing if/where you can make money from smart

Execute change programs

• Improving customer service effectiveness
• Educating customers about smart meters and new tariffs that encourage off-peak energy consumption
• Implementing innovative new technologies and adapting business processes

Reduce operational risks during execution

• Understanding the true costs and value of your customer base, and which customers are the most profitable
• Handling privacy and IT security infringements that could jeopardize the success of smart meter rollouts
• Avoiding losses at financial subsidies by non-compliance with legal and regulatory requirements

To help you assess whether your organization is ready for smart — and which areas need improvement — we have developed a smart readiness diagnostic tool. This tool takes you through a series of questions based on the seven characteristics of a smart winner and provides a good starting point for planning your smart journey.