On July 11, 2024, Ofwat unveiled its draft determinations, setting the stage for Asset Management Period 8 (AMP8)—the most significant investment period in the UK water industry’s history. As a water company leader, you’re now facing new challenges and opportunities as you prepare your company for this transformative era.
In this blog, you'll gain valuable insights to help you navigate this critical period, including:
- The challenges you and others in the UK water industry are facing, and why traditional approaches are no longer sufficient.
- How you can leverage data-driven strategies to revolutionise water management, from precision problem-solving to enhancing your customers’ experiences.
- Three key areas where you must transform your business to maximise ROI in the data revolution.
- Practical steps you can take to navigate the AMP8 period successfully, based on North Highland's experience in highly regulated industries.
By the end of this piece, you'll have a comprehensive understanding of your sector's imminent transformation and a starting point for reimagining water utility operations. You'll learn how innovative solutions can help you address operational inefficiencies, meet regulatory pressures, rebuild public trust, and deliver value for your customers and the environment, enabling you to turn challenges into opportunities and lead the way into a more sustainable and efficient future.
Where is the industry today?
The UK water sector stands at a critical juncture. You’re facing a multitude of challenges that demand a sweeping transformation in your approaches and ways of working across your organisation. While industry discussions focus on the impending change in AMP8, a crucial question emerges: What will drive meaningful transformation for you?
The industry’s challenges are well-documented:
• Operational inefficiencies
• Talent and skills shortages
• Intense regulatory scrutiny
• Waning public trust
These issues are compounded by mounting debt, regulatory penalties, and the delicate balance of maintaining affordable customer bills. Yet, the heightened attention on your sector—coupled with the imperative for change in AMP8—presents a unique opportunity. You have a chance to demonstrate your ability to deliver essential services, excel in customer satisfaction, protect the environment, and provide your customers with value for their money.
The size of AMP8 plans surpasses the capacity of the current water industry model, creating an urgent need for innovative solutions that can revolutionise the sector. Your challenge now is not just to evolve, but to reimagine the very foundations of your water utility operations.
Embracing a data-driven future
Water companies – perhaps yours – are already embracing the data revolution, and as AMP8 approaches, the industry is rapidly scaling up the deployment of solutions like smart meters and sensors across water networks to usher in a new era of data-driven decision-making.
The flood of consumption and performance data will enable you to understand what is happening in real-time in your network, allowing for significant operational improvements, such as:
- Precision problem-solving. Organisations can pinpoint issues to individual properties and detect them within hours instead of days. This dramatic improvement in response time and accuracy is revolutionising network maintenance.
- Targeted investments. With granular data at leaders’ fingertips, companies can direct their resources where they'll have the most impact. The result? Significant reductions in leakage and per capita consumption, plus lower customer bills.
- Customer-centric approach. Data-driven insights are enabling personalised customer experiences, leading to improved satisfaction scores and lower bills.
- Enhanced resource management. Rich data sets are powering more sophisticated modelling of water demand, enabling companies to proactively and efficiently allocate resources.
This data revolution isn't just about operational efficiency—it's about reimagining your water management ecosystem. By harnessing the power of data, you can simultaneously improve service, reduce costs, and enhance environmental stewardship. As we stand on the brink of AMP8, the message is clear: those who master this data-driven approach will lead the industry into a more sustainable and efficient future.
Three key opportunities for success
The explosion of data will enable a range of new initiatives, but alone, it’s insufficient to drive fundamental performance improvements. You will need to transform the way your company operates to fully realise the value of your data investments, and that requires a focus on your people and your systems.
North Highland’s experience in successful data-driven transformations across highly regulated industries highlights three key areas you must address for maximum ROI.
- Preparing your people for the future. The water sector’s skills shortage will intensify with the increased focus on data-driven operations. To bridge the gaps, you must align to a more flexible, adaptable operating model; transform through new ways of working; re-skill to embed effective use of data and systems; and employ strategies to retain your talent through AMP8 and beyond.
- Unlocking data’s full potential. In the rush to embrace data-driven solutions, your company risks creating an isolated data ecosystem that, paradoxically, can impede your ROI. To prevent this, you must evaluate how data and technology are managed across your organisation. This includes assessing how data and technology interact with your operating model and identifying opportunities for better coordination, cost reduction, risk mitigation, and performance improvement. Don’t lose sight of your people when embarking on data and systems modernisation. It’s all about building the right data and technology capabilities to develop a future-ready talent pipeline.
- Maximising investment impact with Strategic Portfolio Management (SPM). It’s no secret that you are juggling quite a bit: new tech, evolving people needs, operational change, and unprecedented levels of investment that will come with AMP8. With so much in play, tracking value and staying on strategy has never been more crucial. This is where Strategic Portfolio Management (SPM) comes in. SPM isn't just another buzzword — it's a framework that helps you prioritise what truly matters. It weaves strategy execution into your business fabric, ensuring every pound invested aligns with your overall goals. Gartner® predicts that “by 2026, 30 percent of organizations will embrace effective strategic portfolio management, and invest in talent and enabling technology to become industry leaders.” Implementing SPM allows your water company to navigate AMP8's complexities, balancing short-term needs with long-term vision through data-driven decisions. It's your tool for adapting to market shifts and regulatory curveballs, while showcasing improvements in efficiency, customer service, and environmental stewardship. Bottom line? In this transformative period, SPM isn't just nice to have; it's essential. It's how you ensure you're not just spending more, but spending smarter.
Your partner in water utility transformation
As leaders in digital transformation for energy and utilities, we combine our people-centric approach with expertise in data and transformation management to guide water utilities companies towards operational excellence. From developing comprehensive data strategies to implementing smart metering solutions, we empower companies to leverage data for sustainable growth and customer-centric innovation. North Highland offers the data-driven, people-centric transformation capability essential for successful delivery of AMP8 commitments and beyond. Continue your learning journey here.
Gartner, Magic Quadrant for Strategic Portfolio Management, John Spaeth, Shailesh Muvera, et al. 28 May 2024 (For Gartner Subscribers only)
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