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Digital transformation and corporate culture in the utilities sector

While digitalisation is also gaining momentum in the water, energy and waste management sectors, it also poses major challenges for the industry. However, the importance of corporate culture for the success of digital transformation is still all too often underestimated. Friederike Lauruschkus, Katharina Buhnar and Robin Kabelitz report on this and on the opportunities that data can offer for optimising existing business models.

What role does digitalisation play for the utilities and waste management industry and how prepared do you consider the companies to be?

Robin Kabelitz: Digital transformation continued once again to gain importance and momentum in 2019. On the one hand, the focus is on further advancing internal digitalisation, e.g. through increasingly digitised processes and communication channels within companies, but also between companies and their customers. On the other hand, the collection and evaluation of data and the installation of sensor technology are enabling more and more new product and business ideas.

Companies in the industry are therefore increasingly asking themselves how to address the issue of digitalisation as a whole. We contribute our experience in strategy development combined with our expertise in data analytics to develop custom digitalisation strategies together with our customers.

In addition to the business model and the question of digital expertise in the areas of data, technology and application, the digitalisation strategy comprises essential core elements of the company: from the digital value chain to customer intelligence, from process digitisation to process automation and from innovation to change management.

Once the strategy has been defined, a gap analysis is used to determine the need for action, identify suitable measures and bundle these in a roadmap.

Corporate culture plays a central role in the successful digital transformation of companies.

Katharina Buhnar: An important, often neglected aspect is the impact of digitalisation on corporate culture, organisational structures and employees. The resistance that exists at various levels of a company poses huge challenges for implementing digitalisation projects; this resistance must be addressed and mastered if the transformation is to be a success.

In our experience, a key success factor for companies is therefore to involve, include and empower employees. After all, many digitalisation projects require a new mindset and thus a change in the existing corporate culture. We have already seen enough examples of complex restructuring processes failing which were simply ‘ordered from the top’. In a recent matters study, we showed that the corporate culture is indeed the greatest obstacle to the successful digital transformation of transport companies.

How can waste management and street cleaning companies benefit from smart waste or data use?

Robin Kabelitz: They can cut costs, increase customer satisfaction and improve their reputation while using their resources more effectively and efficiently. In the short to medium term, data analytics and data use will lead to more intelligent and flexible control of street cleaning routes and thus to a better public image with the need for additional resources.

Through smart data analytics, for example, refuse collection routes can be made more flexible and at the same time more employee-friendly.

What’s more, the physical effort required for refuse collection routes can be made transparent and objectively evaluated. In this way, the different burdens on refuse collectors can be adjusted on the routes so that they can carry out their work longer and remain healthy.

Smart waste and data use also allow completely new business ideas to be developed, data to be collected for the municipality or routes to be used for additional services.

What demands are sustainability and climate change placing on the industry?

Friederike Lauruschkus: The path towards a genuine circular economy poses a huge challenge that cannot be met by the circular economy alone. Instead, the way must already be paved in the production of goods and in the use of materials. And we must rethink our way of life and the patterns of consumption associated with it. This is therefore a task for the entire economic sector, but also for all of us as consumers.

Water management has two special tasks when it comes to sustainability: On the one hand, it must comply with the obligations arising from the new European Drinking Water Directive and, on the other hand, it must find rules for financing the handling of trace substances in water according to the causation principle.

The water industry, in particular, is facing major challenges when it comes to coping with the effects of climate change.

In addition, as climate change becomes increasingly noticeable, it poses considerable challenges for water management companies: First of all, they must help to reduce greenhouse gas emissions, if possible by 50% by 2030 compared to 2020.

Secondly, periods of drought and heavy rainfall place new demands on infrastructure during peak periods; the security of supply and disposal must also withstand more extreme conditions.

And thirdly, water management is called upon to press ahead with the conversion to a green-blue infrastructure, i.e. to reopen watercourses and create green and infiltration areas in urban areas in order to strengthen the climate resilience of cities. Every tree has the same cooling effect as ten air conditioners!

What do you expect for 2020?

Friederike Lauruschkus: Climate change will continue to dominate the political agenda. In order to reach the 1.5°C goal of the Paris Climate Agreement, water and waste management – like almost all other sectors, by the way – will undergo the most profound transformation in the coming decade since the Industrial Revolution. But the good news is that this conversion can already be mastered using today’s technological possibilities and is economically viable. Failing to act, on the other hand, would come at a much higher cost.