The productivity proposition of digitalisation

Al Cho of Xylem on the water opportunities open with proven digital technologies

For water and wastewater utilities, the opportunities presented by digitalisation should be viewed much more broadly than just the technologies involved, according to Al Cho, vice president and general manager, advanced infrastructure analytics at Xylem. The challenge, he says, “is one of economics, and a change in how we allocate capital to solve fundamental challenges in the delivery of drinking and wastewater services.”

Focusing on the technology, he adds, “is putting the cart before the horse. The underlying challenges that we are trying to solve through digitalisation and other dimensions of innovation are fundamentally about resolving a deeper strategic issue.” This is one of how to balance the need to reinvest to ensure the resilience and continuing quality of operations and service in a world of rising challenges, reconciling this with the need to ensure affordability of water services.

Data analytics and improvements in sensing technologies will, for example, enable a step change in productivity by dramatically improving the return on investment from capital improvement programmes for asset management, Cho explains. The typical current approach of replacing a set proportion of pipes as a rolling activity to upgrade a network can mean pipes that are in good condition are removed. There is a danger that the areas needing investment are not always targeted.

Change management

Cho explains that Xylem has been scanning the market for solutions where the underlying technical risk has already been eliminated and a rigorous due diligence process undertaken. With such technologies, “we can move the needle dramatically on capital productivity, on environmental outcomes, and on operational efficiency through digitalisation with technologies that are already proven and well established in the sector,” he says. “The challenge now is diffusion and broader acceptance. This is more of a challenge of change management than a change of technology.”

Simply wanting to be a digital utility is not an effective rationale for change, he adds. “It has to start with the fundamental premise that there are key performance indicators or real strategic objectives that can only be achieved within budget constraints by questioning some fundamental assumptions.”

The switch the industry needs to make revolves around providers talking not about new, disruptive and transformative digital technologies, but about the challenges that can already be solved, he says.

For utilities to navigate the plethora of solutions and services available, Cho says: “I think the need and the opportunity now for a utility is to begin to search out technologies that are increasingly interoperable and modular in their architecture. Pushing for modularity, interoperability and ease of use is the single biggest customer need that I am seeing at this stage of the market’s development.”

This also affects regulation, he believes, specifically the opportunity to use a wider range of options within an outcomes-based regulatory regime, delivering more affordable solutions. “Introducing flexibility and affordability as critical components of a regulatory regime without in any way compromising environmental quality standards is a dialogue the industry needs to have,” says Cho.

Cho believes the industry is now at a stage of widespread adoption driven by the convergence of increasing hazards from scarcity and increasing constraints around the need to really tackle affordability. “The balance is swinging from there being a perception of risk around the adoption of new approaches to a perception of risk around not embracing approaches now manifestly acceptable and proven in the industry. I think this pivot will accelerate adoption of these new solutions in the industry.”