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The digital transformation of water

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  • The digital transformation of water

About the blog

Maurizio De Stefano
With a degree in industrial engineering and based in Spain for 18 years, Maurizio De Stefano is an expert in Energy, Innovation, digital transformation. He is also a professor consultant, swimmer, passionate, creative, provocative, visionary.

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Themes

Internet of Things (IoT) technologies, such as data analysis, cloud computing, intelligence amplification (or cognitive augmentation) and blockchain entail new possibilities to analyse, automate, correct in real time, forecast and minimise risks. They can help water and sanitation companies address many of the challenges they face, such as extending the useful life of ageing assets; reducing leaks, attacks, and other anomalies in the distribution network; improving water quality, service levels and the reliability of the supply; promoting water conservation or increasing revenues through greater operational efficiency.

Even though the uptake of digital technology has increased in the water sector, it still is behind other industries with regards to integrating new smart technologies and digital transformation.

The digitalisation of water is no longer optional, and new technologies can potentially offer significant results in the water sector too.

The real impact of digitalisation lies in linking new technologies to re-imagine business processes and facilitate their adoption in the whole company

As the capabilities of technology advance, so does our ability to gather information from remote devices and relate the information from different systems to enable almost real time management, or use intelligence amplification to interpret a structured variety, increasingly more unstructured, based on text or sensor data.

Cognitive analysis will increase the capacity to obtain value from those data and execute or automate the subsequent best action based on the analysis of predictive and prescriptive data.

Undoubtedly, these technology advances will have a great impact on public services, but I would say that is the easy part.

Utility companies can be proud of the reliable services they have provided for more than one hundred years, but operational management has not changed a lot with time.

The real impact of digitalisation lies in linking new technologies to re-imagine business processes and facilitate their adoption in the whole company.

A recent IBM study highlights the fact that even in the main organisations where central operational functions are being re-invented, both the strategy and the implementation have a certain delay.

Meanwhile, other companies are struggling to stay up-to-date, protect their business and manage the demands of talent that needs 'digitalisation'.

In my view, we can identify three key recommendations:

  1. First, design a digital strategy with an action plan and stick to it.
  2. Second, build a technology base, ensuring you have the basic elements in place to support future growth.
  3. Third, focus on commercial imperatives and communicate benefits and fast pay off, to link the investment in digital technology to the results that support the strategy.

This approach will enable us to encourage the digital agenda instead of having to impose it.

Therefore, the difficult part will be looking for the real impact of digitalisation in the water sector, and re-invent business models enabled by today's advanced technology.

The water sector has the great advantage of being able to use the lessons learned in other sectors, particularly the gas and electricity sectors

From a perspective of digitalisation, the energy sector is a leader and an example to follow. More than 10 years ago, they started to implement smart meters. Nowadays, more than 50% of households in the United States and Europe are 'smart'.

Gas and electricity companies started asking the question 'How do obtain value from being "smart"?' Companies can benefit from these lessons learned and established best practices concerning the implementation of smart devices all the way to obtaining benefits.

It is also possible to take a leap forward, because technology has evolved, the prices of smart devices have decreased, and functionalities have increased.

Digital water tries to set the basis for utilities to start applying data analysis and artificial intelligence techniques to business problems. The virtual representation of the water system will enable an almost real time vision and quality monitoring; this can potentially lead to solving many of the challenges the industry faces.

We have seen improvements in response times to an event of 20%, increases in work reuse of 25%, reductions in energy use in the network of 15%, and other benefits in the entire value chain, specifically in the area of asset management.

 

During the next decade or so, I expect that all public services will take a step ahead, moving from maintenance based on time lapsed to maintenance based on the actual condition. When they have the capacity to understand the effective age of assets and can predict potential failures, public services will be able to identify and schedule massive improvements in maintenance activities to extend the life of assets, and will be able to plan replacements strategically within their long term asset planning.

Another area where technologies enable progress are cognitive augmentation and augmented reality. We can use video images and pattern recognition to review and analyse images. If we consider asset administration, the capacity to process images captured during a normal inspection process allows quick identification of anomalies and defects, by matching patterns with images that were analysed and classified previously. This will allow identifying hundreds or thousands of models of defects and create those that use cognitive technologies that have been enabled by human experts.

Water utilities and cities are looking for ways to be more resilient

The application of technology to detect leaks, manage water quality and evaluate assets is really interesting. We are in a much better position to understand conservation requirements during drought, thanks to precise models that simulate groundwater resources or conservation behaviour.

Last, but not least, is that technology can help us prepare for disasters, ever more frequent, in terms of a critical approach. We live at a time when floods and droughts are becoming more frequent and severe, and water utilities and cities are looking for ways to be more resilient.

The losses due to natural disasters and human-caused disasters, including floods, storms, and the impacts of climate change are increasing: in average, they cost governments more than 300 USD billion globally every year.

Obviously, the introduction of technologies, as we mentioned earlier, would be gradual, because there are still barriers to overcome in order to accelerate full digital integration.

The most important barrier to the adoption of digital technologies in the water sector is the paradox of the real water value, meaning that, although water is essential for life, its value is not appreciated in the market. Water is considered a basic product and in many places, a 'right'.

As a result, important investments are not done, year after year, leading to ageing infrastructure and considering new ideas on digitalisation as something superfluous, or else digitalisation initiatives have to pay off immediately otherwise their implementation will not be approved.

In addition, the fragmentation of the value chain in public water and sanitation services has consequences for decisions, restricts funds and suffocates business cases. Part of this comes from regulations that, traditionally, are a barrier to innovation. Other stakeholders, such as workers, technicians and/or trade unions, are naturally resistant to change. But most stakeholders, including regulators, utility workers and the communities they serve, are beginning to understand the benefits of digitalisation. A lot has to change to really adopt these technologies, and we are just at the beginning, but the effects will be incredible.

One of the most interesting effects is the transformation of the consumer into a 'digital' consumer.

The digital transformation will have a great impact on consumers and I think it is very important to ensure that any change comes with a communication strategy to convey the effects of the digital transformation to all 'digital' stakeholders, including consumers, workers, regulators, ecosystem actors, etc. On the other hand, I would say that the digital consumer is driving the change to a certain extent, instead of acting as a recipient.

The most important barrier to the adoption of digital technologies in the water sector is the paradox of the real water value

The expectations of the client with regards to sustainability are driving behaviour changes in traditional services, and this concept of consumers as prosumers is very much applicable to the water sector. Some consumers already participate in water conservation and reuse as prosumers, and they will be able to do it more so as public services become digital, making smarter decisions on how to use and reuse water. At the same time, consumers are also generating innovations.

Another great transformation will concern blockchain technology and its potential to increase confidence through the creation of transparent supply chains or the trade of water rights in water markets.

The expectations from blockchain are high. An area I think could be of interest is to address drought problems. Just think about the potential of blockchain credits to test efficiency measures. If public services could demonstrate they are more efficient, they could obtain blockchain credits and this could create a market with the change in water and drought conditions; it could lead to a real change in behaviours, because there will be a financial reward for being more efficient.

Other cases of more advanced uses include cybersecurity, water rights trading, smart contracts and agreements, peer-to-peer trading and capital increase.

We have to bear in mind that introducing all of these technologies in the water sector opens the door to elements such as cyberterrorism, and the importance of this resource makes us extremely vulnerable.

Water services control systems were not traditionally designed taking security into account, and although this in itself does not make them vulnerable, it should be considered when you digitalise an existing system with old tools and applications. Network intrusions have also been a concern for utility companies; for many years work has been done to protect personal identification information, and so it is no longer an issue.  There are increasingly more threats concerning critical control systems, especially those that control water flows, so treatment works and dams are exposed to security risks.

We are at the beginning of an incredible change

Conclusion

When you start to talk about new technologies such as artificial intelligence, the cloud, IoT, augmented reality, etc., from the point of view of water utilities, many of them continue to be just something on paper, so there is a long way ahead.

It cannot be just a technology company coming in and digitalising a utility company, you need a full ecosystem and a clear strategic plan.

I am concerned about what will happen if we do not move fast enough. The triad of water, energy and food is critical; given our current rate of growth and consumption, water scarcity can potentially paralyse food and energy supply chains and stop economic growth. We are at the beginning of an incredible change, so let us work together to drive a real change in this world.

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