Throughout its existence, the energy market has been about as investment-heavy as it gets, and for most of its value chain, that description is still very accurate today. This is proving a challenge for energy companies, especially when factoring in price wars throughout Europe and the rest of the world as well as increasing government regulation like we’re seeing in Germany. Additionally, the difficult circumstances we’ve been living in for the past year also contribute to this.
These trying times are starting to take their toll on the financial health and investment capacity of European energy companies. The stark reality is that only those with an integrated mix of robust revenue streams will stand an actual chance of building a healthy balance sheet that leaves enough capital to invest in the necessary innovation.
One potential add-on revenue stream that has often gone overlooked – until now – is that of monetizing data harvested throughout the business-to-business-to-consumer (B2B2C) value journey. At Futurice, we have invested heavily in creating a hands-on playbook for getting the monetization of data and artificial intelligence (AI) out of the realm of theory and concretizing them for the CDO, CFO, and the rest of the senior leadership.
Don’t let your tools go unused
For at least the past five years, data has appeared as an increasingly large blip on the C-suite radar. The number of companies that rely – either entirely or largely – on new business models built around monetizing their data is growing rapidly.
In the energy business, where both consumers and governments push for smart services to gain more freedom and improve sustainability, data streams and volumes are growing at a stronger rate than the actual kWs delivered. The first opening moves, such as creating value-adding services for businesses and consumers, have been made. However, practice has already shown that there is a steep learning curve to conquer in order to generate real revenues from these, as consumers are proving reluctant to pay for services they feel they should receive for free.
But there is still plenty of ground to cover in data monetization, as our Mika Ruokonen posits in his new book, Growth Reinvented: Turn Your Data and Artificial Intelligence into Money. Various tools already exist to help in that process, but in many companies, those are essentially just sitting unused in the toolbox.
Having worked intensively with energy companies across Europe, our educated guesstimate is that out of the eight typical data and AI offerings outlined in Mika’s book, usually two – at most – have been implemented to generate extra revenue. Additionally, the responsibility to explore different ways to utilize data is oftentimes assigned to someone who is already too busy in the first place, instead of a dedicated data monetization manager who could actually get things done and start delivering results in mere months.
“Yup, that’s an opportunity lost,” I can hear you thinking. So where to start? Here are three first steps anyone can take an easy start with.
Get inspired. To build enthusiasm and energy for your business model update or add-on, look at some unexpected success cases in the market. One of our favorite examples is that of Roomba, the maker of robotic household vacuum cleaners. The accumulated data that Roomba units gather about room size, width, depth and height while cleaning houses is collected, anonymized and offered to companies in the home audio tech business, such as Apple. To them, these are valuable insights for future product development. Set your mental radar wide open for similar cases in your industry and beyond. Growth Reinvented, the book I’ve mentioned above, offers plenty of inspiring and practical real-world examples.
Do your homework. All work on data starts with, well, collecting and grooming data into useful building blocks for value creation. But on top of that, spend some time on a team workshop to find out where data could be harvested or combined in your organization’s current processes and customer journeys that could have a value impact later. In one of our projects in the construction industry, we found that so-called proxy data of digital access devices, used by construction crews, allowed us to generate very accurate estimates of the progress of the construction work, helping predict disruptions and delays. This foresight saved our client plenty of additional expenses from managing the projects at hand. Ask yourself: What data – currently dismissed as circumstantial or trivial – are you not collecting in your processes right now that could easily be harvested for free, potentially resulting in unexpected positive value further down the road? And conversely, what data are you already collecting that could have a new application once analyzed with a value monetization focused mindset? Consider what areas or use cases in adjacent sectors could benefit from energy-related data – for example, EV charging or domestic heating.
3. Utilize the Futurice tools at your disposal. We care about the open source community, and many of our tools are freely available to you. In this case, the Futurice playbook for data and AI enabled business offerings and revenue models – as featured in Growth Reinvented – would be your go-to tool. Thoroughly scan and analyze the different models presented in figure 1 below. What makes sense for your current business? What could be your next one? Where could you potentially combine business models or build stronger ones by reaching out to partners and shaping a data ecosystem that benefits all parties?
Figure 1: The Futurice playbook for data and AI enabled offerings and revenue models (from Growth Reinvented: Turn Your Data and Artificial Intelligence into Money)
Fortunately, refining data and building new business around it is a much simpler and less resource-intensive operation than doing the same with oil or hydropower. Yes, data monetization is a complex theme, but it also gets immensely rewarding as you dig deeper and identify new opportunities for generating revenue – with assets that are already within your reach, but sitting idle.
At Futurice, we strongly believe there’s no need to mystify data. It all really starts with getting immersed in the possibilities, aligning your business mindset with it and building focus on it with your team. We’re here to help you with this – please don’t hesitate to reach out if this topic intrigues you.
You want to learn more about our energy approach? Make sure to check out our energy page!