The (digital) transformation of the water utility

A water utility 101 (experienced readers, jump directly to “from laggards to champions”)

Water utilities play a crucial role in ensuring our access to safe, drinkable water and the treatment of wastewater that can safely be released into the recipient. Thus, the water loop is closed - from source, through networks to users, and back to the watershed. The four key tasks for a water utility are: 1) Operation of water production plants, 2) Management of the potable water network, 3) Management of the wastewater network, and 4) Operation of the wastewater treatment plants.

 But what about managing water from above? In some cities, the work of protecting communities from flooding events during storms is managed by a separate utility, while in some areas, this task is handled by the wastewater utility.

 The way these five tasks are organized varies greatly from country to country and even within a country. Some utilities cover all functions, while others focus only on the potable or wastewater network, and some handle only one of the four functions. Ownership also varies, from being publicly owned, privately owned, or organized as a public-private partnership.

The size also varies, with very few very large utilities in the UK and a few very big and many very small utilities in the US, to a more evenly distributed size of medium and small-sized utilities in Germany etc.

However, the responsibilities and challenges are more or less the same for all water utilities worldwide.

One of my great colleagues, Fabian Seunier , shared a at a keynote speech a metaphor that summarizes this: The water cycle (our water loop) is the same from start to end, but the need to comply with regulations, handle contaminants, battle pollution in the wastewater stream, balance tight budgets with infinite needs of reinvestments, minimize leakages, and remain attractive as a workplace introduces new tasks that extend the loop. And thus put increased pressure on the water utilities and on our budgets.

From Laggards to Innovation Champions

If you speak to a water industry analyst, you will often hear them characterize the industry as conservative, slow to adapt to changes, and relatively "analog." This is only partly true; there are a few water utilities that have embarked on the digital journey, and a small portion of those have become "digital superusers," developing their own digital solutions to manage their operations and assets. These are the ones that spearhead open innovation initiatives, ideation camps, and even joint investments into startups, funded by themselves, the government, European Community, or by collaborating with private companies (e.g., Anglian Water Services in the UK, IOTA in Australia, Aarhus Vand in Denmark, El Paso Water in Texas and Greater Cincinnati Water Works .

Some utilities are actively using these activities to attract and retain talent, ensuring that the workplace is interesting and relevant for employees, aligning with the overarching global challenge of an aging workforce. 

By asking a few very simple questions, you can easily take the temperature on the state of digital. How are reinvestments made to achieve the biggest effect for the scarce resources at hand? How do you know what is actually going on in the sewerage network? How big are the #non-revenue-water (#NRW) rates? And how does the utility maximize the performance of its stormwater infrastructure? Even the very basic question of how you can easily and in real-time see the digital information on the 80% of the utility's assets that are buried underground - the water and wastewater network - will reveal a lot about whether you are talking to a laggard or an innovation champion.

The Power of Data and the Digital Transformation

Naturally, the digital transformation is also taking place within the water industry, and we see more and more exciting solutions out there that, by adding the power of data, create tremendous customer value and increase the sustainability of the water utility.

IoT-enabled sensors that provide data in real-time give more accurate and faster monitoring and surveillance. Smart algorithms that use machine learning decode huge datasets and predict failures and hunt down leaks in the water infrastructure, asset investment planning that correlates likelihood and consequence of failure, information on soil conditions and pipe age to advise on where to spend the sparse money to get the biggest effect, analysis of infiltration and inflow, likelihood of H2S buildup or leak prediction, automated management of stormwater ponds - all of these are examples of digitally enabled solutions that help utilities save operational costs, support the utilities to provide clean drinking water, reduce sewage overflows, hunt down pollutants in the city, and manage more extreme weather.

Digital transformation of a water utility adds (digital) new data sources, data integration systems, digitally driven analysis, and visualization services to present insights and promote decisions. A few operational efficiency tools even provide direct feedback and actions to the plants or the network, thus optimizing in real-time without human intervention.

Change is the Often-Neglected Sister of Innovation

A relatively recent term that has surfaced within the water industry is the concept of "digital twins" - a digital alter-ego on your physical plant or network that can be used to simulate, optimize, plan, and understand the current and future status of your assets.

Another term that is gaining traction is the "smart water platform," with the platform being the visualization and advising layer that compiles and presents the available data in a form that promotes actionable insight. The smart water platform can, in fact, be a digital twin and vice versa, but I prefer the term "platform" since the phrase is less mystical for the common utility to understand.

I believe that both water utilities and us solution providers have a pretty clear and consistent picture of what we want to achieve. But since we are all coming at it from very different angles and positions, the messiness that appears when reality meets visions becomes huge.

A good case could be the digital management of stormwater. There are stand-alone solutions out there already that work perfectly, but at the same time, software companies that produce design and simulation software are starting to move into the domain, since the gap between simulation and control is very thin. Similarly, the providers of the software that runs and controls all the pumps and machinery at the (water) plants are starting to look for extending their solutions to also work outside the fence (in or on the water network). Several hardware producers are starting to look into how adding digital management can enhance their offerings and thus create value for the customers. And finally, some water utilities have chosen to (sometimes at vast expense) create their own proprietary solutions.

Why is this a problem then?

From a technical point of view, probably not at all. But from a user and customer perspective, the plethora of digital solutions and interfaces and working processes you have to get acquainted with present a big barrier and create unnecessary friction. Today, most of us have adapted to using the Microsoft suite of applications. If you know how to use and navigate in Word, chances are that if you accidentally open up PowerPoint, you will feel familiar.

But in the world of the digital water utility, almost every digital solution has its logic, interface, and way of working. Combine this with an aging workforce and a workplace where digital adoption, in general, has been quite weak, and you will start to understand that one of the overarching challenges is not the lack of digital solutions, but the lack of understanding from the solution providers and procurement departments that the new solutions will incur a hefty amount of change within the organization. And, as most MBA students can confess, managing change is way harder than you are taught in the American textbooks.

To put it into perspective: Today, most water utilities still lack a solution to unify their data; in fact, many utilities either lack data or have multiple data sources that are incompatible across solutions. After talking to several water utilities and engaging in many discussions at water conferences around the world, I believe that the amazing technology of AI, machine learning, terms like digital twins, large language models, etc., has actually annihilated many potential users, which is a shame, since the benefit of digital is proven.

Where do we go from here?

A first action point could be to talk about what tasks need to be solved and acknowledge that digital solutions are only tools to help solve real-world problems.

Us solution providers could also be even better at engaging in partnerships and applying an ecosystem thinking. I do not necessarily have to own the full value chain, and with so many solutions out there, the chance that my particular solution will become the number one or two on the market is pretty thin. But by engaging with others that provide solutions that supplement your own - and by ensuring that the data can flow freely through open APIs - we can at least do our best to help our customers solve the problems they are battling. I like this mindset, as it fosters us solution providers to engage and collaborate even with our competitors because chances are that the customer you once will sell something to will most likely already use a component from a competing firm, and unless you cannot connect to that component, the full benefit of the digital will never be harvested.

The future looks bright!