Next-Generation Services Create New Sources Of Competitive Advantage
Companies understand the urgency of ramping up their business technology (BT) capabilities to help the business innovate and grow. Increasingly, they realize that they cannot do this alone and firms will require partners that can help deliver agile services that bring fast and predictable outcomes to the business. For instance, Bharat Light and Power (BLP), one of the largest clean energy generation companies in India, signed in late 2013, a 10-year engagement with IBM to build a new business capability that aims at nothing short of transforming the utility sector in India. In a few words (more details are available in this report), BLP and IBM are creating an open energy service platform that will help BLP understand how to optimize the utilization of its wind turbines. The really interesting part for me lies in the way the company intends to leverage the information generated by this platform as the basis of its competitive advantage. The energy service platform will indeed act as an expertise repository that BLP can leverage to:
- Increase the value of its own assets. As the company operates, grows, and optimizes its own asset efficiency, it learns how the climate, power grid, and wind turbines influence a vital business metric for a utility company: the plant load factor (PLF). This will allow the company to generate more revenues from its existing assets.
- Develop new revenue streams. Deep analytical capabilities enable BLP to develop a specific competency around optimizing the productivity and operations of its energy assets. This competency will be in turn available to other firms in the form of a digital asset that BLP intends to offer as-a-service to other utility companies.
- Assess the business value of potential investment targets. BLP needs to attract investors to grow its wind turbine portfolio and respond to India’s fast growing demand for renewable energy. The energy service platform will help BLP assess the value of investment target by comparing the productivity of these assets to its own benchmarks.
This platform is operated by IBM as a next generation managed service focused on delivering improved outcomes to the business. In this engagement, IBM bundled software assets like Maximo and Cognos, Softlayer cloud services, deep domain and machine learning expertise to deliver a true business capability to BLP. The engagement model also contains business outcome-based incentives that help ensure that IBM's behavior aligns to the success of BLP's business – both in terms of asset productivity improvements and information monetization. We are light years away from the typical cost containment ("Give me money, so I can save you money") value propositions of traditional managed services or business process outsourcing deals.