Data’s vital role for the water industry in AMP8

An industry under pressure

It’s no secret, England’s water utilities are facing a plethora of issues currently:

  • Sewerage spills into England’s rivers and seas have more than doubled.
  • The public are increasingly frustrated with their poor environmental record, and the steep increases in water bills (up by as much as 40%) in some areas.
  • Many are shouldering high levels of debt (£64 billion across the utilities), with Thames water already defaulting on payments.
  • Demographic and climate change are adding additional pressure to aging and leaking infrastructure networks.

Although these issues are felt more acutely by some more than others, none are completely in the clear. In OfWat’s (the UK water regulator’s) performance review for 2022/23, all utilities were classified as either average or lagging behind, with none being classified as a leader.

Meanwhile, the sector is about to enter the next 5-year investment period (AMP8). Commendably, the overall level of investment during this period is due to double current levels to £96bn by March 2030.

Doing more with less: the role of data in the success of AMP8

A significant challenge lies ahead to upgrade and improve services, win back customer support and protect the environment whilst continuing to service loans. With historically steep construction, energy and labour prices, they will need to find a way to do more with less, and data needs to form part of the answer.

The 5 year plans for AMP 8 set out how each company plans to tackle these issues. What’s striking is how data dependent these plans are. For example:

  • Optimising the renewal of infrastructure assets requires accurate inventories about where assets are and what condition they’re in, whereas many of the pipes today are still unmapped.
  • Preventing sewerage discharges requires timely data about sewerage and rain levels to predict and prevent clogging issues and overflows.
  • Reducing leakages requires better leakage data and leak detection technology, as well as data about customer water consumption (e.g. smart meters) to identify and fix leaking pipes downstream.
  • Strengthening customer service and relations requires a detailed and joined up view of the customer, who they are and their needs.

Big ambitions need high quality data

All of theses initiatives demand high quality data for them to be successful. However, our analysis of the sector also shows that today, most water utilities lack the data and capabilities required to make a success of such complex, data-driven initiatives.

‘Data dependency’, a measure of how dependent an organisation is on data to conduct its activities, and a good proxy for being ‘data driven’, shows that the utilities sector (including water), has one of the lowest data dependency scores in the UK.

Companies in the UK water industry have a low data dependency. They will have to remedy this to meet their data dependent AMP8 ambitions.
Anmut’s own research into the data dependency in the UK shows that utilities, including water companies, are some of the least dependent on data today.

Turning data into a strategic asset

To get their data in shape to support their business plans, all water utilities will need equally ambitious plans for data. With AMP8 due to kick off next year, how can they get ahead to turn data into the answer as opposed to another problem?

Water companies are used to managing critical infrastructure assets. They should treat their data the same way. Here’s how:

1 – The first step should be to identify the most critical data underpinning their strategic initiatives. This is the data that puts plans at risk if it’s not available. Understanding this will enable them to focus on fixing what’s most important.

2 – Second, just like an old drain, they need to know where the leaks are. Assessing the fitness for purpose of the data against the requirements of each strategic initiative will identify where there are gaps that need filling.

3 – Finally, they need to build the capabilities to continue managing this data as strategic assets. Just as water pipe networks need engineers, technicians, planners and inspectors to keep them functioning, so too do the digital assets that underpin them.

Establishing these capabilities will put utilities in a better place to take advantage of data sharing with each other and their stakeholders. OfWat is rightly calling on the utilities to ‘unleash the benefits’ of open data sharing, such as stimulating innovation and new business models, creating efficiencies, improving decision making and transparency. For these benefits to be realised, the data must be available and in sufficient condition to be shared. OfWat’s own analysis suggests much of it isn’t.

The regulator’s interest should therefore extend beyond data sharing. OfWat are currently reviewing the 5 year business plans of each company. This review should consider whether there is sufficient investment in data and data capabilities to support their ambitions.

These changes needn’t take years. Taking a prioritised approach and focussing on the most important data for their business objectives will help avoid time and resources being wasted on unproductive data assets, whilst maximising value. 

Now is the time to get started.  Contact us, to learn more about how to ensure your initiatives have the fit for purpose data they need to succeed.