To say 2020 brought change to the water sector is an understatement. Increased adoption of technology, further attrition in the technician and engineer ranks, new processes and decreased revenue as a result of COVID. At the beginning of Q2 2020, we wrote about our expectations due to the pandemic and most of them have come to pass. And while it feels like there is light at the end of the tunnel with vaccines, ongoing change is inevitable and there will continue to be some transformative changes that we should expect as an industry in the new year. So here are some of our thoughts on the changes, trends, and transitions that the drinking water sector should expect. Some of them are from within the industry, which means water systems have some element of control, but most are from outside of the industry and, consequently, will cause disruption at scale.
- The previously small pool of new technologies and ideas is now a flood. The drinking water industry has to accept that new ideas are not all bad, as has been the approach up until COVID. COVID opened up many water systems to the adoption of new approaches to remote monitoring and data analytics to fill revenue gaps (as examples). As customer behaviors change and new technologies came to market, these technologies (mostly from outside water) will come into the water industry and upend how we do business. There are very few new and big companies in the drinking water space, that the incumbents are still the incumbents after 50+ years suggests that industry solutions are getting stale (no pun intended). An industry that is not refreshing itself is dying. New ideas from redesigning home water systems, water from air, etc. need to be allowed through the ‘concrete’ wall of skepticism that dams the industry. That wall needs to become more permeable, rigorously testing and preventing crazy ideas from making it through but balancing that with a recognition that our current processes and technologies will not provide the level of service an ever more discerning consumer base desires.
- Every company is becoming a technology company. The water industry has been a predominantly service focused sector. By that, I mean even where there are optimal approaches (technologies or processes) by which we can operate, we choose service. What that translates to is tens of thousands of consultants serving everything from the largest water system to tiny water systems with ~1000 connections. To ensure that consumers drink clean water consistently water systems will have to become technology-first companies. Technology companies that deliver a product called ‘clean water’. Other industries have seen this shift, it is inevitable that this will happen in the water sector. The questions water system leaders should start asking is 'What does becoming a technology company mean for my water system?'
- Location and synchronous work for all water systems employees will be a thing of the past. COVID showed us two things i) many water systems had too many employees ii) many water systems were making their teams work synchronously when it wasn’t necessary. Post-COVID, but already playing out in sectors like healthcare, i) multiple water systems will utilize the same pool of technicians/engineers reducing their technician expense, and ii) these technicians can be located in any part of the world and still work with these water systems. The speed of change and the increasing pace of job destruction as a result of what I’m calling delocation and asynchronousity will hit the drinking water quite hard and we are not prepared for it.
- Wasting money on smart meters. This one is less of a change and more of a lesson I hope we learn from seeing the outcomes from other industries. There are many smart meter/AMI projects being implemented, including the largest one in San Antonio with 500k meters to be deployed over 5 years. These meters are being deployed to increase visibility into customer water usage. The truth is that smart meters only benefit the utility. Power utility smart meter deployments did not work, as highlighted in this COMED situation, because the focus is on revenue assurance for the utility and not truly on improved services for the consumer. Smart meters are an ‘innovation’ that serves the utility. In a world where the institutions that will win are the institutions that focus on doing what is best for the consumer, smart meter deployments are misguided. What is the alternative?
Water systems will have to focus on deploying water quality monitoring, leakage monitoring, and system awareness at a scale that ensures no customer issue is missed. Technologies that center the customer experience and the customers desire to trust the water coming out of their taps.
These are some of the trends we see. What are your ideas on the next set of trends and transitions that will happen in the drinking water space in 2021?