Ahead of our forth­com­ing SAP for Util­i­ties con­fer­ence in San Diego next month, ASUG sat down with Michael O’Donnell, nation­al vice pres­i­dent of util­i­ties at SAP. In this first part of our con­ver­sa­tion, he dis­cuss­es the lay of the land in the util­i­ties indus­try and the grow­ing impor­tance of sus­tain­abil­i­ty to util­i­ties com­pa­nies and their customers. 

ASUG: Tell me a lit­tle bit about what’s going on in the util­i­ties land­scape today. 

Michael: There’s such a con­flu­ence of things that are hap­pen­ing right now to the util­i­ties indus­try. I’ve been with SAP for over 20 years and in the util­i­ties prac­tice almost that entire time. For many, many years, util­i­ties process­es were straight­for­ward. Deliv­er elec­tric­i­ty, gas, water, pick up trash, and col­lect pay­ment. I can tell you that the expec­ta­tions con­sumers have with their util­i­ties have dras­ti­cal­ly changed. 

Let me start with cli­mate change. When you think about the util­i­ty, obvi­ous­ly it con­tributes a large amount of the car­bon emis­sions that go into the total CO2 out­put around the plan­et. When you drill down to the specifics of how the util­i­ties indus­try is think­ing about how it dri­ves down car­bon emis­sions to try to get to zero CO2 emis­sions, there are a lot of dif­fer­ent approach­es and ini­tia­tives. This top­ic has been a dis­cus­sion for well over a decade. The change that’s hap­pened is that there seems to be a lot more urgency around tak­ing action. Instead of just say­ing, ​“We’re look­ing at how we reduce our car­bon out­put and we’re try­ing to do things to become more sus­tain­able as an orga­ni­za­tion to be clean­er and green­er,” orga­ni­za­tions are actu­al­ly now being much more tar­get direct­ed. They are say­ing, ​“We’re work­ing to get to car­bon neu­tral by x‑date, and these are some of the steps we are going to take.” 

The sec­ond thing is how orga­ni­za­tions are address­ing the con­cept around diver­si­ty, equi­ty, and inclu­sion. In the util­i­ties indus­try, orga­ni­za­tions have been dri­vers in a lot of ways around serv­ing under­rep­re­sent­ed pop­u­la­tions in their employ­ee base, includ­ing women, vet­er­ans, and minor­i­ty stake­hold­ers of all dif­fer­ent types. But much of the approach has been pro­gram­mat­ic in nature. What I mean is they might have a pro­gram that states, ​“We want to hire more women. We seek diver­si­ty. We have a pro­gram around dri­ving more vet­er­ans to our ranks.” These pro­grams need to become more of an inte­grat­ed part of how their orga­ni­za­tion oper­ates. Orga­ni­za­tions in the util­i­ties ecosys­tem are work­ing hard to fig­ure that out. We’ve done work with the NUDC [Nation­al Util­i­ties Diver­si­ty Coun­cil] dis­cussing dif­fer­ent approach­es that are help­ing bring that to fruition. The real­i­ty of run­ning a pro­gram is that pro­grams have a begin­ning and an end. It’s not ful­ly part of your orga­ni­za­tion­al DNA and who you are. The next step in the util­i­ties indus­try is to make diver­si­ty and inclu­sion ful­ly inte­grat­ed into who they are as an organization. 

From an SAP per­spec­tive, we are help­ing these orga­ni­za­tions dri­ve their tech­nolo­gies to address a few dif­fer­ent things. First, there is the chang­ing nature of the util­i­ty, mean­ing orga­ni­za­tions have to fig­ure out how to become more agile to deal with the changes that they’re fac­ing much more rapid­ly. Sec­ond, there is a gen­er­a­tion per­spec­tive. Deter­min­ing how the gen­er­a­tional mix is chang­ing, and how to oper­a­tional­ly han­dle it from a tech­nol­o­gy per­spec­tive. Then there’s secu­ri­ty, which is a major issue for util­i­ties. Orga­ni­za­tions are work­ing to be able to take a more proac­tive stance in how they approach that chal­lenge. Final­ly, there’s cus­tomer engage­ment. What cus­tomers expect from the util­i­ty has com­plete­ly changed. The abil­i­ty to exam­ine how peo­ple con­sume ener­gy and the engage­ment that can now hap­pen because of that exam­i­na­tion com­plete­ly changes the val­ue that a util­i­ty can pro­vide to their cus­tomers. Util­i­ties are hav­ing to fig­ure out how they can change and how they should engage to make sure that they’re meet­ing demands and stay­ing the cen­ter of the uni­verse for the cus­tomer that they serve. 

ASUG: What are the main hur­dles in the util­i­ties indus­try and how are your cus­tomers using SAP solu­tions to over­come these challenges? 

Michael: We have amaz­ing cus­tomers that have been with us for a long time. With them being cus­tomers for such a long time and hav­ing our solu­tions in place for a long peri­od, the ques­tion of how to effec­tive­ly evolve is a huge chal­lenge that they’re fac­ing right now. It’s a chal­lenge that we’re work­ing through from an SAP per­spec­tive. It’s not a one-size-fits-all approach. We’re look­ing at how to get them to dig­i­tal plat­forms that give more agili­ty and to do so in a secure way.

Instead of being in a data cen­ter where you have your appli­ca­tions, and where you run, man­age, and secure them, we’re now in a sit­u­a­tion where a lot of this work is run­ning in an organization’s cloud infra­struc­ture. It is a dif­fer­ent set of con­sid­er­a­tions. A lot of our focus is on try­ing to help our cus­tomers solve that chal­lenge of how to evolve into these new sys­tems that are going to allow them that need­ed flex­i­bil­i­ty. It’s a work in progress, but it’s excit­ing because I think this effort also has cre­at­ed an envi­ron­ment with a lot of oppor­tu­ni­ties for us to help our cus­tomers for­mu­late what the next 20 to 30 years look like. 

ASUG: With all that in mind, what are some of the oppor­tu­ni­ties that you see in the util­i­ties sec­tor right now?

Michael: There are lots of dif­fer­ent oppor­tu­ni­ties. I think with change, there always is an oppor­tu­ni­ty to change how you engage, oper­ate, and run from a util­i­ties per­spec­tive. Depend­ing on where the util­i­ty resides and how heav­i­ly they’re reg­u­lat­ed, some of that oppor­tu­ni­ty is some­what — quite frankly — put with­in the con­fines of those reg­u­la­tions. Util­i­ties orga­ni­za­tions have to deal with and work through those chal­lenges. But there are so many dif­fer­ent oppor­tu­ni­ties. When util­i­ties start to think about how they’re evolv­ing their gen­er­a­tional mix to reduce car­bon, they’re look­ing at cre­at­ing smart net­works, the end-to-end process, from gen­er­a­tion to end-state con­sump­tion by the con­sumer. The impor­tance of hav­ing sen­sors through­out that entire gen­er­a­tion, trans­mis­sion dis­tri­b­u­tion, and con­sump­tion process changes the scope of infor­ma­tion they have access to and what they can do with that information.

ASUG: It’s been so refresh­ing to watch SAP make sus­tain­abil­i­ty a key focus. I know that things like the recent UN Report on the com­ing impacts of cli­mate change have been dis­tress­ing to read. 

Michael: It’s pret­ty dire, right? The SAP Chief Sus­tain­abil­i­ty Offi­cer Daniel Schmidt has sev­er­al key ini­tia­tives on how we’re approach­ing the chal­lenge of cli­mate change. Because it’s not just util­i­ties that are say­ing, ​“We need to reduce our car­bon out­put.” It’s every orga­ni­za­tion and com­pa­ny that SAP engages with. Every com­pa­ny and orga­ni­za­tion now has a sus­tain­abil­i­ty strat­e­gy. They have a strat­e­gy on how to get it to car­bon neu­tral. For us, it is a holis­tic dis­cus­sion and approach that goes well beyond just the util­i­ties sec­tor. I think the oth­er inter­est­ing thing is how util­i­ties take advan­tage of and dove­tail with what their con­stituents are try­ing to do. With the orga­ni­za­tions that they engage with from a com­mer­cial and an indus­tri­al per­spec­tive, how will they do that? 

We are doing a pilot with one of our util­i­ties around sus­tain­abil­i­ty man­age­ment and account­ing. How do you account, finan­cial­ly, for how you’re mea­sur­ing toward your sus­tain­abil­i­ty goals? That process can only be done by tak­ing all nec­es­sary data and glean­ing the infor­ma­tion that is hav­ing an impact on dri­ving down car­bon consumption. 

ASUG: Beyond the over­all focus of sus­tain­abil­i­ty at SAP, it seems like the util­i­ties side of the house is also incred­i­bly focused on this top­ic as well. Can you talk about why you think this is so vital right now? 

Michael: Sus­tain­abil­i­ty is such a pas­sion of mine, even out­side of my job at SAP. I do advi­so­ry work with com­pa­nies that are look­ing at alter­na­tive and dis­trib­uted pow­er tech­nolo­gies. I think there’s a lot of dif­fer­ent emerg­ing tech­nolo­gies that will play a role in the future of the ener­gy mix. There are so many com­pa­nies doing great work in this space, like Ter­raPow­er using spent nuclear fuel to cre­ate a new gen­er­a­tion, or ESS focus­ing on long-term ener­gy stor­age and how that will play into the future of the ener­gy mix. There’s a lot of ener­gy — no pun intend­ed — being put toward how to solve this problem. 

An ​“all of the above” strat­e­gy is going to be the answer in the end. There’s not going to be some panacea answer of one solu­tion that’s going to solve all of our ener­gy needs. It would be nice, right? All the dif­fer­ent sus­tain­abil­i­ty efforts will play a part as we move for­ward through the upcom­ing decades, and I do think we prob­a­bly need to mea­sure progress in decades, not years.

Reg­is­ter for the first in-per­son ASUG con­fer­ence in over a year and half. SAP for Util­i­ties will take place in San Diego Oct. 17 – 19. You can reg­is­ter here.