Few industry sectors are as dynamic and sensitive to external factors as the utilities industry. This is an industry straddling a pandemic-induced supply chain crisis and a war that has impacted fossil fuel and other raw material access. It’s an industry caught up in a climate crisis of fire and drought that has the potential to wreak havoc on sustainable energy production and the delivery of water, sanitation, and other services. And it’s an industry facing pressure to manage its carbon footprint and finesse myriad other regulatory issues while facing deregulation and new forms of competition in several major markets.
The complexities coming from the external world are mirrored in utilities’ internal complexities. A modern utility must be a customer-facing company that speaks—and sells—directly to consumers while managing and servicing enormous capital assets and distribution networks as well as meeting customers’ specific service and support requirements. As such, a utility IT infrastructure may be required to support retail operations; complex billing and taxation requirements; supply chain planning and management; logistics; procurement; cybersecurity; and manage an increasingly scarce talent pool. Utilities must do all this while navigating to modern, cloud-based systems from a technology foundation that for many organizations was last updated during the Y2K “crisis.”
Some Common Ground
For utilities that run SAP systems—or any major enterprise software system—there is no silver bullet. There is no one true path to deal with all these challenges, these complexities.
But there are significant commonalities, particularly in the need to innovate and meet new competitive threats and take up new business opportunities. There’s also common ground in utilities’ drive to improve productivity and provide return on ratepayer and other stakeholder investments.
The result is an imperative shared by virtually all utilities: act strategically to update the systems that hold back innovation and new business opportunities while making sure to keep the lights on and the water flowing. Doing all this and still meeting customer success requirements can be a complex dance for an industry that is often simultaneously beholden to shareholders, utilities’ commissions and water districts, and the vagaries of state and local political processes. “Move fast and break things” is usually not an option.
Dramatic Results Without Rip and Replace?
That doesn’t mean there can be no dramatic change, or expectations of dramatic results, from upgrading and updating legacy technology. Moving some strategic IT systems to the cloud while maintaining a hybrid on-premise system can support important new requirements without massive disruption. Analytics, asset management, materials management, field service, billing, and other ERP processes can be migrated to the cloud and provide significant benefits. These can include improved customer support, planning and budgeting, and/or more efficient regulatory compliance without starting a painful, company-wide rip and replace project.
Just getting a handle on strategic processes that need to be upgraded is an important starting point. For many utilities, smart meters and other IoT technologies have dramatically changed operations and left IT systems behind. Getting IT in synch with operations should be another important goal for any utility trying to find strategic wins in a mountain of new opportunities.
Another key opportunity could reside in the standardized business processes in SAP’s S/4HANA, Industry Cloud for Utilities, and other cloud properties. The standardization and automation of complex customized processes can help organizations sunset code that is expensive to maintain and often acts as an anchor to innovation. The good news is that an increasingly large number of standardized business processes are available on SAP’s cloud properties. Particularly those that support asset management, customer service, field service, and environment, social, and governance (ESG)) requirements.
People of Paramount Importance
More than anything, utilities have a strong requirement to help stakeholders manage the changes that tech upgrades and cloud migration may engender. Whether they are internal employees, contract installation and service providers, or customers, the people side of technology innovation and transformation is of paramount importance to utilities industry decision-makers. Perhaps more so than in many other industry sectors.
With costs rising and recession looming, the need to be as strategic as possible with technology investments—even cloud-based SaaS investments that are no longer recorded as a capital expense—has never been greater. It’s guaranteed that running a modern utility company in today’s complex, dynamic global economy is only going to get more complicated. With so much at stake, the timing of the upcoming SAP for Utilities, Presented by ASUG conference fits well into business and technology leaders’ many imperatives. It provides opportunities to learn from peers and dive deep into the new challenges and opportunities for utilities in the SAP ecosystem.
Joshua Greenbaum is Principal at Enterprise Application Consulting.