Utility companies are under increasing pressure on multiple fronts, whether it’s going up against new competitors in deregulated markets or struggling to maintain compliance with complex regulations in monopoly states. Factor in aging technology and a seasoned workforce, and it’s clear why a focus on modernization, AI, and operational agility is surging.
At the recent SAP for Utilities conference, presented by ASUG Best Practices, I was excited to provide my thoughts about the state of the utilities industry. Here are excerpts from the interview I participated in.
Industry challenges
After more than 25 years in the utilities industry, working through technology shifts and regulatory and operational challenges, I believe the industry is at a point of real inflection and confluence.
- There is a desire from the public to change the way utilities do business. Customers are looking for more options—especially the younger demographics, who rely on their phones and devices so heavily.
- Disruptive technologies and new companies (like microgrids) have the potential to cherry pick utility companies’ load and customers away.
- Utilities in regulated service territories have a built-in customer base but face their own set of challenges.
- More than half of utilities’ employees are over age 50 and more than a half million are expected to retire within the next 10 years. Attracting younger workers presents both an opportunity and a challenge.
- And, of course, the threat of physical and cybersecurity breaches keeps utility company executives and their boards up at night.
Power generation has not changed much since the 1960s, though the industry has added renewable sources to the mix. Assets are aging and in need of replacing, so we're at the point where introducing digitization, modernization, AI, and automation, among other things, is a necessity.
Enabling data-driven strategies
Deeper insights that enable smarter business decisions are now available with the advent of AI. For example, predictive models using data and data insights to forecast demand can enhance operational efficiencies in situations such as:
- Charging fleets of electric vehicles at night
The ability to forecast this demand and load becomes essential. Is it best to manage demand only, build new generators, and rely on wind, solar and other renewables? The answers to optimizing asset performance are in the data.
- Preventing failure of an ailing transformer
You can optimize when and how you roll trucks to repair to determine which incidents require maintenance, and which require service. The data and insights derived from AI can lead to automation of those repetitive tasks and more streamlined and efficient operations.
- Replacing cast iron gas mains
Predictive modeling will simplify advance planning for this work, so it doesn’t become a service issue.
- Tracking expensive capital assets in the field
GPS enables easy tracking for maintenance and service projects. When coupled with predictive modeling, GPS' value for easily tracking devices is enhanced, since companies now can leverage data insights about these assets to plan maintenance or replacement requirements.
Utility companies are also adding more rigor around interdependencies within their massive capital programs and projects, looking at the best ways to sequence, allocate resources, and manage budget. It's all driven from data and data insights.
Learn how DXC Fast RISE with SAP helps enterprises accelerate SAP S/4HANA transformation in our exclusive ASUG executive Q&A with Keith Costello, General Manager and Global SAP Lead at DXC Technology.
Addressing the challenges
DXC has more than 50,000 engineers, many of whom have backgrounds in power and utilities. They are experienced in the digitization of real-time systems used for controlling, monitoring, and analyzing industrial devices. This is the heart of DXC’s Managed Services business as it relates to our utility customers.
We know how to manage and modernize critical systems, and how to integrate and move to digital solutions to provide safe and reliable energy. Utility customers expect lights to come on when they flip a switch, televisions to work, refrigerators to stay on to keep food safe, and so on. The key objective is to continue to provide that safe, secure, reliable network and service while balancing other business priorities like sustainability, customer engagement, and new market opportunities.
At DXC, we partner with our customers to resolve these challenges while still providing core critical systems support as utility companies make the shift from being commodity-based services to strategy-focused organizations.
The workforce of the future
Adopting current technologies—especially AI—will help drive the interest of younger and more diverse talent, giving utilities a wider hiring pool.
We’re helping clients take a proactive approach to bring new generational layers to the workforce. The change in focus to strategic and outcome-based projects for regulated utilities should make the work environment more attractive for recent college grads and new entrants to the job market.
Deregulated utility markets—where companies often consider themselves to be technology and marketing companies rather than utilities—generally boast a much younger and more diverse employee base. These workers bring ingenuity and fresh ideas, and, candidly, they have opportunity to be mentored by smart, experienced co-workers. So it's a win/win.
Working with the ASUG community
One key area where DXC helps ASUG members is operational agility. Many investor-owned, regulated utility companies are in monopoly service territory businesses. When considering a change from owning IT assets to moving to the cloud, utilities must keep in mind their commitment to their shareholders to deploy capital and generate a return on assets/equity, which requires assessing how cloud assets will be capitalized, and to their customers in terms of how rates may be impacted.
Regulatory approval may also be required to make the shift. Unfettering from the physical infrastructure and technical debt that they're currently saddled with to a more flexible and responsive IT model focused on the core business is critical.
By taking advantage of managed services and outsourcing support, those utilities’ in-house teams are now able to lead more strategic, value-based, and outcome-based projects. SAP RISE and S/4HANA fit into this modernization process really well.
For utilities running older versions of SAP that are either no longer supported or are nearing that point, this is the solution. We work with our clients to resolve any obstacles to the subscription model so that they can realize the benefits of SAP RISE.
We were able to do this very successfully at Energy Harbor, which won an award last year at the SAP for Utilities, Presented by ASUG conference. It was a complex migration, with SAP, S/4HANA, and RISE with SAP. Despite compliance restrictions due to the nuclear facilities, we were able to complete Energy Harbor’s migration in less than eight months.
More than 2,000 users were migrated to the new version of SAP. Custom code was reduced by about 50%, and we were able to remediate the customizations in their SAP S/4HANA system with around 98% automation.
Energy Harbor can now operate more efficiently. That’s the power of SAP RISE supported by the deep industry knowledge of our DXC team.
Joe Pennacchia is the Energy Sector Leader for the Americas at DXC.