As utilities contend with changing consumer expectations and regulatory demands, they are also implementing new technologies, including cloud environments, SAP S/4HANA, and artificial intelligence (AI). Ahead of his participation at SAP for Utilities, Presented by ASUG (Sept. 9-11; register here), ASUG sat down with Marc Rosson, Enterprise Architect at Snohomish PUD, to talk about how utilities are approaching these changes.
This interview has been edited and condensed.
ASUG: What priorities and challenges are top of mind for you and your peers in the North American utilities community?
Rosson: All of us are going through times of dramatic change—on both the business and technology sides. We’ve seen disruption across the board. For example, there have been shifts in the power supply perspective with the need to move to greener sources. We’re also altering how we engage customers in the demand side of managing electrical utilities.
On the IT side, we’re seeing shifts, including the adoption of generative AI and RISE with SAP. We’re also seeing a need for our employees to be more technology-savvy to support this new technology. As more experienced long term employees retire, and we bring in more technology-savvy—but not necessarily utility-specific—employees, there will be more demands on all of us.
And, of course, we’re using analytics, embedded AI, and mobility solutions. There’s a lot of pressure to keep up, from a technology perspective, to create a compelling work environment for these new employees who are coming. They have high expectation of what technologies they will have at their disposal at work and we want to meet that expectation to encourage our new employees to stay at our utilities.
From an SAP-specific perspective, one of the biggest questions is, “How do I move to RISE with SAP and support my solution with this offering, given the fact that this is a new area for SAP? How do I make sure that I have a path to follow and that I can reduce my risk by following others who have been successful?”
ASUG: What are some benefits and detractions you see specifically with utilities and their IT operations as they move to cloud environments?
Rosson: One huge advantage of moving to a managed service cloud solution is that you can enable a faster pace of change. You can facilitate innovation faster. And you can adapt to change in your business much, much faster. Part of that is because change is hard. Change has to be tested. If I'm doing everything on premises, the maximum number of times that I can try to introduce that change is three: once for development, once for quality assurance (QA), and once for production. I’ve got three bites of the apple to try to get it right.
If I have a managed service—like RISE with SAP—and I'm asking to do an upgrade, the people overseeing that upgrade haven't just done it three times for me. In fact, they've also done it three times for every single customer. They possess experience that I could never reproduce if I was trying to go through that process myself in an on-premises environment.
With RISE, that whole group managing my environment eats change for breakfast. They're basically able to create an environment where I can enable this innovation on an ongoing basis without to the risk of blowing something up because I've introduced a change that wasn't tested, or because I did the change wrong. That’s a huge advantage.
ASUG: SAP has also been pushing AI heavily—especially as a benefit for embracing the cloud. Do you see compelling reasons and use cases for utilities to leverage AI in their IT operations?
Rosson: As I hinted at earlier, AI impacts two big areas: IT and business. On the IT side, people aren't coding anymore. People now have a mentor sitting right beside them that happens to be generative AI, helping them code and innovate while also making them better coders, testers, and faster implementers of change. You can work and prototype much faster and move code through a software development life cycle with a generative AI solution set that's being enabled for all the developers.
Whether it’s SAP or our own internal developers building cloud-based ABAP solutions on the SAP Business Technology Platform (BTP), generative AI is helping everyone innovate faster, build prototypes faster, and being more agile. There might still be bugs and feature enhancements, but you're doing it faster. I'm not wasting innovation time trying to do a prototype for six months. I can quickly put up a prototype in a week and have something that I can vet and iterate through from an innovation lifecycle perspective.
On the business side, there are several different use cases. There's a collaborative group called Utility Analytics, which hosts a meeting where different utilities talk about what they're doing with generative AI from a business perspective. Some use cases are low-hanging fruit, such as loading financial reports into AI and asking it to questions during stockholder meetings.
That’s just a simple example. The more complex operations include figuring out how Joule can integrate into our business solutions around answering customers' questions. Use cases that the industry business unit for utilities are working on include operations like using generative AI to help customers look at different rates and save money by taking a programmatic approach to evaluating customer data. The solution that looks at the customer's historical usage data in a particular way and comes back with potential answers for customers in real time to save money
Now, you have to be careful that you're giving out the right answers. We've seen early adopters with generative AI start giving out wrong answers to policy questions. The point is that this technology is in its early days. Part of what we're struggling with is figuring out how to prepare for the future. How do we get ready to solve problems we currently don't have but will be on the horizon? And how do we get ourselves ready for innovation? Moving forward with RISE is just one of those precursor steps that we're trying to do to get ready for the coming wave of innovation that will be available through all of these new technologies.
ASUG: A clean data core is so crucial to generative AI success. What’s your sense of how SAP should continue to communicate the importance of a clean core methodology through RISE?
Rosson: At the end of the day, business decisions and business outcomes are facilitated not by the applications but by the data. The data is what's supporting the business decisions. The data is organized and supported by the applications, which are supported—and organized—by the infrastructure. This is a tier, and to make better information-based decision making, you have to have quality data.
That's one of the big trends we're seeing in the utilities, because our people are turning over. Utilities are going from experience-based decision making (I used to have an operator with 30 years’ experience who could listen to a generator running and tell you what maintenance need to be done on it) versus information-based decision making (where the new guy needs a dashboard coming out of SAP Enterprise Asset Management). That transition from experience-based decision-making to information-based decision-making is happening very quickly, as people are leaving the workforce and we’re hiring all these new people. If you don't have solid data dictionaries and information governance, it can become a problem, because you’re losing intuitional experience.
ASUG: How do you see regulatory and reporting demands evolving in the utility space?
Rosson: The regulators are always in a position of playing catch up. As the world has accelerated, regulation still has a set pace. I don't think regulators have changed their pace of innovation to keep up with the amount of change currently happening. That's typical. However, the regulation is now catching up with the utilities, and everyone is, of course, working to be compliant.
For example, gas utilities are replacing cast iron, water utilities are replacing lead pipes, and electrical utilities are putting in systems to prevent wildfire. All of these utilities professionals are working on replacements and additions of functionality to comply with regulation. That regulation needs to evolve faster because sometimes there's regulation that solves problems, which—by the time we solve them—will be gone and won't be issues anymore. It's important that regulators regulate enough, but not too much. This is so that they keep up with the innovation but do not quash it. It's a balance.
As an example, the government is funding new meter technologies with very detailed power analyses at the meter and under the glass. They're putting the same GPU chips being used for AI are going in under the glass in a meter. That technology allows electric utilities to analyze the grid at a much finer level of detail. Therefore, they can introduce more renewables, demand side changes, and dynamic system distribution resources.
In America, part of government funding helps innovators come up with new ideas. However, investor-owned utilities still must have an incentive to undertake that kind of innovative work. Right now, the government does it with grants. From a regulation perspective, everyone's looking for help with the Governmental Accounting Standards Board (GASB) rules for accounting. For the investor-owned utilities, they get revenue on capital, but cloud-based spending is not capital. How do I tell my investors that running on the cloud leads to faster, quicker innovation, but because of regulation, I don’t get any revenue if I migrate to the cloud? That rule is a damper on all of the innovations in the cloud for investor-owned utilities.
ASUG: How do you anticipate this sector is going to evolve over the next three to five years, and how does that excite you?
Rosson: Well, the utilities industry is a fabulous space to be in. We enable life for everyone. We’re the hot in your shower and the cold in your beer. At least electric and gas utilities are. And how long have humans been alive without water?
Utilities, in general, are underappreciated, yet utilities are systemic to the lives that we live in this modern day. How can you not want to be part of an organization that's delivering life to the people in our communities?
Now, there's a better understanding of how power generation and the resulting carbon dioxide fuel global climate change. So, we are currently figuring out how utilities can participate in solving these generational challenges the world is facing. It’s exciting to be a part of the industry that’s solving problems. I’m optimistic about the future, and I'm excited to be doing my part.
Hear more about these topics at SAP for Utilities, Presented by ASUG. Join us Sept. 9-11 in Miami. Register here.