Ahead of SAP for Utilities, Presented by ASUG (September 9–11, 2024, Fontainebleau Miami Beach; register now!), gain insights from Jeff Briner, a Principal with PricewaterhouseCoopers (PwC), in its SAP practice; he is the Digital Supply Chain Capability leader.
Digital transformation will bring utilities into the future, enabling providers of our world’s most essential services to improve business processes and harness clean energy while reducing disruption, responding to market trends, and complying with evolving regulatory requirements.
For today’s North American utilities, completing the clean-energy transition will require more than industry-standard maintenance. Indeed, modernizing existing infrastructure by shifting to SAP S/4HANA Cloud while integrating renewable energy sources will require significant business shifts.
The race is on for utilities to transform their operations while maintaining peak performance. And by and large, those who pull ahead in this race can do so by investing in three key areas: data, process, and people.
1. Data
Data governance should be a priority for utilities approaching digital transformation. Even beyond the technical value of data cleansing and validation before migrating from legacy systems to cloud ERP systems, utilities should also consider the operational, safety, and regulatory impacts of clean data.
The cleaner data is when it first comes across, the more quickly organizations can unlock value from cloud ERP, the more effectively they can improve business operations, and the more confidently they can guarantee the safety of their employees. Rather than dedicating time and resources to continuously addressing accuracy and quality issues in legacy data, utilities that invest in data governance ahead of migration will be able to more effectively leverage analytical decision-making capabilities that will prove impactful to the bottom-line.
Clean data will also support the success of shifts in organizations’ technology landscapes brought on by mergers and acquisitions (M&A); companies that have a clean data model in the new SAP S/4HANA environment will find the clarity, guidance, and structure provided by this model to be a game-changer. For utilities, these SAP S/4HANA clean data models can enable unprecedented transparency, allowing utilities to see from the meter all the way to the electron, along with all the aspects in between. Within SAP S/4HANA Cloud landscapes, the advanced dashboarding capabilities offered by SAP Analytics Cloud can additionally help organizations with clean data models to help utilize the predictive analytics they need to make future decisions more accurately.
2. Processes
Processes generate large volumes of data from a variety of sources, and harnessing that data from operational activities in addition to maintaining master data is one hallmark of the modern intelligent enterprise.
Leveraging analytics to analyze that data and identify inefficiencies can allow businesses to make data-driven improvements, such as streamlining workflows. Across the entire project lifecycle of developing a utility-scale solar farm, for example—initial assessment, design and engineering, regulatory requirements, financing and procurement, construction and installation, and operation and maintenance—hundreds of processes can drive data about themselves to allow the larger organization to assess their adherence to industry-leading business processes.
Building resiliency into these processes can also bring out new forms of reporting that can help utilities to proactively respond to emerging regulatory standards and different ways of working.
3. People
Bringing processes and data together, of course, requires people. Investing in the health and professional development of one’s workforce is another essential characteristic of the modern enterprise: teaching people how to work within cloud ERP, arranging skillsets and professional-development paths to align with that business shift, is what transformation is all about.
The State of the Race
For most utilities, moving to the cloud will likely be a more expensive process than many might have originally thought; it will also likely take longer to go live than previously estimated, according to recent research. The reasons for this are multi-layered, ranging from a lack of internal skills to support transformation to extensive customization in companies’ legacy ERP systems, but it’s clear that the ultimate leaders in this race will be determined by certain competitive advantages.
Utilities that are efficient and effective in how they shift to SAP S/4HANA, adhering to a clean-core methodology that allows them to benefit from industry-leading practices and run the system out-of-the-box as much as possible, can avoid the obstacles that threaten to block those utilities running highly customized core SAP systems, who’ll take longer and less effectively leverage the increased business functionality of SAP S/4HANA.
In the clean-energy transition, as well, there will be those who lead and those who can learn. Though utilities across the board have made sweeping commitments to invest in renewable sources, there’s no guarantee—without additional investment in data, process, and people—that those investments will be used efficiently, and this emerging market is still in early-enough days that configuring and consuming those investments properly for organizations is far from a certainty. Embracing clean energy will require significant business buy-in, as well as an awareness that utilities will likely make mistakes on the road to electrification; the leaders in this race will be those who learn from those mistakes and keep moving forward.
Beyond that, those utilities leading the clean-energy transition will have successfully stayed on SAP’s standard ERP functionality within their SAP S/4HANA transformations, keeping their cores clean so as to enable a fit-to-standard approach in SAP S/4HANA Cloud implementation that can allow their business to benefit from industry-leading practices. Of course, utilities will require some level of customization and localization—but at the mobile level or within SAP Fiori, rather than within the core of their ERP systems.
Those utilities taking a greenfield approach to this transformation, migrating from SAP ECC to SAP S/4HANA in a new environment, designing systems and workflows from scratch without carrying over outdated SAP ECC customizations, are particularly set up for success in the clean-energy transition. That’s because enabling carbon accounting, new business models, and intelligent asset management will require of utilities a shift in mindset as well as technology.
In moving toward cloud ERP systems to support modern sustainment processes, enable a more resilient set of operations, and meet the future of their business head-on, the most competitive utilities in the market today are those approaching SAP S/4HANA migration as not a technical lift-and-shift but a wider-reaching business transformation, with wider-reaching results.
Jeff Briner is a Principal with PricewaterhouseCoopers (PwC), in its SAP practice; he is the Digital Supply Chain Capability leader.