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Today’s electric utilities face a number of the same challenges they faced decades ago. Costs of energy production, transmission, and distribution have increased with higher fuel costs, capital investments, and labor costs. Demand for energy has also increased steadily with larger populations to serve and new commercial businesses requiring power.
As a credit to the utilities’ success, power supply has kept up with demand and, as noted by the Edison Electric Institute, consumers have enjoyed relatively low energy prices, as compared to other consumable goods. This is largely due to overall technological improvements in the production and supply of electricity and also to the predominantly regulated environment in which utilities continue to operate.
In today’s environment, the name of the game is largely cost management:
- There is an increased need for significant investment in assets and infrastructure to ensure ongoing grid stability, reliability, and scale. Properly prioritizing these investments and effectively managing performance on capital projects have become critical to each utility’s overall cost containment or cost reduction efforts.
- In order to sustain operations and maximize their returns, utilities must carefully manage their working capital position. Proper cash planning allows organizations to sustain day-to-day operations, reduce interest expenses, avoid opportunity costs, capture all possible revenues, reduce fraud and theft, and apply appropriate strategies to reduce customer risk.
- Cost containment extends to the efficient operation of field service crews and the ability of the supply chain to provide the right amount of inventory when and where it’s needed. Excessive stock drives up costs while running too lean adds risk to delivery and also increases costs when delays in work occur.
- Demand management not only minimizes grid reliability problems and improves environmental impacts, it reduces operating costs through smoothing consumption over non-peak periods. For vertically-integrated firms, it reduces capital expenditures by keeping peak demand within power generation limits.
- And in selected unregulated markets, we’re seeing competitive pressure to provide differentiated service, to retain valuable customers, and to proactively market and sell other value-added products, such as renewable energy and energy efficiency services.
In response to these and other related challenges, utilities have turned to advanced information technology to improve the efficiency and effectiveness of their operations. Core technologies and systems, such as AMI/AMR, real-time monitoring, remote sensing, CIS, GIS, and ERP to name a few, all contribute to streamlining business processes and improve the capture and use of data. Providing management visibility into that data to understand how process performance impacts the achievement of business goals and strategies, requires the appropriate application of Business Intelligence (BI) and Business Performance Management (BPM).
Leveraging our energy industry experience, our broad functional experience, our Six Sigma-based process improvement methods, and our high caliber BI and BPM skills, DecisionPath has developed eight Energy Industry Solution Templates that enable companies to solve common industry challenges and jump-start process improvement initiatives. They can be specifically tailored for your company to provide a solid foundation for business intelligence solutions
Capital Planning and Management Analysis
- Analyze the investment portfolio and progress against objectives to ensure infrastructure meets future demand and reliability requirements
- Understand capital project performance through leading and lagging indicators
- Evaluate root cause of project performance problems to determine corrective action
Asset Management Analysis
- Proactively monitor asset health and likely impacts to service delivery
- Evaluate asset maintenance and replacement strategies (e.g., reliability centered maintenance) to determine effectiveness
- Improve accuracy of asset inventory tracking and management by integrating asset information across disparate systems
Meter & Demand Management Analysis
- Utilize AMR / “Smart Meter” usage and cost data to determine effectiveness of TOU pricing, progress toward AMR deployment goals, and overall cost improvements resulting from usage shifts from peak to off-peak and avoidance of capital expenditures
- Profile and segment customers based on propensity to purchase TOU plans, renewable energy, and other energy efficiency services
- Analyze historical meter readings to ensure accuracy and identify potential problems
Working Capital Analysis
- Understand cash position and contributing factors, including planned and unplanned work, interest expense, opportunity costs, payables, inventory, and receivables to improve reserves and operations planning
- Improve receivables position through improved understanding of collections effectiveness, optimization of collection activity, and reduction of customer credit risk
- Reduce unbilled revenue through improved understanding of billing accuracy, idle facilities, fraud, and theft
Supply Chain & Inventory Management Analysis
- Optimize inventory levels by analyzing historical and planned inventory needs, turnover, and safety stock levels
- Evaluate supplier performance in terms of on-time delivery, item quality, and costs
- Identify opportunities for strategic sourcing by analyzing supplier relationships and supply needs across the business
Customer Care Analysis
- Analyze responsiveness and quality of service related to work performed, customer inquiry and problem resolution, billing accuracy, etc.
- Collect and evaluate customer satisfaction/feedback from service requests, incident reports, trouble tickets, call center logs, and surveys to determine quality of service, identify problem areas, and evaluate new product/service offerings
- Evaluate customer care touch points, such as call centers and company web site, to evaluate effectiveness as sales channel
Work Management Analysis
- Analyze historical demand-driven work requests, demand forecasts, and historical outages to improve work forecasts
- Analyze work forecasts against current and planned workforce to improve resource retention, allocation, training, and hiring strategies
- Evaluate work performance to identify problem and improvement areas related to work efficiency and effectiveness
- Monitor and improve work safety by stratifying work activity based on risk exposure, evaluating safety practices, and determining risk-related correlations to adjust safety-related policies and procedures
Marketing & Sales Analysis
- Profile and segment customers based on value, risk, and opportunity to develop strategic marketing strategies
- Analyze customer feedback to enhance product and service offerings
- Assess effectiveness and efficiency of customer acquisition, retention, cross-selling, and other promotional campaigns to determine optimal “treatment” strategies
- Evaluate pricing strategies vis-à-vis cost of service to improve revenue position
For more information about our Energy solution templates, please send us a note at EnergyIndustrySolutions@DecisionPath.com.
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