Utilities encountered a decade of
challenges in the 1990s – utility
diversification, attempts to adjust
to emerging regulatory opportunities and
distractions from extended investment
strategies. Consequently, in the early
2000s, many of these utilities began to
reevaluate their business practices and
followed a “back to basics” approach
to recover from the failed strategies of
the earlier era. While the elimination of
noncore business activities may have
helped to shore up those utilities’ financial
condition, the strategy proved ineffective
in addressing the core challenges of an
aging infrastructure, aging workforce and
much-needed gains in productivity.

Now utilities are searching for and
embracing new strategies for managing
assets and performing work – strategies
that are both pragmatic enough to
deliver results today, yet forward-thinking
enough to provide continued leverage in
the future. The aim is to achieve service
transformation, to completely make over
the methodology and infrastructure supporting
the delivery of services to customers.
Many are beginning to look for
new ways to create an intelligent utility
platform – an intelligent infrastructure,
if you will – to drive improved productivity
and achieve better business results.
The results of this strategy validate the
fact that harnessing an emerging and
maturing intelligent infrastructure can
help utilities employ new strategies and
technology and reach the goal of service
transformation.

Back to Basics – It’s Not Enough

The back-to-basics trends of the past
decade were survival tactics deployed
in the face of increasing cost pressures,
which have created a constant struggle
to satisfy escalating market expectations.
Mandates to cut costs, coupled with the
need to improve infrastructure and customer
satisfaction levels, have created
seemingly conflicting objectives. As with
most industries, the entire utilities cost
structure has continued to increase, adding
fuel to this already volatile equation.
Labor costs, long recognized as a major
portion of the service delivery expense,
have continued to rise while labor resources
have become scarcer, creating
still more concern. Transportation costs
also increased well above historical
highs and must be included in the growing
cost spiral.

In addition to these tangible impacts
on cost, more elusive “relationship” elements
have begun exerting pressure on
utilities. Investor-owned utilities have had
to deal with the high expectations of Wall
Street, demanding 5 to 6 percent profit
growth, while organic growth remained at
less than 3 percent in most areas. Moreover,
the entanglement of the customer
relationship with the regulatory relationship
became critically important as many
utilities found it essential to seek rate
changes.

It has become clear that the need to
meet the regulatory and customer goals
for greater reliability, improved levels
of service and stable rates has further
increased the stakes for transformation. In
short, these changes cannot be achieved
via a simple back-to-basics strategy.

But solving this conundrum requires
new solutions and strategies to transform
the way service is delivered. The outcome
must impact the three most critical
aspects and financial-consequence areas
of the utility business – its assets, customers
and workforce. Fortunately, there is a
solution to drive change and yield results.

The Intelligent Infrastructure

A new paradigm is changing the way
assets are managed and work is executed.
It is enabled by an emerging and maturing
Intelligent Infrastructure (see Figure 1).
This intelligent infrastructure correlates
with the concept of the intelligent grid.
The intelligent infrastructure allows technologies
to link between IT software systems and the tangible assets within the
infrastructure, which, in turn, enables the
physical tracking of vehicles and people,
providing sensing capabilities to alert
when assets are failing, and including
communication capabilities to interconnect
the elements and systems within
the enterprise.

Being able to leverage these technologies
is a recent phenomenon, but it is also
a realistic solution. Moreover, the cost
provides a reasonable return on investment.
The data-enabled 800 MHz radio
systems are relics of the utility industry’s
past; complete intelligent infrastructures
are the tools of today’s savvy management
team. We now have extensive tools
that can directly impact the efficiency of
any work process. These tools support a
new strategy for how we manage assets
and deploy our workforce – appreciably
impacting the results we achieve.

Addressing the Challenges – The Business Case for Service Transformation

So what exactly is involved in service
transformation? What must a utility
do to become an “intelligent utility”?
The underlying business case for service
transformation – harnessing the
intelligent infrastructure, embracing a
new strategy and employing solutions
designed to enable execution of this strategy
– can be illustrated by looking
at several interrelated areas:

• Sweating the Assets – An Aging
  Infrastructure
• Capturing Business Knowledge –
  An Aging Workforce
• Creating a Platform for Consolidation
  – The Enterprise View
• Improving Worker Productivity –
  Enterprise Workforce Management
• Coupling People and Parts – The
  Fusion of Supply Chain and Work

Sweating the Assets – An Aging Infrastructure

The utility industry is clearly dependent
on a highly distributed yet interdependent
infrastructure to deliver the utility commodity.
The health of that generation,
transmission and distribution network is
a key determinant of the business results
achieved. For example, research shows
that the industry as a whole is based on
an aging infrastructure, where the average
age of transformers is 38 years – a
significant statistic in light of their typical
40-year design life. In fact, the recurring
joke in the industry is that most of the
nation’s power distribution systems are
now eligible for AARP membership. Compound
this with documented studies indicating
that the failure rate on transformers
escalates to 50 percent at 50 years,
and the stage is set for disaster.[1]

While simply replacing this infrastructure
is an obvious answer, it is clearly not
practical and it’s much too expensive.
Modernization must be combined with
strategies for “sweating the assets” in
order to extend their useful life – on an
individual component basis. Specialized
software is at the heart of the new maintenance
strategies and techniques that
will let utilities walk the tightrope. This
approach allows for the network to be
modernized at a robust pace and takes
fullest advantage of components already
in place – while continuing to ensure safe
and reliable power.

Capturing Business Knowledge – An Aging Workforce

Utilities must also acknowledge that
the workforce itself is aging. In fact,
statistics show that the median age
of employees in the utility industry is
higher than in other lines of work, and a
noteworthy spike exists in the 45 to 54
age group.[2] These facts point toward
a looming crisis for labor replacement
and knowledge retention, creating an
urgent need to standardize practices
and capture knowledge in systems. The
classic utility culture relies heavily upon
“lore” passed down through mentors and
trainees. It’s also based on the traditional
expectation of a stable workforce. In
today’s work environment, however, it’s
no longer safe to count on an ongoing
supply of lifetime and intergenerational
employees. New workers must have the
knowledge-bearing tools to guide them
through processes at experienced levels.
As noted by one leading utility expert,
“The system needs the benefit of 20
years of experience, not the worker.” It’s
a daunting prospect, but this forecasted
attrition rate should serve as a catalyst
for change, driving the implementation of
technology-achieved productivity gains
to offset hiring needs.

Creating a Platform for Consolidation – The Enterprise View

Consolidation is yet another emerging
trend in the market. Consolidation opportunities
and drivers exist at several levels.
One is the opportunity to expand systems
to break down traditional silos and take
an enterprise view of the service delivery
functions spanning customers, assets and
workforce. The norm of siloed information,
with each organization having its
own systems, is giving way to an enterprisewide
view that yields significantly
improved results and better performance.

For example, a December 2006 Aberdeen
study shows that standardized,
enterprisewide, proactive maintenance
processes not only increase asset uptime
and availability and asset productivity
(as a percentage of capacity) over ad
hoc maintenance processes, they also
decrease service and maintenance costs
as a percentage of revenue. Furthermore
utilities are seeing these results to a
greater extent than other asset-intensive
industries because they are twice as likely
to use standardized, enterprisewide maintenance
processes.[3]

These types of results are above and
beyond the typical impact of simply eliminating
redundant systems. However, the
key is having a single platform capable
of being configured to meet the business
needs of multiple users.

Another element of the consolidation
trend is to enable effective post-merger
assimilation. There is a unique source of
business value in having highly scalable
systems that can absorb multiple companies into a single entity. Thus, common
trends seek to drive consolidation business
value in order to:

• Deploy applications on an enterprise
  basis to handle “any work type, anywhere,
  by anybody”;
• Standardize business practices and
  streamline processes;
• Create supply chain efficiencies;
• Reduce integration complexity; and
• Focus on fewer, more strategic

vendors.

Improving Worker Productivity – Enterprise Workforce Management

Improving worker productivity is a common
goal, but it can be tricky to quantify
the gains realized. One place where tangible
benefits can be rapidly achieved is in
the area of enterprise workforce management.
The problem is easy to define: The
typical utility field worker is on the job
and able to work only 1.6 to 2.8 hours per
day. This provides an enormous opportunity
for immediate productivity improvements
ranging from 20 to 35 percent. This
requires three interrelated capabilities,
shown in Figure 2:

• A resource management platform capable
  of managing workforce availability;
• An assignment tool to automate the
  optimal distribution of work across the
  available workforce; and
• A mobile data infrastructure to feed the
  work to the appropriate technician.

In the past, these tools have been limited
in several ways.

First, the capabilities have only been
deployed against individual work groups.
Therefore, sharing of resources across
the organization has been hampered, as
technicians cannot be easily redeployed
to respond to the ebb and flow of business
needs – regardless of work type (e.g.,
construction, inspection and maintenance,
repair or service). Work assignment is thus
not based on skills and work proximity, but
on the basis of arbitrary organization and
system silos.

Second, past deployments have not
leveraged significant advancements in the
area of optimization technology, which
facilitates the assignment of work to
the right technician, with the right skills,
parts and tools to do the job. Optimal
assignment yields huge savings, as this
minimizes drive time and increases productivity.
But, it’s a problem that cannot
be easily solved without the aid of technology.
Consider that 10 jobs can be ordersequenced
in more than 3 million different
ways. Each yields a different business
result in terms of efficiency and effectiveness.
Utilities deal with hundreds, if not
thousands, of orders per day across tens,
if not hundreds, of technicians; clearly,
the correct assignment and sequencing of
work can yield phenomenal benefits.

Third, all of this potential benefit is lost
without the ability to communicate reliably
with the field. No plan is immune to
the test of reality once the truck rolls out
of the yard. Thus, it is essential to harness
the intelligent infrastructure to react to
changes, so that work can be deployed to
the right resource and without being constrained
by the tools’ lack of connectivity.

Coupling People and Parts – The Fusion of Supply Chain and Work

One of the most dramatic areas for
productivity improvement is often overlooked.
It is the ability to link people and
parts, fusing the supply chain aspects of
the business with the work management
aspects. Most work requires specific
parts matched with skilled labor for the
job to be completed correctly. Moreover,
an effective asset management strategy
must take into consideration both supply
and demand.

Spare parts often comprise 80 percent
of the purchasing department’s transaction volume in a utility maintenance
environment,
yet the primary reason for delay
in completion of work assignments is the
lack of necessary parts. Supply chain
systems designed to be companions to
financial systems, rather than work management
systems, do not have the needed
functionality, process orientation or work
flows for achieving optimal asset life cycle
management results.

A major Tier 1 utility in North America
recently quantified the importance of recognizing
and implementing this strategy.
The utility found that linking people and
parts in its asset life cycle management
enabled the following benefits:

• Energy delivery headcount reduced
  from 326 to 217 employees;
• Inventory decreased from $121M to
  $56M;
• 93 percent fill rate increased to 99.9
  percent;
• 0 percent material invoice automation
  increased to 90 percent;
• 0 percent automated purchase orders
  increased to 73 percent; and
• 49 supply facilities reduced to 28.

A New View of Service Delivery – Leveraging the Intelligent Infrastructure

Achieving maximum benefits and savings
requires a holistic view of the business,
as savings in one area is often affected
by another. While each organization will
choose an area to focus on first, a calculated
– and often evolutionary – enterprisewide
strategy must be articulated as
well. Just as the intelligent infrastructure
connects the dispersed and disparate
components of the utility’s network of
assets, service delivery management
connects a complex web of highly interrelated
business processes. Having a “process-
centric” perspective is paramount to
driving change. So the need for an intelligent
infrastructure is even more critical
to success!

A simple way of looking at this is in the
context of work management activities.
One can easily see how work planning,
work allocation and work execution all
impact each other, as shown in Figure 3.

Many organizations fail to implement a
sound strategy – and solutions – for ensuring
that the right work is being performed.
A combination of preventive and predictive
planning strategies can overcome this
liability. Traditional field service solutions
don’t tell you anything about whether
specific work should have been identified
at the project outset. These tools can help
get technicians started working faster, but
they don’t provide any analytics to help
determine if the task was truly needed in
the first place.

The next step focuses on work allocation.
In determining how to optimize work
assignments, organizations must consider
the skill match with technicians, parts
availability and work and schedule prioritization.

Only when you’ve determined the
appropriate work to be done and the optimum
sequence for executing that work,
are you ready to perform the work. And
then, you need mobile support. Plans are
outdated as soon as the technician is given
the day’s schedule, and good intentions
fall apart in the unpredictable real-world
environment. Therefore, the ability to
address, augment and modify that optimized
plan on a real-time basis completes
the process of carrying out work in the
most efficient and effective way.

Summary

The intelligent infrastructure, along
with a new view of service delivery and
appropriate technology tools, enables
pragmatic yet progressive means to
achieve transformational results. Service
delivery management recognizes the
optimum chain of work logistics, leading
utilities to identify and prioritize better;
to improve the match of resources, parts
and work management; and, finally, to
execute with ongoing real-time contact
and continually refine work plans to
reflect changing circumstances. This supports
the planning, allocation and execution
for achieving excellence in service
delivery, effectively delivering on the
promise of the intelligent utility.

Endnotes
1. William
H. Bartley, “Life Cycle Management of Unility Transformer Assets: p.6.
(http://www.serveron.com/downloads/dl_files/HSB.Bill%20Bartley.Life%20Cycle%20Management%20of%20Utility%20Transformer%20Assets.pdf)
2. U.S. Bureau of Labor Statistics, 2005
3. Collaborative Asset Maintenance Strategies, Mark Vigoroso, Michael Israel;
Aberdeen Group Inc., December 2006.