A Long-Term View of Technologys Value to Utilities
The rise of wireless data networks,
coupled with the evolution of software
solutions, has made advances
in field automation, project management
and collaboration widely accessible to
investor-owned utility (IOU) companies.
As in many other industries, the cost and
perceived value of these solutions need
to be addressed over time by utilities.
And that cost has to be looked at both
positively and negatively; that is, both the
value resulting from streamlining operations
as well as the cost to an organization
when the technology it relies upon fails.
Once IOUs become dependent on having
computers in the field, the pain and
cost of downtime becomes very real. For
this reason, utilities should take a hard
look at return on investment (ROI) and
total cost of ownership (TCO) in technology
decision making.
Defining ROI and TCO
Total cost of ownership is exactly what
the term suggests: the total cost to own
a product throughout its lifetime. This
includes the purchase price, deployment,
maintenance and decommission.
TCO cannot truly be calculated until
the day the technology is retired. However,
it is important to remember that
keeping costs in control over that lifetime
can be far more imperative than
keeping costs down at any single point in
the TCO equation, including at the time
of initial purchase. The secret to making
good capital decisions is to use TCO to
manage risk and minimize unexpected
lifetime costs.
ROI is the relative value a product
will bring to an organization throughout
its deployment. Maximizing return on
investment means getting the greatest
advantage possible from resources.
However, ROI does not simply equate to
recouping the original purchase price of
technology.
If you can figure out how much time will
genuinely be saved or which goals can be
better met with the right technology, ROI
will tell you exactly how much value can
be delivered beyond any specific dollar
figure, like the purchase price. As long as
customers are better served, field teams
are more efficient and information is gathered
more rapidly or more accurately, ROI
will continue to accrue.
While TCO tells us how much a solution
will really cost and ROI tells us how much
value a given technology will bring to our
users, both are fundamental to making
good decisions.
The Impact of Reliability on Total Cost of Ownership
TCO is especially significant in mobile
deployments because of their high risk of
failure. The decision to embrace computer
technology is based on an expectation
that solutions will work whenever and
wherever needed. Unfortunately that reliability
is not guaranteed.
For example, in 2006, Gartner Inc.
published a report benchmarking computer
failure rates, which encompasses
any need for some form of hardware
repair. The report stated that within the
first year, business notebooks failed15
percent of the time. By the third year,
those estimates escalate to 22 percent.
PC Magazine, in its annual reader survey
(September 2006) reported a 23 percent
annualized failure rate in business
notebooks.
Its not clear if these failures are caused
by poor quality or by the way people use
or abuse their machines, but its obvious
that this level of downtime can significantly
impact both ROI and TCO. Statistics
like these underscore the importance of
building solutions appropriate for the user
environment, and they are one of the main
reasons that IOUs opt to deploy more reliable,
rugged computers.
Downtime impacts operations and customer
perceptions because it directly
impacts the ability of technicians to:
- Respond quickly to outages. Techs
cannot restore service if they cannot
receive work assignments remotely. - Recognize trends and determine the
source of an issue. The source of an
outage can be identified early on when
work assignments are delivered in real
time to a mapping system on a mobile
computer, thereby speeding resolution. - Access customer information systems.
Insight into customer history helps
technicians avoid repeatedly repairing
surface issues rather than getting at
the core problem. - Access maintenance and repair
instructions or manuals in real time.
A lack of critical information may
lead to time-consuming failed repair
attempts and costly follow-up visits. - Map territory. Utility technicians are
dependent upon GIS (geographical
information systems) to display maps of
utility grids, street maps, the location of
power lines and poles, and other assets. - Remain remote. Without digital order
processing, technicians must manually
submit completed orders. When up and
running reliably, mobile devices save
substantial travel time and fuel costs.
Factor in the Intangibles
The examples above demonstrate that
there are obvious connections between
technology, operational efficiency and
customer service. Fundamentally if techs
cant restore service, IOUs cant bill the
customer and drive revenue and shareholder
value.
However, less-concrete factors are also
important, and intuition and experience
are also critical in making a successful
buying decision. Any TCO model is best
when it includes intangibles. Some product
features that dont directly increase productivity
or efficiency, for example, may
have a strong impact on the person using
the mobile device or on the experience of
the person being serviced. For instance:
- How much will productivity increase if a
field tech uses a touch screen instead of
a keyboard? - If techs can read screens in full daylight,
how much time can they save? - How does using technology impact
overall morale? Employees value being
given the right tools to do their jobs
and being trained effectively. - How do customers perceive companies
that embrace technology to improve
service?
Of course, any technology solution must
have clear buy-in from employees to be
effective. But people generally dont like
change, and in some cases, IOUs will be
automating paper processes for the first
time. Adoption rates among first-time
users can make or break the success of
any long-term project.
Invest Up Front in Operational Analysis
No matter the project, it is critical to
establish goals and identify the ways
in which you can ensure that your TCO
remains low and your ROI high.
This operational analysis should include
an honest assessment of technology
alternatives based on their relative cost
and perceived value. In order to be truly
effective, it must include financial data,
validated by accounting, that support
internal resource allocation processes
and look ahead to predict future budget
requirements.
By looking at these kinds of issues,
project teams will have a much easier
time convincing their IT and procurement
organizations that a purpose-built rugged
computing solution will be more beneficial
to their organization than trying
to press corporate-standard notebooks
into heavy-duty service. In fact, it should
help prove that taking a one-size-fits-all
computing approach can be detrimental
and run counter to the goals of process
automation.
The goal of any technology implementation
should be to ensure that workers are
given the right tools to help them be more
effective in support of customer service.
With these factors in mind, calculating
TCO and ROI becomes much easier, and
the business case for adopting technology
can be as easy as ABC.