A Long-Term View of Technology’s 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.

It’s not clear if these failures are caused by poor quality or by the way people use or abuse their machines, but it’s 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 can’t restore service, IOUs can’t 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 don’t 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 don’t 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.