Conventional thinking considers the aging utility workforce a critical problem demanding a call to arms. Although the demographics are more pronounced within the utility industry than in many other businesses, the seemingly harsh reality of a disappearing workforce – disappearing principally because of retirements, but also because of cost cutting measures and hiring competition – confronts all types of businesses worldwide.
But is an aging workforce a Human Resources dilemma alone? Or is it more broadly a window through which utilities can examine ways that they can foster positive change for the future of their organizations? The exit of a large cohort of skilled workers may represent the most significant opportunity a utility will ever have to confront and fundamentally alter how it carries out its business and upgrades its financial performance.
At most utilities, little or no opportunity for significant revenue growth has existed for some time while increasing personnel related expenses have continued to squeeze profit margins. To
achieve the annual earnings improvement targets of 10 – 15% their stakeholders have expected, utilities have had no alternative but to reduce ongoing operational expenses dramatically, and often that has meant cutting staff.
But the dramatic cutting of expenses based on typical cost reduction strategies is all but over. With nearly a third of the industry eligible to retire today or within the next five years, further personnel cuts aren’t warranted. Utilities now have the unique possibility of making business improvements that can reduce future costs.
One approach involves the use of innovative technology to drive improvements like these:
• Lessen headcount requirements and make better use of reduced staffs
• Capture the knowledge base of skilled workers before they depart the workforce
• Reduce the number of people involved in getting work done by improving data access and communications between operating units
• Place emphasis on the availability and use of key skills rather than on total numbers of personnel
• Create true “best practices” instead of using “status quo practices”
• Develop a “digital organization” that excites and retains new hires
Utilities that are successful in the future – the high performance utilities – will not be able to hire their way to successful performance. There will be fewer skilled workers available for hire, recruitment will remain costly, and ongoing personnel related expenses will continue to escalate. The high performance utility will institutionalize (capture existing employee knowledge about) its key procedures and business processes, and exploit documented best practices before employees fly out the door. The high performance utility will succeed by challenging accepted ideas of business as usual and finding new ways to perform and improve on its core business despite staffing challenges.
Forward-looking utilities must invest in strategic technology, using a variety of partner models to meet their requirements. Technology solutions that solve localized issues will not address the future. Solutions that look at a utility horizontally, as an organization with many parts that need to
perform as a single entity, will be an important means to deal with the
disappearing workforce.
WHAT ARE UTILITIES LOSING? AND GAINING?
Of the major issues confronting utilities today (expense reduction, industry consolidation, regulation and business process standardization), the imminent loss of critical skills and the knowledge base of an aging workforce approaching retirement represents a demographic tsunami, a force unprecedented in business history. During the next five to ten years, many utilities will lose 50% of their current workforce to retirement, and no job classification is immune. Clerical and administrative staff, as well as field technicians, managers and supervisors, engineers, IT personnel and business executives, will all be part of the retirement wave.
Utility workforce retirement is more profound than personnel turnover because it represents a loss of critical knowledge. This knowledge base embodies the art of the organization, and not just the information that is explicitly documented in manuals, maps, procedures and databases. Also it incorporates the organization’s culture and attitudes.
As the aging workforce leaves and is replaced by younger workers, utilities face a potential fracturing of the motivational belief system that once bound the workforce to common goals. So that new workers can meet the utility’s objectives, they need the expertise and knowledge of prior generations of workers available to them. Working with past knowledge, the new workers can add their own motivations and the utility can gain a new and positive culture for success.
CONVENTIONAL SOLUTIONS
Industry literature suggests a number of solutions to the aging utility workforce problem:
• Long term staffing plans
• Partnerships with universities and community colleges
• Continuing education and training programs
• Active involvement in industry organizations
• Internal knowledge sharing programs
Each of these approaches has a role to play. But collectively, these approaches likely will not suffice to lessen the impact of half or more of a utility’s workforce leaving. The number of students enrolled in college math and science programs, except for computer and information sciences, continues to decline. In the last 15 years, colleges and universities have seen a 50% decline in the number of graduating engineers, one of many skill sets a utility requires. As utilities lose their skilled workers, those skills are not being replaced in the labor pool. Solutions other than hiring programs will be needed to bridge the gap between skills lost and skills needed.
THE ROLE OF TECHNOLOGY
Much of the technology utilities have implemented over the past five to ten years has been represented by “point” software solutions. By solving specific and limited problems, this software has tended to reinforce status quo ways of doing business rather than enabling innovation or better problem-solving.
In many utilities, the status quo means a vertical organization, that is, a group of departmental silos that define the utility’s corporate structure. In a vertical structure, each group or department operates as a somewhat isolated entity, and each group “owns” the work to which it is assigned. But the manner in which utilities conduct business is comprised of horizontal business processes spanning the office and the field, processes that are driven by the customer, whether commercial, industrial or residential.
Thus vertical organizations often inhibit changes that can reduce headcount requirements and ensure better communication among remaining personnel. But changes that help flatten an organization horizontally – so that operations and procedures are viewed from end to end – can streamline business processes to improve hand-offs between job roles and eliminate time-consuming and labor-intensive administration steps.
In the future, high performance utilities will of necessity implement horizontal business process solutions that involve multiple systems spanning what were once organizational silos such as customer service and distribution operations. Horizontal solutions represent a quantum change in project complexity that will stretch many utilities’ internal organizations and define the systems integration market in the future.
The major opportunity offered by an integrated, horizontal solution is to create a strategic technology platform that offers the benefits of positive change and value creation. Such changes are critical to supporting a utility as it undergoes workforce attrition and cultural evolution due to workforce retirements. The following represent some of the opportunities for change that high performance utilities should be reviewing now for implementation.
• Business Process Change Opportunities
The term best practices has sometimes come to mean a generic methodology or a detailed scripting of events rather than an organized, documented view of what is truly the preferred and streamlined way to carry out a particular procedure. Many major technology initiatives and systems implementations have failed to deliver value to the utility because the “best” practice is never defined, and therefore the transformation of the business process never occurs. The pressure to reduce costs and the rush to adopt scripts of existing procedures primarily accounts for this disappointment.
The high performance utility of the future must make a commitment to define accurate best practices and commit to a program of continuous process improvement. Such a program continues to drive costs out of the business by simplifying and standardizing business processes, eliminating paperwork and redundant data, reducing personnel interface points, and viewing a utility’s operations from office to the field as the single continuum. A strong strategic technology platform can support the capture and reinforcement of these standards.
• Design Engineering Opportunities
The average investor owned utility in North America has more than 50 design engineers architecting construction work undertaken by the utility. The design of such work involves significant systems support: a GIS and a graphical work design interface that links the GIS to a work management system. The intermediary application, the design manager, also ensures that as the engineer renders a design, the accompanying work order in the work management system accounts for the compatible units implied by the engineer’s job design.
Much of the construction work and underlying design work undertaken by utilities is repetitive. Such repetitive work, particularly for light or medium construction activities, lends itself to design templates. It is conceivable that the use of design templates can accommodate as much as 80% of the design engineering workload. The development of a best practice based on standard designs for discrete types of work, and institutionalizing a standard design as a replicable template for the engineering
department, can reduce the utility’s dependence on an increasingly limited supply of talented engineering labor.
• Scheduling and Dispatching Opportunities
The average investor owned utility (IOU) in North America has more than 700 field crews serving trouble response, customer service, maintenance and construction activities. Although job function definition and responsibilities vary among utilities, the roles that manage the deployment of the field crews may be defined as (1) schedulers, (2) dispatchers, (3) administrative personnel, and (4) field supervisors; all of these individuals may actively schedule or dispatch the field workforce, even within the same utility.
The same average IOU has as many as 60 FTEs, approximately one for every 12 field crews, involved in scheduling, dispatching, monitoring and otherwise administratively supporting the field workforce. The staff handling these tasks is often functionally, organizationally and geographically dispersed. The functional and organizational dispersion is directly attributable to the point software mobile applications that mirror the organizational silos that acquired the applications. Typically each piece of software addresses one job type: emergencies, customer service, maintenance or construction. Accordingly, each department has multiple staff scheduling or dispatching each respective type of job.
This kind of environment spells opportunity for a utility that is faced with a shrinking workforce. A single dispatching technology can have immense cost-reduction implications which include reducing redundant job roles.
The scheduling of field personnel can also be worked into a single dispatch strategy. Utilities need one view into all work – one centralized organization of super users exercising sophisticated scheduling/dispatching functionality – a kind of utility command and control center for scheduling and dispatching all work. The right strategic technology platform incorporates significant business intelligence, understands job dependencies, employs least cost routing, and continually provides the super user with an optimized schedule throughout the workday. As the scheduling software assumes more of the scheduling responsibility, the 60 FTEs formerly required by an average utility become unnecessary, thereby eliminating a major staffing concern.
• Wireless Opportunities
For the last two years in North America, utilities have issued more RFPs for mobile workforce management than any other application domain. All of the top 100 North American IOUs have some form of mobile deployment in place. However, these applications are point software solutions that address one job type, such as trouble, and they do not support a horizontal dispatching and scheduling function. Further, many utilities lack an overarching wireless strategy and platform that isolates devices, networks, back office and mobile applications from the vagaries of rapidly accelerating wireless technology to fully mobilize the workforce.
Utilities require a plug and play wireless
communications architecture that (1) manages the flow of data between the office and the field, (2) maximizes the bandwidth / throughput of existing utility RF radio, wire line and wireless networks, (3) assigns priorities to time sensitive data, and (4) provides least cost routing (network choice). This is a complex undertaking, and today there is no generic plug and play platform that manages field workforces in this way.
The architecture of a universal communications platform (dispatch) that manages all types of work is the holy grail of the network connectivity business. No utility has this capability today.
A universal architecture will allow the utility to plug and play back office and mobile applications as required to broaden the footprint of work conducted wirelessly in the field. A universal mobile application controller that manages all types of work is the application that will power the future of mobile computing. No utility has this capability today, either. In addition to application and network independence, the utility’s wireless enterprise strategy must accommodate the management of multiple field devices, and the supporting server and communications hardware/middleware environment.
An integrated universal communications platform must be viewed as the next technology that will afford utilities further opportunities to lessen their dependence on headcount.
The technologies that support such a platform are being created now, and to blunt the impact of a disappearing workforce, high performance utilities need to begin partnering with systems integrators who can bring these technologies to the table.
THE FUTURE OF TECHNOLOGY: SOLUTION OPTIMIZATION
The next significant strategic technologies implemented by utilities will be those that optimize solutions and processes. They will help a utility institutionalize the knowledge of seasoned employees and incorporate that knowledge within documented, sustainable best practices. Further, new strategic technologies will help the utility evolve best practices over time through a program of continuous process improvement. Also, the new technologies will provide the utility with ways to most effectively use both new and existing applications to perform work across the entire horizontal utility organization.
Instead of tactically buying enabling technology such as software, utilities will strategically partner with organizations that can deliver technology that creates value within the utility. Utilities will increasingly seek partners who own the business result, not simply the process or the IT infrastructure. Such partners will share utility risk and reward in a program of continuous process improvement, as they and the utility constantly refine and optimize solutions.
Conclusion
In ten years, what will the high performance utility look like? It will have fewer employees and more new faces. It will have lost much of the culture it relied upon to drive its business forward. But if it makes the right plans today, tomorrow it will have gained a new culture that takes advantage of the best of the old knowledge combined with the advantages of a new strategic technology platform. The new platform will unite all segments of utility operations within a single set of business goals. A workforce that is disappearing due to retirement doesn’t need to spell disaster if a utility takes steps now. These steps include applying conventional hiring approaches, embracing new technology and seeking out vendor partnerships to help unite and optimize the utility’s work processes.
About the Authors
Brad Kitterman is President, North America, for LogicaCMG’s energy and utilities division located in Houston, Texas. He has over 20 years experience in asset and resource management for the utility industry.
Jack Dugan is Executive Consultant for LogicaCMG’s energy and utilities division in North America. He has 30 years of applications software experience within the global utility and telecommunications industries.
LogicaCMG is a global IT solutions company, providing systems integration, consulting, products and services. LogicaCMG’s Asset & Resource Management (ARM) product suite includes work management, mobile computing, asset management, compliance tracking, dispatch, scheduling and reporting capabilities delivered as a pre-integrated, seamless solution.
For additional information visit LogicaCMG’s web site at www.us.logicacmg.com or contact the Houston office at 713-954-7308.
But is an aging workforce a Human Resources dilemma alone? Or is it more broadly a window through which utilities can examine ways that they can foster positive change for the future of their organizations? The exit of a large cohort of skilled workers may represent the most significant opportunity a utility will ever have to confront and fundamentally alter how it carries out its business and upgrades its financial performance.
At most utilities, little or no opportunity for significant revenue growth has existed for some time while increasing personnel related expenses have continued to squeeze profit margins. To
achieve the annual earnings improvement targets of 10 – 15% their stakeholders have expected, utilities have had no alternative but to reduce ongoing operational expenses dramatically, and often that has meant cutting staff.
But the dramatic cutting of expenses based on typical cost reduction strategies is all but over. With nearly a third of the industry eligible to retire today or within the next five years, further personnel cuts aren’t warranted. Utilities now have the unique possibility of making business improvements that can reduce future costs.
One approach involves the use of innovative technology to drive improvements like these:
• Lessen headcount requirements and make better use of reduced staffs
• Capture the knowledge base of skilled workers before they depart the workforce
• Reduce the number of people involved in getting work done by improving data access and communications between operating units
• Place emphasis on the availability and use of key skills rather than on total numbers of personnel
• Create true “best practices” instead of using “status quo practices”
• Develop a “digital organization” that excites and retains new hires
Utilities that are successful in the future – the high performance utilities – will not be able to hire their way to successful performance. There will be fewer skilled workers available for hire, recruitment will remain costly, and ongoing personnel related expenses will continue to escalate. The high performance utility will institutionalize (capture existing employee knowledge about) its key procedures and business processes, and exploit documented best practices before employees fly out the door. The high performance utility will succeed by challenging accepted ideas of business as usual and finding new ways to perform and improve on its core business despite staffing challenges.
Forward-looking utilities must invest in strategic technology, using a variety of partner models to meet their requirements. Technology solutions that solve localized issues will not address the future. Solutions that look at a utility horizontally, as an organization with many parts that need to
perform as a single entity, will be an important means to deal with the
disappearing workforce.
WHAT ARE UTILITIES LOSING? AND GAINING?
Of the major issues confronting utilities today (expense reduction, industry consolidation, regulation and business process standardization), the imminent loss of critical skills and the knowledge base of an aging workforce approaching retirement represents a demographic tsunami, a force unprecedented in business history. During the next five to ten years, many utilities will lose 50% of their current workforce to retirement, and no job classification is immune. Clerical and administrative staff, as well as field technicians, managers and supervisors, engineers, IT personnel and business executives, will all be part of the retirement wave.
Utility workforce retirement is more profound than personnel turnover because it represents a loss of critical knowledge. This knowledge base embodies the art of the organization, and not just the information that is explicitly documented in manuals, maps, procedures and databases. Also it incorporates the organization’s culture and attitudes.
As the aging workforce leaves and is replaced by younger workers, utilities face a potential fracturing of the motivational belief system that once bound the workforce to common goals. So that new workers can meet the utility’s objectives, they need the expertise and knowledge of prior generations of workers available to them. Working with past knowledge, the new workers can add their own motivations and the utility can gain a new and positive culture for success.
CONVENTIONAL SOLUTIONS
Industry literature suggests a number of solutions to the aging utility workforce problem:
• Long term staffing plans
• Partnerships with universities and community colleges
• Continuing education and training programs
• Active involvement in industry organizations
• Internal knowledge sharing programs
Each of these approaches has a role to play. But collectively, these approaches likely will not suffice to lessen the impact of half or more of a utility’s workforce leaving. The number of students enrolled in college math and science programs, except for computer and information sciences, continues to decline. In the last 15 years, colleges and universities have seen a 50% decline in the number of graduating engineers, one of many skill sets a utility requires. As utilities lose their skilled workers, those skills are not being replaced in the labor pool. Solutions other than hiring programs will be needed to bridge the gap between skills lost and skills needed.
THE ROLE OF TECHNOLOGY
Much of the technology utilities have implemented over the past five to ten years has been represented by “point” software solutions. By solving specific and limited problems, this software has tended to reinforce status quo ways of doing business rather than enabling innovation or better problem-solving.
In many utilities, the status quo means a vertical organization, that is, a group of departmental silos that define the utility’s corporate structure. In a vertical structure, each group or department operates as a somewhat isolated entity, and each group “owns” the work to which it is assigned. But the manner in which utilities conduct business is comprised of horizontal business processes spanning the office and the field, processes that are driven by the customer, whether commercial, industrial or residential.
Thus vertical organizations often inhibit changes that can reduce headcount requirements and ensure better communication among remaining personnel. But changes that help flatten an organization horizontally – so that operations and procedures are viewed from end to end – can streamline business processes to improve hand-offs between job roles and eliminate time-consuming and labor-intensive administration steps.
In the future, high performance utilities will of necessity implement horizontal business process solutions that involve multiple systems spanning what were once organizational silos such as customer service and distribution operations. Horizontal solutions represent a quantum change in project complexity that will stretch many utilities’ internal organizations and define the systems integration market in the future.
The major opportunity offered by an integrated, horizontal solution is to create a strategic technology platform that offers the benefits of positive change and value creation. Such changes are critical to supporting a utility as it undergoes workforce attrition and cultural evolution due to workforce retirements. The following represent some of the opportunities for change that high performance utilities should be reviewing now for implementation.
• Business Process Change Opportunities
The term best practices has sometimes come to mean a generic methodology or a detailed scripting of events rather than an organized, documented view of what is truly the preferred and streamlined way to carry out a particular procedure. Many major technology initiatives and systems implementations have failed to deliver value to the utility because the “best” practice is never defined, and therefore the transformation of the business process never occurs. The pressure to reduce costs and the rush to adopt scripts of existing procedures primarily accounts for this disappointment.
The high performance utility of the future must make a commitment to define accurate best practices and commit to a program of continuous process improvement. Such a program continues to drive costs out of the business by simplifying and standardizing business processes, eliminating paperwork and redundant data, reducing personnel interface points, and viewing a utility’s operations from office to the field as the single continuum. A strong strategic technology platform can support the capture and reinforcement of these standards.
• Design Engineering Opportunities
The average investor owned utility in North America has more than 50 design engineers architecting construction work undertaken by the utility. The design of such work involves significant systems support: a GIS and a graphical work design interface that links the GIS to a work management system. The intermediary application, the design manager, also ensures that as the engineer renders a design, the accompanying work order in the work management system accounts for the compatible units implied by the engineer’s job design.
Much of the construction work and underlying design work undertaken by utilities is repetitive. Such repetitive work, particularly for light or medium construction activities, lends itself to design templates. It is conceivable that the use of design templates can accommodate as much as 80% of the design engineering workload. The development of a best practice based on standard designs for discrete types of work, and institutionalizing a standard design as a replicable template for the engineering
department, can reduce the utility’s dependence on an increasingly limited supply of talented engineering labor.
• Scheduling and Dispatching Opportunities
The average investor owned utility (IOU) in North America has more than 700 field crews serving trouble response, customer service, maintenance and construction activities. Although job function definition and responsibilities vary among utilities, the roles that manage the deployment of the field crews may be defined as (1) schedulers, (2) dispatchers, (3) administrative personnel, and (4) field supervisors; all of these individuals may actively schedule or dispatch the field workforce, even within the same utility.
The same average IOU has as many as 60 FTEs, approximately one for every 12 field crews, involved in scheduling, dispatching, monitoring and otherwise administratively supporting the field workforce. The staff handling these tasks is often functionally, organizationally and geographically dispersed. The functional and organizational dispersion is directly attributable to the point software mobile applications that mirror the organizational silos that acquired the applications. Typically each piece of software addresses one job type: emergencies, customer service, maintenance or construction. Accordingly, each department has multiple staff scheduling or dispatching each respective type of job.
This kind of environment spells opportunity for a utility that is faced with a shrinking workforce. A single dispatching technology can have immense cost-reduction implications which include reducing redundant job roles.
The scheduling of field personnel can also be worked into a single dispatch strategy. Utilities need one view into all work – one centralized organization of super users exercising sophisticated scheduling/dispatching functionality – a kind of utility command and control center for scheduling and dispatching all work. The right strategic technology platform incorporates significant business intelligence, understands job dependencies, employs least cost routing, and continually provides the super user with an optimized schedule throughout the workday. As the scheduling software assumes more of the scheduling responsibility, the 60 FTEs formerly required by an average utility become unnecessary, thereby eliminating a major staffing concern.
• Wireless Opportunities
For the last two years in North America, utilities have issued more RFPs for mobile workforce management than any other application domain. All of the top 100 North American IOUs have some form of mobile deployment in place. However, these applications are point software solutions that address one job type, such as trouble, and they do not support a horizontal dispatching and scheduling function. Further, many utilities lack an overarching wireless strategy and platform that isolates devices, networks, back office and mobile applications from the vagaries of rapidly accelerating wireless technology to fully mobilize the workforce.
Utilities require a plug and play wireless
communications architecture that (1) manages the flow of data between the office and the field, (2) maximizes the bandwidth / throughput of existing utility RF radio, wire line and wireless networks, (3) assigns priorities to time sensitive data, and (4) provides least cost routing (network choice). This is a complex undertaking, and today there is no generic plug and play platform that manages field workforces in this way.
The architecture of a universal communications platform (dispatch) that manages all types of work is the holy grail of the network connectivity business. No utility has this capability today.
A universal architecture will allow the utility to plug and play back office and mobile applications as required to broaden the footprint of work conducted wirelessly in the field. A universal mobile application controller that manages all types of work is the application that will power the future of mobile computing. No utility has this capability today, either. In addition to application and network independence, the utility’s wireless enterprise strategy must accommodate the management of multiple field devices, and the supporting server and communications hardware/middleware environment.
An integrated universal communications platform must be viewed as the next technology that will afford utilities further opportunities to lessen their dependence on headcount.
The technologies that support such a platform are being created now, and to blunt the impact of a disappearing workforce, high performance utilities need to begin partnering with systems integrators who can bring these technologies to the table.
THE FUTURE OF TECHNOLOGY: SOLUTION OPTIMIZATION
The next significant strategic technologies implemented by utilities will be those that optimize solutions and processes. They will help a utility institutionalize the knowledge of seasoned employees and incorporate that knowledge within documented, sustainable best practices. Further, new strategic technologies will help the utility evolve best practices over time through a program of continuous process improvement. Also, the new technologies will provide the utility with ways to most effectively use both new and existing applications to perform work across the entire horizontal utility organization.
Instead of tactically buying enabling technology such as software, utilities will strategically partner with organizations that can deliver technology that creates value within the utility. Utilities will increasingly seek partners who own the business result, not simply the process or the IT infrastructure. Such partners will share utility risk and reward in a program of continuous process improvement, as they and the utility constantly refine and optimize solutions.
Conclusion
In ten years, what will the high performance utility look like? It will have fewer employees and more new faces. It will have lost much of the culture it relied upon to drive its business forward. But if it makes the right plans today, tomorrow it will have gained a new culture that takes advantage of the best of the old knowledge combined with the advantages of a new strategic technology platform. The new platform will unite all segments of utility operations within a single set of business goals. A workforce that is disappearing due to retirement doesn’t need to spell disaster if a utility takes steps now. These steps include applying conventional hiring approaches, embracing new technology and seeking out vendor partnerships to help unite and optimize the utility’s work processes.
About the Authors
Brad Kitterman is President, North America, for LogicaCMG’s energy and utilities division located in Houston, Texas. He has over 20 years experience in asset and resource management for the utility industry.
Jack Dugan is Executive Consultant for LogicaCMG’s energy and utilities division in North America. He has 30 years of applications software experience within the global utility and telecommunications industries.
LogicaCMG is a global IT solutions company, providing systems integration, consulting, products and services. LogicaCMG’s Asset & Resource Management (ARM) product suite includes work management, mobile computing, asset management, compliance tracking, dispatch, scheduling and reporting capabilities delivered as a pre-integrated, seamless solution.
For additional information visit LogicaCMG’s web site at www.us.logicacmg.com or contact the Houston office at 713-954-7308.
