EET&D: Much has been written about the aging workforce issues this industry faces. Among the most formidable problems bearing down as Baby Boomers retire is the severe shortage of qualified power industry engineers and computer scientists. As two women that have achieved significant stature in what has historically been a male-dominated industry, what advice would you give to women contemplating a career in the energy/utility sector?

Coveney: I would advise anyone considering this sector to seek a position that challenges them. There is so much going on in utilities today and so many areas of focus – it is certainly a “buyer’s market” with respect to roles women could and should consider in a utility. To reinforce this notion, for the past few years, SAP has hosted “Women in Utilities” networking sessions at SAP-led events such as SAPPHIRE (SAP’s annual customer conference) and the SAP for Utilities North American Conference, as well as industry trade shows like CS Week. Women from utilities and utility suppliers flock to these events to establish industry connections and to share how they have approached problem-solving in the world of utilities. It is wonderful to look around those rooms and see women working together to their mutual benefit and to the benefit of their utilities.

Tough: I have worked in the utility industry for over 25 years, the first 15 in the industry and now on the supply side. The face of the utility industry has undergone tremendous change – we now see more women having key decision-making roles in utilities. Today, it is not uncommon for a CEO, CFO, or CIO within a utility to be a woman. Similarly, within SAP Canada, you will find women at all levels of the organization, working within the utilities sector.

I believe utilities are focused on finding people with the right education, skills and passion to drive the changes to ensure continued growth and success – regardless of gender. It is an exciting time to work in the utility industry.  We are at the beginning of the transition to the utility of the future and women will find challenging and rewarding careers in this sector.

EET&D: Obviously, there is a tremendous amount of change already ongoing, and there seems to be more on the way. Some people see these as exciting times while others see it as a crisis, and utilities are certainly included in that mix. Would you say that utilities have fundamentally changed the way they run their businesses today compared to a decade ago?

Coveney: Utilities are looking to deploy integrated, scalable, affordable and proven technology that can help them better manage their business processes, reduce costs, achieve regulatory and environmental compliance and support their growth. That part is nothing new, but I think they see greater value today in deploying an “enterprise” solution versus a “best-of-breed” solution. Customers are looking to simplify their business and information technology (IT) landscape and are putting greater pressure on their supply chains to support their business needs as standard product versus going the route of custom-build that has been so prevalent in the past.

Both large and small utilities alike are looking to standardize their business processes and IT landscapes as a means to lower their operating costs and total cost of ownership. Smaller utilities are thinking out-of-the-box to lower costs and mitigate risks by leveraging industry best practices and sharing services and infrastructure costs with their peers.

EET&D: Cathy, would you like to add anything to that?

Tough: Yes, utilities today also have more aggressive market demands from regulators looking to increase consumer transparency to energy prices, from consumers looking for new and expanded service channels to fit better with their lifestyles (e.g., self-services) and from investors looking for a better rate of return. To help utilities meet these demands – whether in a regulated or deregulated market  – utilities need smarter technology such as advanced metering infrastructure (AMI), mobile workforce management, customer self-services and intelligent network management.

EET&D: What kind of solution attributes should utilities be looking for to help solve these problems that are perhaps different from those we’ve seen employed in the past?

Tough: Utilities should be looking for a holistic set of business solutions that support the critical business processes of electricity, gas, and water utilities in regulated, in-transition and deregulated markets. Moreover, they should be built on a solid foundation of core utility-specific applications for enterprise resource planning, enterprise asset management and customer relationship and billing management, as a minimum. The platform employed should embrace an open integration model that integrates disparate software systems to reduce IT complexity and that leverages existing IT investments/infrastructure to lower the total cost of ownership. The platform must also be highly scalable and able to support utilities as their needs change and their businesses grow.

EET&D: Are there any new kinds of solutions that you see gaining momentum in North America?

Coveney: In particular, we’re seeing increased focus on applying the existing portfolio of enterprise solutions in different and beneficial ways. A good example of this among utilities in the U.S. is an area we call rate lifecycle management (RLM), the process by which utilities maximize rates of return by aligning corporate strategies with rate strategies.

EET&D: Could you please elaborate on exactly what you mean by this term, Rate Lifecycle Management?

Coveney: Sure. As we see it, RLM encapsulates three principal activities, which include:

• assessing the utility portfolio of potential capital projects and determining which projects are in the best interest of utility customers, what the cost recovery mechanism will be and over what time frame (building the case and determining the correct rate);
• managing the process of taking the case from the idea stage through formal approval by a regulatory body (defending the case); and,
• implementing the approved rate, which includes monitoring and reporting on the project and the associated rate throughout the life of the rate (monitoring the rate).

EET&D: What are some utility pain points that can be addressed by RLM?

Coveney: Utilities face a constant balancing act trying to manage a portfolio of competing projects and external pressures and determining how to spend money wisely. For example, utilities have significant capital expenditure initiatives such as laying the architectural groundwork for the Smart Grid, provisioning alternative energy supplies, building out the transmission and distribution network, as well as performing asset refurbishments or replacements.

They must translate these initiatives into rates that their customers and their regulatory agency (e.g., local PSC/PUC) will support. The lack of a centralized and integrated framework prevents optimal decision-making. The RLM process draws on a complicated set of data (e.g., enterprise data, operational data, spreadsheets, etc.) that can prevent utilities from developing adequate models and performing “what if” analyses most effectively. This, in turn, can limit the potential for the case and, ultimately, the rate.

Often, this means that utilities end up with actual earning levels that are below their targeted rate of return. Because utilities have a limited number of resources to prepare and manage cases and report on rates once implemented, it is imperative that they get it right the first time. A well-articulated RLM process leverages a utility’s investment in financial tools, enterprise resource planning, document or record management, as well as billing and business intelligence.

EET&D: That sounds like a lot of work and invested resources, so it seems like there would have to be a big payoff at the end to justify it. What are some of the key business benefits of a well articulated RLM business process?

Coveney: The rewards are actually quite significant. With RLM, a utility can prioritize capital projects and reduce costs by aligning business strategy and execution. It can maximize business visibility with clear insight into key processes while also increasing agility by optimizing the RLM process. It can also improve rate model accuracy by automating and controlling rate lifecycle processes and enhance relationships with regulators and other key stakeholders by providing electronic documentation to facilitate the review process. Finally, RLM allows a utility to make faster, more incisive strategic decisions based upon a foundation of consistent and reliable enterprise data.

EET&D: How do you view RLM in the context of the “Utility of the Future”?

Coveney: For quite a few utilities, RLM is a necessary step on the road to transforming into what many are calling a “utility of the future.” The utility of the future is doing the things we discussed at the start of this conversation – they have large initiatives like implementing advanced metering infrastructure (AMI) technologies. To get there, they must consider how best to fund these transformative projects. To the extent practical, the streamlined RLM process will serve as a business and project accelerator.

EET&D: You bring up AMI as a case in point, Maureen. Assuming that a utility can successfully recover its costs through an RLM process, how do Canadian utilities think about AMI as a transformative initiative, Cathy?

Tough: Canadian utilities are increasingly focusing on advanced metering infrastructure (AMI) technologies, which enable automated, real-time communication between back-office solutions and the field. AMI helps utilities innovate business processes for sales and customer service while optimizing revenues and demand. AMI delivers cost-effective customer service and increases efficiency. With AMI, utilities can send price signals to the meter in the home so consumers know the price they are paying for energy at any point in time and can adjust their consumption patterns to take advantage of lower prices.

AMI also enables utilities to read meters remotely on demand, eliminating incorrect readings and reducing travel time and costs. It can help utilities design pricing programs and bill services based on actual consumption data, which can be gathered in small time increments, enabling time-of-use pricing programs. Finally, AMI automates the transfer of energy data and better manage customer service inquiries and disputes by accessing up-to-date customer data. While AMI is certainly not unique to Canada, the Ontario Smart Meter Initiative has certainly moved things forward aggressively toward goals that might have otherwise taken many more years to achieve.

EET&D: What types of solutions should utilities moving towards AMI look for in this new – and economically uncertain – year?

Tough: Utilities should look for solutions that will enable them to perform on-demand reads of a customer’s meter through a call center, manage remote disconnects and reconnects to support the dunning process and outage reporting, and implement time-of-use rates. Additionally, the software should provide integration of processes between the meter and back-end systems to reduce a company’s total cost of ownership for AMI infrastructure. They should also look at the vendor’s commitment to delivering new innovations to the utility market and its capacity to invest significantly each year in the development of new utility-specific capabilities to ensure that they can benefit from their investment in the long term.

EET&D: AMI represents a big chunk of a utility’s investment. Do you expect the current financial and credit market turmoil to have a big impact on utilities and their ability to continue their capital investment projects?

Tough: I don’t think the impact will be as pronounced for Canadian utilities as it could be in the U.S. or globally, where utilities are primarily investor-owned. Canadian utilities have always been conservative in their spending due to the public regulatory review process in place in most provinces. However, we do expect that utilities will learn to do more with less. For example, capital spending towards modernizing aging energy infrastructure and/or legacy IT landscapes will undergo greater scrutiny by the utility management boards and public utility review boards alike. Any new technology or business application will need to be leveraged across the enterprise to achieve the expected rate of return to justify any new capital spending.

EET&D: Would you like to add anything to that, Maureen?

Coveney: As a major North American supplier, SAP recognizes this shift in decision-making, so we are focusing our efforts on solutions that address the business needs of various business groups within the utility – creating greater integration (and lowering total cost of ownership) across utility processes (both commercial and operational) and systems in an effort to hold down costs and improve efficiency.

EET&D: Where do you think the focus of companies like SAP needs to be in 2009 to best serve utilities?

Coveney: In the backdrop of today’s volatile economic environment, the pace of technological change in the utility industry continues to steadily increase. Technology will help utilities meet many of the challenges facing them in the years to come. Dealing with an increased number of retirees (many of whom are taking a wealth of self-taught expertise with them) and the pressure from customers to deliver more and differentiated products and services to an increasingly web-savvy customer base will likely be central themes.

In the U.S., we will focus in 2009 on customer care as utilities look at migrating from old, legacy CIS systems with minimal risk to service and billing operations. AMI, another focus, will give utilities a single view of the customer across departments to improve response and customer satisfaction. Enterprise asset management is a concentration with operational excellence and high performing assets, as utilities increase asset utilization across their operations. Financial analytics will also be important to streamlined financial reporting and supplier collaboration and the overall management of the utility’s portfolio.

Tough: In Canada, the focus in 2009 for our customers is on the renewal of legacy business systems such as enterprise resource planning, customer information systems, workforce management, enterprise asset management and geographic information systems; integration of customers’ AMI assets to their back-office systems; and enterprise and operational data consolidation and reporting. Utilities are increasingly looking to move away from best-of-breed environments to integrated solutions that will deliver a lower total cost of ownership and shorter time to value. We are finding our customers are seeking new-generation solutions that deliver end-to-end process transparency, integration across the enterprise and that enable easy, cost-effective adoption of new technologies such as AMI.

EET&D: What do you see as some of the more onerous challenges going forward?

Coveney: The next-generation infrastructure of energy assets hinges on the successful integration of information and processes across a multitude of systems and applications within utility system operations, planning and engineering and customer services. Coupled with the aging workforce issues mentioned earlier, technology will play an increasingly significant role in the solutions. I think Cathy would agree that this part of the equation knows no geographical boundaries or limitations.

Tough: In order for utilities to fully leverage the benefits of new technologies, their back-office business and operations systems will need to be upgraded or replaced to be able to accommodate the increased volume in data to be processed, enhanced business processes that will now be automatically triggered by the intelligent interpretation of the incoming data and the need for integration with other back-office applications such as geographic information systems or outage management systems. And it won’t really matter if those facilities are in Canada, the United States or elsewhere. At the end of the day, we’re all in this together.