Utility Automation & Engineering T&D - IT on the brain: Utilities gather in Amsterdam for SAP conference

Editor's note: the reporter's attendance at and travel to this conference was paid for by the host company.

Amsterdam, Netherlands, Mar. 3, 2007 -- Utilities from around the world gathered in Amsterdam recently for a users conference put on by SAP, a business software solutions provider, to discuss recent deployments and the IT needs of the emerging deregulated European market. The 6th SAP International Utilities Conference held educational sessions and customer meetings from Feb. 28, 2007, to March 2, 2007.

The conference opened with a keynote session in the morning featuring Henning Kagermann, CEO of SAP AG, Klaus Heimann, vice president of the industry business unit for utilities at SAP AG, and Angelique de Vries, sales director of SAP Netherlands.

After being introduced by de Vries, Kagermann took the stage and gave the audience a brief overview of how SAP is fairing in the utility sector and the goals the company has for 2010. Kagermann commented that SAP's market share of utilities has grown over the last few years in its peer group and that the company intends to grow organically in the future as opposed to growing through M&A activity. In outlining the goals SAP has for 2010, Kagermann said SAP wants more flexible solutions with the aim of having all its solutions 95 percent standardized. Kagermann boasted that SAP has 1,100 electric, gas, and water utility customers in Europe and said the company has a target of 100,000 customers by 2010.

Kagermann said SAP also intends to stay focused on specific industries, one of which is utilities. While anticipating customer needs, Kagermann also said SAP will continue to work on open platforms to encourage innovation and creativity. He also announced that SAP will offer a regulatory compliance solution for all deregulated utility markets.

Wrapping up his remarks, Kagermann summed up what he thinks clients expect of SAP solutions. "Customers do not really buy products," said Kagermann. "They hire them to get a job done."

Next, Heimann gave an overview of worldwide "energy roadmaps." Heimann characterized the China/India energy roadmap as one in which the governments and utilities of those countries want to provide power for all of their citizens, a luxury they have been unable to offer in the past. The market model in China and India, Heimann said, is focused on growth at an incredible rate.

Heimann then turned his attention to the European energy roadmap, saying the European market is focused on deregulation. Many utilities are experiencing government mandated "unbundling" of their services in an effort to privatize. He also said Europe is ready for competition in the utility sector and that innovation and technology for smarter power generation are paramount goals for the market.

Finally, Heimann turned his attention to the U.S. energy roadmap. The market model in the U.S., said Heimann, is focusing on energy resource autonomy, power reliability, and better technology to save energy and reduce risks, all with a view to lowering costs. In the future, said Heimann, once the U.S. realizes its market model goals and has seen how competition in Europe has made companies "agile" and that it's driven innovation, there will be nationwide deregulation.

After a lunch break among the conference exhibitors, attendees went to various breakout sessions offered in three conference tracks: generation, transmission and distribution, and retail. One of the T&D sessions, called "Empowering Utilities with Technology and People," was presented by Joseph D. Thomas, associate vice president and general manager of client fulfillment at United Illuminating Co. (UI). Thomas discussed UI's experience with deregulation in Connecticut.

When Connecticut deregulated in 2000, UI became a "wires only" company. As a result of deregulation, Thomas said, UI wanted to automate as many processes as possible, which was sorely needed. With 320,000 customers, a third of which are located at seven major universities in UI's service territory making them a transient customer segment, 20 percent of UI's customer accounts were delinquent. Further complicating the billing process, 40 percent of UI's meters were indoors, making access difficult for meter readers.

UI had to automate, said Thomas. The demands of deregulation drove the need to automate, said Thomas, adding that customers also desired more information as they became more aware of the need for energy conservation and efficiency, in addition to wanting a lower electricity bill. UI went to work automating its business processes with SAP solutions.

Thomas laid out a timeline of UI progress toward automating as many systems as it could. The company first turned its attention to its metering problems. In 2001, UI installed the Cellnet network meter reading system, which allowed automatic reads and an exchange of usage information with the utility. After installing the network, UI no longer had to estimate bills for meters it could not get to, said Thomas.

From there, UI installed a call center work scheduler for workforce management and a new SCADA system, both in 2002. In 2003, UI added interactive voice response to their call center, a customer information system (CIS), and a field automation wireless mobile dispatch solution. In 2006, UI automated a frequently asked questions option for its call center, implemented "theft detection algorithms" that would identify usage data consistent with power theft, and added a remote disconnect option to the collections process. Also, in December 2006, UI revamped its website to offer online energy and bill management to its customers.

Thomas said there have been many benefits of automating so many of the company's processes. Thomas noted that usage and pricing information is available to all the company's end users; outage reporting is automated; identity theft has been mitigated; demand response programs are available; and theft detection is stronger. Thomas said UI intentionally did not highly customize the solutions it implemented so it would have the ability to change and adopt new processes as it sees what is working for other utilities. Thomas also said UI offers real time billing information to customers online and that call center representatives can offer customers more accurate information about their energy use and offer analysis and efficiency recommendations. UI has also seen benefits for its field workers, said Thomas. Now UI has better scheduling for field crews and a degree of safety has been added because of its ability to know where field workers are at all times.

Revenue has also been protected, said Thomas. Through its automated processes, UI has been able to detect energy theft more easily and reduce the amount of delinquent bills. Thomas said UI has also sent the message to energy thieves that the company will collect what it's owed and prosecute offenders.

Thomas added that UI was able to make all the changes to the company without lay-offs.

Other accounts of successful automation projects were presented by Ana Babcock and Phil Slack of Florida Power & Light, and Dave Coleman of ESB in Ireland. Coleman reported that ESB, according to an EU directive, had to unbundle its services when the Irish market fully opened in February 2005. By automating its processes, Coleman said ESB was able to fully unbundle its services two years ahead of the EU-mandated schedule.

The second day of the conference, March 1, the morning's keynote addresses were given by Al Fohrer, CEO of Southern California Edison (SCE), and Mahvash Yazdi, senior vice president for business integration and CIO of Edison International and Southern California Edison. Fohrer and Yazdi teamed to describe SCE's need and rationale for an enterprise resources planning (ERP) system.

Fohrer started with an overview of SCE, saying the company has 4 million customers and 50,000 square miles of service territory. However, Fohrer said, SCE also has many of the same challenges as other utilities. SCE, he said, needs to replace old infrastructure, build new substations, and add more transmission lines to its service territory. SCE also faces the challenge of an aging workforce and the need to get more renewable energy to its customers. Combined, these challenges, Fohrer said, have caused the need for an ERP at SCE.

Fohrer said the information technology (IT) arm of SCE had to change from being a service-oriented department to a thought leader in the company. "The way we've done business won't get us where we need to be," Fohrer said. He then introduced Yazdi and asked her to describe the process of implementing the ERP system at SCE.

Yazdi said that SCE once considered outsourcing its IT services but realized it had to take responsibility for changing the way it does business. When SCE decided against outsourcing IT, Yazdi was given the task of implementing an ERP system. She said she devised a three-step plan: transform IT, integrate SCE's business processes, and finally roll out the ERP.

To transform IT, Yazdi said, SCE had to transform the department into one that had broader responsibility within the company and consolidate the disparate systems each SCE department used. Once that was achieved, SCE could focus on business process integration by making processes more efficient and simple, modernizing its wires network, and aiming to satisfy customers while rebuilding customer relations damaged by the California energy crisis. And though the process is not fully completed, SCE is in the process of implementing SAP's ERP system to complete the final stage of the plan, said Yazdi.

Yazdi said the conditions for a successful ERP implementation are listening to one's customers, having a "one company" approach to the process, and employees who understand they must accept that the ERP will be implemented and changes will occur. "This will make or break you," Yazdi said of gaining employee acceptance.

After the keynote session, attendees were released to attend workshops on various offerings from SAP for utilities, including collections, AMI, and enterprise service-oriented architecture solutions. After a lunch break in the exhibit area, attendees could attend one of six "interactive solution circles" focusing on generation, T&D, retail, water, gas, and waste and recycling solutions. In the interactive circles, attendees were given the opportunity to hear about the latest offerings from SAP in their area of interest, discuss best practices, hear customer and SAP representatives give presentations on various solutions, discuss what they want from a solution, witness demonstrations, and share their needs.

The final day of the conference featured keynote addresses by Torsten Ecke of E.ON AG, and Lois Hedg-Peth of Centrica plc. Ecke discussed the developments, trends, and challenges of the European utilities market.

In the past, Ecke said, European markets were local and diverse with low connectivity and little liquidity in the global market. Overall, he said, this meant that there was no pressure on the European utility industry to achieve "top reliability and efficiency."

That's starting to change thanks to a recent push by the European Union to build an integrated and competitive European energy market, said Ecke. This is happening in part, he commented, because the EU sees the current market as not optimal for customers. The EU is hoping that a change will bring about increased market liquidity, retail competition, and "customer churn."

For energy companies like E.ON, Ecke said, there will be three questions they will have to answer as a result of the changes in the European market: "What will be my future business model with respect to value-chain steps, products, and regions? How will I effectively organize and steer my business in a European scope for the future? [and] What is my contribution to the development of the new European market?"

No matter how utilities answer these questions, Ecke concluded that IT departments at utilities must become a "change enabler" as the new market emerges.

Hedg-Peth then took the stage and contributed some concrete examples, by telling Centrica's story of migrating its customers in a fully deregulated U.K. market from legacy systems to systems purchased from SAP.

After a short break, a panel discussion on smart grids in Europe was held. On the panel were Dr. Britta Buchholz, senior project manager at MVV Energie, Dr. J. Patrick Kennedy, CEO of OSIsoft, Jon Brock, COO of UtiliPoint International, and Klaus Heimann. The members of the panel all agreed that smart grids will be a reality in the future but had differing opinions about when that would happen. Heimann believes smart grids will be a reality when younger generations that are worried about the environment start to throw their market weight around. Kennedy thinks smart grids won't start to be developed on a large scale for another 20 years. Finally, Brock forecast that another round of deregulation in the United States will encourage smart grids, adding that the U.S. is already building much of the infrastructure that will be crucial for smart grids.

The conference then wrapped with a prize drawing and some closing words from Heimann.

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