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Author's profile photo James McClelland

SAPPOV: The Future of Utilities Lies in the Cloud – But it Depends On Human Decisions

The discussion about the future of utilities focuses on smart grids and smart homes – but in the end it is people, not grids or homes, who will both conserve and consume.

If we want to reduce the consumption of resources – which we must – then new technology applied to utilities is vital. However, technology has to work with – and for – the customers and utilities operators.

In Texas, where I am based, we get a reminder of the challenges facing utilities companies every summer. The temperature soars, and when it does every household in Texas turns up its air conditioning.

No amount of education or campaigning is going to stop Texas from heating up in summer, which impacts power, water and other resources. Companies and government agencies can encourage moderation, but campaigns at the consumer side need to be partnered with innovation from the utilities regarding their own processes, approaches and technologies.

The economics of innovation

The challenges facing utilities are not purely technological – there may be financial and cultural reasons why they cannot evolve as quickly as they might like.

Historically, utilities have sought to own the hardware and the software maintaining their infrastructure. This simplified management in pre-Internet utilities, and was also tied to financial reporting – these were assets that would depreciate for accounting purposes.

Moving to the cloud, then, represents a change not just in technology but in the way utilities are run. It’s a challenge to established practice – just like persuading me to turn down the AC a few degrees on a sweltering July day.

The call of the cloud

Cloud-based systems, however, address some of the biggest issues facing utilities.

First, utilities are experiencing a shortage of skilled labour, as experienced workers retire, taking vital knowledge with them.

Cloud solutions hit this problem from two sides. First, a cloud-based talent management system empowers the search for specific skills inside and outside the enterprise, by allowing many different HR systems and recruitment networks to be analysed. As the talent pool continues to shrink, being able to connect multiple facilities in a private cloud, to improve monitoring and refer higher-level issues to a “virtual control room”, will become increasingly important.

The utilities workforce is ageing in key areas, and so is the utilities infrastructure. As nations move, generally piecemeal, towards smarter utilities, agility becomes increasingly important.

Take energy: an energy provider’s goal is to be producing as much energy as their customers require. As the grid becomes smarter, the ability to measure and estimate demand operates at a progressively more granular level. Simultaneously, regulation and market forces encourage greater diversity of supply.

Agility is key, and cloud procurement provides utility suppliers with new options and new speed to market. So, for example, if a power plant needs to be built or refitted there will be thousands of processes involved, requiring uninterrupted supply of materials and labour representing thousands of contracts and inventory items.

A single break in supply – something as simple as waste bins or plastic sheeting – causes damaging delays. The ability to find and switch between providers seamlessly, while monitoring costs, is not just advantageous but absolutely necessary.

The future of utilities provision is one of increasing interconnection. Smart utilities will not only push out to homes and businesses, but factor in contributions from microgeneration. Connectivity will extend beyond the grid: information on weather systems and even local news reports will be analysed for their likely impact on consumption.

Ultimately, though, the greatest unknown factor in the future of utilities will be people – those managing utilities, and those consuming them. Recently, thinking of summer and air conditioning bills, I asked my son what would encourage him to save energy. He suggested a competition, where the whole neighbourhood could compare consumption online to see who was saving most effectively. 

That kind of real-time information sharing is now becoming possible – and may motivate the next generation to sweat a little more in summer and wrap up more warmly in winter.

For more on the transition of utilities – and utilities customers, and the role of cloud-based solutions like SAP SucessFactors for talent and SAP Ariba for sourcing, take a look at the SAP Solution Explorer for Utilities, and check the @SAP4Utilities Twitter feed.

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