Helping utilities transform during transition
Modular approaches to SAP S/4HANA adoption will help ease the shift
The utility business model must change
With the SAP S/4HANA 2025 migration deadline approaching and the implementation rate increasing, more industry verticals are beginning to realize the benefits of a digital S/4HANA core. The utility market, which has relied heavily upon the SAP IS-U component for the last 15 years is often seen as a laggard when it comes to embracing a digital core. This must absolutely change, and we are seeing signs that slowly but surely this change is taking place.
The utility sector is seeking to become more competitive and to digitalize more of its business processes. According to ASUG Research, utilities realize that they must approach this change in a more agile and cost-effective manner. According to one respondent in its The State of the Utilities Industry report, “focusing on five-year or 10-year plans with large capital technology investments is not a feasible model.”
Recently I had the opportunity to attend the SAP for Utilities event in San Diego. This annual event was attended by over 1,100 SAP users, administrators and partners. In his opening remarks at SAP for Utilities, CEO of ASUG Geoff Scott identified three main trends for the utilities industry:
- Migrating to SAP S/4HANA
- Using analytics/reporting to drive business decisions
- Multichannel options for managing customer demands.
Most SAP utilities customers are extremely interested in the move to SAP S/4HANA, however, 71% are still using SAP ECC, the predecessor of S/4HANA, and 55% still rely upon SAP IS-U. This leaves a large part of the industry watching and waiting to see how other utility players approach the impending 2025 deadline for moving to S/4HANA.
What are they waiting for?
We know that utilities are strapped for resources and hindered by regulations, making a wholesale or “big bang” shift to a digital core nearly impossible. The cost alone is prohibitive considering the amount of legacy systems, applications, processes that would need to be updated.
At SAP for Utilities, we heard that utility customers appreciate the ability to see their usage and consumption data, but they have challenged providers to go a step further and give them the “why” behind the data. This requires more detailed and insightful analytics to help customers understand the reasons behind spikes in usage and other changes. Improving the experience of customers is a prime driver behind many digital plans. In fact, many SAP IS-U users are building S/4HANA business cases around improvements to customer experience.
How much easier would the transition to a digital core be if it could be made in gradual steps? Utilizing a modular approach would certainly serve utilities best and it would enable them to make best use of limited budgets, and manage risk and regulatory issues more easily.
Transform during transition
Now more than ever, utilities require solutions that enable them to approach digital change in a modular, building-block fashion. Utilities also need to be able to leverage their investments in SAP, specifically S/4HANA. While at SAP for Utilities, my colleagues and I introduced DORA (Digital Operations for Retail by Atos), a complete suite of digital transformation applications to optimize electricity and gas retail sales processes, helping utilities to improve customer experience, bring new services to market and stay compliant with regulatory policies.
Many utilities are challenged by the inability to integrate data across providers and the absence of a single digital platform for operational visibility, which can complicate FERC reporting. DORA can address these issues by providing a single digital platform built upon S/4HANA that enables asset lifecycle management, smart grid control, smart metering, CRM, billing and customer analytics, to name a few. We have found in working with other Atos power and gas clients that DORA can cut time to market by 50% for new products and services. In addition, DORA can also help deliver the data that will help utilities deliver detailed insights to customers.
For more information about Atos SAP services, visit: https://atos.net/en/industries/utilities