service delivery optimization - sapfm.sap.com/pdf/bf05ho/5_bailey_servicedelivery.pdf · ¾%...

Service Delivery Optimization:Integrating the Enterprise from the Asset to the Customer

Henry Bailey

Utility Industry Principal, SAP America

Best Practices for the Enterprise

Examples

Industry Trends

Operational Excellence

© SAP AG 2005, Title of Presentation / Speaker Name / 3

Industry Trends - Increasing Energy Prices and Volatility

Electricity = average retail price (cents per kilowatt hour)Gas = wellhead prices (dollars per 1,000 cubic feet)Oil = domestic first purchase price (dollars per barrel/10)Source: Energy Information Administration (EIA)

US Energy Prices 1980-2004

0

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9

1980

1982

1984

1986

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1990

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1994

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2002 Ja

nMarMay Ju

lSep

ElectricityGasOil


Industry Trends - Slow Improvement in Financial Health

US Electric & Gas UtilitiesQuarterly Financials ($M)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04

ProfitsRevenues

Sources: BEA, EIA, IDC


Industry Trends - The Top 10

#1 – US Utility M&A Activity Will Accelerate, Putting CIOs in the Spotlight

#2 - Utilities Will Get Serious About Business Process Outsourcing

#3 – Capital Will Flow to Alternative/Renewable Technologies

#4 – Upstream Will Invest in Digital Oilfield Initiatives

#5 – Wholesale Will See a Recovery of Energy Trading

#6 – Delivery Will Remain Focused on Operational Efficiency and Compliance

#7 – Retail Investments in US Will Focus on BPO for Customer Care and Billing

#8 - Intelligent Grid Hype Will Increase, But Reality Will Be Years Away

#9 - Energy/Telecom Convergence Will Re-emerge, But With Limited Success

#10 – US Energy IT Spending Will Exceed $22 Billion in 2005

Source: “Top 10 Predictions for the Energy Industry in 2005”, Energy Insights, an IDC Company, January 2005

Best Practices for the Enterprise

Examples

Energy Industry Trends



KPIs for Operational ExcellenceProcess

SAIDI, SAIFI, MAIFI, CAIDI

Maximum system demand

Annual system load factor

System losses

Unmetered energy

% Corrective / preventive maintenance

% Maintenance hours reported

% Rush work orders

% Repeitive equipment failures

Employee

Injuries per 200k maintenance hours

% safe work order completed

Days lost to industrial disputes

Days sick leave

Days lost to workers compensation

Lost time injury frequency rate

Lost time injury severity rate

% O&M Spent on Training

Financial

O&M spend/customer, Kwh or Mbtu, mile/pipe - wire

Maintenance cost / UOP

Direct labor costs

Contractor & service costs

Capital expenditures related to:new customers, refurbishment, augmentation

Return on assets



Operational Excellence: The simultaneous achievement of top performance in Safety, Cost and Production

Safety(Employee)

Cost(Financials)

Production(Process)

OPERATIONAL EXCELLENCE

Required for long term success of a Best-Run Utility

Foundation for Best Practices

Examples




Foundation for Best Practice

An IT foundation strategy should:Standardize processes and organizations for single or multiple sites and support the streamlining of procedures. Facilitate the redesign of functional area processesAlign business processes with the Enterprise Software Application Enable Best Practices of functional areas to be integrated around a single, proven integrated software application that includes following processes: ▪ Engineering ▪ Regulatory Compliance▪ Work Management ▪ Personnel Safety▪ Supply Chain ▪ Financials & HR▪ Document Management

Reduce IT costs associated with the enhancement and maintenance of legacy applications and retire multiple software applications

Source: Executive from large utility that is undergoing a merger


Summary




Summary

The Energy Industry is undergoing the next evolution of changeBest Practices start with a strong community around sharing industry knowledge and benchmarking KPIsIT solutions can enable Best Practices by capturing the right data at the right time at the right placeIntegrated, real-time information from the asset to the customer is a critical requirement for a Best-Run Utility


Summary

Questions?

Thank You!

service delivery optimization - sapfm.sap.com/pdf/bf05ho/5_bailey_servicedelivery.pdf · ¾%...

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