I wrote this piece with my friend Denis Chartrand as a companion document for my CEA presentation back in February 2018 (See http://benoit.marcoux.ca/blog/cea-tigers-den-workshop/) but I now realize that I never published it. So, here it is!
On February 21, 2018, I presented at the annual T&D Corporate Sponsors meeting of the Canadian Electricity Association. This year, the formula what similar to the “dragons” TV program, with presenters facing “tigers” from utilities. They asked me to go first, so I didn’t know what to expect, but it went well. Or, at least, the tigers didn’t eat me alive.
The theme was a continuation of my 2017 presentation, this time focusing on what changes utilities need to effect at a time of low-cost renewable energy.
I’ve attached the presentation, which was again largely hand-drawn: CEA 20180221 BMarcoux.
In a previous post, I said that consolidation reduces costs. But it does more: consolidation eases implementation of systems to reduce dependency on the particular knowledge and experience of key individuals. This is particularly clear in 2 areas:
- Work Scheduling and Dispatching. Advanced schedulers, such as ClickSoftware, may automatically dispatch field crews based on skillset, equipment and availability, without relying on dispatchers’ particular knowledge and experience, especially for unplanned (emergency) work. In reducing human interventions, dispatchers become supervisors of the overall process, focusing on difficult situations that the system cannot process effectively by itself. In addition to more efficient truck rolls, the number of dispatchers and schedulers (now consolidated) can be reduced.
- Customer Relationships Management (CRM). Large utilities may have sophisticated Customer Information Systems (CIS) for millions of residential and small commercial and industrials accounts, but there is often no system to manage the hundreds of large commercial, industrial and institutional (CI&I) customers. Therefore, these remain the privy of local resources owning the customer contacts. The lack of rigour in regard to customer contact is probably a contributor to low CI&I customer satisfaction often observed. It would not make sense to implement a large system for a few customers, but a light CRM, such as Salesforce.com, can be cost effective and have a relatively fast implementation time
Full disclosure: My father worked for 25 years as a utility dispatcher. He is long dead now, but I am sure that he would be amazed to see the tools that dispatchers at modern utilities may have now.
Large utilities have many multiple regions in their territory, with each region having multiple field depots. This structure leads to a great amount of duplication and overlap of responsibilities as key business functions such as work planning, work scheduling, project management and customer relationships are duplicated across regions. This also causes deviations and lack of uniformity in the way the work is executed in regions and depots.
There is a clear trend in the industry to consolidate regions and depots, flattening the organisation. Talking to utility managers having gone through consolidation of field regions, I concluded that one can expect a 20% reduction in overhead in a 2:1 consolidation – and this can be compounded many times, i.e. a 4:1 consolidation leads to almost 40% overhead reduction.
Why was this not done earlier? Implementation of Enterprise Resource Management (ERP) systems, which forces standardization of process, is one key driver. Furthermore, an ERP can effect consolidation without requiring centralization of roles – consolidation without centralization has less organizational resistance from middle management than pure centralization.