Case Studies

Electric and Gas Utility: Standardization Enables Automation & Predictive Analytics, Improves Work Orders Cancellations by 50%

Top 15 Electric and Natural Gas Utility
Western USA

Client situation

The newly-appointed CEO of an electric and gas utility company was eager to leave his mark on the business. The utility was the largest division of its parent, a Top 15 (by customers) utility holding company in North America.

Within the industry, the CEO’s division maintained a long history of adopting leading-edge operating methods, technologies, and management styles. Having spent the bulk of his career with the division, he had very specific changes in mind, but he wanted to look broadly and assess opportunities across the entire organization.

Prior to the CEO’s appointment, the senior management team had aggressively pursued new technology to sustain operating margin. A round of high-profile technology investments—including a costly, outsourced robotic process automation (RPA) “Center of Excellence”— yielded small, rapid gains initially.

But soon, the “citizen developer” teams struggled to find opportunities (use cases) to automate, and progress slowed to a crawl. Senior management was disappointed with the performance of their investment and sought a major increase in use-cases.

A series of recent rate-case disappointments, along with contractual increases in labor costs, acted as catalysts for seeking large-scale improvements and benefits. The CEO had appointed a full-time internal team to address the rapidly accelerating margin erosion, as well as the RPA use-case shortfall. Their preliminary analysis and summary-level benchmarks validated the existence of major improvement potential.

Early, casual investigation identified high levels of error corrections, scheduling issues, and excessive cancellations of work orders and projects. The team needed rapid documentation of largescale, end-to-end (E2E) business processes, but lacked the time, tools, and expertise to deliver these.

The Lab’s templates quickly convinced them that the entire division could be mapped at the activity level within a matter of weeks.

Project Overview

Project Sponsor: Chairman & CEO
Client: Electric and Natural Gas Utility

Implementation Results
  • Operating cost: Down 12%
  • Work order cancellations: Down 50%
  • Automations launched: 35 (over 10 mos.)
  • Break-even point: 5 mos.
  • 12-month ROI: 6x

Client Description, Project Scope, Objectives

A U.S.-based, regulated utility company and a division of one of the Americas’ largest energy providers, the client operates more than 20,000 miles of electric and natural gas transmission and distribution lines serving more than 3.5 million customers.

The scope of the effort included all major operations and organizations. The primary objectives targeted improvements that could be achieved without major new systems, capital investment, or facilities closures. The secondary objective was to ensure that the organizations involved collaborated in the effort, supported the changes, and agreed to the benefits targets.

Additionally, The Lab’s effort was designed to support and integrate with existing initiatives. For example:

  • All the work would be conducted alongside the CEO’s previously commissioned full-time dedicated team.
  • Automation development and deployment was coordinated with the specifications and resources of the existing Center of Excellence team.
  • And several workstreams were designed to be sufficiently compatible (e.g., IT systems, regulatory compliance, union work rules) to be utilized by other utilities divisions of the parent company, in the immediate near term.
Initiative Objectives:
  • Cost reduction/avoidance
  • Automation acceleration
  • Customer experience
  • Safety/compliance
  • Upgraded analytics
Project Scope:
  • Electric Operations
  • Gas Operations
  • Finance and Legal
  • Customer Service
  • Schedule and Dispatch
  • Information Technology

Findings: Phase I, Analysis and Discovery

The enterprise-wide initiative began with a ten-week Phase I analysis. The Lab documented over 15 end-to-end business processes across the utility, from engineering and construction through customer service.

The Lab’s database of utilities operations templates— including industry-standard KPIs, process maps, benchmarks, best practices, automation “use-cases,” and more—enabled rapid documentation and analysis of more than 85 percent of employee work activities (approximately two minutes each), while only requiring one hour per week of any subject matter expert’s (SME’s) time.

Coordinating and reconciling the client’s data with The Lab’s templates resulted in E2E maps and improvement opportunity “inventories” that could easily be remotely reviewed, refined, and validated by all employees within the project scope.

The Lab’s detailed analysis documented over 300 activity-level improvement opportunities. Capacity models revealed stunningly large (from the client’s viewpoint) cost-reduction and/or avoidance opportunities—over 30 percent for certain organizational areas.

But the CEO wanted to look beyond cost savings.

With that in mind, The Lab grouped projected benefits into broad categories related to the senior management team’s strategic objectives:

  • Cost reduction/avoidance
  • Safety
  • Information security
  • Compliance
  • Customer experience

The Lab’s staff worked jointly with client team members to group each improvement opportunity into about 12 distinct workstreams for implementation. These workstreams were then further segmented and prioritized into sequential “waves” based on benefits and staff availability. Examples:

  • “Quick wins” (enterprise-wide)
  • Analytics upgrades (enterprise-wide)
  • Automation program acceleration (enterprise-wide)
  • Dispatch job cancellation reduction
  • IT asset management controls
  • Fleet management optimization
  • Many more

This Phase I effort delivered a self-funding business case and work plan that launched a ten-month, Phase II transformation project to implement the most valuable groups of improvement opportunities selected by the senior management team.

Project Summary:
  • 10-week Analysis and Discovery
  • 10-month Implementation
  • Enterprise-wide scope
    • 15,000 FTEs
Assets and Deliverables: Phase I, Analysis & Discovery
  • 15+ major end-to-end business processes documented at nano-scale detail
  • 160+ process-standardization opportunities identified
  • 90+ automation candidates identified
  • 50+ advanced analytics and KPI use-cases
    • Performance measurement dashboards
    • AI/ML opportunities (e.g., error preemption, management “alerts”)
    • Ad hoc analysis: operational, strategic

Phase II: Implementation

The ten-month, self-funding Phase II implementation effort succeeded in moving the needle across the board for the senior management team’s strategic objectives. Improvements implemented throughout the client’s various organizations, functions, and departments succeeded in:

  • Increasing organizational speed and effectiveness
  • Reducing unnecessary expenses
  • Designing and installing new standards to simultaneously improve:
    • Productivity
    • Work quality
    • Service levels
    • And More

Specific improvement goals were established by department and/or by workstream, and the organizations involved could perform the work with any mix of resources they chose:

  • Internal resources
  • The Lab’s resources
  • Others

IMPROVEMENT EXAMPLE #1 Schedule and dispatch rework reduction

Avoidable work-order cancellations—consistently above 30 percent—were squandering high-cost resources. The problem: The utility’s deployment of an industry-standard ERP system (SAP) was not configured to capture the root causes of these costly cancellations. The Lab solved this issue in four steps, reducing cancellations by more than 50 percent over six months:

  • Data definitions – Standardized cancellation “reason codes” were documented.
  • Data capture – A simple web-based tool was launched to capture vital data on each cancellation at every point in the lifecycle.
  • Predictive analytics – Over half of all cancellations could be avoided or canceled with no cost if captured early. Basic artificial intelligence (AI) was added to the workflow to enable early-warning notifications.
  • Reporting and monitoring – Report preparation was largely automated through standardization, previously unused ERP features, and RPA bots.

IMPROVEMENT EXAMPLE #2 Analytics standardization and simplification

Despite more than 300 reports, executives claimed to lack the insights required to improve their operations. The Lab identified a common issue: The client’s business intelligence (BI) team had a wealth of data, but most existing reports were one-off—created to answer a specific question.

Each had a different look and feel; extensive effort was needed to reconcile different reports. The Lab defined standard KPIs for each area and launched ten simplified, reconciled, automated management dashboards. And AI-driven notifications fed specific insights to managers, e.g., performance variance, target adherence, and “red flag” compliance issues.

IMPROVEMENT EXAMPLE # 3 Automation program acceleration

The parent company maintained a long-term agreement with a high-profile, global IT vendor to manage the utility’s RPA program. The past year was spent developing an automation “Center of Excellence”—yet only a single, low-impact bot had been launched. The Lab was tasked with accelerating benefits.

  • Discovery – The Lab’s standardization & automation templates increased the inventory of high-value RPA use-cases tenfold.

  • Prioritization – A simple scoring system was installed to prioritize 150+ available automation use-cases for near-term implementation.

  • Documentation – The Lab installed standard, developer-friendly documentation templates to preempt common questions and delays.

  • Development – A decentralized approach was adopted; based on resource availability and skills, the utility could simultaneously develop bots using internal staff, The Lab, or other vendor(s).

Post-Implementation Support, Sustainability & Automation

The Lab provided hassle-free, post-implementation hourly sustainability support for this client to maintain automations, process standardization, and operational data analytics models implemented during the Phase II engagement.

If the client’s team was not up-skilled enough to perform any needed automation updates, they leaned on The Lab for Tier 3-level support. If analytics dashboards required additional views or data connected, The Lab’s team was a simple phone call away.

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