The product and service offerings based on business intelligence (BI) have come a long way since BI’s inception. Utilities, worldwide have realized the potential of this technology and have made significant investments into harnessing the benefit of these technology offerings.

 

By leveraging analytics, utilities have been able to gather key information out of the operational processes. If you take a moment to analyze some of the utility companies and their usage of BI products, you will find them in different quadrants of maturity.

 

The forces that have dictated this maturity positioning are numerous, be they regulatory pressures, operational efficiency concerns, environmental concerns or the mere appetite to absorb high risk on the part of the enterprise. In part 1 and part 2 of this article, I will examine some of the key usage positioning in the quadrants, described in Figure 1 and will address the quantum leaps that are being taken by the companies to make more effective use of the service and product offerings. I’ll also examine how business performance management (BPM) is positioned as a key strategic offering in the world of utilities by elucidating the process of energy efficiency programs and its integration with other key processes.

 

 

Early Adopters: Quadrant 1

 

The organizations in this quadrant have played a visionary role in their industry vertical with regard to the use of BI and analytics. Typically, these organizations have a history of adopting new technology offerings and making the most of it by working with the product/service provider to adopt the technology to its maximum benefit. In the SAP area, such ramp-up customers can be seen in a wide variety of areas. They often collaborate with technology companies to produce outstanding solutions that many times become the benchmark.

 

These organizations are continuously trying to harness value, using creative techniques from the portfolio of products, already deployed in their organizations. When other organizations may still be grappling with the idea of value-based analytics, these organizations are already tinkering with service offerings in the BPM arena. These early adopters are in the process of using the latest levers in the area of analytics, such as predictive analytics, data mining and accelerators, to seek further value from their investments. An example is the early adoption of SAP Strategy Management (SSM) offerings by Pacific Gas and Electric that connect operational planning and drivers with key strategic plans.

 

Pragmatists: Quadrant 2

 

The organizations in this quadrant have waited patiently to see how the technology plays out in their vertical. They have conducted very careful studies to see the cost/benefit associated with the investment in BI. Quite often, they include BI as a part of their total transformation program, such as a major enterprise resource planning (ERP) program. These companies follow a best practices route after carefully mitigating any risks associated with their investment. They effectively partner with big consulting system integrators to carefully define the processes and see where they can fit BI to provide value.

 

One of the value drivers in this quadrant is that data warehousing and analytical reporting reduce the cost in producing and maintaining reports out of the transaction systems. The data warehousing tool provides a simpler way to associate data from one functional area, such as finance, with another area such as inventory, without hiring teams of programmers to write complicated reports. Another common theme of the entities in this quadrant is that they often take advantage of economies of scale in product maturity. In the case of SAP BI, the data warehousing structures - such as cubes, operational data stores (ODS) and transformation rules - has already been created for major functional areas and are part of the product known as business content.

 

You will find a large number of organizations in this segment. They are currently using Cognos, SAP, Business Objects and other established products to harness value of their transactional systems.

 

One of the drawbacks in this approach is that this merely establishes a reporting organization. The delivery model is to extract the transactional data into powerful data warehouses and produce reports that look nice and are easy to develop and maintain. Often, the output of the reports is not used to provide value out of the business analytics in operational systems. An example is Southern California Edison, which is spearheading a major transformation process by adopting SAP.

 

Conservatives: Quadrant 3

 

The members of this quadrant are averse high to risk. They have burned their fingers in the past while investing in new technology transformation programs and are very shy about investing into noncritical products or methodologies. These organizations wait until most people have made the switch and until it becomes inconvenient to stay with the older technology.

 

Assume that you are in the deregulated market. The ability to understand your customer’s needs before the competition is highly critical. If your competition has a mature customer analytics portfolio, you will be at a loss without investing in the technology. In this case, BI becomes a competitive strength and not making use of it not only becomes an inconvenience but also a handicap in trying to get an upper hand in the market.

 

Members of quadrant 3 obtain the most cost benefit in the industry. Because products and offerings have matured by the time they decide to implement, they can readily access products and resources at a cheaper cost. The tradeoff is the cheaper cost versus benefits of early adoption. This can be significant given the market regulatory and operational pressures on an organization.

 

Entrenched: Quadrant 4

 

This segment is small. The organizations are always in the battle to put out day-to-day operational fires. They do not have the luxury or the budget to invest into strategic products. It is very difficult for them to maintain their current systems without large investments and without many problems. The organizations in this quadrant may be undergoing critical disruptions in the way they perform business. The energy crisis in California, for example, was an event when companies like Southern California Edison were “engulfed” - merely trying to raise money to survive. Another key event example is the Y2K conversion. In the late 90s companies “had to” invest money in the conversion in order to survive. Another reason for organizations to be in quadrant four is potential mergers/acquisitions in the horizon. Companies often choose to wait until organizational restructuring is complete before investing in new tools and service offerings.

 

Part two of this article will be featured in next week’s Business Intelligence: Special Report.

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