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Increasing Resilience, Profitability, and Sustainability in the Utilities Industry – Futurum Tech Podcast The Intelligent Enterprise Industry Series
by Daniel Newman | November 5, 2020

This episode of the Futurum Tech Podcast – Interview Series is the seventh installment of our newly launched Intelligent Enterprise Industry Series — done in partnership with SAP — where I will be speaking with advisors and executives across ten different industries on how they are focusing on furthering their intelligent enterprise story. I’m excited to welcome Anthony Sabatini, an executive advisor for the utilities industry at SAP.

The Interconnected Utilities Sector

SAP recently partnered with Oxford Economics to conduct a research study to learn how executives from around the world are managing end-to-end processes, business networks, and talent recruitment to support strategic goals amid rising levels of uncertainty. The report includes findings from 3,000 senior executives, including 300 from the utilities sector.

My conversation with Anthony revolved around the following:

  • The primary demands utility companies are responding to.
  • How the utility industry is shifting to a customer-centric model.
  • The changes that companies are making to meet the new demand — both internally and externally — for greater personalization and ease of use.
  • How companies in the utilities industry are investing more in employees.
  • The new investments, including in technology, that the utilities industry is making to deal with challenges.
  • The impact these changes are having on the culture of utilities companies.

Anthony and I explored some of the findings of Beyond Efficiency: How the Utilities Industry Leverages Systems Thinking, but I know we only scratched the surface. If you’re interested in a comprehensive overview of the subject download The Oxford Economics report on the Interconnected Utilities Industry here.

Listen to my interview with Anthony here:

Disclaimer: The Futurum Tech Podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Read more analysis from Futurum Research:

Increasing Resilience And Sustainability In The Public Sector 

Increasing Resilience, Profitability, And Sustainability In The Professional Services Industry 

Increasing Resilience, Profitability, And Sustainability In The Retail Industry

Transcript: 

Daniel Newman: Welcome to Futurum Tech Podcast, I’m your host, Daniel Newman, Principal Analyst and Founding Partner at Futurum Research. I’m excited about today’s interview series podcast with Anthony Sabatini, Industry Executive Advisor at SAP, and as part of our continued series of discussions about industries, some of the different industries that are handled by SAP, the digital transformation of these industries, the impact that this year that the pandemic has had. We’re going to talk about an Oxford Economic Study that was commissioned by SAP and the impact that it’s had on particular industries.

Then of course, we’re going to talk about the intelligent enterprise. As a reminder, this is part of a series, a 10 podcast series that we have done with 10 different industries. It’s a great series. I hope you’ll tune into all of them. We’ll put links below as to how you can get to all of these podcasts, because no matter what industry you’re in, hearing from these industry executive advisors, you’re getting insights from real businesses, the challenges they’re facing and how these companies are addressing those challenges. Without further ado, let me welcome my guest on today’s show Anthony Sabatini. Anthony, how are you doing?

Anthony Sabatini: I’m doing well, sir. How are you?

Daniel Newman: Doing great. I feel like I’ve done this before a couple of times. Talked to a couple of different folks, but no, it’s great to have you here. It’s great to talk to another critical industry, the utility space in this case to hear a little bit about what’s going on, the challenges in your industry, the challenges in your space. But before we do that, I did give everybody your title. If people haven’t listened though, to this show, they probably don’t really know what an industry executive advisor does. Why don’t you just tell everyone a little bit about your tenure at SAP and what you do there each and every day?

Anthony Sabatini: Yeah, absolutely. Again, thanks for having me. It is an exciting time to be doing this podcast, but also to be in the industry. As an industry executive advisor at SAP, we’d like to focus and we spend our time really helping utilities in North America, helping drive strategic goals and objectives, whether they’re things that are very tactical in nature of allowing utilities and helping utilities get to a certain place, so to speak within a digital transformation. Anything that might be very tactical in nature, but really helping kind of drive the industry and helping to drive trends and really assisting our customers and potential customers along the journey that sometimes it’s easy to put it in forecast. It’s easy to put it in a capital plan, but ultimately executing on it is the most difficult part in having a strong and robust ecosystem.

That’s something that myself and my team that we do that we offer our assistance and our advisory services to utilities to really help them kind of along that journey to ensure that they’re successful, not only for their stakeholders, for their employees, but also more importantly for their customers.

Daniel Newman: Yeah, absolutely. Having had the opportunity to speak to so many of you and the folks that do your role, I guess I only spoke to one you, but a series of members of your team across the 25 industries that SAP handles. We did 10 in this case. It was really interesting. We talked with automotive, we’ve had the chance to talk with retail. We’ve had the chance to talk to oil and gas. Like I said, it’s been a lot of fun because a big part of the job that you and your cohort does at SAP really is about getting deep inside these different enterprises and these verticals and understanding the challenges these businesses face. It’s very consultative. It’s very developmental, but you’re also really walking side by side with a lot of companies that are going through a lot of things to help them understand where do different, not only technologies, but different cultural shifts and transformational shifts impact the business. I have to imagine Anthony that this year has been really unique for you.

Anthony Sabatini: Yeah. Daniel, it has been. It’s one of these things where being face-to-face with our customers, being able to whiteboard solutions, whether it being white board business outcomes and really kind of spending that one-on-one relationship time with utility executives, leaders, lines of business is really important. At the beginning of the year, we had the opportunity … I mean, however, we have been remote, like a lot of people and like a lot of industries, but we’ve really found that from a resiliency standpoint, the industry, as it relates to revenue and financials, but also from a workforce perspective. I mean, utilities have really been, they adapted really quickly from a workforce perspective being remotely. That’s really turned into granted more meetings throughout the day, not having to travel on planes and in car sharing services and at hotels. A lot of the conversations we’ve been having with the utilities have been very meaningful just as they’d be meaningful if we were sitting in a conference room together or having lunch together.

It has been very different being at home and being remote, but our conversations and the way that we’re helping utilities not only navigate some of the things through the pandemic, but ultimately how do we help drive success post pandemic? What do things look like from a technology perspective, investment perspective, and again, what other utilities that are having some of the same struggles, what are they going through and how are they ultimately going to define success going forward? Again, it has been very different, but it’s also been rewarding and gratifying as we approach the end of the year.

Daniel Newman: Absolutely. Let’s dig in, I got a few questions specific to the utility space. This is your expertise domain. I could talk all day about the tech, but applying it to the industries is something that I think is critical and executives, CIOs, business leaders, they’re all asking a lot of the same questions. In your industry, as utilities are striving for a more customer centric model, what are the primary demands that these companies are responding to?

Anthony Sabatini: All consumers in all industries, you and I both as consumers, we want more. We want more options. We want … Or in my case, I want less interaction. We want ease of use. We want things to be very timely and efficient. Our utility customers are no different. We’ve heard them loud and clear. They voiced through whether it’s surveys, whether it’s feedback that they’ve given to utilities and to the industry, they want a frictionless experience. With that said, they also want it very personalized. For example, real-time updates on service orders or work orders that are out in the field. Real time and accurate responses related to an outage or an emergency that might be occurring at their residence or at their business. Having varying options of programs again, that are very tailored and very specific to me. Me personally, I opt out of a lot of things.

With that, I expect from a options of programs perspective, I shouldn’t be receiving a lot of the additional value add services that my utility offers to me because I just don’t want to be contacted. I think it’s kind of having those options that are available for the ones that want it. It’s great. Also to be able to identify in signaled to the utility that I don’t want to be contacted around some of those things, but we’re seeing those utilities meet those demands by delivering a lot of quick value. Focusing specifically on business outcomes and kind of really the journey of a customer as they do vary across different lines of business in the way that they interact with the utility. Then ultimately utilities are leveraging thinking systems as an actual strategy, along with some of the digital transformations and some of the digital initiatives that they’ve put into place for this year and in years to come.

Daniel Newman: Absolutely. You bring up a lot of great points. I think we’ve been talking for a while about digital transformation, meeting the customer where they are, delivering services that add value, and really what I heard a lot of in your response, there was personalization. People want a level of service personal to them. Some people want a lot of interaction. A lot of offers, a lot of opportunities to engage. They want to know what opportunities there are to save money, to provide feedback and other people, as you kind of alluded to yourself, maybe just want to be left alone. Those are both personalization choices. The hard part is companies that are making big investments in reaching customers sometimes miss the fact that not all their customers want that level of high touch interaction. It depends on the business and the industry. I find in utilities, for instance, it’s really an industry where most people, most of the time just want things to work.

When it doesn’t work, they want very high touch, very responsive, very easy ways to interact, whether that’s through a mobile device, an app through the web, pick up the phone, social media, but it’s not one of those things where maybe your favorite clothing brand or your shoe company or your sports team where you kind of like, “Oh, I want to know what’s going on with them.” It’s kind of like, “I want my lights to turn on. I want my water running and to be drinkable, I want my electricity to always work.” These are obviously consumer stories, not all, some utilities are focused B2B. Some are B2G some are B2C, but it is a microcosm of the whole thing, right? It’s not the typical industry where you’re like, “Oh, I want to hear from them all the time.”

Do you want to hear, for instance, the opportunity to, “Hey, we can help you save 10% with some new offering we have with solar,” or some way you can reduce your electricity use or, or water usage through new smart metering technology. I have to imagine there’s some changes. Let me ask you that. What are some of the changes that we’re seeing to actually kind of meet this demand and meet this level of personalization, both internally within companies, themselves and also externally?

Anthony Sabatini: Yeah, I mean, historically the meter and or the bill has really been the centerpiece of the utilities relationship with the customer. The monthly bill that was sent out via mail, which utilities don’t like to do too much anymore, just from a cost prohibitive perspective. The monthly bill was really the only touch point the utility would have with the customer, unless the customer calls into a call center or makes a request on the mobile app or maybe through email with a billing inquiry question, maybe reporting an outage, scheduling a turn on, turn off and as we’ve seen over the last five to six years, the industry is in the midst of a full transformation. Whether the utilities or whether the industry likes it or not, and whether they’re ready for it, we’ve seen varying response to that, but that modern utility is becoming an experience based company to ultimately meet those needs.

When we talk about experience-based, we think specifically to a customer, however, the experience is not only the customer, it’s also the employee and it’s very employee-based. Much of the utility workforce is retiring. Shortage of that skill talent was cited in the study as one of the top challenges that the utilities are faced to carry out some of those strategic change initiatives. The recruitment of new talent has changed. The technology and processes to successfully execute that recruitment to drive throughout that workforce has also improved.

Daniel Newman: Yeah. You bring up a lot of good points. We touched a lot on my reply, your reply covered the external environment a lot, but I’m glad you mentioned the internal environment because to deliver great services, you’re going to need the technical know-how. Of course the front line know-how as you’re developing new tools, as we implement IoT and sensors and technologies at the edge that are going to provide better information environmentally, to both the consumer and the company. As we start to build out tools that help employees, customer data platforms, an expansive CRM to better understand every customer, when they want to be connected, all the personalization stuff we talked about. That’s got to be done with data and analytics, and then we need ML and AI to enrich that data, to give us better cues. When should we be reaching out? We’re not always explicit as customers to tell you that.

The technology gives those next best actions, also building value chains and systems in the B2B space. Having the technologies to connect identities of people you work with across the chasm, you got identity management. There’s all kinds of different ways that technology plays, but then there’s also the culture of these companies. You’ve got an old antiquated sort of industry it’s been around forever. It’s technologically advanced in a lot of ways, it’s in technologically enhanced, right? The utilities we receive today are far more technically involved in yesteryear, but it’s still not necessarily considered a cool high-tech industry yet. How do you drive high talent? Do you want to go to work for big tech company or do you want to go to work for the local utility?

That’s going to be a challenge though, because if you want to continue to innovate, you want to continue to build the best marketing, the best programs, the best biz dev, the best solutions. You need to have passionate employees. I love all that. Those are some great insights, Anthony. I got one more question for you and I want to talk about investment. These companies have to continue to invest to achieve any of the stuff you’ve talked about. How are the investment strategies of utilities aligning with this ever-changing pace? Especially in what we just said, how are they going to become more efficient and more successful with those challenges?

Anthony Sabatini: In the last six to eight months, utilities, they’ve adjusted to the impacts of the remote workforce from a technology perspective and the industry leaders and executives are anticipating for the future and are currently executing on the need to be more digital, to be more nimble, but also to be more integrated throughout the organization. You do a lot of that through the technology, through process improvement and also through the people. We’ve seen the inefficient processes such as the manual and human intervention throughout all this have become painfully ineffective. Then even in some cases unmanageable. We’ve heard from some industry leaders around when they’re coming back to work, are they back in the office? Are they still remote? We’re hearing things around, “Well, we have to go back in the office periodically to go sign papers.”

The thought of that, the thought that a lot of industries, utilities even haven’t adopted a lot of electronic signatures. It’s something as simplistic as that is huge and it’s impacting the workforce. Investments are being made around some of those nimble cloud solutions that you can get a lot of quick value and a lot of segmented value too, but really them driving capabilities around true automation, a lot of data sharing. Again, the electronic processing or e-signatures. Having those intelligent workflows have transitioned from things that are nice to have or we would love to enhance or invest in something like this to now being very necessary to complete operational and customer requests.

Again, a lot of the virtual workforce from a front office and back office, they’re virtual and they’re at home. The need to have automation to really kind of help drive some of those investments and enable the digital capabilities within either existing solutions, maybe being leveraged at the utility or on the shelf, or even accelerating the procurement of other technologies and or projects. We’ve seen that that’s ultimately going to be fairly critical to develop that efficient strategy that is not only needed now as we approach the end of the year, but also in the next one to three to five years as this industry is changing.

Daniel Newman: Yeah. You’re going to continue to see more investment being made in tech. I think data at the core of everything, got to have the right data. You’ve got to have the right fluidity of that data across platforms because these companies have systems that some are very modernized and some are quite antiquated. The flow between these systems has to be expedited to really truly have that full customer. Also that full environmental view of your systems, right? It’s not just about customers. Customer focus is going to be a big differentiator long-term. I mean, clearly you’ve emphasized that a lot. Everything from talking to customer centric to developing the new needs, but also having systems and utilities that work at scale. You think about things like metering and stuff, IoT technologies that give you advanced notice of potential failures in your system, so they can be addressed positively, proactively to reduce outages.

I mean, these are all things that are going to take key investments. They’re going to need to be done at scale in a lot of cases, we’re still seeing proof of concept to scale, and you’re going to need to also change the whole mentality about deployment, which kind of brings me to like one sort of a follow on question before I let you go, Anthony, but are you seeing the cultures of these businesses keep up? Are they enthusiastic about becoming modernized, more digital, innovative companies?

Anthony Sabatini: I believe so. We’re seeing that across the industry, again, back to that segmented value. The days of these long expensive projects with 200, 300 consultants or internal FTEs, a lot of those for the most part are gone. I think from a transition perspective, seeing those utilities start looking at things that they can get quick value, but still also have a transformation in play with a project or a program. It is exciting. It’s exciting to see from a customer experience perspective and the focus. It’s exciting to see a lot of robotics, machine learning that are being now incorporated within processes within the organization, whether it’s, again from a call center perspective back office, or even the field, and seeing the way that potential assets are repaired these days. Or knowing when an asset needs to be repaired before the asset goes out, it is exciting. Working with a lot of utilities from the smaller utilities to the larger IOUs, the executives are taking the advice of the industry and they use the advice of their partners in the ecosystem to do a lot of those things. It’s really exciting.

Daniel Newman: Yeah. No doubt about it. Much of our research has found it’s about culture, adaptability and adoption technology are always tightly connected to the business’s culture and the business’s ability to embrace, change and buy in to that transformation. That comes down to hiring. It comes down to satisfied customers. It comes down to having the right levels of innovation and innovation happening at the right pace, but you’d have to tie that together. People drive change, change drive people, and overall, that’s how we get towards an intelligent enterprise that really does meet customers where they are and deliver services that will be good for what’s today and for what’s tomorrow. Anthony Sabatini at SAP, I want to thank you so much for spending some time here with me on the Future of Tech Podcast interview series.

Anthony Sabatini: Absolutely. Again, Daniel, thank you so much for the time and take care and be safe out there.

Daniel Newman: Absolutely. For everybody out there, you heard us talking about that Oxford Economics study, please hit the show notes and feel free to click on that study. It’s available for free. Tons of great insights for almost all industries and wanting to learn about transformation, change, innovation and the intelligent enterprise. Click on that study, download it. I want to thank SAP for a partnership here in this 10 podcast series. For everybody out there that’s enjoying this show and the other shows, please hit that subscribe button. We’d love to have you as a regular. We have lots more interviews. We have these 10 SAP interviews. We have interviews of all types with executives across the technology sector. For the Futurum Tech Podcast today, I got to say goodbye for now. Thanks for tuning in. I’ll see you later.

 

Daniel Newman