By Colin Beaney, Global Industry Director for Energy and Utilities at IFS
The recent gas price cuts by the UK’s major energy suppliers have brought the industry under renewed scrutiny. How can suppliers live up to the higher expectations of end customers, while remaining competitive and agile?
The public will be keeping a watchful eye over energy suppliers, expecting them to reflect their lower costs with lower prices. Energy suppliers have heeded this call and started lowering prices – it is important that they don’t use this as an excuse to cut corners or scale back, as further price cuts may be precipitated by external factors. They should instead aim to increase their efficiencies and productivities in order to prevent potential future price cuts from eating away at their competitiveness.
Can enterprise software help?
In order for energy suppliers to stay abreast of competitors, they should take proactive steps to ensure that their business processes are fully integrated and that their dataflow is seamless and efficient across the board. At the same time, they need to confirm the cost of their assets, even before the design stage. Both of these goals can be addressed through the use of business software solutions such as Asset Lifecycle Management (ALM) and an Enterprise Asset Management (EAM) solution tailored to the needs of the company.
In streamlining their data and asset practices, energy companies can become better equipped to cushion sharp price falls.
What is the scale of the challenge?
According to research from PwC, global capital project and infrastructure spending will exceed $9 trillion by 2025. Within asset-intensive sectors like mining, ports, refining, chemical and heavy metals, the investment in new plants is expected to double to nearly $2 trillion in the same timeframe. These industries are all intimately linked to the energy sector which will have to grow to meet the requirements of these huge ventures.
How can companies meet it?
The balancing act between satisfying customers and maintaining or increasing market share is poised to become more delicate. In line with PwC’s predictions, energy businesses will face a greater demand for transparency around investment decisions and how they might impact consumer energy bills. Companies will be expected to diligently monitor their resources, whether it’s their assets, personnel or facilities.
Full lifecycle management is key. ALM captures all the information about assets before they are delivered or constructed. Companies can now have a detailed, chronological overview of resources, enabling them to focus on potential bottlenecks and address them appropriately. Additionally, by providing real-time data sharing across every stage ranging from infrastructure planning to commissioning and retirement, EAM reduces service and repair costs and maximizes time-to-value.
What is also encouraging is that assets are becoming ‘smarter’ than before, as they will be part of a wider network of communication enabled by sensors, robotics and automation technology. This will make it easier to track, transport and repair an asset as its status will be available in real-time. Holistic visibility is another important benefit resulting from a tailored enterprise solution. Ongoing ventures and investment decisions highlight the need for master data management in order to keep data consistent across inventory and different facilities – such issues are especially important for multinational operations, where costs across countries can differ markedly, including those associated with weather conditions and currency fluctuations.
Lastly, as business software gradually becomes integrated with wearable technology, energy industry leaders and managers will be able to communicate more quickly and effectively with their key personnel as well as receive immediate updates and notifications on issues ranging from equipment failings to market changes and their anticipated impact.
What of transparency then?
Aided by bespoke data collection practices and tailored business software, energy companies have an opportunity to own their ‘big data’ and make more informed decisions about their resources, assets and facilities. Crucially, they will be able to answer and account to the public faster and more thoroughly about upcoming investment decisions and predicted costs for customers.
The negative spin around gas price cuts should caution energy companies to become more efficient and productive internally and use this as a conduit to reward customers not only with lower, more competitive prices but with a more productive overall business model.
