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Utilities need to rethink their Asset Management Approach for maximizing ROA

Utilities need to rethink their Asset Management Approach for maximizing ROA
September 30, 2021

Assets are the heartbeat of the utilities industry and play key role in managing overall portfolio and delivering value to business. The utilities are instrumental for setting up OT systems such as SCADA, RTUs, and historians etc., to provide reliable power to end customers. With disruption happening at every intersection of value chain, two-way electric flow at distributions, and renewable integration with DERMS, the utilities must manage their asset efficiency to deliver uninterrupted power to customers. The new challenges combined with existing problem of aging infrastructure, and regulatory compliances are putting more pressure on existing asset management solution. Older ways of managing the assets are neither cost effective nor run operations smoothly, negatively impacting the MTTR (Mean Time to Repair). With the advancement in technologies, there are many actions which business can do/act which was not possible earlier even in imagination as well. Most of the utilities have their core EAM system in place for many years but very few are able to take full advantage of suite. There are factors such as underutilization of product, poor implementation, and limited knowledge contributing to overall ineffectiveness of asset management. Therefore, the utilities are looking for measures to improve their asset management system for tighter integration with new business models.

Every utility company must think about creating a digital roadmap of upgrading their asset management IT system along with their existing asset management plans.

Every utilities must think on the lines of creating a digital roadmap of upgrading their asset management IT system along with their existing asset management plans. This digital roadmap will help them to achieve operational efficiency and increased asset life. The example below shows how the routine maintenance process for asset will change in new digital world.

IT System

 I am sharing my thoughts which can be useful for defining the overall journey from traditional to intelligent asset management IT system.

  • Assessment to identify the gaps in their existing EAM implementation – This must be done to check whether all processes in asset lifecycle are properly defined and used by business. Also to find out the standard available functionalities in the package which business is not using currently. This will help in defining the roadmap for minor/major upgrade of system. The first step must make your core strong in such a way that it is future ready and provides single view of truth for all asset types
  • Shift to smart assets enabled by IoT- EAM implementation solutions alone cannot support the full breadth of asset types with advanced level of predictive and strategic capabilities. There must be a thought through plan to install IOT devices/sensors on critical assets with surrounding IT solutions. IOT market in Utilities is expected to grow from USD 28.6 billion in 2019 to USD 53.8 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 13.5% during the forecast period. They must integrate this approach into their asset investment plan creation step going forward. Without this, the utilities will not be able to run smoothly along with delivering value to their stakeholders
  • An Integrated Field Service Management (FSM) Solution – Utilities must have an integrated field service management with their asset management system to improve efficiencies in day-to-day operations such as providing accurate information to technicians, real time data updates, and crew optimization etc.
  • Move to strategic asset management system - This is a top-down function of setting a performance specification for each major operating unit, identifying the critical components of performance, and systematically improving the key controllable variables of operation. Strategic Asset Management involves managing the capital investment towards a long-term program of increasing the ROA . This will help the utilities to move to operational reliability
  • Continuous improvement plan for asset management strategies – Once all the above steps are implemented then a core group must be formed to track the benefits and suggest improvement on quarterly basis. This will help to redefine strategies which are not performing as per business benchmarking.

Asset management strategy can be a combination of solutions and frameworks to link assets and business decisions.

This is an exciting time for the utilities industry with many new opportunities and some challenges too. New capital investment project must be completely integrated with strategic asset management system across the organization. Utilities must consider their asset management strategy to be a combination of solutions and framework to form a crucial link between assets and business decisions. This will also give the utilities an edge over the competition in connected world. They will know in real time whether or not and when they need a capital project or defer CAPEX. Use of digital twin at scale will take these capabilities to a new unthought-of territory in future. I will be explaining the details of five pointers in my subsequent blogs of this series.

Utilities must create a digital roadmap for upgrading their asset management.