January 15, 2019
Ask Utilities about their Data Challenges, and They will Come
This article was originally published online on the Utility Analytics Institute site on January 15, 2019.
How to create data solutions for utilities that they actually need
Most people who were around circa 1990 know the quote from the Field of Dreams: “If you build it, they will come.” While this approach worked out for the protagonist in the movie, played by Kevin Costner, it rarely pans out in the business world. And yet, people keep trying.
The idea is that you have a great idea for a company, product or service. You develop and release it into the market. Potential buyers somehow find what you’ve created, recognize the obvious need for it and rush to make a purchase.
One important thing that is missing from this approach is the voice of the customer (marketing is the other). Without interacting with potential buyers, lots of them, and asking them what they need, it’s difficult to fully understand how you can uniquely solve their problems.
Utegration’s “Ask First” Approach
Utility companies began realizing the transformational potential of analyzing the customer data delivered by smart meters and other assets, but found themselves overwhelmed by data lakes.
The data lake architecture is a store-everything repository. Data isn’t classified when it’s stored in a lake because the value is not yet understood. Without knowing its’ worth, building business cases and receiving project funding for analytics’ initiatives is difficult.
Utegration, a utility industry firm providing full service SAP consulting and solutions, began having conversations with their customers about big data challenges. According to Bart Thielbar, the firm’s CEO, “We started talking with our clients about leveraging data lakes, our data scientists and advanced analytics to help them better understand and serve their customers. While this wasn’t part of our core offerings at the time, we recognized this emerging need and that we were uniquely qualified to help our clients.”
The Use Case Approach
The firm started building out their analytics offerings through high-impact use cases. A use case is a set of contextual requirements that captures how a user will interact with a system to achieve a specific goal. Building a use case must start with answering the questions: “Why are we doing this and what value is achieved?” According to Thielbar, “In addition to building new uses cases, we revisit and improve the “why” of existing cases over time, as well as the value.”
According to Sadi Fieldsend, Utegration’s Executive Director of Customer Experience, “Customers want to leverage new tech (big data, etc.) but they don't know how or where to start. As a partner, it is our responsibility to help guide them. What we've created is the ability to leverage our industry knowledge to build use cases that address business challenges with data-driven solutions, involving both processes and technology."
Two High-Impact Use Cases
Building Comprehensive Load Studies
A publicly traded electric utility company experienced an unusually hot summer that translated to increased load and higher than expected revenue. They needed to learn if the revenue growth was truly weather driven (seasonal), or due to changes in consumer behavior, failing energy efficiency programs or growth of its customer base. Being able to understand load is important for asset planning, energy procurement, rate case negotiations and articulating the drivers of financial performance.
Utegration teamed up with data scientists to develop LoadPlanning4U*, a comprehensive solution that analyzes and predicts load. It is allowing the utility to combine data from smart meters, historical loads and weather for different rate classes to normalize the effects of each factor by region.
The results are the ability to develop more comprehensive load studies for operational purposes, rate case filings and regulatory reports, along with improving long-term forecasts.
Looking Beyond the Credit Bureau to Identify High-Risk Customers
Since the universal credit score from credit bureaus is not tailored for utilities, an electric utility in the Southwest region was struggling with the misclassification of customers who posed a high credit risk. Classifying customers correctly is essential to the bottom line. For high risk customers, a higher deposit is requested at the time of enrollment, or a more aggressive collection strategy when the bill is past-due.
Due to the high number of interactions utilities have with their customers, they have access to more data than credit bureaus that may help gauge credit risk including customer payment history, contract history, communications, interactions with the call center, use of web/mobile apps and usage patterns. Utegration developed three models for credit risk scoring to be used at different stages of the customer life cycle as shown below:
These models meld the credit score with utility data and since the scoring process is tightly integrated with the operational systems, operational processes now use the scores from each of these models to assess risk.
These models are allowing the utility to more accurately classify customers than the universal credit score alone. Utegration builds continuous validation into the models, which continues to ensure accurate results. Additionally, the utility has seen an increase in revenue growth by expanding the eligible customer base in the enrollment process through a decrease in misclassified customers.
According to Henry Le, who led the use case initiatives for Utegration, “Use cases like these provide the best opportunity to demonstrate the value of advanced analytics in concrete ways. Not only do they deliver bottom line impact, but they provide utilities with a new way to drive their business. One terrific use case begets another as utilities become data-driven across the enterprise.”
Continuing to Evolve Alongside Customers
When asked about “what’s next” for Utegration, Henry Bailey, the firm’s Chief Strategy Officer said, “As a company, we will continue to put our customer’s evolving needs at the forefront of our growth. We will challenge ourselves to think outside of box and to deliver the next level of excellence.”
“Ask utilities about their data challenges, and they will come,” isn’t a quote that will ever make it to the big screen, but it in the real world it’s this approach that is delivering greater success for vendors and the companies they serve than “build it and they will come.”
*solution name updated since original article was published in January 2019