April 27, 2023
How Ready are You for the Future? IIJA Checkpoint
In February 2022 we posed the question: How ready are you for the Infrastructure Investment and Jobs Act (IIJA)? Now, just over a year later, we think it's time to revisit the question.
To understand how well IIJA was progressing, we did some research, including reviewing several recent industry publications. We found a few notable and worthwhile projects fulfilling one of the primary objectives of this Act: addressing aged and failing infrastructure. However, what we did not see in our search was the number of projects to the scale one would expect given the magnitude of the goals established for the program.
We did find an interesting survey conducted by Itron1 in October 2022. Itron surveyed 75 U.S. utility executives which included mid-level managers or higher who had decision-making input in the electric, gas and water utilities. We found the following points from the survey pretty interesting:
- 69% of utility executives intend on pursuing IIJA funding while 21% do not, and 9% are unsure
- Survey participants are looking to fund projects related to electricity (61%), smart cities (24%) and water (15%)
The Itron survey also found that accelerating existing projects (33%) and advancing strategic initiatives (30%) are among the top priorities for utility executives who are interested in pursuing IIJA funding.
In our research, we also found a site to add to your favorites: NASEO.org. National Association of State Energy Officials created a site Infrastructure Act Resource Hub2 which provides information, insights and instruction about IIJA. NASEO outlines three key challenges associated with IIJA:
- Scale: Although there are some systems in place to process and manage logistics for these sorts of complicated and multifaceted implementation efforts, investments on this scale — totaling more than $2 trillion combined — will ultimately pose several difficulties.
- Complexity: The IIJA does not live in a vacuum. It is one of several programs – including the Inflation Reduction Act (IRA) and the Creating Helpful Incentives to Produce Semiconductor and Science Act (CHIPS) – that consist of numerous initiatives with detailed legislative language that require input from multiple agencies. Under the IIJA alone, more than 45 federal bureaus and 16 federal agencies and commissions will grant funding for 369 new and existing programs.
- Accountability: With so many cooks in the kitchen, it’s hard not to wonder: Who is accountable for seeing projects through, driving them forward and measuring impact?
The challenges above point to why we may have not seen the number of projects scaled to the goals. However, NASEO offered a recommendation we thought was spot-on.
- Adopt a startup mindset: Many programs and projects supported by the IIJA, the IRA and the CHIPS Act aim to be implemented expeditiously. To achieve ambitious goals and navigate complex challenges … embrace a startup mindset — focused on altering market conditions and changing deep-seated behaviors — to think creatively and get things done. The new federal initiatives represent massive investments in America’s competitiveness for generations to come. But their immense execution challenges will call for thoughtful coordination and management.
How to Adopt a Startup Mindset and Get IIJA Underway!
In the past, I was involved with the preparation, processing, delivery and accountability of a few governmentally funded opportunities. I will be the first to admit, it was not an easy task. However, I have also seen the significant benefit received. These programs can be a “shot in the arm benefit” for the utility to secure transformational funding and for their customers to benefit from the transformational investments.
As you can see from the Itron survey results referenced above, a good portion of the utilities are looking to move forward and pursue IIJA funding. They are ready to face the challenges of scale, scope and accountability. As a part of this effort, we would encourage utilities to “think beyond the physical assets”. Start planning how you, your processes, practices and technologies might transform to support the existing and new assets emerging now and into the future. Set the bar to achieve the digital technologies that enable the benefit capture and sustainability of these assets well into the future. Also recognize that one of the key intents of the IIJA is to prepare and train resources to meet the future operational demands. This is an opportunity to enable the next generation of field personnel with improved field capabilities. You can also look to enrich your operational knowledge, safety, training, responsiveness, and performance roadmap now as you approach digital transformation.
If our team at Utegration — combined with the new talents of our Cognizant associates — can help you “get underway” in this journey, please reach out for a conversation.
House in Order – Getting Enterprise Asset Management Ready for the Future!
The IIJA discussion sparked Utegration’s “startup mindset.” There are some interesting parallels that align to actions we recommended in previous articles about how to get your “House in Order” for SAP S/4HANA and digital transformation. Throughout our blog series we have discussed early deliverables to identify, prepare, deliver and incorporate transformation with your S/4HANA roadmap and journey. This journey parallels many of the expectations of the IIJA. It also provides utilities with a platform to take prior assets and transform them to support future generations. Using previous core assets to build upon a proven, yet innovative, technological foundation that will be extensible and flexible as energy, natural resource, sustainability and customer demands change. Wow, quite a challenge!
I thought, given the complexity and diversity of questions, I would give ChatGPT a challenge. So, I asked: How companies can leverage technologies like SAP to increase the benefits of asset management improvements resulting from the Infrastructure Investment & Jobs Act (IIJA)? The ChatGPT response (verbatim):
- Improved visibility and control: SAP's asset management software provides real-time visibility into asset performance, maintenance, and repair data. By leveraging this technology, companies can gain better control over their assets, making more informed decisions on maintenance and repair work, and reducing downtime.
- Predictive maintenance: SAP's asset management software can help companies move from reactive to proactive maintenance by using data analytics to predict when maintenance is needed before failure occurs. Predictive maintenance can increase the lifespan of equipment and reduce the need for costly repairs and replacements.
- Streamlined compliance: SAP's asset management software can help companies ensure compliance with regulatory requirements related to asset management. The software can capture, and store data related to inspections, repairs, and maintenance, making it easier for companies to demonstrate compliance and avoid penalties.
- Improved collaboration: SAP's asset management software can facilitate better collaboration between departments, such as maintenance and operations, by providing real-time access to asset data. This can help companies reduce communication gaps and improve decision-making.
- Enhanced reporting and analytics: SAP's asset management software provides powerful reporting and analytics capabilities, enabling companies to gain insights into asset performance, maintenance costs, and other metrics. By leveraging these capabilities, companies can identify trends and make data-driven decisions that improve asset management practices.
Overall, leveraging technologies like SAP's asset management software can help companies maximize the benefits of asset management improvements resulting from the IIJA. By using data analytics, predictive maintenance, and other capabilities, companies can increase efficiency, reduce downtime, and improve compliance and reporting.
A solid response from ChatGPT. However, there are more perspectives to explore. I would anticipate many of you have been using SAP for 10+ years. You built your functional locations and equipment to a manageable level corresponding to the work order and maintenance activity types, aligning both ‘work and financial’ integration. You have time-based planned maintenance and may use measurement points on some triggering events. You also leverage notifications for asset inspections for compliance and/or triggering events. Nothing wrong with the above, because it moved us from disparate processes to enterprise integration. Now, as you look to the future, how do you move from “enterprise integration” to “digital operations” within S/4HANA? How do you leverage real- or near real-time information in a safe, responsive, predictive, sustainable and compliant digital asset management program?
A House in Order action is to first understand the opportunities SAP or integrating solutions can provide in the S/4HANA platform — perhaps just as ChatGPT outlined! These are the questions you need to ask “now” so you can determine how you will leverage SAP and other technologies to transform your asset management program from “enterprise integration” to “digital transformation”. Once you understand the possibilities, the next step is to identify what actions you can take today for that readiness. For example:
- Rethinking your Functional Location, Equipment and Work Order Structures
- Changing the symbiotic relationship between finance and the work order, with the advances and new capabilities of S/4HANA finance
- Evaluating the asset data quality across not only SAP but other systems and setting a path forward to have the data ready for transformation thoughtfully and not as just a “deliverable” on the project
- Expanding your current asset digital footprint associated with risk, preventative and predictive capabilities – defining these now with supportive analytics
As you begin this strategic process, don’t forget the most important filter: people. Building and enabling the next generation of utility professionals is critical to achieve digital transformation of today’s utilities’ asset foundations. Beyond supporting the spirit of the IIJA, it is just smart business.
Again, if our team at Utegration, combined with the new talents of our Cognizant associates, can help you “get underway” in this journey, please reach out for a conversation.