As both utility workforces and infrastructure continue to age, asset management takes on an increasingly vital role. We asked Rodger Smith, senior vice president and general manager of Oracle Utilities Global Business Unit, to share his views on the changing face of utility asset management, and the drivers for these changes.
EET&D : The International Energy Agency (IEA) has indicated in its World Energy Investment Outlook 2014 that $740 billion annual power infrastructure investment is needed globally over the next 20 years, with 42 percent of that going to building and refurbishing transmission and distribution networks. What role does the optimization of existing utility assets play in this projected, massive investment?
Smith : Many of the utility assets in operation today were installed in the growth boom of the 1960s to 1970s and have reached the end of their useful life. Aging infrastructure is creating a growing risk for utilities that asset replacement budgets can’t keep up with. Asset optimization is increasingly mission-critical for utilities. However, many utilities are not yet prepared to realize the business value asset optimization provides. As PriceWaterhouseCoopers’ 13th Annual Global Power & Utilities Survey noted, utilities share the view that asset performance improvement is necessary, topping the list of areas for improvement with 73 percent of those utility executives surveyed. Interestingly enough, 60 percent also see improvement needed in asset risk management.
EET&D : Where are the most critical areas for improvement in asset management, in your opinion?
Smith : One of the biggest areas in which improvement is vital is using asset analytics to drive reliability-centered maintenance programs. Here’s why: Historically, utilities have relied upon traditional asset maintenance processes and a run-to-failure approach to many assets. As utility infrastructure and assets continue to age, the utility workforce is also aging and retiring. At the same time, the utility’s budget with which to maintain or replace those assets has continued to decrease. Retaining a manual, reactive approach to asset management, in the face of these challenges, increases the risk to asset reliability and operational efficiency, and typically leads to higher costs to the utility, as device failures occur that could have been prevented given more timely maintenance. We have all seen examples of catastrophic failures of critical utility assets make the front page news headlines and lead to regulatory inquiries and political scrutiny of utility processes.
EET&D : So how can technology enable utilities to avoid such risk?
Smith : Historically, data has resided in utility department silos. In order to be able to look at assets and asset maintenance in a holistic way, better centralization, visibility, sharing and analysis of asset data across the enterprise is needed. This is particularly useful for investment and risk planning with regard to asset replacement. Let me elaborate: Asset management and maintenance have always been a balancing act between efficiency (i.e., the cost of providing the equipment) and effectiveness (i.e., the availability and efficiency of the equipment). Each utility approaches that balancing act differently, but the essence of most utility maintenance strategies is to optimize the availability of the assets against the cost constraints of providing that availability. Therefore, the more robust the enterprise data is on those assets, the better the decisions on best actions for particular assets can be.
EET&D : You mentioned asset management as a balancing act between efficiency and effectiveness. What do you see as the fulcrum in that balance?
Smith : Again, every utility approaches that balancing act differently. But both automation and analytics can play important roles in the balancing act between efficiency and effectiveness. I mentioned earlier that manual, reactive processes can increase the risk to asset reliability. In a more proactive approach, taking action on the right asset at the right point in time – or ‘right work/right time’ management – is made much easier. By using analytics to identify prevailing trends in usage and asset health, utilities can better balance the availability of assets against the cost of providing that availability. For instance, utilities can leverage detailed usage and weather data to assist in identifying overloaded transformers.
As well, this type of actionable information can be used to better prepare field employees for specific repair/replacement situations. Every year, utilities are faced with difficult budget cuts to capital and maintenance programs in order to maintain corporate financial targets. With asset risk management and asset investment planning techniques, utilities can know exactly what the risks of such cuts in order best manage and minimize their impact.
EET&D : So asset risk management becomes a focus on asset optimization, rather than run-to-failure and replace?
Smith : Yes, precisely. Proactive work reduces asset failure rates and drives down the cost to operate each asset. For example, costs are reduced and reliability is improved by scheduling proactive work during normal business hours instead of being a reactive after-hours call-out due to a failure. If you add automation to this equation, possible now with smart sensor and control devices all along the utility’s infrastructure, real-time asset analysis also becomes part of the asset management toolset. Advanced asset risk analytics can correlate the appropriate data from across the enterprise (specific sensor data with advanced metering data, for example) to provide immediate prescriptive maintenance work requests, effectively mitigating a problem while it is still minor. Use of smart sensors and related real-time communications is growing at an exponential rate as costs decrease with the evolution of the technology. Many of these smart devices come IP addressable and wireless connected, creating an Internet of Things (IoT) that a number other industries have been using for years to drive operational performance. Utilities are just starting to leverage the sensor technologies.
EET&D : But smart devices create an additional wrinkle to traditional asset management approaches, don’t they?
Smith : Yes, in the sense that manual approaches to asset management have become even less effective. Smart devices do require new field maintenance processes like device configuration and firmware updates. However, automated device management processes (like the automated updates on your smart phone apps) can reduce the need to put more people in the field to accomplish this new work. Much like the physical assets, smart devices must be managed across their lifecycles to avoid failures. Say one of your device vendors notifies you of a critical security patch to the device firmware. Is there a process to get this update tested, installed, and documented to support a regulatory audit? Operational device management does that and can serve as a utility’s automated lifecycle management and maintenance shop, analyzing data in real time to swiftly identify and proactively adjust, update and repair security, performance and compatibility issues as they arise.
EET&D : You mentioned earlier the issue of an aging utility workforce. Is there a way to capture this field and equipment knowledge before it is lost? What about best practices?
Smith : Absolutely. Our teenage kids and new hires are showing us how cool technology like GoPro cameras and Google Glasses can be used to capture and display information. In the utility we are finding these can be great transition technologies for knowledge capture of the aging workforce and to equip the new hire digital natives to leverage their experience. For example, a senior crew member can video capture complex maintenance procedures from a camera mounted on his hardhat. Mobile workforce and asset management technologies can store these procedures and play them back for the new hires to assist them as they do their work. Other things such as internal social media interaction with peers as they do their work can help less experienced crew members with questions or issues that might arise.
EET&D : Utilities aren’t known to be early adopters of new technology. Are they ready for all this?
Smith : Not all of them. But many are realizing we can’t keep doing this the same way we always have. Customers are demanding more while sustainability and efficiency are reducing utility revenues, putting additional pressures on asset maintenance and replacement budgets. It is going to take real leadership across the industry to make this happen. It’s going to take leadership that is willing to embrace new ways of doing things and new technologies to drive performance like we have never seen it before.
EET&D : What is holding us back?
Smith : Lack of imagination and fear of failure. Listen, I get it that we are in a high-risk industry and people lose their jobs when things don’t go right. Innovation starts with leadership. It’s easy to sit back and keep doing it the way we always have. If we aren’t driving innovation, we are going to fall behind, even in the utility industry, and that’s when customers and regulators start to make things difficult. I like what Thomas Edison said: “Our greatest weakness is giving up, the most certain way to success is to try one more time.”
EET&D : We can’t thank you enough Rodger for taking the time out of a hectic schedule to share your insight and considerable knowledge about driving change in the world of asset management with our readers.
About the Author
Rodger Smith is senior vice president and general manager of Oracle Utilities Global Business Unit. His passion for the opportunities afforded to today’s utilities by changing customer expectations and new technologies is fuelled by extensive hands-on utility experience at Southern Company, combined with utilities consulting experience in positions with PriceWaterhouseCoopers and Black & Veatch before joining Oracle.
