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July 23, 2013

Utility- New Frontiers and IT Challenges

            The utility entities have been long considered as perennially content. Coming out of the clutches of municipalities / government & getting owned by shareholders has completely changed the game plan. Maintaining revenue with regulated tariff is no more sufficient. The deregulation & consequent emergence of small price players have compounded already precarious condition of old energy retailers.

            Herd of the big retailer are now moving towards alternate pastures. We are witnessing newer business models getting introduced to earn revenue on top of their usual commodity business. Some of you might have seen electric car charging stations in the important city centers. Customers pay subscription fee to avail services of the station & also pays for the electricity consumed. Entities have also started selling small devices viz. Thermostats, equipments to measure individual devise consumption (for washing machine, geysers) etc. They get one time device charges and also regular subscription revenue. The switch towards greener energy is also throwing newer opportunities. They are present in the complete value chain starting from selling the solar panels, to installing, maintenance & even providing insurance. Revenue from services is the current buzzword in the utility business. For instance customers are suggested monthly average utility amount (Budget bills) based on their meter readings from smart meters. Small communities in villages/local neighborhoods are provided the IT infrastructure to manage their bulk energy buying, electricity generated from alternate sources etc.

              These business models are also throwing up new challenges for IT. In fact rollout of these initiatives is often hindered by the current IT capabilities. These new business models require separate billing & other functionalities which cannot be fulfilled by standard utility software packages. Also for these disparate businesses we need to maintain flexible tariffs. Then converging the invoices from all these platforms into Electricity & gas invoice needs perfect synchronizing with the organizational utility heartbeat. The future IT landscape might look more distributed. The billing & tariffs might be processed outside the core utility package & these documents will be imported in the standard ERP system. A step further, utility companies might partner with external organizations to sell products & services and thus need integration platforms. Again full potential of smart grid & meters still needs to be tapped due to enormous requirement of data computing capability. Building solutions for these requirements might require custom software involving higher costs of development & continuous maintenance.

             The large ERP players are slowly responding to the demands of the business. Current utility software packages are usually tightly coupled. In the future versions of the packaged solutions, we are seeing more loosely coupled solutions for

                              a. Flexible pricing & billing for incorporating disparate business models
                              b.Convergent Invoicing with normal utility bills
                              c.Payment handling & Collections
Even if pricing/billing is done outside ERP systems or by external organizations, seamless interfaces are provided to integrate with organizational commodity billing & invoicing system. Recent innovations in in-memory computing capability should be able to able to solve some of the Business Intelligence jigsaw.


         
Still the perennial gap between demands of the business & current IT capability is here to stay. Do share your thoughts on the newer revenue models introduced by business across the globe & how IT suppliers & SI's are responding to those challenges.

July 17, 2013

Touching the Cloud - Part I

Having worked in ERP domain for most of my IT career, I always thought Cloud is hype! While I appreciate various benefits Cloud technology offers, I wondered how can large enterprises, with heavy investment in on-premise ERP landscapes, adopt this Cloud innovation. What happens to their current IT investments? Do these fancy cloud offerings rip & replace their existing on-premise solutions? What happens to current process design and the historical data they have amassed over number of years? In fact I believed Cloud is only for small companies who can't afford to have their own IT infrastructure. I was convinced Cloud is just as distant & misty for large ERP customers as the real clouds in sky! 

However last month, when I was required to prepare for a customer meeting, I broke my myth. I had to propose Cloud adoption options for one of our large pharma customer having highly complex & heterogeneous IT landscape with myriad of ERP & legacy applications. Frankly I was clueless hence I decided to check how SAP plans to address this dilemma.

SAP started the cloud journey in 2007 - that's when they launched the first SaaS solution SAP Business ByDesign targeted towards the mid-size companies looking for SaaS ERP.  After initial bumpy ride, ByDesign got rolling in 2010 with introduction of multi tenancy feature. In the meantime, SAP built a portfolio of cloud based solutions to address the four pillars of business - My People, My Customers, My Suppliers & My Money. These Line of Business (LOB) solutions include Employee Central (EC), Financials on demand, Sales on demand, Sourcing on demand, Travel on demand etc. SAP reinforced its cloud focus with acquisition of SuccessFactors, a SaaS only HCM solution in Dec 2011 and by appointing its CEO, Mr. Dalgaard to oversee SAP's cloud offerings.

In March 2012, SAP announced 'on-demand' availability of SAP Business One, characterized as it's 'most affordable ERP solution for small & growing businesses'. With competitively priced subscriptions offered on monthly named-user basis, this on-demand version has around 50K customers across globe. SAP Business ByDesign is now matured and stable with over 1000 customers. It is positioned for mid-size businesses, professional services organizations and as a subsidiary solution. ByDesign along with Business One forms the fifth pillar of the SAP cloud portfolio - Business Suite.  For large customers, SAP offers Rapid Deployment Solutions - proven industry flavor products; packaged, preconfigured and deployable in virtualized environment. As recently announced in SAPPHIRE 2013, SAP currently has a comprehensive portfolio of Cloud applications with 20+ solutions, covering 60 industries, supporting 168 countries and 34 languages.   

 

It is interesting to note the way all SAP cloud solutions are designed. In contrast to traditional on-premise ERP, user interface is highly intuitive and mobile enabled. It has built in analytics based on social data. All products are loosely coupled and SAP provides end-to-end integration with prepackaged content (SAP iFlows). SAP is leveraging HANA platform to power these cloud applications to enable Google-like user performance. These solutions are designed to connect people, data & documents in 'location and device agnostic manner' to drive better business decisions and actions. SAP customers can pick & choose from best of the breed solutions suitable for their specific business needs, as they want, at their own pace. Customers with specific business problem can start with pointed LOB solutions (eg. Employee Central or Sales on demand) while customers who want to go for one integrated solution for all their business processes can opt for suites (eg. Business ByDesign, Business One). 

 

After all Cloud is not as far-flung as I used to think - SAP is helping its customers to touch and feel the Cloud with a diverse solution portfolio and a clear roadmap. In my next blog (Part II), I will share more about how exactly on-premise SAP customers are leveraging this Cloud innovation.

 

References

SAP Business One Heads Into The Cloud, by Cindy Jutras of Mint Jutras LLC (published Mar'12)

SAP Cloud Strategy and Road Map presentation (TEC102) by Sven Denecken (TechEd Sep'12) 

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