By Sharon Allan, President, Elster Integrated Solutions
Like most industries, the utility marketplace has entered a time of profound challenges. We are all living through a time of economic uncertainty, changes in the global financial markets, and continued technological innovation. The most forward thinking utilities and suppliers understand that to meet these challenges, each organisation must transform not only its core business processes, but also the fundamental business philosophies on which those processes are based in order to be flexible to deal with rapid change.
Our company, like many others, has embraced change and has found the key principals of transformation important as we have set our course for peak performance in delivering customer systems. This article examines the business transformation of Elster, a smart metering and Smart Grid systems and solutions provider.
By 2004, Elster possessed the technical savvy to develop one of the first and most flexible fixed network mesh Smart Grid systems.
To effectively deliver the consulting, technical services, and support needed by its utility customers, Elster began to re-think and re-work its business processes and organisation to meet the emerging needs of utilities and its rapidly growing solutions business.
By adopting the five principles of Business Transformation, Elster has emerged as an agile and integrated enterprise, focused on efficiently and effectively meeting its customers’ needs. These five principals, and Elster’s use of each of them, are discussed below.
- Plan and Design
- Enable and Evaluate
- Sustain and Internalise
ENVISION THE END RESULT
True business transformation requires cooperation from every group, business discipline, and employee. The vision for deep, long-term change needs to be clearly articulated, consistently supported, and driven from the top—from the CEO, the president and the rest of the senior staff.
To develop our vision, Elster took a fresh look at the emerging concerns and interests of utilities and their consumers. We saw utilities endeavouring to keep electricity costs in check, while addressing a multitude of infrastructure, fuel cost, and environmental issues. We also saw a growing awareness at the consumer level regarding energy conservation and carbon “footprint” reduction. We wanted to help utilities respond to these challenges through the use of smart metering and Smart Grid solutions.
Electricity, natural gas and water facilitate and sustain our lives and business activities. We depend on these commodities to be there when and where we need them, at a price we can afford. Elster sees its role as being much more than just a reliable purveyor of precision meters and metering technologies. We believe that Elster, as a partner to the utility industry, helps manage the necessities of life — a responsibility we take seriously.
Our fundamental mission and vision is to embrace this responsibility. To do this, we brought together the best of Elster’s multiple businesses under one umbrella and called it “Elster Integrated Solutions (EIS).” Our focus on integration enables us to offer our customers a cohesive, multi-faceted, solution set — regardless of which aspects of data collection and management, or associated technologies, the customer might currently be exploring or is committed to deploying.
By envisioning an enterprise which would best serve the wants, needs, and expectations of the changing energy and water markets, we took the first step to reshape Elster as a critically important partner for all utilities and their consumers.
In 2007, the launch of EIS Australia advanced the company’s footprint in the global AMI market as a premiere provider of smart metering systems solutions. Headed by General Manager Mike Kenyon, Elster entered this new market segment with expanded smart grid solutions aimed at helping utility customers meet their growing information and resource management needs.
“The formation of EIS Australia demonstrates Elster’s commitment to the region and continues its global objective of delivering an integrated solutions plan for water, gas and electricity applications,” said Kenyon.
Mike Kenyon has more than 25 years of global management experience and is responsible for the operating performance of EIS for Australia, New Zealand and surrounding areas.
HONESTLY ASSESS YOUR CURRENT PROCESSES
By definition, business transformation is an attempt to radically change the current mode of business operations to achieve breakthrough performance improvement. This kind of improvement does not come from merely making progress around the edges. Rather, only dramatic change can lead to significant improvement and real results.
Most businesses are full of transformational opportunities, but taking advantage of these opportunities requires a focused commitment to a specific range of actions in order to be successful. The selected strategy should enhance efficiency and effectiveness, possibly reduce costs, and be measurable and outcome-oriented. Senior executives need to weigh competing opportunities and prioritise work so that teams charged to implement the strategy can properly allocate available, and sometimes scarce, resources.
To make its “integrated” vision a reality, Elster began with a serious self-evaluation. We looked at what we did well. We looked at gaps and weaknesses in our system and our services. We evaluated the threats we were facing in the marketplace and our vulnerabilities.
We discovered that we had fragmentation in some areas. While we had the experience, skill-set, technologies and processes to successfully deliver Smart Grid solutions, we were not fully leveraging our extraordinary abilities into a whole greater than the sum of its parts.
To effectively deliver end-to-end Smart Grid solutions, we knew we needed an organisation that was not divided into functional or departmental silos. We needed to establish a more cross-functional way to efficiently and effectively design, build, deliver and service our product.
PLAN AND DESIGN THE NEEDED CHANGES
After a thorough self-assessment, the next step in our business transformation was the design, planning, and implementation of the needed changes and the metrics that would enable us to measure the success of the transformation. For us, identifying the need for change was easy. The real challenge was in managing the transition effectively.
Our goal was to work within a well-defined, but loosely coupled, network environment that would enable our customers to migrate toward future solutions as they become available. Essentially, we wanted to “future-proof” our customers’ investment. As we designed and rolled out our “solutions roadmap,” we embraced a service-oriented architecture. Our Integrated Solutions (EIS) team was formed to execute this transformation.
The focus of EIS is to develop, sell, deliver, deploy and support automated meter reading, advanced metering infrastructure (AMR/AMI), and Smart Grid system solutions.
This transformed structure enables us to better serve our utility customers as they invest in state-of-the-art information and communication technology to support their strategies, business processes, shareholder value, and customer satisfaction. Because of this structure, we can easily collaborate with the utility as it addresses the many crossfunctional process changes that sophisticated metering brings to their business.
This transformed structure enables us to leverage our 170 years of metering excellence with a new building-block systems approach — resulting in a unified focus on the needs and delighted satisfaction of our utility customers.
ENABLE AND EVALUATE THE TRANSFORMATIVE CHANGES
Depending on the degree of transformation desired, and the resources and time available to support the effort, organisations will choose to standardise, simplify, and/or streamline their processes. Optimal transformations often require a blending of these options. A complete reorganisation will probably require the elimination of organisational silos and the formation of cross-functional teams. The following paragraphs describe these options and how Elster has employed them.
Standardisation facilitates business functions by defining “how things are done” to ensure consistent quality and high performance across an organisation. At a company as large as Elster, with its many divisions (electric, gas, water, systems), standardisation ensures efficient solutions delivery. One example of our dedication to standardisation is in our deployment of a single Enterprise Resource Planning (ERP) application with common standards across all of our North American divisions.
Simplification and streamlining of an organisation’s rules, methods and processes is key to driving transformational results. Like many organisations with a long history, Elster has many legacy rules and procedures. Some are externally imposed by our customers, regulatory and standards bodies, or by law; while others are self-imposed and may contain elements which are no longer relevant.
It is often difficult for an established organisation to look objectively at its long-standing business procedures. As a new organisation, EIS took the opportunity to scrutinise and rewrite many rules and processes when it applied for ISO 9000 certification for the systems and project delivery business. Several audits later, these streamlined processes are proving their worth—they are easy to maintain and yield excellent results. In another example of our streamlined approach, EIS has embraced Information Technology Infrastructure Library (ITIL) best practices as the foundation for our IT infrastructure, development and operations.
Silo elimination is very challenging for many organisations. Most business entities are organised around functions such as finance, logistics, procurement, human resources, manufacturing, engineering, sales and IT. Each functional manager builds his or her staff to optimise that function, with little regard to the upstream and downstream elements of the end-to-end process delivery.
By unifying Elster’s focus around customer delivery, EIS and the larger Elster organisation have been able to successfully focus on end-to-end solution delivery. To align our management team, incentives were created that make success dependent upon customer delivery and customer satisfaction.
Evaluation ensures that the transformation goals, as established by the vision, are met and any variances from those goals (including schedule, cost, or performance) are identified.
To ensure that we continue to track to our business transformation objectives, Elster uses a wide range of selfevaluation tools and methods including ISO 9000 processes, a “gate” process for new product releases, a balanced scorecard, and financial metrics.
Our overarching goal is to provide excellent end-to-end consulting, technical services, and support for our AMI and Smart Grid customers. Our customers continue to be highly satisfied with our products and services. Today, we have more than 45 customers on long-term maintenance contracts, and at least 20 new systems being rolled out. Our customers know we are committed to their success and are responsive to their needs. Every one of our customers is willing to act as a reference for other potential customers, to host a tour of their system operation, or to brag a little about their Elster system at our User Group conferences.
SUSTAIN AND INTERNALISE THE CHANGE
(NO BACKSLIDING TO THE “OLD DAYS”!)
Once a transformational project has been selected, deployed and found to be effective, it needs to be reinforced so that people do not revert to the old way of doing business.
To ensure continued success, business transformations may involve a continuum of process and policy changes, staff training, facility improvements, and a realignment of organisations and roles with the objective of increasing business value.
At Elster, we give training a high priority. The training room at our Raleigh headquarters is constantly booked with classes and webinars for employees and customers. When the pace of industry change, and responsive company growth, is significant year-over-year, adequate training is especially important.
Our top management is visibly supportive of transformational change and takes specific action to ensure that every employee and process is on track for success. This commitment is evidenced by: quarterly “town hall” meetings with the entire company; an alignment of individual and organisational incentives with business objectives; and, semiannual employee performance evaluations.
SUCCESS IS THE BEGINNING OF PEAK PERFORMANCE
In summary, business transformation is never easy, but it is doable, and it is a worthy goal. The guiding principles outlined here are the basis for effective business transformations and can be used individually or in steps. When these principals are combined with the focus and dedication of all stakeholders, meaningful change is possible.
The imperative for business transformation has never been greater. In this time of economic crisis and intense budget pressures, businesses and utilities require efficient and effective operations as well as greater transparency and lower costs. Aggressive implementation of business transformation, such as that underway at Elster, will increase the opportunity to yield measureable benefits in terms of efficiency, effectiveness, and overall cost savings.
As a result of our business transformation, Elster is better positioned to help our utility customers, and their end-user customers, meet the energy challenges of the future through the provision of advanced metering and Smart Grid system solutions and services.
Since launching its EnergyAxis System in 2004, Elster has shipped more than two million communicating endpoints (fixed network AMI and HAN equipped electric, water and gas meters as well as demand response devices and sensors for the smart grid) to more than 60 utilities throughout the US, Canada, Central America, the Caribbean, Australia and New Zealand.