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Power Forward with Digital Finance

September 2018

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The U.S. economy is digitalizing quickly: between 2002 and 2016, the percentage of U.S. jobs that called for substantial digital knowledge more than quadrupled, from 4.8 percent to 23 percent, according to the Brookings Institution report “Digitalization and the American Workforce”. “Workers of every stripe – from corporate finance officers to salespeople to utility workers and nurses – are now spending sizable portions of their workdays using tools that require digital skills,” summarized the report.

With this trend has come digital finance, and utilities can no longer ignore the potential benefits of putting the power of technology to work for savings, new revenue, and value-producing activities. One UK energy company recently reported a whopping 200 percent ROI from implementing new digital finance tools (in this case, Robotic Process Automation, which the company used to automate repetitive tasks). Indeed, Robotic Process Automation (RPA) is expected to be a pivotal driver in the digital finance revolution. The global RPA market is anticipated to jump from $629 million in 2018 to $1.2 billion in 2021, according to HFS Research.

Businesses can realize many benefits from workplace automation, such as better decision-making capabilities and increased utilization of employees on value-adding work. Likewise, employees themselves benefit from spending less time on data entry, and gaining the opportunity to learn new capabilities, according to research by specialized recruiter Robert Half, in an article, “Automation: Beneficial for Both Companies and Finance Employees”.

But as a utility, how can you start to embrace the wave of digital finance?

Consider these three tools that bring an immediate ROI and that can be implemented successfully and swiftly: Greenfield Budgeting, Robotic Process Automation, and Data Analytics. We recommend beginning with Greenfield Budgeting – an efficient way to address the need to cut costs – then harnessing RPA and tracking the results with Data Analytics.

 

 

With Revenues Decreasing, Utilities Benefit from Greenfield Budgeting

Greenfield Budgeting – or zero-based budgeting – is especially beneficial because it can completely revolutionize a utility’s financial planning by evaluating all organizational costs from scratch. No budgets or departments are exempt from this process, and justification of all budget line items is required. Based on our experience, Greenfield Budgeting enables optimized budget planning, transparency around spends, and clear steps for process improvements, which can, in turn, reduce costs. Typical cost savings of around 25% can be achieved.

Robotic Process Automation for Better Operations

Robotic Process Automation (RPA) is an ideal tool for utilities as many routine processes can easily be automated, including metering, billing and settlements, consumption tracking, complaint resolution, and customer records management. When bots perform these tasks, staff becomes available for more complex, strategic tasks. Based on our project experience, 30-50% of applicable rule-based finance activities have the potential to be fully automated.

While cost savings typically range from 10-30% when implementing RPA, quality improvement, higher productivity, and better efficiency of staff are some of the other benefits of RPA for utilities and their ratepayers. Additionally, we have helped our clients quadruple their processing speeds with RPA.

Data Analytics Creates Transparency and Accountability

A third digital finance tool that’s especially applicable to utilities is Data Analytics. It can instantaneously reveal tangible opportunities for process improvements as well as milestones reached after integrating KPIs from Greenfield Budgeting and RPA.

Customized data software can collate, analyze and represent financial data in an interactive display. Utilities can then build targeted KPI dashboards and graphics that provide real-time views into how well their teams are meeting implementation, customer satisfaction, and efficiency targets. For example, a CFO might want to evaluate how far their utility is in realizing a $300-million-in-cost-savings effort, having identified improvement measures through Greenfield Budgeting and RPA. From the convenience of their own phone (tablet, or desktop) they will quickly be able to identify the top three KPIs, their degree of implementation, and any direct financial impact on the utility’s bottom line. From our experience, the greatest benefit of Data Analytics is the complete transparency it provides, which ensures greater accountability for and direct control over KPIs.

Get Going!

With triple-digit returns on the table from investment in digital finance and one in two jobs across 32 countries expected to be significantly influenced by digitalization in the near term (according to a report from the OECD) there’s no time to lose and so much to gain from the digital revolution. Utilities are in the perfect position to lead into the digital future, and reap ample cost saving, productivity, and efficiency benefits along the way.

We’ve helped utilities across the globe implement these and other meaningful finance and digitalization improvements. Reach out and let’s discuss the immediate ROI you could experience from these strategies.

 

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