Interview with SAP SE’s Stefan Engelhardt

“SAP solutions drive sustainable growth and profitability”

With the industry experiencing a significant transformation owing to decentralisation, decarbonisation and deregulation, new and emerging information technology (IT) and operational technology (OT) solutions are becoming vital for utilities. In a recent interview, Stefan Engelhardt, vice-president, industry business unit utilities, SAP SE, shared his insights on digitalisation, smart grids, internet of things (IoT), cloud and a host of other solutions that utilities can leverage to enhance performance. Excerpts…

What are some of the promising IT-OT/digitalisation-related trends that you see in the power sector today, particularly in power distribution?

Driving effective IT-OT integration is critical for the performance of power distribution utilities today. There are several priority capability areas that IT/OT integration would greatly support – the power sector in general, and distribution utilities  in particular. These areas cover a broad range of key business issues and I would like to highlight the following high-priority areas from a power distribution utilities’ perspective:

  • Advanced asset management processes with accurate data flows from network assets would largely support utilities to monitor asset health and performance in real time. This could enable predictive and condition-based maintenance of critical assets in the distribution network, significantly improving the network uptime. This would enable utilities to take more effective engineering decisions, as well as plan and allocate capital expenditure more accurately and effectively.
  • In the current wave of business transformation towards decentralised generation, the integrated insights from IT and OT data are essential to steer the development of distributed generation processes in order to ensure grid reliability and optimise grid performance.

Many digital business processes require the convergence of IT and OT data and processes. Outage management is a critical example where the seamless integration of real-time information from technical systems with commercial data can leverage significant business value. As an example, smart metering could provide near real-time monitoring of the outage status across the network, supporting distribution companies to quickly respond through proper material and workforce scheduling.

How does SAP view the Indian smart grid space? What are some of the steps needed to be taken to accelerate progress?

The smart grid is not a one-time event but a series of steps and processes in the context of the local attributes of the respective country. With different key initiatives taken by the government, I feel India is headed in the right direction to introduce smart grid infrastructure across the country. For example, India’s focus on increasing the renewable energy portfolio (targeting 175 GW by 2022), the launch of the National Smart Grid Mission, and the large-scale adoption of smart metering technologies (130 million smart meters to be deployed by 2021) clearly indicate that India is taking the smart grid programme very seriously. I think all these initiatives will provide significant benefits and pave the way for the adoption of a holistic smart grid based on the most innovative technologies available today.

Smart grids pave the way for the adoption of innovative business models. Thus, large-scale pilot projects are urgently needed to test various business models and then adapt them to local circumstances. Moreover, the role of regulators is very important to fully realise the objective of the smart grid programme; for example, to test the effectiveness of demand response. The various smart grid initiatives will not only catalyse the deployment of cutting-edge technologies in India, but also provide valuable experiences for the roll-out of smart technologies in other countries across the globe.

The deployment of modern IT solutions could significantly accelerate the roll-out of smart technologies in India. SAP, for instance, has developed a dedicated “Smart Meter Roll-out” solution that ensures optimal planning and execution of large-scale meter installation processes in a geographical context.

What are the new and emerging utility requirements in the smart grid domain? How can these be addressed? 

Countries and regions use smart grids for different purposes such as to reap the maximum benefits and to address the priority requirements at the local level. A successful smart grid programme considers the end consumers as a critical element in the entire value chain. Consumers help balance demand and supply, and ensure grid reliability by modifying their energy usage pattern. This modification should come if, and only if, the consumers are provided with choices that can motivate them with different consumption patterns and behaviour. Furthermore, consumers may also become “prosumers” when they generate their electricity partially with their own infrastructure (such as photovoltaic modules). In that case, the utility has to treat their customers as co-producers with their own commercial paradigms.

These processes involve new technologies, new information about their electricity use, and new forms of electricity pricing and incentives. In my view, this is the most important aspect for successful implementation of the smart grid programme.

In general, for any market, the following key aspects should be addressed, which cater to the very objective of the smart grid initiatives:

  • Integration of electrical, information and communication technology
  • Focus on decarbonisation and decentralised operation: Renewable and distributed generation integration
  • Advanced metering infrastructure
  • Peak load and power quality management
  • Enhancement of the transmission and distribution networks. Fault resilient and self-healing grid
  • Electric vehicle charging infrastructure
  • Customer-side systems, demand response and demand side management programmes.

From the operational point of view, adoption of advanced metering infrastructure (smart metering) across the customer base is the most important step in the entire journey of smart grid adoption. The smart metering initiative undertaken by the government is clearly in the domain of technology innovation and, to make it a success, the country needs a proven and scalable solution that will meet all requirements specific to the Indian power sector. To address this challenge, SAP and Siemens have joined hands and will bring together all the experiences of SAP’s AMI Light House Initiative, which was initiated in the US and Europe 10 years back in order to provide a comprehensive and robust solution specific to the needs of Indian utilities.

 What are SAP’s key offerings for Indian power utilities? What are your plans for the Indian market?

 For over 40 years, SAP’s innovations have helped power utilities transform and achieve the goals they never thought was possible – making more-informed decisions and innovating to lead in new markets. SAP enables the real-time enterprise, empowers new experiences, and unwires businesses. The world’s leading utilities, across every major industry segment, rely on SAP solutions to drive sustainable growth and profitability, and deliver value to customers. SAP offers the most comprehensive portfolio of solutions for the utilities industry, enabling companies to focus their key business processes and activities on assets, operations and customer service, while monitoring risk and compliance.

Specifically designed for the power utilities, our solutions can be categorised as:

Energy supply chain optimisation

The energy supply chain involves everything from fuel procurement and power generation to delivery and consumption by customers. SAP’s solutions under this category are:

  • Fuel supply chain management
  • Energy portfolio management
  • Corporate sustainability

Operation efficiency for plants and grids

 Sound asset management is a primary concern for all utilities. Faced with aging infrastructure, increased regulation, environmental pressures and the demand for renewable energy, utilities must manage asset portfolios with great care. Core solutions under this category are:

  • Asset portfolio and commissioning
  • Asset visibility and performance
  • Asset operations and maintenance
  • Environment, health and safety

 Intelligent grid

Constrained by finite resources and challenged by climate change, steadily growing demand, and an aging infrastructure, utilities must also respond to tough new energy policies and demand-side activism. This includes:

  • Smart meter data management and operations
  • Demand side management
  • Grid data processing and analytics
  • Energy and environmental resource management

Customer experience

 SAP has the most comprehensive Billing and CIS product offering in the market and has achieved a rare feat of maintaining its leadership position in Gartner’s Magic Quadrant consecutively for the twelfth year.

To gain a 360 degree, real-time view of customers to enhance service, marketing, and sales, and satisfy empowered and connected customers by responding to their requests fast and efficiently via the channel or device they prefer, SAP’s solutions include:

  • Sales and customer service for residential customers
  • Sales and customer service for commercial and industrial customers
  • Bill-to-cash management
  • Omni-channel commerce and subscription billing

Apart from the above application portfolios and the back-end Digital Core solution, the following technology innovation solutions drive change and help utility companies meet complex business needs.

Analytics and big data

Using breakthrough software such as analytics solutions and the SAP HANA platform, utilities can maximise the return on assets. For example, SAP HANA in-memory technology supports tracking and evaluation of plants and equipment in near real time to optimise maintenance strategy.

Mobile

SAP mobile apps give access to critical information anytime, anywhere, improving productivity and streamlining operations.

IoT

SAP Leonardo provides a highly innovative IoT portfolio that extends SAP’s digital core with adaptive applications, big data management and connectivity to enable new business processes and realise critical business use cases for the utility’s operation. This also includes the usage of artificial intelligence (AI) and machine learning capabilities for industry-specific core processes.

Cloud

Cloud-based software from SAP and its partners provides new ways for utilities to run their businesses better and faster. Pay-as-you-go solutions reduce costs and risks, while ensuring flexibility, scalability and integration across end-to-end business processes.

Apart from the above solution portfolio, SAP has a huge ecosystem of partners and start-up communities that complements the various aspects of the power utilities’ business. For example, at the India Smart Grid Week, SAP along with Tata Power Delhi Distribution Limited and our partner Choice technologies launched the “Choice Revenue Intelligence” solution powered by SAP HANA. Choice Revenue Intelligence is predictive analytics software that applies the most advanced AI techniques to detect fraud and theft in the utility industry. It can help Indian utilities combat the issue of commercial losses and support them to curb energy theft, thereby enabling them to reduce aggregate technical and commercial losses.

SAP is already having a dominant position in the Indian market. With the most comprehensive and innovative suites of product and solution, I am confident that SAP will continue to maintain its position and help power utilities to achieve their business goal in this very interesting era of digital transformation.

What are the biggest challenges for vendors and solutions providers like SAP in the Indian power industry?

In the present digital age, access to data and managing that data is driving the growth of power utilities business. With decentralisation, decarbonisation and deregulation, the entire business model of utilities is changing at a rapid pace. Cutting-edge technologies make transformational changes possible that were beyond imagination even a few years back. In this scenario, business demands very innovative solutions supporting the specific needs of a utility, which, in effect, requires a collaborative effort on part of both the utility and the IT solution provider to realise a specific business case. We would expect, like many of our global customers, Indian power utilities will also engage with SAP in a collaborative way, and participate and co-innovate with us to realise their business objectives in an optimum manner.

Cloud adoption is another area which, I think, needs to be re-looked at from the Indian power utilities’ perspective. Many utilities worldwide have adopted a cloud-first strategy to drive business growth in the most agile and cost-effective way. I am sure that policymakers and business houses in this sector will adopt a similar strategy in India in the near future.

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