One billion dollars in savings. One billion dollars in additional revenue. One billion dollars in added company value. That’s a significant amount for any company, even for a multinational oil and gas company. But such an achievement is no longer a pipe dream for the utilities industry. In fact, it’s becoming more and more feasible with digitization.
What’s more is that these savings are possible today using technologies that already exist, even within the offices of the average oil and gas company, argue McKinsey:
Making better use of existing technology can deliver serious returns—by increasing production, streamlining the supply chain, or reducing engineering time. The computers in the offices of the average big oil company can find an additional $1 billion in value, if you let them.
And with such financial gains being readily accessible, electricity, oil, gas, and water companies globally are embracing digitization in the form of robotic process automation (RPA). However, others see digitization as a threat to their business models and are more hesitant to adopt still emerging technologies. In order to shed light on the realities of automation within the utilities industry, let’s first consider the ideological skepticism of RPA within the industry, the possible applications of the software for utilities companies around the world, as well as the value propositions RPA can bring.
Warming up to RPA
Digitization is beginning to gradually unfold within the utilities industry, and professionals in the field are taking note of both the benefits and the challenges of a digital workforce and operational strategy. It’s clear that digital technologies have gained their place in boardroom discussions...but also that utilities companies will need some time to warm up to the idea of implementing automation.
An estimated 60% of respondents in an EY survey "believe looming advances in technology will require their companies to retrain and redeploy existing employees,” while 53% “believe it will create opportunities and necessitate hiring new talent.” But forward thinking about digital transformation isn’t embraced by utilities companies universally. In fact, some have seen and continue to see technological development, including RPA, as a burden. What’s missing among naysayers, however, is the recognition that RPA is certainly an innovation worth investing in, especially for utilities companies looking to boost their core business.
RPA’s value proposition
In order to gain a better understanding of RPA’s true value, let’s consider the technology’s emerging role in the utilities through a handful of specific applications and use cases for companies in the industry. To put things in perspective, take the example of a publicly traded oil and gas company based at the Gulf Coast of the United States with 5,000 employees and $10 billion in yearly revenue. Faced with slow operational processes, inefficient relationship management with partners and customers, and little digital optimization in the back office, the oil and gas company in question used the automation capabilities of RPA to:
Analyze data patterns
By recording and monitoring their actions, RPA software robots collect large volumes of data on a customer’s buying preferences as well as on the efficiency of internal business operations. RPA robots can reveal the time it took to process an order, the number of outstanding transactions, as well as the processes that generated exceptions and required human intervention. While large amounts of data are produced by RPA, they can also be analyzed. The company in question, for example, used RPA to help identify patterns among sensor information and drilling data contained within daily drilling reports. Through RPA’s analytical capabilities, the oil company was able to make better informed decisions for drilling wells and reduce process bottlenecks to increase operational efficiency, improve employee utilization, and reach higher levels of back-office productivity.
Improve accounting processes
Accounting processes are repetitive, time-consuming, and typically require high levels of involvement from employees. Especially faced with these challenges when closing the books on a monthly basis, the oil and gas company used RPA to automate and provide analytical insights on its most fundamental financial accounting processes: monitoring revenue and expense accounts, recording journal entries, reconciling balance sheet accounts, and preparing the financial statements. All this was in addition to the support RPA already provided to the company’s daily Accounts Payable and Accounts Receivable processes. By additionally establishing automation alerts, the company’s finance analysts only had to intervene when exceptions were generated and were, instead, able to focus on more value-adding responsibilities. At the same time, company executives were also able to gain better end-to-end visibility of the company’s finances.
Streamline joint ventures
Oil and gas companies frequently engage in joint ventures with other companies in order to mitigate risk, meet regulatory requirements, and optimize supply chains as well as to share access to technology, capital and resources. Joint ventures can often be an IT headache because integrating platforms from the involved companies is difficult, if not impossible. This is especially the case if the systems and platforms used by the two mother companies are incompatible. Even more so, maintaining disparate applications can be costly and time-consuming. Through its interactions in the presentation layer, RPA is able to bridge various systems to allow for streamlined collaboration between inventory systems, accounting processes, and customer databases — all without requiring a restructuring of the existing set-up.
The future of RPA for utilities
As we’ve seen with the automation capabilities provided by RPA, utilities companies can optimize their operational outputs in the back office through data analysis, improve their accounting processes, and streamline their joint ventures. But as RPA continues to gain traction, one of biggest challenges for the utilities industry will be to overcome the ideological barriers that prevent oil and gas companies from fully embracing the tangible benefits that can already today be leveraged with automation technology.
Managing director of Accenture Utilities, Stuart Brown, suggests that the use and adoption of automation within utilities still remains rather isolated. However:
(...) that will change as more visionary leaders come to understand that data is the currency of the digital future. They will build on the [...] cost savings that automation delivers by applying predictive analytics, machine learning and other technology solutions to create smarter systems, generate meaningful and game-changing insights, and achieve step-change improvements in performance.
While the advanced cognitive and machine learning capabilities are largely still a part of the future, the benefits of RPA’s automation are already tangible now. Rather than being timid about implementation, utilities companies must adopt more ambitious goals for the digitization of their operations. RPA should be embraced with open arms to ensure that the benefits of digital transformation can be leveraged to the fullest extent.
This is a companion discussion topic for the original entry at https://www.uipath.com/blog/industry-solutions/rpa-impact-on-the-utilities-industry