How P&U is facing up to transformation challenge

Globally, the utilities sector is having a pretty tough time. It is undergoing a massive transformation and needs to invest at least US$16.9* trillion in power supply infrastructure by 2035. The sector faces a delicate juggling act to ensure that hard decisions are made today, so that it is sufficiently lean, clean and able to meet that future demand.

High on the list of priorities is replacing aging infrastructure in developed countries. However, many utilities, dissuaded by market conditions, are confused about where best to invest and are relying on existing infrastructure to get by. Meanwhile, those countries with growing energy needs have no choice other than to build new capacity to meet demand.

Breaking with the past, on budgets with little elasticity, utilities have to wake up to the fact that they can no longer continue with business as usual.

Breaking with the past, on budgets with little elasticity, utilities have to wake up to the fact that they can no longer continue with business as usual.

Of course, one way of improving performance is to emulate or improve upon the standards set by better-performing peers. Such comparative analysis can help utilities to review the processes that will make their transition to new business models smoother, faster and more efficient. Ernst & Young’s Power and Utilities Maturity Model and Architecture (PUMMA) does just that.

It is a repository of global industry data** that defines the processes and process flows across the principal activities at top-performing utilities. Simply expressed, PUMMA is a template for what good looks like. Sitting on top of existing business models, it provides a blueprint for a desired future state by helping to identify potential weaknesses in the existing workings and pinpointing where to put things right, without detours or misguided expenditure.

PUMMA is especially useful in these very traditional businesses where legacy practices, built up over a number of years, need to be unwound, simplified and recalibrated to fit a future-looking model.

And, given the cash demands on utilities, PUMMA can help to take some of the guesswork out of where to target investment.

In short, PUMMA is a tool that helps to get you where you want to be, quickly. It encapsulates the right guidance, practices and process information that will help businesses optimize performance to cope with the industry transformation.

*   World Energy Outlook 2011, International Energy Agency.
** Data is derived from Ernst & Young professionals’ experience with power and utility companies around the world, leading industry practices and information from the American Productivity & Quality Center (APQC), a third-party organization focused on benchmarking, knowledge management, measurement and process improvement.

The complete article was written by:

  • Al Galiunas
    Senior Manager, Advisory Services, Ernst & Young, US
  • Jens Grabow
    Assistant Director, Advisory Services, Ernst & Young, Germany
  • Henry Kinler
    Senior Manager, Advisory Services, Ernst & Young, US

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