US Energy Utility: Operational Excellence and Sustainable Cost Savings

Accenture helped this US gas and electricity utility identify ways in which the company could achieve sustainable savings by automating, streamlining or eliminating processes.

Within the first 12 weeks, Accenture helped to identify more than 50 initiatives with a savings potential of $123.7 million in operations and maintenance expenses, and capital savings of $44.3 million.

This energy utility is a Fortune 500 company with some 20,000 employees. It supplies gas and electricity to about 4 million customers across several US states.

In response to tough market conditions in 2009 and a projected decline in revenue growth, the utility needed to reduce its overall cost structure to continue to meet stakeholder expectations for financial returns.

To create sustainable cost savings the client embarked on a work simplification program. The objectives of the program were to identify ways in which the company could achieve sustainable savings by automating, streamlining or eliminating processes.

Accenture won the bid to provide management consulting services for this project based on our broad range of experience in multiple functions pertaining to the project. The scope of Accenture’s work covered the three phases of the program (assessment, mobilization and run). The assessment phase included the client’s finance, HR, supply chain, IT, customer, transmission and distribution, corporate services, sustainability, regulated operations, and commercial power functions.

During the rapid, 12-week assessment process, Accenture helped coordinate 200-plus interviews, facilitate 100-plus workshops and collect 5,000-plus surveys. Accenture then compared the utility’s processes with those of 20-plus utilities and 30-plus asset intensive companies of similar size.

Once the opportunities for sustainable cost reduction had been identified, Accenture set up a centralized program management office to help the utility track and realize the savings, rolling out a benefits realization framework that included scorecard tracking, reporting processes, identification of work metrics and work packets. During the project phases, Accenture leveraged our proprietary benchmarks, Operating Performance Assessment and High Performance Utility Model to help increase speed and reduce risk.

Within the first 12 weeks of the project, Accenture helped to identify more than 50 initiatives with a savings potential of $123.7 million in operations and maintenance expenses, and capital savings of $44.3 million. Two months later, scorecards and other templates for reporting status had been completed and rolled out. In all, Accenture helped the utility generate the savings it required, as well as providing the tools needed to sustain these benefits into the future. Over the longer term, the improved and streamlined operations will help the client achieve high performance.

Accenture and the utility have worked together in the past, and this familiarity provided a useful foundation for a close and fruitful collaboration. Accenture was able to field a multidisciplinary team from our CRM, Finance and Performance Management, Talent and Organization Performance, Strategy, Supply Chain Management and Technology Consulting service lines to address the broad scope of functions required to deliver the project. Accenture also had the resources and experience to help the client implement our recommendations.