Utility Week

UTILITY WEEK | 18TH - 24TH JANUARY 2019 | 19 Finance & Investment T he digital age and disruptive market conditions present opportunities and threats to many current business models. As companies evolve to survive and thrive, CFOs have to balance their traditional role of protecting value with the new requirement to cre- ate it. In utility companies, as with other walks of business, the finance head will need to support their chief executives in forming and driving strategy and making informed board decisions. At the same time they need to ensure "business as usual". That means the mechanics of the day job, including managing risk, compliance and treasury, run as smoothly and efficiently as possible. While they do that, it's crucial they're not worrying about unreliable accounting systems, or out-of-date reporting soware. Only with that reassurance can CFOs have more time and head space to channel their commercial thinking. As a number of CFOs explain in this report, utility boards face difficult choices as they weigh up capital investment decisions against return on investment in a vast array of new tech- nologies, from improving customer engagement, payment processes and complaints, to upgrading assets to protect their networks against growing cyber attacks. With energy and water companies transitioning to low carbon, sustain- able and digital environments, compa- nies need to be able to take informed decisions swily about how to adapt to rapid and constant change and to then implement new strategies. In addition, they need to be able to manage perfor- mance nimbly, constantly monitoring what is working and what is not and redeploy resources accordingly. That's the new reality. But there's an additional challenge: how can finance professionals adapt and sur- vive when new digital technologies are threatening the future of knowledge work? And what does finance have to do to remain relevant, empower the CFO and enable the business to become agile? In our search for answers to these questions, Oracle has partnered with the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) to conduct research on how finance can navigate successfully through today's economic uncertainty and create value in the digital age. Our latest study, Agile Finance Revealed, identified several common traits of agile finance leaders: • They lead cross-functional, inte- grated teams that are centralised in shared services or centres of excel- lence. Empowered by cloud and digi- tal technologies the ever-improving accounting services and efficiency delivered by these teams are driving significant business improvement. • They strive to leverage the full potential in big data analytics and AI to generate the insights organisations need to develop innovative strategies and achieve performance levels that eclipse the competition. • They've developed new skill sets in statistics, data analysis, data visuali- sation, and business partnering to support rapid decision making and performance management. • They are far more likely than other business functions to have fully imple- mented cloud-based enterprise perfor- mance management and are also far more likely to have fully implemented cloud ERP for standardising their accounting processes. What also emerges from our research is modern CFOs appreciate that finance transformation is a con- tinuous journey, and fresh skill sets are needed to lead the way through today's disruptive economy. The new operating model offers genuine clar- ity about the next destination – but getting there will require leadership and continuing innovation within the utility finance function. sector is the changing nature of energy supply. The days of a limited number of suppliers being managed by the grid and network operators has gone, and now com- panies must adapt to their new role of man- aging peaks and troughs on the grid from a large variety of oen intermittent sources. "The sector is changing because of the transition from distribution network opera- tor to distribution system operator [DSO], and while the majority of investment is still the replacement of ageing assets, WPD is also committed to testing conventional reinforcement and developing flexible solu- tions," says Williams. "In 2017, we became the first DNO to pub- lish a costed strategy for the DSO transition. The first year was about creating the founda- tions with stakeholder engagement, equip- ment analysis, trials and close liaison with the Energy Networks Association's Open Net- works project to both determine what DSO means across the industry and to share non- sensitive information with other DNOs." A similar approach is being taken by UKPN's Jenny Harrison. "We want to use open and transparent market mechanisms to facilitate the flexibility we need to manage our network," she says. "If the market can provide the capacity, we need at a more cost-effective rate than building new infrastructure, that is exactly what should be encouraged. "We aim to retain the flexibility in our business model to be able to respond to the evolution of markets associated with storage, EVs and low-carbon generation." Technology will undoubtedly play a large role in the shi to a more decentralised energy system. And again, in a reflection of the widening thinking CFOs are taking on board in an age of rapid development, which Brought to you in association with Utilities and their CFOs can work in a more agile way to embrace opportunities in the fast- changing environment in which they operate. Opinion Vince Smallhorn ERP director, communications, media and utilities, Oracle continued overleaf

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