Accurate forecasting could save energy companies millions

Accurate prediction is vital for today's energy and utilities industry as it continues to adjust to an environment of change.

"The industry is beginning to feel the impact of stringent corporate governance legislation, as well as changes to operations and technology," says Peter Venn, Strategic Account Manager: Eskom at SAS Institute, leaders in business intelligence.

"In addition, it is finding data management increasingly difficult as internally its systems continue to become more sophisticated. To excel in this environment, more precise and focused forecasting has become a necessary core competence," he says.

The ability to accurately predict the volume of retail and wholesale demand, along with more accurate revenue projections, can bring significant financial rewards. Improving corporate governance through the same functionality can also significantly reduce risk.

A recent benchmarking study by SAS consulting partner Capgemini - internationally recognised as a leader in the energy industry - calculated that even improvements of 0.5% in forecasting accuracy could yield millions of dollars in annual savings even for small and mid-sized energy companies.

"Additional intangible value can be achieved by improving revenue projections through reduced needs for re-budgeting," says Venn.

"Payback periods for forecasting improvement initiatives are typically measured in months, and the savings are realised year after year."

However, many energy companies find it difficult or impossible to achieve these savings due to a lack of integration, flexibility and functionality in their current demand and revenue forecasting systems.

Two global companies, SAS Institute and Capgemini, have addressed this problem with an innovative new demand and revenue forecasting solution.

SAS for Adaptive Forecasting by Capgemini combines the strengths of the latter's world-class expertise in the energy industry with the former's unrivalled data warehousing and predictive analytical software.

The solution enables generators and energy delivery businesses to reduce risks, increase profitability and provide internal value in the areas of:

* Compliance with corporate governance requirements;
* Portfolio optimisation and pricing strategies;
* Sourcing optimisation and energy procurement strategies;
* Compliance with PUC requirements for integrated resource plan;
* Energy balancing; and
* Customer acquisition and retention.

"Sadly for many, if not most enterprises, the amount of data is growing substantially faster than the value they are able to obtain from the data. Capgemini has been working with SAS and its extensive analytical tools to firmly reverse this trend.

"In fields from CRM solutions to demand forecasting in utilities, Capgemini, with SAS's help, has been able to innovate advanced solutions that drive substantial business value, gaining competitive advantage for our customers. SAS is a great example of a specialised technology company with whom we can partner to mutual advantage," concludes Andy Mulholland, Chief Technology Officer, Capgemini.