Beyond ROI, Key Performance Indices and GIS Close Performance Gaps
[Note: This is the third post in our new series about Managing GIS.]
A common question we get from our utility customers is, “What is the return on investment (ROI) for GIS?” The reason is most utilities need to justify the cost of building, upgrading, or enhancing their GIS (e.g., investing in a tablet-based damage-assessment app) or doing the same with their GIS data. That justification takes the form of a financial study that answers these questions: What is the payback period of GIS? What is its impact on balance and income sheets? What is the cash flow for the project?
Utility financial people call these hard-dollar savings. Hard-dollar savings are a common measuring stick by which to judge the merits of an investment.
But there are other measuring sticks, too–especially for successful utilities. These include safety, customer service, number of accidents, and more. You’re probably already measuring these through key performance indices.
Use KPIs to Show the Full Value of GIS
Nearly every utility company, large or small, has a mission statement that addresses at least four major stakeholders: the owners (or investors), customers, employees, and communities. ROI serves only one of these stakeholders: the owners. Yet poor customer service, unhappy employees, and bad press get utility executives fired just as quickly as poor earnings. So how do you show you’re improving service to the customers, employees, and communities, too?
Most utilities have a dozen or fewer critical key performance indices (KPIs) related to the four stakeholders. KPIs help benchmark Company A’s performance against that of Companies B, C, and so on. KPIs live in the company’s balanced scorecard, which nearly every company builds each year. The scorecard includes the company’s current performance, its desired performance, and the gap between the two. The performance gap is where the company allocates its spending. GIS can close the performance gap by meeting the needs of customers, employees and communities.
The key for justifying a GIS upgrade, then, lies in quantifying its ability to close a performance gap for customers, employees, or communities.
Customer KPIs and GIS
What are the most common complaints from electric customers? High costs, sure. Annoying power failures and lack of communication during power failures rank right up there, too. The most common KPI for electric reliability is SAIDI (pronounced “Sadie”). An acronym for System Average Interruption Duration Index, SAIDI measures how many minutes an average customer is out of power during the year. In the United States, the average SAIDI is approximately two hours. (Did you know? SAIDI in South Korea is just 20 minutes!)
Here’s a common example of how GIS can close this performance gap. Let’s say that during their annual retreat, the senior utility managers at Company A set out to improve SAIDI from 140 minutes to 120 minutes (a 20-minute gap) by the end of the budget year. They want–need–to do this because they’ve gotten flak from the public utility commission, politicians, and their customers. But to reduce SAIDI by 20 minutes is tough! It will take a coordinated effort across many organizations.
GIS can help.
GIS improves reliability by providing those who assess outage damage with better information for quicker assessment. GIS also offers sharper situational awareness and better spatial analysis for targeted vulnerability determination.
Employee KPIs and GIS
Another KPI is OSHA-reportable employee accidents. Every gas and electric company posts these metrics on every bulletin board on every floor of every building they own. Justifying a GIS app will include a solid study of how that app can reduce employee accidents. GIS enhances collaboration and helps accident assessment, analysis, and reporting. GIS provides unambiguous location data for critical, dangerous assets.
Community KPIs and GIS
Community KPIs consist of complaints to the regulator, J.D. Power consumer rankings, or environment fines. These often end up being reported in the daily newspaper. And when they do, senior management freaks out.
These community-based metrics are measurable and, thus, manageable.
GIS can identity where customers are complaining. It can show the spatial relationship of complaints to places where the company is taking action. It can even show where bad customer tweets are clustered. If the company wants to improve its community image, GIS can help it specifically target complaints, overall satisfaction indices, and even the number of negative social-media posts.
The Bottom Line
Sure, one could translate SAIDI, employee accidents, or bad tweets into some kind of financial proxy, but that would miss the point. The point is that utilities–like most companies–have to concern themselves with more than just financial metrics. These non-financial metrics are nevertheless measurable and manageable. The key to justifying a non-financial based value is to quantify how much the GIS project will close the gap in one or more of the KPIs. The estimate should be based as best as possible on solid research and benchmarking. This will take some study and certainly some assumptions.
That’s no different from the financial ROI reports.
In effect, the GIS ought to be able to improve those things that are most important to the utility, all stakeholders included. And the tools are already in place to measure the full value of GIS.