The energy sector supplies the entire world with enough power to live and operate. Thermal power plants, hydroelectric stations, NPPs, solar batteries, geothermal plants – all these facilities produce energy by converting other resources such as oil, gas, water, wind, etc. In the majority of countries, the energy industry is a top-tier market sector which often is oversighted by governmental bodies. That’s why a reliable managerial approach is necessary for all teams, so a solid ERP for energy company should help greatly.
But wait, what’s an ERP at all and how it can be used in the energy industry? After reading this article, you will be able to answer all questions related to enterprise software in energetics. Even if you don’t know about ERP solutions at all, we will guide you through the topic from the most basic stuff like ERP definitions to benefits of the applications for strategic development of businesses. Take your time. The described products are pretty costly, so you definitely want to explore them carefully before making a purchase.
Critical challenges in the energy industry nowadays
Let’s begin with the current state of the energy sector worldwide. With the growing panic about global warming and the increasing popularity of sustainable development ideas, energy companies have to adapt to new conditions all the time. Smart meters and rooftop solar panels, geothermal stations and emission trading – new energy-related stuff appears regularly, so it’s crucial to evolve and keep the company’s stability.
Thus, take a look at major challenges which appear in front of energy teams worldwide:
- Renewable energy. While Norway has almost 98% of renewables share in the national energy production, leaders like China and the US has only 26% and 17.7%, respectively. The switch to renewables is one of the biggest challenges today.
- DERs and DSR. Distributed energy resources combined with the demand-side response allow ordinary people to sell energy back to the system. This is popular now in Scandinavia, for instance, but other regions can benefit, too.
- Resilience and grid structure. Disasters and poor management lead to catastrophic consequences such as shutdown in Puerto Rico after Maria’s strike in 2017. It’s necessary to modernize grids, make them more stable and efficient.
- Cybersecurity and digitizing. It’s impossible to avoid digital transformation today. Various businesses implement software solutions to manage workflows, so they should remember about hackers and malware.
- Governmental regulation. Despite governments can barely set prohibitions or orders, they have an international impact on the energy market. Remember, for example, the Kyoto Protocol which focused on emission control.
Over the next years, we can expect more transformations in the energy sector. Renewable resources will increase their share, modern tech inventions will reshape the industry, and digital/online tech will blur the line between real energy and the Internet. In this case, good ERP software for energy company is required to keep a strategic advantage. Further, we will check how applications can help achieve business goals.
ERP for energy business key facts
The industry excursion is over and we can proceed to the main topic. For higher convenience, we’ve split this section into three parts focused on ERP understanding, ERP types, and ERP importance. In every part, the software is reviewed in terms of its general features and, particularly, its relations to energetics.
Energy ERP definitions
Overall, average ERP for energy company is a software platform which combines several applications (we will call them functional modules) integrated through the common database. It allows to connect various business processes and make information easily accessible for different parts of the team. Especially, ERP apps are good for MNCs which have to manage numerous branches all over the world.
Globally, companies which create and sell ERP for energy business list dozens of definitions trying to convince customers that their vision is the only true. It’s better to be a bit skeptic about commercial decisions. Here are three ultimate ERP characteristics which define almost any enterprise system including energy-related ones:
- Integration. All modules and data packages must share common standards, be connected to each other, and meet the main goal of business optimization.
- Accessibility. Information about core processes, tasks, resources, clients, and other links of the company’s workflow must be always available for related employees.
- Timeliness. Applications must operate in real time with regular updates of tasks’ status and fast execution of all requests.
Still, if you’d like to check reputable sources, look at the Gartner’s definition of ERP.
Bonus: don’t confuse ERP with ErP! The first abbreviation is our point of interest, the software for enterprises. The second one stands for energy-related products – various things which don’t use the power directly but affect the energy usage, e.g. windows, doors or taps.
Types of software
But that’s not as simple as you can think now. While the global idea of an ERP software for energy company should be clear, there’s another point to remember – differences between applications.
In terms of development, there are two big types. The first one includes prepackaged applications which are built once and then distributed to different customers. These ERPs for energy company come with traditional features which are accepted by clients and get proven efficiency. However, you are likely to finish unsatisfied with the software because of too high price and redundant functions or, instead, too limited power of apps.
On the other hand, we have custom products. They are fully unique because developers create them from scratch. With custom apps, you can install everything you want from simple accounting tools to giant catalogs for all types of clients. Moreover, you can order a minimalistic application with only basic functions if you don’t want to overpay. Generally, custom products are more flexible but take more time until the final launch.
Apart from this big classification, you can find other differences:
- Price: with fees, license costs, quote-based payment or free.
- Deployment: on your server or in the cloud.
- Size: for SMBs, large enterprises or governments.
The need in ERP system for energy company
With enough knowledge on ERP ideas and differences, we can move to the main question: why use ERP for energy company at all? Each entrepreneur should answer this question independently because there are several reasons for software implementation.
Nonetheless, we have some insights for you. Firstly, ensure that the company suits the ERP vision. In other words, your business should be somewhat global, for example, with two or more departments which require a strong connection. The thing is that small companies with only one branch can be profitable without ERP apps but more global facilities require some kind of in-system cooperation.
Plus, you want to explore the brand’s strategy. What are your current goals? What are the plans for expansion? Will you need more resources and, respectively, more managerial time to control them? By answering these questions, you will be able to define exact modules of ERP and extra services such as upgrades. For example, ERP for energy business can come with functions focused on long switching period for smoother renewables introduction.
At the end of the day, it’s crucial to know your goals and capabilities. Some companies do well without ERP but other businesses need this type of software urgently. Remember to conduct previous analysis to understand the potential benefits and risks of ERP implementation.
Necessary functions of energetics ERP
We will talk about the benefits a bit later. Now, we’re going to discuss functional areas of energy ERP or, in other words, software modules. First of all, modules cover general features such as accounting, project management, scheduling and dashboards, contracting, execution, warehousing, sales, etc. Long story short, each business process which you can imagine also can be presented in the ERP structure.
But what about more industry-specific functions? Modern ERP for energy company should represent five key areas to be successful now and in the future.
1. Asset management
In the energy industry, even minor players depend on assets highly. Power plants building, energy grid maintenance, even analysis of the existing network – each process requires accurate tracking and management. Thus, proper project planning module combined with activity/tasks tracker and reporting system for backward analysis should benefit energy teams.
2. Geospatial planning
The second uniqueness of the energy sector is its reliance on geography. It’s impossible to manage data without binding it to spatial points such as locations of plants or regional energy distribution analyzed in the scale of city or state. The connection between assets and geospatial data leads to higher complexity, so a solid GIS module is also desired.
3. Graphical engineering
Diving more into the idea of assets importance, we should mention that a good ERP system for energy company should also facilitate engineering. With visual real-time tracking of orders, usage of materials, building, and maintenance, applications can help employees in understanding the process and spotting weak links just in time.
4. Outage management
For energy corporations, shutdowns and breaks are one of the most painful issues. When a given plant doesn’t work, the company-operator doesn’t get money and also has to spend resources on fixing problems. With a single system which connects assets, geodata, and trouble tickets, the company can solve these tasks much faster.
5. Services for customers
Finally, the energy sector’s feature is a wide range of clients. Companies contact both other companies such as distributors or builders and individual customers like end users. Governments often cooperate with energetics businesses, too. Thus, proper CRM services can greatly enhance interactions with clients and lead to better brand reputation.
Strategic advantages of ERP software for energy company
ERP systems will benefit your business if implemented correctly. For this, you should invest in prediction analytics to understand which product type is the best for your team and which consequences its implementation will have. To get the maximum of any ERP app, we suggest cooperating with custom development companies like ours. As well, the exact list of possible advantages can help you to realize benefits.
From the Panorama report for 2018, we can see that 80% of enterprises which have installed an ERP system have higher information availability now. 55% of them face better data reliability and 44% get improved productivity and lead time.
Overall, the benefits of ERP for energy business are as follows:
- Compatibility with third-party apps. You can find suppliers or distributors to manage resources and expenses more efficiently almost without effort.
- Improved training for new employees. ERP apps are great training grounds for new staff members as people can get ideas of core processes using a single system.
- Risk management. Apps provide exhaustive information on potential risks including ones related to disasters, so you can design emergency plans in advance.
- Simplification of big tasks. For large multinational corporations, ERP products handle tech question, currency conversations, taxation, and business rules.
Not to mention elaborate project management and great cost reduction thanks to optimized manufacturing, maintenance, and customer experience.
Traditionally, the last guide’s section covers general questions on the described topic. Our FAQ is anti-forgetting means. Just explore the next answers to learn about key article’s insights.
What is an ERP for energetics?
In the energy industry, ERP doesn’t differ too much from other sectors. This software is designed for enterprises which want to optimize in-house operations and interaction with external teams. Automation feature is widely used, too.
Why use ERP for energy company?
For instance, ERP can help you to manage assets, connect them to spatial data, predict outages, and deal with them. With these applications, data management becomes more convenient and simple which is important for energy companies.
What are pros and cons of energetics ERP?
First and foremost, the software has a great potential to boost the brand’s reputation and profitability. As for disadvantages, ERP systems are usually large, so they take a lot of time to be implemented and also feature high expenses.
How to find the best ERP software for energy company?
We have a universal recommendation: explore both your needs and market conditions. When you clearly realize what the company requires and how to reach the set of goals, then you can find the right vendor or a developer to create suitable software.
What is the total cost of ERP?
The final cost depends on the project scope and the number of modules installed. Prepackaged software comes at prices from $40 per month per user or from $1,500 per license. For quote-based apps, prices vary between several thousand to several million.
Custom development approach
What’s the final conclusion, you may ask? We can repeat this statement once again: custom ERP software for energy company is better than out-of-the-box applications because you can easily tailor them to your objectives. Despite custom development features higher initial cost and longer SDLC, it provides for optimal results. Especially, this is important for energy teams because they have to invest carefully and consider all the risks. If you’re interested in this type of development, read more about our team.