Transforming utility data into actionable performance measures and strategic drivers

Authored by Amanda Lasinski

Utilities have a wealth of data available but may benefit from optimizing how it is communicated to management and/or boards of directors. Often times, utility leadership receive reports blanketed with figures and facts devoid of the context necessary easy comprehension and immediate action. Data displayed as key performance indicators (KPIs), trends and dashboards is much more useful in measuring performance levels, determining improvement areas and driving strategy.

For example, a report stating only total sales and operating expenses for the current year doesn’t allow utility leadership to easily assess performance compared to prior years.

YearSalesOperating expenses
2017$5,000,000$4,500,000

In contrast, a report that adds prior year data for sales and expenses and also includes gross profit illustrates how current year performance compares to prior years. In the example below, positive trends as well as potential issues are readily apparent ― gross profit steadily increased over the last four years but in the current year, it has decreased.

YearSalesOperating expensesGross profit
2013$5,050,000$4,350,000$700,000
2014$4,950,000$4,250,000$700,000
2015$5,100,000$4,300,000$800,000
2016$4,900,000$4,050,000$850,000
2017$5,000,000$4,500,000$500,000

To further delve into this data, create a KPI for the operating ratio, a measurement of an organization's operating expenses as a percentage of revenue. The formula (1 - operating ratio) represents the gross margin available for debt service. This KPI explains at a glance how a utility performed in a given year, allowing leadership to set targets for improvement, if needed. The ratio also could be used to compare to a utility’s own historical performance and/or with other similar utilities.

YearSalesOperating expensesGross profitOperating ratio
2013$5,050,000$4,350,000$700,0000.86
2014$4,950,000$4,250,000$700,0000.86
2015$5,100,000$4,300,000$800,0000.84
2016$4,900,000$4,050,000$850,0000.83
2017$5,000,000$4,500,000$500,0000.90

The same performance data is more impactful when presented in graph:

Now that legwork has been done to expand, analyze and visually enhance the data, concentrate it in a dashboard. This one-stop shop format can summarize goals, trends and KPIs, display comparable peer data, and articulate reasons for the performance level and plans for the future.

For example, the dashboard below includes this key information:

  • KPI name and definition
  • Inputs used in the KPI calculation
  • Metric owner – (who is responsible for monitoring)
  • Metric target – (where does the utility want to be)
  • Metric comparable – (how other utilities compare)
  • KPI trend graph
  • Management’s comments on KPI (explain reason for performance)

With key performance indicators (KPIs), trends and dashboards at their fingertips, utility leadership will devote less time to analyzing data from scratch and more time to the decisions that result in achieving performance and strategic goals.

For more information on this topic, or to learn how Baker Tilly energy and utility specialists can help, contact our team.