Global VP of Innovation and New Business Models at SAP
Industry Business Unit, Utilities
Orchestrating the future of energy — How utilities companies are using technology to manage the energy transition
“All around the world, people now have great ideas to change the global energy system, but the complexity behind making that change can feel endless,” says Markus Bechmann, global VP of innovation and new business models at SAP, a market leader in enterprise application software that helps companies of all sizes and in all industries. “That’s certainly true in utilities, where the stakes are high: For example, we must reduce the carbon footprint and switch to renewable energies, manage millions of decentralized energy assets, balance the demand and supply in the power grids with increasing volatility from renewables, manage the data avalanche coming from more and more connected devices, and more. There are tremendous challenges to change the energy system. But I feel extremely privileged to be helping make this change become reality.”
Before joining SAP, Markus Bechmann worked as a consultant with Management Engineers and PwC. During a recent conversation from his home office in the southwest of Germany, he discussed his vision for the future of utilities, as well as the broader energy revolution he expects to see in Germany and beyond.
What’s your main focus at SAP?
My team — and our customers — are working on the global level to help utilities companies use intelligent technologies for new business models and energy services. As the global market leader for commercial solutions in the utilities industry, we constantly enhance our own solutions to optimize existing processes and enable innovation. At the same time, we work with a large ecosystem of innovation partners. A recent highlight of my work was the launch of an SAP.iO startup cohort for utilities. After screening more than 100 energy startups, we selected seven of them and built end-to-end integration use cases to deliver innovation even faster.
How are you seeing the digital transformation play out in the utilities sector?
The agile world that has come with cloud computing and digitization has brought a lot of change. So we’ve really focused on finding balance in how we take our established installed base into the new world — to have, on the one hand, stability and scale, and on the other hand, the flexibility and the speed to have faster time-to-market. In several design thinking rooms, I saw a slogan on the wall: “Fail often and early!” This is certainly a good attitude [if you want] to be creative and test new business models, but it’s probably not the best motto when you’re responsible for the operation of a power grid. Therefore, we need to manage both speed and stability.
In what ways are you seeing new technologies emerge?
I think in IT we’re seeing new technologies emerge in two ways: first, for our own solutions that we are providing, and, second, to give our customers greater flexibility to do their own innovation. For instance, we’ve started using new AI technology in one of our core products, the meter-to-cash process. So you have your energy meter and your water meter in your home. Then the meter data goes to the utility company. Well, we can now enhance that process, by using machine learning, to check the meter data and see if there are any potential errors or inconsistencies that need to be checked before a bill goes out. Or, in another example, with the cloud, our customers and partners can now use data from our SAP systems along with new technologies to build their own lean applications on top of our cloud platform, which allows for flexible innovation that can be scaled up easily when the new business is growing.
What about the move toward renewables? How is that affecting your work?
In many ways, we’re now in a completely new world and a completely new business model for the established utilities players. As we see ongoing decentralization of the industry and we expand what we call the “Internet of energy,” we’re getting more and more sensors into the power grids, with really large amounts of data going to the utilities companies. So as we make the grid smarter, we can still balance the energy supply of the rising number of decentralized energy resources with flexibility in energy demand to keep the power grids stable. I think more solutions like this are coming, and the role of the utilities companies will continue to evolve. In the past, utilities have been the providers of energy and water, but increasingly I think they will be the orchestrators of decentralized energy markets, working to stabilize the system, with many players generating their own energy and trading with this electricity.
What’s the best advice you can offer others during this time?
Find common objectives across the business. Build networks. Continue to learn from each other. And follow your vision by taking it one step at a time. Also, remember to take a break sometimes. For me, I do that when I’m playing the clarinet in a local orchestra.
And finally, any recollections of your time at PwC and Strategy&*?
I have great memories of my time as a strategy consultant. Many exciting projects have taught me what I can do today: combine IT and business strategy to achieve big changes. I’m grateful to be a part of this community, and I look forward to engaging more in it.
*Independently operating as Management Engineers (later Booz & Company) at that time