The innovation is the main driver of the Italgas development strategy. The Company’s capacity to consolidate its leadership position in Italy and Europe involves its technological innovation, assuring it is confirmed as cutting-edge in the gas distribution segment. This is why the digitisation of assets and processes and the development of the digital skills of Italgas people are seen as the cornerstone on which to assure ever more efficient operation and consequently improve the service offered to customers.
In July 2020, Italgas signed a partnership with the Polytechnic University of Turin to develop joint research, innovation and training activities in support of the energy transition, sustainable mobility and the circular economy. The collaboration includes research projects on general themes – such as digital innovation, the optimisation of energy consumption, improvement of network efficiency and recovery of resources – to more specific actions. These actions will be aimed at developing innovative technologies for feeding renewable gases into existing networks, developing “power to gas” systems to recover surplus energy production, and creating an advanced gas smart meter especially for “smart” networks. The Polytechnic and Italgas will also be working on several educational fronts, with joint projects aimed at developing university Master’s courses, courses for recent graduates, events and dissemination activities through national and international networks. Italgas has also provided professors and researchers with the spaces and expertise of its Digital Factory, the driving force behind the digital transformation of the company.
The speed at which digital is overturning rules and markets is forcing companies to considerably speed up their transformation projects, obliging them to identify an IT and business architecture that is effectively able to assure present and future competitiveness.
In this context, the following elements become important:
The Digital Factory, which has been operative since 2018, continued to work even during lock-down. Here, physical and virtual rooms work in smart form towards the digitisation of the business processes, giving rise to various innovations that have enabled Italgas to further improve its everyday work. WorkOnSite, which is one of the main creations of the Digital Factory, offers a practical demonstration of this; it uses artificial intelligence to verify from a remote position the conformity of the sites and the progress made on works; or Shareview, smart glass thanks to which an expert can offer, from a remote position, their technical knowledge to help colleagues a long way away.
Below are the main rooms, relevant in terms of the digital transformation:
|Site supervision||MVP no. 3 relative to the WorkOnSite application for the management of the digital works supervision process. Control is made remote through the sending of photographs from the site in relation to the measures to be verified for the various site phases. Activation of a virtual control room to verify the photographs and introduce artificial intelligence in support thereof.|
|Emergency Assistance||MVP no. 1 Optimisation of the emergency intervention management process and introduction of the SalesForce platform.|
|Customer travel||MVP nos 1 to 2 to 3 Redesign of the commercial processes for interaction with the end customer and towards the sales companies, through the introduction of the SalesForce platform.|
|Digital estimation||MVP nos 1 to 2 – Redesign of the estimating process in digital terms. Possibility of carrying out a site inspection from a remote position for the issue of the estimate and optimisation of the process after estimation, with a view to continuously monitoring progress made on the activities, both for the end customer and for the ITG internal units involved.|
|End-to-end smart meter failure management||MVP nos 1 to 2 – introduction of a digital tool for the continuous tracking of related activities, from the purchase through to return to the supplier.|
|Fleet management||MVP no. 1 – introduction of a digital platform with the aim of evolving the current procedure for managing Italgas corporate vehicles in a digital approach, simplifying and automating the systems for end-to-end reporting and monitoring, from the assignment to refuelling and reserving pool cars.|
|Analitycs||MVP no. 1 to 2 to 3 – scope of in-depth analysis on data will be: smart meters, leaks, commercial.|
|Employee travel||MVP nos 1 to 2 – review of the processes and tools in support of employees.|
|Digital final statements||MVP no. 1 – To complete the works execution process, the intention is to digitise the process used to manage final site statements, digitally reporting all information already present on the WorkOnSite system.|
For a major digital transformation, people are key. In order to address the change, Italgas is promoting a new “digital mindset”, pursuing a gradual development starting from the capillary mapping of the digital skills in the company and continuing with the identification of Italgas Digital Ambassadors, who, trained according to the train-the-trainer model, have become responsible for the promotion of the company’s digital transition. The company has also activated an extensive programme for the strengthening and acquisition of new skills (upskilling and reskilling) that, thanks to the active involvement of the people, has made it possible to significantly reduce the foreseeable rate of resistance to change and align to the company’s new digital identity.
In its plan for this important transformation and technological evolution, Italgas has also provided for adaptation to accessibility standards for the inclusion of disabled colleagues and customers.
More specifically, the collaboration with SAP Italia has led to adjustments being made in support of the main internal administrative and organisational processes, making native instruments available that also allow people with impaired sight to use a screen reader, namely a software application that identifies and interprets the text shown on the screen of a computer, presenting it by means of vocal synthesis or through a Braille display.
One of the most significant and innovative outcomes, generated by the collaboration between SAP and Italgas, has been the translation of the screen readers’ scripts into Italian, to be used with the SAP GUI interface. This is an achievement from which all Italian companies that adopt this management system will benefit.
In 2020, Italgas strengthened its partnership with Microsoft for the development of cloud computing, big data, IoT and artificial intelligence in order to pursue the digital transformation of the processes and services, striving towards greater sustainability and even higher standards of quality and security. To digitise its network, Italgas has opted for the Azure IoT platform, in order to create and rapidly distribute the new applications and process progressively larger quantities of data, exploiting artificial intelligence and machine learning, as well as planning, anticipating and easily monitoring the activities on their networks thanks to predictive analysis and the use of specific analysis tools, such as Power BI.
Italgas makes the security of the service provided to its end customers the cornerstone of its business and mission.
Attention paid to security starts with the careful choice of traces established for its infrastructures in the design stage; it then continues with the use of increasingly innovative site-suitable materials and develops with the construction of the networks in respect of reference legislation; finally it consolidates through specific plans for the running and maintenance of networks that can keep expected quality and performance unchanged over time, along the lines of continuous improvement of performance and technology.
In order to improve the quality and security performance of the service, as well as to increase the efficiency of the distribution system, Italgas continues to invest very significantly in the digitisation of its network and process infrastructures, with unique technology and artificial intelligence.
Activities of digital transformation regard, for example:
As regards leak detection, in 2018, Italgas introduced and now makes extensive use of CRDS (Cavity Ring-Down Spectroscopy) technology – designed and finalised by the US Picarro Inc. It consists of a sophisticated sensing technology that, as compared with traditional technologies, offers important advantages in terms of the speed of conduct and extent of areas under control; indeed, it can:
Thanks to this, Italgas is the only one in Italy to carry out scheduled gas leakage detection, also extended to all the underground and overhead connections, albeit this activity is not prescribed by current legislation and regulations. Right from the first applications, the technology – now fully part of the management of the distribution network – has made it possible to control 150% more kilometres of network than the minimum standards laid down by the regulatory authority.
The function of this technology put Italgas in a cutting-edge position, also in terms of the work it does to limit leaks, a topic to which the European Commission pays close attention.
With the proper start-up of the land-based network monitoring system using CRDS technology, Italgas has also applied the system in different, very specific urban contexts, like Venice, where the natural gas distribution network has no equals worldwide, due to the undersea pipes, clamped to the arches of the bridges or below the pedestrian crossings. The network monitoring in the lagoon is thus carried out using a boat equipped in a similar manner to the cars and that applies and benefits from the same specifications. In addition, during 2020, monitoring was implemented of the pipes that are not buried, with the start-up of a trial that envisages the use of drones and satellite images. This use makes it possible to more easily and quickly reach segments of pipes positioned in areas that are difficult to access (e.g. near overpasses or viaducts), to carry out more frequent preventive controls and to benefit from the adoption of artificial intelligence for the interpretation of images and possible changes. The test involved the metropolitan area of Rome, where, in the last year, it was possible to control approximately 200 kilometres of pipes, supplementing the traditional monitoring.
In order to carry out a systematic real time control of the various operative phases making up the development of a network or a simple user connection, Italgas has designed and finalised, thanks to its Digital Factory, an innovative digital application called “Work-on-site”, which, supported by artificial intelligence systems, makes it possible to:
Italgas has made “Work-on-site” available to all companies operating on its behalf.
Thanks to new digital technologies (industrial IoT), Italgas Reti has embarked on a project for digitising its network infrastructures and plants, thanks to the capillary installation of sensors and electronic devices that are able to:
The above-described activities are carried out in addition to the normal routine and extraordinary maintenance of the pressure reduction plants present on national territory, in respect of the regulatory indications in force today.
The new natural gas distribution networks have already been equipped for some years with multi-ducts and related accessories prepared for the insertion of optic fibre cables for the mass transmission of data recorded by the Digital Reduction Unit’s at the natural gas injection points, by the smart meters installed at the re-delivery points to users and by the sensors installed at the terminal points of the network. The multi-ducts are positioned at the same time as the pipes are installed and within the same excavation. The new distribution networks are also equipped with Rfid markers, again positioned inside the excavation at an average step of 1 every 50 metres, which allow for the traceability and localisation of the pipes directly from the road level without any need for invasive interventions in the subsoil and consequent interference with traffic.
In 2020 Italgas Reti continued its gas odourisation activities, odourisation being crucial for distribution safety because it enables the detection of gas, which would otherwise be odourless and colourless, in the case of accidental leakage.
Within the Italgas Reti Asti Laboratory, centre of technological excellence that can operate according to the standard ISO 17025 for the tests and calibrations indicated on the accreditation certificates on the Accredia website, test and calibration methods are developed and updated in connection with innovative systems and products for each individual production process and the various specialised activities connected with gas distribution are monitored. In 2020, activities continued in relation to instrumental tests on gas odourisation, rhino-analytical tests (sensorial, on gas odourisation), the calibration of gas meters and other instrumentation supporting gas distribution activities, as well as mechanical tests on network materials. In 2020, the Italgas Reti Laboratory has carried out a total of 27,841 activities, of which 11,812 tests accredited and 11 calibrations accredited. A detailed report on the Laboratory activities is included in the “Review of the Laboratory management system for 2020”.
The possibility of improving performance in terms of technical and commercial quality depends on the technological component made available both to the customer and the operative staff.
In this respect, Italgas is committed to completing the replacement of traditional meters with new generation digital smart meters with new functions. For more details, see the paragraph on “Operating performance”.
In support of network safety, the plan has almost been completed for replacing the grey cast iron pipes with hemp and lead joints and mechanical joints; this will not only increase the safety levels but also help reduce gas leakages into the atmosphere: there are now only 3 km left of grey cast iron with hemp and lead joints located in Rome and these will be removed in 2021.
In Italgas’ vision, progress stems from ideas and co-creation and is nourished by values like trust, responsibility, a proactive approach and innovation. People establish and consolidate over time fair, transparent relationships, not only within the Group but along the whole of the supply chain, fostering the creation of shared value. The Italgas network has widespread coverage, enabling close contact with local communities, therefore carrying with it the responsibility of acting sustainably.
For Italgas, responsible management of the supply chain is strategically important in terms of guaranteeing a high quality of its services and safeguarding and improving its reputation; it takes the form of respect for legality and equality with a constant, proactive commitment and is monitored in all phases of the purchase process. Supplier performance not only guarantees the necessary quality standards but mus also go hand-in-hand with the commitment to adopt the best practices in terms of human rights and working conditions, health and safety at work and environmental responsibility. The Code of Ethics, Ethics and Integrity Agreement, Human Rights Policy and Organisational Model pursuant to Italian Legislative Decree no. 231/01 form the basis for all purchases and effectively constitute a code of conduct for all those wishing to collaborate with Italgas.
The COVID-19 health emergency has struck all suppliers of the Italgas Group, which, due to the type of product or service supplied, found themselves forced to come to a halt during the lock-down periods of March and April 2020. Since the start of the pandemic, the Group Supply Chain has implemented a reaction plan, creating a support team to prevent and address any critical issues, preparing a warehouse stock and procurement plan from alternative sources, avoiding consequences linked to a shortage of materials. Italgas has always kept regular contact with all suppliers, informing them periodically on corporate decisions and guaranteeing respect for payment commitments made. Various digitisation projects have speeded up considerably in this context, particularly in terms of excavation sites, so as to guarantee the safe resumption of works.
Supplier chain sustainability is monitored right from the early stages: before being included on the Vendor List, all suppliers must make a formal commitment to comply with the requirements envisaged by legislation (Italian Legislative Decree 231/2001) and to adhere to the principles of the Italgas Code of Ethics and Suppliers’ Code of Ethics and to go about their business in respect of regulations governing safety at work, health protection, environmental safeguarding and international standards on human rights and employment, as well as all technical, economic-financial and legal standards.
The Italgas Group supplier qualification process is regulated in a specific procedure through the establishment of a Vendor List and is managed by means of the Vendor Management System, addressed to all companies concerned by the product categories.
Suppliers are divided up into three macro product classes (products, works, services) and each one is classified on a scale that goes from a minimum of “D” to a maximum of “A”. Suppliers pertaining to product classes “A” and “B” qualify as the strategic suppliers for the Group’s core business. For each critical level, the minimum Quality, Environment, Health and Safety requirements must be satisfied, as well as the technical, economic and financial requirements. The suppliers to be invited to carry out the tender procedures are selected each time from the Vendor List.
Works suppliers account for 61% of purchases and are located throughout national territory. Suppliers of products and services account for 39% of purchases and are of Italian and international origin.
The most important activities that are considered as being above threshold pursuant to Italian Legislative Decree 50/2016 (Contracts Code) are managed through the publication of “Qualification Systems” by the European Community, stating the minimum HSEQ requirements, technical-organisational and financial, needed by suppliers in order to be entered on the Italgas Vendor List. In 2020, 77% of tenders were managed under the Tenders Code.
For other activities considered important in terms of turnover and technological complexity, Italgas publishes the “Italgas Qualification Systems” on its portal, stating the minimum qualification criteria required for entry on the vendor list.
Tier II suppliers are an integral part of the Italgas Group process and this is why, in addition to verifying the reputational requirements, as from 2020, they have been qualified and included on the Italgas Group Vendor List. The activities include restoring the road and cathode protection, in addition to various suppliers of materials.
Thanks to the new features already introduced and the constant attention paid to making the most of opportunities for renewal, in 2020, the Group qualified and developed projects with a growing number of suppliers under the scope of Technological Innovation (37 suppliers).
In 2020, the Italgas Vendor List numbered 1,602 qualified suppliers. Of these, an important role was played by small and medium-sized companies (around 70%).
In terms of economic value, despite the crisis due to the health emergency, in 2020, Italgas commissioned contracts and orders for €1,064 million, of which approximately 1% for contracts with suppliers located in other European and non-European countries.
With a view to assuring continuous improvement, the Group intends to further optimise the processes involving supplier management, in 2021 activating specific projects.
The numerous criteria identified by the Group to qualify and select suppliers include specific importance assigned to ESG aspects and ISO certifications.
The main certifications required of Italgas suppliers are:
As compared with 2019, the portion of suppliers certified ISO 14001 and OHSAS 18001 rose due both to direct action taken by Italgas, which systematically includes in tenders or supplier qualification phases an indication that certificates must be held, by way of rewarding requirement to take part in the tender and to the increased awareness of businesses in considering certificates as an aspect that makes them more competitive.
In 2020, through the introduction of environmental criteria in all phases of the purchase process and by introducing the sustainability questionnaire and technical scoring in most tenders, Italgas launched an awareness-raising campaign towards suppliers for the obtaining of SA8001 (Social accountability), ISO 37001 (Anti-bribery management systems), ISO 50001 (Energy management systems) and ISO 27001 (Information security) certifications.
The priority objectives of the Italgas Group include: constant monitoring of the social, environmental and governance impact on the entire supply chain and an increase in the percentage of suppliers (+5% over the year, with a first objective set through to 2022) in possession of additional ISO certificates, over and above those already demanded as minimum requirements for qualification.
The supplier assessment monitoring and management model was made official in 2019 through the definition of a series of supplier scores and aims to monitor the technical, organisational and management capacity, as well as the ethical, economic-financial reliability and adhesion to compliance aspects of Italgas Group suppliers.
More specifically, the following indicators and criteria are observed and monitored:
In addition, following information received from open sources, 4 suppliers have been assigned to reputational alert, whilst awaiting definition of their position. In addition to monitoring suppliers through the contract manager giving feedback, the Italgas Group constantly monitors activities in situ through Audits at sites where the contractors work. In 2020, 39 Audits were performed by external certification bodies. In addition, the HSEQ Technical Audit facility continually conducts audits on aspects of quality, the environment, health and safety, as well as on the proper performance of works. The following were conducted in 2020: 670 Audits on suppliers, 325 of which regarding areas of safety on the sites.
Italgas makes available to (qualified and other) suppliers a web portal through which it manages its procurement policy, in complete transparency, traceability and completeness of the information made available, with the aim of becoming increasingly a meeting point between Italgas and the suppliers (fornitori.italgas.it).
To safeguard these principles, registered suppliers can find out about tender notices on the portal, take part in tenders on-line and complete the qualification process for inclusion on the vendor list.
Both public tenders and invitation-only tenders are managed through the portal.
The Italgas Group always promotes new sustainable development activities along the entire supply chain. To this end, for 2020, we would point out the following projects:
Social and environmental sustainability is a key integral part of its strategies and business. A position that has led to an extension of this attention to include all partners of the supply chain.
The Project, which was launched in 2019 as a “pilot project” on 120 suppliers, was extended and consolidated in 2020 by the Procurement Department in collaboration with Seaside, the Group company operating in energy efficiency, extending participation in the Sustainability Questionnaire to 245 suppliers, selected on the basis of eight different product categories and considered strategic due to the highly complex nature of the product and service, the risk level of the supply and the high impact on Group profitability.
Through the questionnaire, for each supplier, the main topics regarding sustainability42 were analysed, to each of which a different weighting has been assigned to calculate the final position, determining for each company the general and specific level of sustainability and obtaining an overview of certification in the various ISO management systems (quality, environment, safety, energy, anti-bribery and cyber security), which has revealed an increase in ISO 37001 (+10) and ISO 50001 (+5) certificates on the previous edition.
Participation in the questionnaire was high (80%). The 79 companies involved in 2019 also took part in the 2020 edition.
Within the questionnaire, the suppliers were able to specify and list any other aspects or actions of sustainability they had implemented. In 2021, the analysis of the open answers will be analysed more closely and lead to the launch of new projects to be developed, the summary sheet setting out the final score, given by the positioning indexes in the predefined sections, a comparison with last year’s score, positioning in respect of the best in class in the category and certifications held, will be shared with each supplier. The general report, obtained from the questionnaires analysed, is presented during the year, at the Virtual Convention held with the Suppliers.
The project has made it possible to define the solidity of the Italgas Group suppliers more accurately, in terms of ESG criteria, for the first time attributing a specific “Sustainability Index” rating.
In 2020, Italgas launched an extensive initiative digitising the corporate processes, which includes, in collaboration with STRATEGICA INSURANCE MANAGEMENT S.R.L, the Contractor Insurance project.
The Project allows the companies to fulfil their insurance obligations in a smart manner, through an online digital platform and by adhering to a specific Agreement stipulated by the Italgas Group on the insurance market. This has allowed, and continues to allow, excellent cover at competitive costs and streamlines and speeds up the business processes, meaning that in just 4 hours, we can have approval of the Policy document and its immediate availability to the contractor.
The initiative comes as part of the Italgas Group digitisation process, through agile methods and tools aiming to digitise processes and standardise contents, so as to optimise the Group’s efficiency and effectiveness and that of all those collaborating with it.
Also in terms of sustainability, with the Contractor Insurance Project, the Italgas Group seeks to adopt a solution with the entire supply chain, reducing time necessary, assuring greater insurance cover and economic benefit’s all round.
The Contractor Insurance Project already involves numerous businesses, which have quickly and easily stipulated their policies with them. In 2020, 94 policies were issued, for a total of 50 contracts stipulated.
In order to facilitate the classification of small and medium enterprises for the maintenance and construction of gas distribution networks and the maintenance of water networks, in 2020, Italgas published two new Qualification Systems. Both systems, one for the gas networks and the other for water, aim to include the small and medium enterprises in the works segment on the Italgas vendor list and spread values and principles for a progressive progress towards aware production growth. It is in the Group’s interests to spread awareness of a responsible management model, taking into account the different sizes of the companies and the heterogeneous nature of their businesses.
During the year, five small and medium enterprises were qualified, which took part in tenders below threshold in accordance with Italian Legislative Decree no. 50/2016 (Tenders Code). Orders were assigned to three suppliers, which are carrying out the activities and whose performance are being monitored, through the operational vendor rating
The initiative makes it possible to increase accessibility and participation of the companies, eliminating entry barriers and expanding on the potential market, monitoring “guided” growth of small enterprises, which stand out in terms of performance, professionalism and quality of work.
In 2020, Italgas launched a reorganisation of its logistics process, identifying opportunities for digitisation but above all opportunities for environmental sustainability.
The project impacted 3 separate areas of the logistics chain:
Transport: a central warehouse was implemented, barycentric with respect to the Italgas depots, to which all encoded materials of suppliers flow, stored and delivered according to the needs of the Territorial Poles. The activity was started by means of tender, involving various different leading suppliers in the transport industry. In the technical scoring and final assessment, significant weight was assigned to sustainability, fostering use of reduced emissions vehicles for the service. This reorganisation of flows, combined with the transport tender will allow for significant savings in terms of CO2 emissions for the movement of Italgas materials.
Work vehicles: the current fleet of moving vehicles owned by Italgas, which envisages various types of fuel (diesel, electricity with lead-acid battery, etc.) will be replaced by a new all-electric rental fleet that envisages use of latest generation batteries thanks to which a twofold advantage is obtained in terms of:
Shelving: parallel to the restructuring of various Italgas offices, supplies of shelving have been standardised, preferring products that respect high quality, technical and sustainability standards.
In order to strengthen the internal structure called to comply with and certify technical-administrative requirements and sustainability requirements for the tender, starting September 2020, the Italgas Group has been collaborating with an external certifier supplier, which, through a Technical Audit at suppliers’ premises during the pre-assignment of qualification and renewal, certifies the technical-administrative and sustainability requirements and confirms the truthful nature of the declarations given previously, during qualification.
The Italgas Group intends to use this collaboration to implement an audit system at critical suppliers during qualification, renewal of qualification and pre-assignment of business, so as to certify the declarations given during the tender proceedings.
Since 2020, Italgas has consolidated an ECO-FIN verification, using an external provider on an on-line platform where the economic prejudice can be analysed in regard to all Suppliers undergoing the Qualification or Qualification Renewal process, with access to specialised analysts for timely in-depth analysis and potentially discussed in the reputational check.