The $31 billion startup: Q&A with Schneider Electric's Jeff Drees

The $31 billion startup: Q&A with Schneider Electric's Jeff Drees

Schneider Electric is not new to entering emerging markets. The French-based energy specialist started as an iron and steel producer before making a significant play into the new-fangled electricity market in 1891 and has never looked back.

Now regarded as one of the leading industrial makers of energy and smart grid hardware -- along with Siemens, ABB and GE  -- the company is putting a "big bet" on software as the company's future direction.

Indeed, through a spate of recent announcements and acquisitions, Schneider Electric has begun a transformation with new offerings in energy dashboards, electric vehicles and smart cities.

The changes include purchasing Virdity Energy to provide visibility for building and facilities managers in IT and operations; launching a new line of electric vehicle fast chargers; and, after the acquisition of Telvent last year, targeting cities through a suite of offerings in city planning, energy and water management, transportation, building efficiency and public safety.

Thanks in part to these efforts, the company, located in 100 countries with 130,000 employees, has a bit of a freewheeling mindset these days: "We consider ourselves a $31 billion start-up," said Jeff Drees, president for Schneider Electric in the US.

Recently, we caught up with Drees to learn more about this transitional time, what it means for energy stakeholders to disrupt "business as usual," and how three macro trends (spoiler: one is big data) directly influence what's next for Schneider Electric.

Derek Top: What opportunities does Schneider Electric see in the convergence of smart grid, EVs, smart cities?

Jeff Drees: Businesses and cities [need] to get smarter about their energy usage. We are helping many companies today understand how to use their energy bill as an asset to be managed and controlled, just like their healthcare, IT and operating expenses. These companies are seeing savings of 20 to 30 percent and more.

This awareness will continue to accelerate as the convergence of smart grids, EVs and smart cities become more of a reality. The days of utilities, cities and companies large and small living harmoniously separate lives have come to an end, and the answer doesn’t lie squarely with one group.

It will depend on all entities, which previously never had to interact unless there was a power outage, engaging each other in an entirely new and uncharted way -- disrupting "business as usual" and introducing a new way of operations.

DT: What are the challenges internally and how is Schneider targeting new markets?

JD: We’ve gone through a massive transformation, [doubling] our size in the last five years, growing to a $31 billion company and [currently are] No. 1 or 2 in 90 percent of our markets.

Our biggest challenges today are speed and agility. We like to say we’re a $31 billion start-up declaring war on waste. We need to back that up on a continual basis with our customers and partners.

Software is one of our next big bets. We’re fast becoming a software and services company. We’ve redesigned and integrated all our software platforms so they talk to each other, and based on open standards, so they talk to our partner systems as well.

DT: What macro trends are shaping the scope and strategy for Schneider?

JD: One, big data or digitization, whatever you want to call it.

It's a reality and it’s giving customers more access to information than they ever had before, information they can use to make smarter decisions about their business. That’s affecting us both in how we integrate and sell our solutions, how we innovate and the relationships we have with new and existing customers.

Two, urbanization is a reality. Our cities around the world are experiencing unprecedented growth. With that growth comes challenges all cities are facing today and in the future -- strained transportation, strained energy and water infrastructures, security and comfort needs for their citizens and limited to no dollars to invest.

It's clear the only practical and sustainable way to manage this growth is through efficiency, and we are in a unique position to show cities  how urban efficiency can be delivered, today, through integration and collaboration.

The last one is the "re-industrialization" happening in the U.S. We are seeing a rebirth in manufacturing in many sectors, including steel, petrochemical, pharmaceutical and automotive. We can be a competitive nation again in manufacturing, and having an efficient manufacturing process gives us a competitive edge. We’ve got a long way to go there … we estimate only about 20 percent of manufacturing facilities are energy efficient, there’s a huge opportunity out there for companies to reduce their energy usage and costs.

DT: Who are some new partners and how is the new ecosystem taking shape?

JD: In today's market, you have to be comfortable and good at collaboration to be successful. We see this every day in every market we do business in. More and more, we’ve been collaborating with the major technology companies like Cisco and IBM to ensure our mutual customers can work with and integrate the best and most current innovations in their solutions.

For example, this summer we launched a new version of our data center infrastructure management software to actually allow customers to identify underutilized and comatose “zombie” servers, which are negatively affecting their energy efficiency, and allow data centers to fully optimize every aspect of their IT equipment. These updates were powered by the additions of offerings from both Cisco and Intel.

We are also working with governments at the federal, state, city and county level more than we ever have before.

The Better Buildings Challenge and the Green Button programs are excellent examples at the federal level, where we’re partnering at the beginning stages with the Department of Energy and others.

We're also working with progressive city mayors at the cities of Houston, Chicago and many others who understand the power of performance contracting and how they can be used to upgrade their infrastructure and create local jobs at no cost to taxpayers