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Utilities are learning to act faster to squeeze out business value

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Reid Nuttall's picture
Principal - Utilities Capgemini America Inc.

Reid Nuttall is a Principal at Capgemini America, LLC. Before retiring as CIO of OGE Energy Corp, Mr. Nuttall was recognized as a KITE award winner by Energy Central and an Honors Laureate by...

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  • Jan 21, 2019 7:15 pm GMT
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This item is part of the Special Issue - 2019-01 - Predictions & Trends, click here for more

Utilities historically have excelled at large projects.  Large and complex generation plants have been completed on time and within budget for decades, and significant complex and lengthy IT projects are regularly implemented successfully.  Thousands of miles of transmission capability are constructed and operated. Many companies have recently upgraded their systems and operations through AMI technology, advanced grid management and other projects.

A robust technical foundation has been laid.  However, the heady potential, yet modest achievement, has left a desire to create more business value.  One of the key priorities for utilities in 2019 is to learn to take advantage of this history of significant projects, thinking digitally and bringing to pass real value, with improvements that matter for customers and employees.  

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The good news is that utilities are positioning themselves to make rapid improvements, targeting opportunities to create value that can take advantage of the data and capabilities of technologies that have been implemented.  In this context, let’s look at some of the utility trends to watch for in 2019.

Expectations have changed

I’m impressed when I think of the claim that the modern phone I carry contains more computing power than the entire Apollo moon program. My kids aren’t. When chiding me for working in what they incorrectly believe is a backwards industry, they cannot understand why Uber can show them exactly where their ride is, while utilities can only provide a wide (and usually wrong) guess on the estimated time of restoration (ETOR) and provide vague and inaccurate approximations of when help will arrive.

The trend that is needed (and observed in leading utilities) is to take the information now available from the modern technologies and systems that have recently been implemented and use it to improve the performance of our business, steadily beating out a cadence of regular improvements.

Think digitally.  Think of outcomes.

This is requiring utilities to think digitally.  They replace thinking in terms of organizations, systems and projects into thinking of outcomes.  Many historically think that the key mission of an IT department is to manage the systems and assets that support the IT function of the company.  This needs to change; supporting IT assets and systems is now easily contracted, available off-premise and more flexible.  Utilities instead need to concentrate on how to provision information flows and analysis to improve operations and customer interface. We need to make sure that the information flows to (and from) our customers and our employees are secure and effective in providing increasing value.  

Utilities tend to have skills at completing large, fully integrated projects. The emerging (and important) trend is to learn to become quick and targeted in squeezing out business value through the information technology that is now pervasive.

New technologies and methodologies open a better world for creating value

Many years ago, my grandfather died of gallbladder removal surgery.  Years later, I had my gallbladder surgically removed. I was on a business trip within a week.

In my grandfather’s day, they had to perform major surgery.  The long incision allowed the surgeon to see, explore, cut and remove; but it was also traumatic for the patient, as long healing times and increased risks (especially for older people like my grandfather) were involved.  For me, years later, the medical community had developed (for other types of surgeries) techniques, imaging technologies, and tools that were ably used for my surgery. These technologies and specialties allowed the surgeon to ‘see’ without the deep incision and coordinate the tools that did the cutting, extracting and closure well enough to make the surgery much less intrusive, faster and safer.

In our industry, we historically have tended to delay improvements until we ‘open up the patient’ during an application upgrade or major project. We want to solve all the issues in the application at once. This usually involves significant delays for desired improvements, and tasks are consolidated until the large ‘surgery’ is scheduled.  

Fortunately, we now have the technology that allows us to target the important objective with less change and effort.  We can focus on outcomes, instead of the systems.

An example: 

Imagine that our new analytics department highlights that customers rate us poorly and make more (expensive) calls to our call center because they do not have the information they need about their outage.  So, we have a desired outcome to provide better updates about their outage and an ETOR.  The old way would be to canvass stakeholders for everything they want for improvements for the Customer Interface System (CIS) and design a project that, when upgrading the system, would develop and implement the needed code and the links to other sources for outage information and the ETOR.  And, further delay might be needed for the project because we need to figure out how to improve the automation of our ETOR calculations.  

The new method would be a quick project that does not affect coding in the base CIS.  Using modern web-based systems, we would quickly develop the interface between systems and plug it into our customer interface. Improving ETOR would be a project that may be scheduled anytime.

Leading utilities are building their IT infrastructure and skill sets in order to take advantage of this more agile way of working.  It demands many things.  Excellent testing and release management capabilities are required. Upgrades will be released often.  Project management is different; the way of designing and executing projects changes. A deep knowledge of the information architecture is needed.

The cloud frees us from inertia

The movement to the cloud is finally gathering steam in our industry. This allows IT groups to focus on results (as opposed to maintaining assets), increases nimbleness and, often, reduces maintenance costs.  Regulatory agencies in many states are allowing long-term cloud projects to receive regulatory treatment like traditional capital expenses.  They are doing this to encourage utilities to move to the cloud, so customers can receive the benefits found in other industries.

Utilizing the cloud allows resources to be focused on improvements that provide business value, as many of the asset provisioning and maintenance concerns are removed.

It also provides speed, as a good part of the IT work we typically need for a project is already there and is quickly deployed. We can also use web-based capabilities to change our project methodology to increase speed and flexibility.

Changing project methodology allows us to be nimble

We used to make every stage in a project large and as close to perfect as can be.  Our workstream ran sequentially through key gates (like scoping, planning, building architecture, designing processes, programming, testing, etc.), ending with a significant completion.  This is often referred to as the ‘Waterfall’ approach.  While it has been used effectively for years, it tends to be slow and rigid. Stakeholders often became overbearing in the specifications (“if I don’t get it now, I’ll never get it”), project team members piously claim that the needs defined in the requirements document are met (even though better ideas or missed requirements are missing) and the result is often met with a realization that it could be better.

With the advent of cloud and other capabilities that reduce the wait time for the upfront technical part of a project to be completed, we can move to the nimbler ways of designing with multiple streams that show results while the program is underway.  These methods are referred as ‘Agile’ approaches.

Large projects are dissected into targeted outcomes, so they can be seen as a group of small projects, with each focused on a valued objective.   The infrastructure is in the cloud and we can often work ‘above’ the base systems, configuring instead of customizing. Therefore, we can have a multifunctional team collaborate, working jointly through that specific outcome-oriented portion of the project.  Focusing on the shortly attained, defined result, they combine in what is call a ‘sprint’ to complete the objective.  As stakeholders are involved in this quick creation, and see the results while they are being created, their creative juices will often provide ideas and simplifications that improve the final result.

Focus on team results brings value

For years, running a mile under four minutes had appeared to be unattainable.  In the 1950s runners were closing in on the goal but seemed to be unable to break it.  Finally, Roger Bannister won the deserved fame and glory for being the first. 

How did he do it?  He had tremendous ability and a strong ‘kick’ he could use at the end the race.  To minimize his time, he needed to run at a pace that allowed him to have just enough reserve to end with a kick that took all his power, so he would be completed exhausted exactly at (not before nor after) the finish line. 

The solution was teamwork. His companions, Chris Chataway and Chris Brasher, in a practiced maneuver, paced him during the famed record-breaking race, taking turns pacing him up to the point of the finishing kick.

In the same way that teamwork was necessary to break the four-minute mile, achieving business value is rarely accomplished only by the efforts of one person, or even one department.  It requires teamwork and collaboration.

We have already seen the trends of moving IT away from the old organization model separating ‘maintain’ and ‘grow’.  The more agile “DevOps” (having development and operations work together) is bringing faster, and better, results.  Improvements are rapidly released.  Instead of thinking in ‘systems’ or ‘departments’, we think of ‘outcomes’ and focus on speed of value attainment.

The 2019 trend is to focus on quick and continuous achievement of business value

So, is 2019 the year when all utilities will be moving towards collaborative focus on rapid business value?  Unfortunately, no.  It takes a lot to build the technologies, toolset, skills, attitudes, culture and capabilities to be able to so, and a very important change in mindset.  The trend has started.  In 2019, some utilities who have already modernized will be starting to reap the benefits of this more agile, digital based approach at improving business value through rapid improvement.  Others are modernizing and taking steps as this trend is building steam.

Reid Nuttall's picture
Thank Reid for the Post!
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Michael Breen's picture
Michael Breen on Jan 22, 2019

Thanks.  I agree with most of your post, but I am pessimistic about the rate of change and the consequences for the utility not moving rapidly enough.   I keep seeing resistance to change and negotiated push-back against technology.  

Reid Nuttall's picture
Reid Nuttall on Jan 23, 2019

Michael - good observation.  I must admit that my optimism about the rate of change is colored by who I visited last.  There are many very progressive utilities, but there also are many that are slow to move.

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