Informed Decision Making

Corporate management is increasingly called upon to make complex critical decisions
in short time frames. Consolidations within industries, competition to maintain
competitive advantage and pressure to maximize return on investment are key
business drivers. Market leaders have learned that success in this environment
requires comprehensive, accurate and timely data and the tools to effectively
utilize them.

Recent technological advances in service-oriented architecture (SOA), business
and operational applications, digitization of field devices, the networks that
link them and the tools to deploy them, along with the associated improvements
in hardware price performance, open standards and security, have collectively
provided a platform for information process transformation across industries
and markets. This opportunity for transformation is unfolding industry by industry
and market by market based on economics, competition, governmental policy and
business opportunity.

A Changing Approach to Change

The energy and utility industries have heretofore been slow to take advantage
of the transformational opportunities presented by technological innovation.
The conservative culture of these two industries, their social importance to
the communities they serve and their designation as critical infrastructure
providers have resulted in their experiencing slower evolutionary change versus
embracing more rapid transformational change. Currently this approach is changing
as a result of multiple business drivers and opportunities, some of which include:

  • There are aging transmission and distribution infrastructures domestically
    and emerging markets globally (e.g., India, China). Significant investments
    are anticipated over the next several years to replace aging infrastructure
    and sustain economic growth in developing countries.
  • Environmental policies, such as the Kyoto Accord, are driving the need to
    better manage demand and use of current energy assets to avoid the construction
    of new infrastructure and minimize the impact of retrofitting facilities that
    do not meet emerging environmental standards.
  • An aging workforce is causing employee turnover and an associated loss of
    corporate knowledge.
  • There is a heightened focus on the efficient use of capital and maintenance
    budgets by investors, markets and regulators.

Transformation professionals synthesized the information process needs associated
with these drivers impacting the energy and utility industries and developed
a comprehensive infrastructure business model for increased energy and utility
value to enable a concept called “informed decision making.” For energy and
utility companies, informed decision making is about using the data that is
available from field devices, operational systems, business applications and
network assets to improve the timeliness and accuracy of decision making. Informed
decision making is made possible through the combination of an intelligent network
that allows real-time connectivity across the enterprise, an SOA that allows
integration of multiple business and operational applications and advanced analytics
for business intelligence mining.

Value of Informed Decision Making

As an example of the value of informed decision making, the CIO of a large
investor-owned utility that is aggressive in the acquisition of generation assets
wanted to transform the IT organization from a support center to a business
enabler. He felt that informed decision making was able to provide the basis
for this transformation based on the following considerations.

First, in terms of overall IT support to the enterprise, for IT to become a
business enabler in this case, the department needs to rapidly integrate the
business intelligence resident on legacy applications in the targeted acquisitions
into the corporate platform, enabling IT to provide a vital service in delivering
better data to key decision makers in multiple departments making acquisition
decisions based on a wide variety of business metrics. These decision makers
cannot be required to learn the intricacies of multiple legacy systems; the
data in these legacy systems must be accessible through the business tools and
models that the decision makers already know.

Second, the IT platforms and business applications resident at the acquired
plants have historically been treated as new stand-alone IT assets, to which
no synergy savings can be applied. This is because historically it has been
very difficult and costly to integrate such legacy assets with the corporate
systems. Determining the extent of such savings is essential to both making
an acquisition business decision and achieving the savings after the acquisition.

IBM’s SOA is the key to providing this capability. The SOA enables services
to be created for business functions, such as work orders and purchase requests,
and these services can be combined with other services regardless of the native
applications within which they are created. Imagine one plant using a commercial
software application for purchasing and another plant using a homegrown system,
while the corporate systems are using SAP software. SOA allows purchase requests
from both plants to be aggregated with those created in the corporate system
to create one purchase order, helping to ensure that the corporation’s strategic
sourcing initiatives are able to be realized across the entire enterprise, not
just in the integrated plants using SAP.

Now consider all the operational systems and the value of being able to rapidly
integrate a newly acquired plant into the corporate network. Consider supervisory
control and data acquisition (SCADA) data and corporate systems data combined
on a single IP-enabled intelligent network using quality of service to determine
priority of data packets on the corporate bandwidth. If this intelligent network
is coupled with SOA, then advanced analytics for business intelligence are overlaid
on top, the goal of having an IT organization that functions as a business transformation
center can be accommodated. This is the approach presented to and embraced by
this utility’s CIO.

The informed decision-making infrastructure model (see Figure 1) depicts the
framework needed to support the integration of data from field devices, business
and operation systems.

Implementing an Intelligent Network

The foundation for informed decision making is implementation of an intelligent
network within the enterprise. The key element of an intelligent network is
the transition to a common IP-based environment. In the common environment,
each element of the network is assessed and optimized based on the best low-cost
IP service available, including internally provided or externally provided through
a service provider. Each element of the infrastructure is migrated toward network
intelligence based on life cycle or capability enhancement requirements. As
this process unfolds, the informed decision-making infrastructure emerges, providing
a wide range of decision-making tools. Data flows from the data source to the
decision maker and back are created. The capabilities include features such
as end-to-end security, resource management, data mining, common business views
and adaptive computing. All of these capabilities are valuable within the current
corporate boundaries and also provide positive business-case value in support
of mergers and acquisitions.

The intelligent network framework provides operational value by creating an
“aware environment” through implementation of a single corporate IP-enabled
network. Additionally, the network is used in conjunction with deployment of
operational applications such as advanced meter management, mobile workforce
management, asset life cycle management, remote asset monitoring/control and
next-generation information brokering. Together, these components provide the
foundation for advanced network analytics, enabling the transformation of data
into insight, the key for informed decision making.

intelligent network provides a “sense and respond” framework that will provide
the enterprise with real-time connectivity across the entire utility value chain,
from data producer (e.g., flow computer, PLC, RTU, ESS) to data consumer (e.g.,
SCADA host, automatic meter reading system, inventory management system, modeling/leak
detection). Figure 2 shows the intelligent network utility value chain.

The favored architectural approach decouples the data producers from the data
consumers. This key element insulates applications from the complexities of
the control systems which formerly constrained them. Equally important, this
independence provides energy and utility companies with business flexibility
and agility for integrating or upgrading new operational environments. In other
words, the intelligent network offers a “plug and play” business environment.
This plug-and-play environment allows a decision maker to optimize decisions
across the entire enterprise of today and tomorrow, unconstrained by organizational
boundaries. This is the cornerstone of informed decision making.

In the energy and utility industries, the device, network and data domains
reach throughout the many networks currently in place. These networks include
corporate enterprise WAN and LAN, land mobile radio, public cellular, SCADA
and microwave. When viewed in historical context, these networks enabled discrete
capabilities prior to the existence of many common carrier services. Within
the operating environments of the utilities, land mobile radio predates cellular
services, and microwave existed prior to T-1, frame relay and Internet service
provider services. When the current utility networks are viewed holistically,
in present-day terms with present-day capabilities, significant opportunities
for reduced costs and enhanced capabilities emerge.

Elements of an Intelligent Network

While there are many elements of an intelligent network, the following four
elements define the core design:

  • Internet Protocol (IP) Communications. The intelligent network will
    help make the conversion from analog to digital while providing greater quality
    and access to operating information. By enabling all devices on the network
    through IP communication, companies will be able to grow their network quickly
    and use technology innovations. Examples of these technologies include wireless,
    broadband over power line (BPL) and Voice over Internet Protocol (VoIP).
  • Open Standards-based, Consistent Architecture. The IT environment
    can grow increasingly complicated in energy and utility companies. As new
    projects are deployed, there are increased difficulties in having redundant
    systems or communication across systems. A common architecture is needed that
    incorporates industry-standard data models, open technology communications
    and adoption by business partners. Having a consistent model enables manageable
    growth while potentially reducing costs and overhead. In essence, lower total
    cost of ownership is available through open technologies.
  • Consolidation through Public and Private Networks. Most energy and
    utility companies have elements of a converged communications and collaboration
    environment already in place. These elements may be a basic intranet portal
    or simply IP-enabled telephone systems. However limited such capabilities
    may be, they still are the foundational building blocks for deploying an integrated
    architecture that combines the disparate technologies to transform the business.
    To realize the promise of convergence, companies need a clear strategy to
    transform their organization from a “disconnected business” to one that has
    integrated key processes through collaborative portals. For example, the voice
    revolution started with the invention of the telephone, which allowed people
    to collaborate one-to-one in real time. The Internet provided a many-to-many
    communication network and enabled organizations to engage in truly collaborative
    processes on a global basis for the first time. Today, the convergence of
    voice, video and data is set to forever transform business relationships and
    collaborative strategies; the network of today and tomorrow needs to apply
    these technology innovations.
  • Security Based on Data/Applications. Regardless of the current or
    future infrastructure, information access and security are critical to energy
    and utility companies. Without security technologies, companies can be targeted
    for security attacks, information theft and massive system failure. The network
    needs to leverage the latest technology advances using the three A’s: authentication,
    authorization and administration. This comprehensive diligence and focus on
    security is a key to business resilience of critical infrastructure.

With these elements in place, tools can be used to mine data for business intelligence
to create insights, thereby increasing the value of the data to the enterprise.

Applying Business Analytics

Leveraging the resources created by the four elements above, “business analytics”
are software tools that transform raw data into meaningful business intelligence.
They do this by applying business rules and processes to raw data, by supplying
context through integration of information from multiple relevant sources and
by presenting the information in a readily comprehended format, such as a dashboard.
Data is generated continually within energy and utility companies; for example,
SCADA data, meter data, service report data, financial data and outage data,
among others. Analytics process this data to assist business managers in making
more informed decisions. Analytics can be used to automate many aspects of utility
operation, such as work management, load optimization and inventory management.
Analytics are also valuable tools to analyze processes such as capital expense
planning, service quality assessment and rate-case development and presentation.

Analytics are a key component of comprehensive utility information architecture.
Energy and utility companies have traditionally been capital- and labor-intensive
operations, but as utility markets become more competitive and utilities become
more automated, it becomes more crucial for utility business managers and executives
to have the information that allows them to connect decisions with true business

The business analytics component of informed decision making is used to refine
raw data into information that creates business intelligence. As energy and
utility companies add more intelligent devices and networking to their operations,
the volume of available data will increase to the point of being overwhelming.
Analytics are the tools that make sense of the volume of data and enable the
workforce to focus on the highest-value decisions while automating the remainder.
Analytics also provide a framework to manage the gradual increases in network
awareness. For example, an energy or utility company might start out integrating
SCADA data with financial data through analytics and gradually add automatic
meter-reading data, remote grid or network sensing or data feeds from other
connected enterprises. As each new level of awareness comes online, the analytics
can integrate the new data smoothly into the existing business intelligence

The informed decision-making enterprise business platform is established through
building business intelligence on top of existing business systems and is typically
built in a phased approach, which begins with the implementation of analytics.
Analytics alone can offer increased value by providing insight into existing
data; however, the business value increases proportionally to the available
level of grid observability. The further down the wire toward the customer you
can monitor, the greater value you can realize.


IP-enabled networks, SOA-migrated application portfolios and analytics for
business intelligence are each strong tools used by many energy and utility
companies globally. However, when these tools are configured in an integrated
approach, they can exponentially deliver greater value. Clearly, informed decision
making has the potential to be transformational in these industries, delivering
extended benefit and competitive advantage to clients.