Using Service-Oriented Architecture to Transform Utilities by Chris Trayhorn, Publisher of mThink Blue Book, May 15, 2006 Since the 1970s, utility companies have grown principally through mergers and acquisitions. This industry consolidation has resulted in organizations with diverse business processes (e.g., customer care, outage management, asset management, financial management) reflecting the legacy operating company practices. Associated with this business process portfolio is a software portfolio, including homegrown and purchased applications (e.g., customer information systems, general ledger systems, work management systems). This business and technology redundancy, with long investment recovery timelines, has resulted in significantly higher operating and maintenance costs. Over time, utility companies have found that these sets of duplicative business process and technology portfolios result in operating inefficiencies and are difficult to adapt to new business requirements (e.g., operational excellence programs, new customer programs, leveraging new technologies) as they emerge. These requirements are driving companies to transform their business processes and the associated technology foundation. Transformation Is the Key to Improving As utilities have refocused on their core businesses, they have embarked on business process transformation initiatives to realize capital and operating benefits. These transformation initiatives typically include rationalizing similar processes across the company especially those that span different operating areas. For example, many utilities continued to sustain multiple independent customer call centers with separate policies, procedures and technology for each of the legacy operating companies. A common business transformation initiative is to consolidate the call-handling processes and then to combine these call centers to allow the same resources to support multiple operating companies. This rationalization process enables the company to better balance its workload across the call centers. Some companies adopt an approach that is targeted to a specific business process, such as customer service, as described above. This focus allows companies to establish an initial process, or methodology, to rationalize business processes and the associated support systems. These companies then move into another area to refine the methodology to continue the transformation and evolve to a Service- Oriented Architecture (SOA) platform. In many cases, this focused approach is coupled with a required technology upgrade or regulatory mandate. Other companies adopt a broader, enterprisewide approach that includes multiple business processes as part of a higher-impact corporate transformation to improve operating effectiveness, customer service or shareholder returns. As a result, these companies embark on an integrated program and methodology to transform their businesses, supported with a proactively designed and built SOA environment. These companies understand that while these methods and environments will serve as the initial foundation, this foundation will continue to evolve as the company moves ahead with its transformation activities. A key element to enable this business process transformation is technology. Given a diverse application software portfolio, a new technology platform based on SOA offers key benefits: Leverages existing technology investments. SOA is a system design technique that does not require wholesale replacement of business systems. Rather, SOA focuses systems on individual capabilities or services. Business and technical architects are then able to expose these services from existing systems in a manner that supports SOA designs. As a result, companies are able to continue leveraging existing technology investments such as enterprise resource planning, customer information, asset management and work management applications. Offers business process and technical flexibility. SOA also supports more flexible business and technical designs. This flexibility is driven by the consistent business processes resulting from transformationmodeling activities. These processes are then encoded in SOA services. As a result, corporate restructuring and partnerships (e.g., adding a generation facility, merging with another company, integrating with a new company) become easier through the use of these consistent services because one side of the business transaction is already well-defined. The key to enabling this flexibility is the collaboration between business and technology teams. This collaboration will help ensure that the technical solution is positioned to meet not just current, but also future, needs. Before starting a transformation process, a company should have a sound understanding of the business operations and functions. Most utilities have not documented the myriad business processes in use across the enterprise. Rather, there are multiple utility industry business models including the International Electrotechnical Commissions (IECs) Common Information Model (CIM) specification[1] and IBMs Component Business Model (CBM) for Energy and Utilities (see Figure 1). The CIM was developed with the participation of multiple utility companies, technology vendors and standard bodies. In recent years, it has received increasing interest from utilities seeking to rationalize their technology portfolios and improve their independence from technology vendors. IBMs CBM was developed as part of a structured process that focuses on high-value transformation efforts that are enabled through SOA. A key distinction between CIM and CBM is that CIM models utility industry business processes, while CBM is integrated into an overall methodology that yields a transformation road map to deliver business value. However, both models portray typical utility industry processes and should be considered as a starting point for developing a utility companys individual SOA design. For example, a company that is targeting improved asset optimization might focus on the distribution network asset optimization and asset design activities in the IBM CBM for utilities. Key Elements of SOA? SOA is a technical concept. Therefore, it can be reflected as shown in the reference architecture (see Figure 2). The business services shown in Figure 2 are intended to provide an initial context for the business service classification. They include interaction services, process services, information services, access services, partner services, business application services, business innovation and optimization services, IT service management services and development services. Interaction services provide the capabilities required to deliver IT functions and data to end users, meeting the end users specific usage preferences. This includes traditional channels, like Web browsers and portals, as well as pervasive devices such as mobile phones and PDAs. Process services provide the control services required to manage the flow and interactions of multiple services in ways that implement business processes. Information services provide the capabilities required to federate, replicate and transform data sources that may be implemented in a variety of ways. Many of the services in an SOA are provided through existing applications; others are provided in newly implemented components; and others are provided through external connections to third-party systems. Access services enable access to existing enterprise applications and enterprise data from the Enterprise Services Bus (ESB). A set of access services provide the bridging capabilities between legacy applications, prepackaged applications, enterprise data stores and the ESB. These access services expose the data and functions of the existing enterprise applications in a consistent way, allowing them to be fully reused and incorporated into functional flows that represent business processes. Existing enterprise applications and data leverage the business application and data services of their operating environments, such as CICS, IMS, DB2, etc. As these applications and data implementations evolve to become more flexible participants in business processes, enhanced capabilities of their underlying operating environments for example, support of emerging standards can be fully utilized. Partner services provide the document, protocol and partner management capabilities required for business processes that involve interactions with outside partners and suppliers. This includes, for example, the handling of industry-specific document and message formats. Business application services provide runtime services required for new application components to be included in the integrated system. These application components provide new business logic required to adapt existing business processes to meet changing competitive and customer demands of the enterprise. Design and implementation of new business logic components for integration enables them to be fully reusable, allowing them to participate in new and updated business processes over time. The business application services include functions important to the traditional programmer for building maintainable, flexible and reusable business logic components. Business innovation and optimization services incorporate monitoring capabilities that aggregate operational and process metrics to efficiently manage systems and processes. Managing these systems requires a set of capabilities that span the needs of IT operations professionals and business analysts who manage the business operations of the enterprise. These capabilities are delivered through a set of comprehensive services that collect and present both IT and process-level data, allowing business dashboards, administrative dashboards and other IT-level displays to be used to manage system resources and business processes. Through these displays and services, it is possible for the business and IT personnel to collaborate to determine, for example, what business process paths may not be performing at optimum efficiency, the impact of system problems on specific processes or the relationship of system performance to business process performance. This collaboration allows IT personnel and assets to be tied more directly to the business success of the enterprise than they traditionally have been. IT service management services include capabilities that relate to scale and performance; for example, edge services, clustering services and virtualization capabilities that allow efficient use of computing resources based on load patterns. The ability to leverage grids and grid computing are also included in this category. While many of the IT service management services perform functions tied directly to hardware or system implementations, others provide functions that interact directly with integration services provided in other elements of the SOA through the ESB. These interactions typically involve services related to security, directory and IT operational systems management. The security and directory services include functions involving authentication and authorizations required for implementing; for example, single sign-on capabilities across a distributed and heterogeneous system. Monitoring allows managing service-level agreements and the overall health of the system, which provide security, directory, IT system management and virtualization functions. Development services are an essential component of any comprehensive integration architecture. The SOA includes development tools, which are used to implement custom artifacts that leverage the infrastructure capabilities and business performance management tools, which are used to monitor and manage the runtime implementations at both the IT and business process levels. Development tools allow people to efficiently complete specific tasks and create specific output based on their skills, their expertise and their role within the enterprise. Business analysts who analyze business process requirements need modeling tools that allow business processes to be charted and simulated. Software architects need tool perspectives that allow them to model such elements as data, functional flows and system interactions. Integration specialists require capabilities that allow them to configure specific interconnections in the integration solution. Programmers need tools that allow them to develop new business logic with little concern for the underlying platform. Yet while it is important for each person to have a specific set of tool functions based on his or her role in the enterprise, the tooling environment must provide a framework that promotes joint development, asset management and deep collaboration among all these people. A common repository and functions common across all the developer perspectives (e.g., version control functions, project management functions, etc.) are provided in the SOA reference architecture through a unified development platform. The ESB serves as the communications channel for sharing services among the different systems. A challenge for technical teams is to clearly define the services to be exposed over the ESB. By exposing too many services, the design becomes overly complex and ineffective due to the large number of services that are available. By exposing too few services over the ESB, the design includes compound services that are also difficult to reuse because too many functions are bundled together. By using business process models such as the CIM or CBM and the SOA reference architecture model, companies can develop a reusable services portfolio to serve as the foundation for the SOA design. These services can be used to integrate existing technology investments and ultimately provide a flexible technology environment that can be adapted more efficiently and effectively to meet new business requirements. A partial list of services for a typical utility company based on CBM, and compatible with the CIM, is presented by business area in Figure 3. Conclusion So, what we have seen is that utility industry consolidation has resulted in having diverse business process and technology portfolios within the same corporate enterprise. This duplicative business environment leads to inefficiencies that may affect customer service and reliability, limit shareholder returns and limit business flexibility. Business transformation is the only viable approach to resolving these inefficiencies. Business transformation starts with corporate recognition of the need for change. This change, when implemented with an SOA design, provides a flexible platform that continues to leverage existing investments to help improve service delivery, business flexibility and, ultimately, shareholder returns. Filed under: White Papers Tagged under: Utilities About the Author Chris Trayhorn, Publisher of mThink Blue Book Chris Trayhorn is the Chairman of the Performance Marketing Industry Blue Ribbon Panel and the CEO of mThink.com, a leading online and content marketing agency. He has founded four successful marketing companies in London and San Francisco in the last 15 years, and is currently the founder and publisher of Revenue+Performance magazine, the magazine of the performance marketing industry since 2002.