Regardless of how the utility positions itself, restructuring is forcing
the utility to focus on:
Reducing operating/maintenance costs
Obtaining a return-on-investment for assets
Increasing service reliability
Summarized, the utility must continue and strengthen their ability to
manage both their assets and customers. Customers, and the assets used
to deliver their energy needs, can not be addressed independently. Management
of either requires consideration of both. This is driving an investment
by the utilities in providing Enterprise Service Delivery (ESD). ESD is
a holistic approach in providing business solutions with a combined customer/asset-centric
focus through the integration of front-office, engineering & operations,
and back-office applications. In some cases, this is an investment by
the utility to integrate existing front-office, engineering & operations
(e.g., GIS, Outage Management, Work Management, and Mobile Dispatch),
and back-office applications to provide a complete business solution.
In other cases, it requires the utility to invest in additional engineering
and operations applications.
This white paper will explore in more detail one role that a utility
may choose to play – or scenario it may find itself in – that of a Local
Distribution Company (LDC, or pipes and wires providers) with multiple
Energy Service Providers (ESPs). Similar enterprise service delivery solutions
exist for other roles a utility may choose to play in the restructured
Utility Industry Drivers for Enterprise Service Delivery
A recent survey of 46 North American electric, gas, and water utilities
conducted by the META Group indicates that the need for an Enterprise
Service Delivery Solution is being driven by:
Regulated Restructuring (i.e., deregulation)
Mergers and Acquisitions (M&A)
Development of multi-utilities (combinations of gas, electric, water,
Emergence of a dedicated asset owner/manager role
Some of these may be cause and effect. For example, the regulated restructuring
in some cases drives resulting mergers and acquisitions. To be a more
full service provider, M&A activities often result in a multi-utility.
A restructured and re-regulated pipes and wires business (1999 through
2003) will be forced to focus on operating costs and service reliability.
As the restructuring efforts unfold, it’s likely that the pipes and wires
providers will be held to several performance standards, e.g., electrical
system reliability or service restoration time during a storm. These are
directly correlated to providing a high level of customer service. The
organization must be both customer and asset-centric. Data supporting
this must be managed in such a way that it is not fragmented and that
the appropriate channels have access – not just the field service personnel,
but also the call center, customer service, marketers, and system operators
as well. The survey results indicated that existing Information Systems
(IS) are underutilized and fragmented, leaving these Lines-of-Business
(LOBs) unprepared for a restructured business environment. This will drive
increased investment (2000 through 2004) in integrated engineering and
operations applications (GIS, Work/Asset Management, Outage/Distribution
Management, Mobile Data, etc.) with front and back-office solutions to
provide enterprise service delivery.
Mergers and acquisitions, including those that result in multi-utilities,
depend on achieving economies of scale and at least the same level of
productivity with fewer resources (i.e., the going-in position for M&A
activities is often a defined reduction in operating costs). Also, technology
solutions, like Mobile Dispatch, may be deployed across the new company,
which have typically resulted in 25 percent reductions in field service
personnel. These efforts contribute to reduced operating/maintenance costs.
Historically, utilities have typically understood the revenue side but
on the cost side, they haven’t aggregated information at the customer
level, and only to some extent, at the asset level. ESD is both the means
to identify what operating/maintenance costs really are, and the means
to become more efficient in service delivery. The utility becomes knowledgeable
in the real distribution costs by customer class and asset, which must
be recovered either directly from the end customer or ESP.
Utilities have long overlooked the value in managing assets, often because
the asset planning/purchase decisions, operation, maintenance, and retirement
are typically the responsibilities of many individuals, with no one person
being truly defined as the asset owner. Additionally, this activity strongly
depends on the availability of data and information upon which to make
decisions. Although much of this data exists, it is not readily available
because of IS being underutilized and fragmented. Enterprise Service Delivery
is seen as the vehicle to pull this data together, maintaining the time-sensitive
relationship of this information, necessary for the asset owner/manager
to be able to make informed decisions in managing the asset (e.g., achieving
a pre-determined ROI for the asset or expected useful life).
Current Utility Market Assessment
A recent survey conducted by the META Group focused on the degree to
which Engineering & Operations applications (specifically, GIS, Work Management,
Mobile, DMS, SCADA, and AMR (Automated Meter Reading) have been implemented,
the current degree of application integration, and planned investments
Figure 1, Implementations, 1997 vs. 1999, summarizes the degree to which
these applications have been implemented, and provides some insight into
the maturity of specific applications. It shows that very high implementation
levels exist for Geographic Information Systems (GIS), Work Management
Systems (WMS), and Supervisory Control and Data Acquisition (SCADA) applications.
Between 1997 and 1999, the GIS implementations remained constant, indicating
that it may be reaching maturity in the utilities industry. This, however,
does not mean that significant, additional investments are not planned
for GIS, as will be seen later. WMS implementations increased significantly,
with moderate growth occurring in SCADA. SCADA, being very specialized
technology, also appears to be mature. Both Mobile and DMS (Outage) showed
substantial growth between 1997 and 1999, with significant room for growth
as currently, both are less than 50 percent implemented. AMR showed little
movement and only about 35 percent total implementation. This can be most
likely contributed to the rapid changes in meter reading technology, the
cost, and the uncertainty caused by restructuring as to whom will own
The degree to which specific applications have been implemented
Figure 2, Current and Planned Applications Investments, summarizes the
additional investments the surveyed utilities plan to make in these applications
between 2000 and 2004. Planned investments are greater than 50 percent
for GIS, WMS, and Mobile, with DMS (Outage) only slightly less. Although
previously, the level of GIS implementations was shown to be high, there’s
still almost a 60 percent planned investment. This investment is not all
in implementations, but a shift in focus on GIS as a supporting technology
and source of data for other applications (e.g., WMS, DMS, and Asset Management).
Current and planned investments in Engineering and Operations applications
It’s worthwhile to briefly discuss the definition of GIS. In the broadest
possible terms, GIS are tools that allow the processing of spatial distribution
of data into information, generally information tied explicitly to, and
used to make decisions about, some portion of the earth (land base). For
utilities, the spatial data is focused on Facilities, Customers, and improvements
to the land base (e.g., roads, buildings, ROW, easements). GIS tools may
either be supported through a technology solution or a manual process.
Every day, the utility is making use of GIS to support work requirements.
For example, when a developer comes to the utility with plans for a new
residential subdivision, Engineering supports the design and placement
of facilities (e.g., poles, transformers) on the subdivision plat either
through physical plat markups or computer-assisted drafting. Another example
is joint-use and utility-owned pole locations, on maps with land base
and property information available through a state agency, maintained
by the local telecommunications company and made available to the utility.
This may be viewed through a GIS vendor “freeware” product. A third example
is the use of GIS software, by Real Estate, to provide utility easement,
property, pole/anchor agreements.
In each of the examples provided above, the utility is accessing/updating
a subset of the same data that resides in multiple sources. Data management
and integrity become at the least challenging if not questionable, and
very resource intensive. Additionally, the information gained from the
knowledge of the spatial distribution of the data has limited distribution,
often only within the user community that developed it. Within Enterprise
Service Delivery, GIS is the provision of a single technology solution
across the organization that supports the entire organization in its need
for spatial information. This is the GIS investment identified in Figure
2. This is not meant to imply an all-or-nothing approach to implementing
Enterprise GIS. Implemented through a series of projects, each of the
user communities’ spatial information needs can be met while providing
a tool for achieving data management and integrity.
Another focus of this META Group survey was to assess the current status
of application integration in the utilities industry, and to determine
the perceived degree to which integration must occur and investments made
based on the previously discussed drivers. Figure 3, Level of Application
Integration, provides a summary. Approximately 50 percent of the survey
respondents indicated current, minor levels of application integration
exist. This typically involved the use of batch file transfers. About
another 40 percent indicated moderate levels of application integration,
typically more applications interfaced through point-to-point interfaces.
Less than five percent indicated a high degree of application integration,
having most applications interfaced through the use of industry standard
middleware or Enterprise Application Integration (EAI).
The current status of application integration in the utilities industry
Planned Application Integration (2000 through 2004) shows substantial
projected increases. Forty-five percent of the respondents chose moderate
application integration and another 45 percent chose high integration.
This is consistent with the drivers indicating that LDCs need to move
toward an integrated environment supported by industry standard middleware.
It’s also consistent with GIS investment plans for making GIS a supporting
enterprise technology and source of data for other applications.
As several states are farther along the path of restructuring, it’s worthwhile
to examine two outcomes for consideration: (1) Who the customer is, and
(2) Timing of IS investments. These two items directly relate to the preparedness
of the utility to operate in a restructured environment.
Who is the Customer?
First, a misconception exists that in this new restructured industry
where the LDC and the ESP are no longer one and the same, that the LDC’s
customers are the ESPs with the ESP servicing the customer consuming the
energy. This has led LDCs to anticipate a reduction in call center volume
with a subsequent reduction in staff. In handling customer service requirements,
transactions must occur between the ESP and LDC. The LDC must recover
the energy distribution costs, either from the end customer or the ESP,
as well as costs for any additional services that may be provided to the
customer on behalf of the ESP. For the LDC, this may take the form of
a flat rate charged to the ESP per customer per year based on an anticipated
level of customer calls the LDC may expect to handle. In one instance,
the LDC’s call volume almost doubled, leaving the LDC short of Customer
Service Representatives, and significantly under-compensated by the ESPs
based on the flat rate charged for the transactions.
Although in this arrangement, the LDC may no longer be able to directly
serve the end customer, this customer’s level of satisfaction (and the
customer’s perception of how well the ESP is providing service) is strongly
tied to the LDC’s ability to maintain and operate the pipes and wires.
The customer still looks to the LDC, and in many cases, will call the
LDC first, over their chosen ESP, in matters concerning customer service.
Timing of IS Investments
Second is the timing of IS investments. A LDC must be prepared to enter
the restructured environment, capable of efficiently providing services
to the ESPs, or fully knowledgeable of the associated costs and transaction
levels to obtain/set a fair-market cost. If the LDC hasn’t made or anticipated
the technology investments up front for enterprise service delivery, the
LDC may not have the opportunity to have ESPs share in this investment.
As ESPs are strongly focused on customer service, and as identified previously,
in many cases the customer still looks to/or holds the LDC accountable
for service, there may be little impetus for the ESP to support LDC investments.
The ESP may deem their relationship with the customer and the level of
service received from/through the LDC, acceptable. This may leave the
LDC in the position of having to make significant investments. An example
of this is where a customer requesting service must be addressed through
a three-way telephone between the customer, the ESP, and the LDC. This
can be particularly true in geographical regions that represent little
or modest growth in new customers to the ESPs.
Enterprise Service Delivery Overview
Enterprise Service Delivery is a wholistic approach in providing business
solutions with a combined customer/asset-centric focus through the integration
of front-office, engineering & operations, and back-office applications.
Traditionally, front-office (e.g., CIS, Call Center applications) and
back-office (e.g., Financial, HR, Accounting, Materials) have been interfaced
independently with engineering & operations (e.g., GIS, Outage Management,
Mobile Data/Dispatch, Work Management), leading to “tight” vertical integration.
However, the importance of “tight” horizontal integration (i.e., front
office to engineering & operations to back office, and within engineering
& operations, such as, GIS to Outage Management to Mobile Data/Dispatch)
has been overlooked. As the need arises for a utility to consider the
implementation of additional engineering & operations applications, such
as Mobile Data/ Dispatch, it typically is strongly focused on the vertical
integration. It is not viewed as part of an integrated IS business plan
to provide complete solutions to the utility’s business problems, and
results in extracting less than maximum value from the new system. Figure
4 provides an example of an Enterprise Service Delivery solution for addressing
The Service Interruption/Restoration scenario and the Enterprise Service
Delivery solution presented in Figure 4 is as follows:
“An individual customer calls to report partial or complete loss of power
for an unknown reason. This call is logged through the Call Center/CIS
to create a permanent record. The call information is subsequently transmitted
to an Outage Management System (OMS) where the call is analyzed and is
determined to be a part of a larger, existing outage. The Probable Outage
Device (POD) is identified as a transformer feeding a residential subdivision.
The resultant Outage Order is assigned and dispatched to an available
crew using a Computer-Aided or Mobile Data Dispatch (MDD) System, and
the time to restore power is estimated. As part of the analysis, an inquiry
was made in the Geographic Information System (GIS) regarding this specific
transformer. It was determined that this transformer was scheduled to
be replaced with a larger unit to meet anticipated residential growth
in this area. The failed transformer is replaced with a larger unit, and
additionally, a normal open point in the primary feed is permanently changed.
The customers are re-energized. The field crew completes its activities
by logging time and materials used on a Mobile Data Terminal (MDT), sending
updated status and facilities information to OMS and the GIS, respectively.
Customers requesting call back are notified by the Interactive Voice Response
(IVR) System as advised by OMS. Customer records in CIS are updated with
completed outage information. Based on completion data from the field
MDT, facilities records are updated and posted in the GIS and Equipment
Master database. The original transformer is retired and the new transformer
is added to the Asset Management database. The OMS operating model is
updated from the connectivity model of the GIS”.
In this particular ESD solution, from the time the customer makes a request,
to the real-time status availability of work-in-progress and completion
of the work, the process is fully integrated and automated, achieving
exceptional levels of customer service. Also, maintenance associated with
the Asset (i.e., transformer) is captured in real time along with the
current physical configuration as documented through GIS, both key components
in Asset Management. Additionally, GIS provides the updated physical connectivity
model used as the basis for creating the operational model in DMS (Outage).
This provides both Customer and Asset-Centric Management.
Utilities are struggling with the number of investments they should make
given the strategic uncertainty of dealing with restructuring (deregulation).
Many utilities are still trying to figure out what role they want to play
in the new markets – whether they want to be an energy supplier, in retail,
etc., either regionally or nationally. However, utilities must continue
and improve in both their Customer and Asset-Centric Management. There
is a shift away from the utility’s traditional mega-application development
projects (e.g., single solution ERP provider) towards a more flexible
environment with packaged solutions. This compliments what many of the
utilities have today, allowing them to integrate new software as markets
change, technology improves, and the restructured lines of business evolve.
Additionally, recent advancements in Enterprise Application Integration
(EAI) software, allow applications to talk to each other in real-time
using middleware rather than custom, point-to-point interfaces which can
be two to three times more costly. This significantly improves the utility’s
capability to respond more quickly to restructuring changes.
Outcomes from several utilities that have experienced restructuring are
worth considering. First, in this newly restructured industry with LDCs
and ESPs as separate entities, the LDC may no longer be able to directly
serve the end customer. However, the customer still looks to the LDC,
and in many cases, will call the LDC first, over their chosen ESP, in
matters concerning customer service. Second, an LDC must be prepared to
enter the restructured environment, capable of efficiently providing services
to ESPs, or fully knowledgeable of the associated costs and transaction
levels to obtain/set a fair-market cost. If the LDC hasn’t made or anticipated
the technology investments up front for enterprise service delivery, the
opportunity may not exist to have ESPs share in this investment.
The blend of a combined Customer and Asset Management focus on providing
business solutions through Enterprise Service Delivery extends a balanced
value proposition to the Utility. It achieves:
Fragmented data is turned into meaningful information, providing all
the appropriate Line-of-Businesses with access.
Additionally, ESD supports E-business initiatives through Web-enabled/hosted
applications that present customer-facing solutions, such as customer
appointment setting, with multiple marketers supplying the customer base
for a LDC. Another example is the Web-hosted Mobile Data Dispatch of work
to field service personnel, reducing the utility’s investment in IS infrastructure
across their service territory. Finally, utilities with non-contiguous
service territories resulting from M&A activities, may consider Web-based/