Leveraging Operational Systems Assets to Realize Their Full Value

The electric utility industry finds
itself confronted by a dynamic
regulatory and market environment
that is necessitating changes at
all levels of these organizations. Whether
a generation utility is participating in a
commercialized or regulated market,
the successful producer must be costeffective,
environmentally compliant
and flexible.

Realizing such a position is no easy
task. All of the obvious measures have
been taken – utilities have made improvements
in their supply chain, reduced
staff and outsourced a variety of functions.
Success requires that generation
utilities dissect their core business processes
in search of quantum improvements
in operations. This doesn’t have
to require significant investment; rather,
that utilities more fully leverage the
investments they’ve already made,
including those in a spectrum of computer-
based information and control
technologies. These technologies can be
organized into a three-tiered hierarchy
that, working together, will provide the
data and automation engines necessary
to identify, implement and sustain necessary
changes to operational processes.

The following classes of computing technologies
are included in this hierarchy:

  • Enterprise-level Systems: These systems provide the basic
    computing infrastructure for the entire organization and include applications,
    services and resources such as financial analysis, ERP, desktop platforms,
    security, Internet presence, business continuance and LAN/WAN networking.
    Given the corporatewide expanse of enterprise systems, the staff levels needed
    to manage and support them, and the large costs involved, they receive significant
    attention at the executive level and have highly refined governance models.
    Enterprise systems can be thought of as enabling more specialized applications
    by providing the services and infrastructure they need. Most utilities have
    long since standardized enterprise applications across their organizations.
    Having done so, they have been able to reduce costs, obtain procurement leverage,
    avail themselves of outsource opportunities and better utilize internal technical
    resources. Enterprise systems are often models of IT governance best practices.
  • Embedded Systems: At the other end of the hierarchy reside
    embedded systems. This category includes highly specialized hardware/software
    such as intelligent sensors, SCADA remotes, control devices, specialized diagnostic
    handhelds, etc. Embedded systems are rarely of any concern to the IT department
    except if they utilize connectivity and security resources provided by IT
    or source operational data to IT-hosted applications, scorecards and performance
  • Operational Systems: The final category of computer systems
    falls in the middle of the hierarchy. Utilities employ specialized control
    and information applications to operate, maintain and manage their generating
    assets. These specialized applications – collectively referred to as “operational
    software” – typically include distributed control systems, maintenance management
    systems and a variety of software applications to analyze and optimize unit
    performance. While software at this level may make extensive use of enterprise
    resources and platforms, the specialized applications themselves are not widespread
    within a utility; they are largely the concern of engineers and other specialists.
    As a result, they have historically been below the radar of IT management.

It has been noted that utilities often model
best practice behavior at the enterprise
level of their organizations. Unfortunately
such practices have not typically extended
to operational software and systems,
which is a smaller but potentially more
critical class of application. Systems at the
operational level deserve the same C-level
governance attention.

Operational Systems Issues

While some operational improvements
may involve costly and time-consuming
mechanical modifications to generating
plants, others can be realized more
quickly and inexpensively by leveraging
the information available from plant control
and information systems.

Challenges facing generation utilities
include responding to newly imposed
emissions mandates, improve heat rates,
decrease the number of forced outages
and reduce plant staffing and operating
costs. Operational systems are critical to
these goals, since they either generate the
data needed for assessment and response
and/or execute necessary actions.

Many utilities are not fully leveraging
the operational systems assets in their
generating fleets; others have operational
software and hardware infrastructures
that do not readily lend themselves to
higher-order capabilities. Historically,
operational systems and software have
been procured by individual plants, on
limited budgets, to meet local concerns
often driven by the need to replace obsolescent
systems. Even in situations where
advanced capabilities have been implemented,
they are not used consistently.

In brief, operational systems are not
deployed using the same cross-competency
approaches used for enterpriselevel
systems, which may be hindering the
realization of their full value.
Of specific note are the following problem

Corporate Governance
Despite investments exceeding $4 million
per unit, operational systems seem to fly
below the radar of many utility executives.
When compared with enterprise
applications, an individual operational
system represents a relatively small dollar
amount and has significantly fewer users.
A different perspective would be gained
if one considers the collective investment
a utility has in operational systems at all
units in its fleet, which can easily extend
to the tens of millions of dollars and
encompass thousands of users.

The most significant impact of this
lack of visibility may that many utilities
have not standardized on a specific plant
control platform. In these instances, control
and information systems are bought
locally with minimal corporate input and
standards guidance. What are often lacking
are not only provisions for a common
hardware/software platform but standards
for functionality too. Functionality should
relate directly to the challenges utilities
face in improving their unit operations.

Overemphasis on Technology
The focus on technology encompasses
the entire project life cycle, from project
inception through implementation and
rollout. This was a major theme that
emerged from a series of in-depth interviews
with the persons experienced in
architecting, deploying and managing
operational systems at mid-to-large-sized
investor-owned electric utilities. The
research found that in initiating these
projects, technical obsolescence of an
existing software implementation was
cited as the reason for embarking on
an upgrade or replacement more than
50 percent of the time. The need for
enhanced functionality was the driver in
only 33 percent of replacement and was
not cited at all as a reason for an upgrade.

Once an operational systems project
is approved, it moves into the requirements
definition phase. Specifications for
operational systems are largely technical
in nature, and references to operational
objectives or business processes are
not often mentioned. Business process
improvements are often used to justify
software procurement, but they are
apparently not being integrated into the
specifications for operational software.
One participant in the writer’s research
said that only a small minority, “certainly
no more than 20 percent,” of request-forproposal
documents include any discussion
of operational objectives.

Lack of User Involvement
There is general lack of user participation
across the entire project life cycle
from initial project inception and planning
through final rollout of the application.
Many organizations say they involve users
throughout software implementation
projects, but a closer look shows this may
be limited to a few “super users” – those
most technically astute who are involved
with the most sophisticated application of
the system in question.

Even super-user participation is mostly
limited to the development of specifications
at the project start. The vast majority
don’t jump back in until the software is
ready to be rolled out for testing and training.
Users participated minimally during
the design phase, leaving their needs to
the interpretation of software developers
who may not be fully cog-nizant of user
job tasks. As a result, user needs are often
not fully realized in the final software
implementation, when it is often not feasible
financially or schedule-wise to make
corrections to anything but the most egregious
issues. The remaining user issues
are left to “future releases” of the software
and often are not addressed at all.

Training and Change Management
The general population of users doesn’t
see an operational software application
until it’s time for training. Usually this
covers the functions of the software
package, as opposed to training people
on how to use the software to perform
specific work-related functions. This
approach, though prevalent, is unfortunate
and significantly raises the risk that
the utility won’t realize its ultimate business
goals for implementing the system.
For example, inappropriately trained
operators tend to turn off optimization
software applications they do not fully
understand. Often these are the same
applications that generators are counting
on to address efficiency improvement
and regulatory issues associated with
their fleets.

Overemphasizing Implementation Costs
Generally speaking, many organizations
obsess over initial capital outlays for software
and associated implementation costs
with little attention paid to life cycle costs
– despite that total cost of ownership can
be significant and is not necessarily reflective
of initial purchase and implementation
costs. Depending on the complexity of the
software, its administrative burden, scalability
and the duration of the expected
upgrade cycle, the need for technical
personnel to maintain software can vary
considerably. In addition, a cost-centric
approach can impact project elements
beyond technology. Training is often the
first thing cut when budgetary issues are
encountered. Similarly, process re-engineering
and user representation are frequently
eliminated to save money.

New Directions

The previous sections have identified
operational systems as a distinct and vital
class of technology within utilities, one
that mandates a governance approach
already in place at the enterprise IT level.
Moving forward, utilities should consider
several calls to action.

Develop Overall Governance Models
Utilities would be well-served to elevate
operational systems to the purview of
executive management:

  • Standardize on system platforms to
    more fully leverage procurement advantages
    and outsource opportunities and
    to more effectively concentrate increasingly
    scarce human resources on operational
    issues. Technology management
    is not a utility core competency; leveraging
    it to operational advantage is.
  • Develop standard control and optimization
    applications that directly reflect
    operational and regulatory needs,
    reduce buss bar costs, etc. Utilities are
    advised to develop systems specifications
    centered on operational objectives,
    with technology assessed only to
    ensure efficient execution of needed
  • Manage the project and the business
    case. Research shows that utilities justify
    the procurement of an operational
    system based on a business case but
    often fall short of achieving it. Projects
    are managed to be on time, on budget
    and compliant with technical specifications,
    but it is rare for a utility to revisit
    an implementation to validate whether it
    met its financial goals.
  • Elevate operational systems to the
    status of enterprise applications. Operational
    applications often languish in
    obsolescence because of the rigid business-
    case criteria that must be met to
    justify replacement or upgrade. Control
    and information systems are critical to
    the business and should be elevated to
    the same infrastructure status as enterprise
    systems. Risk avoidance alone is a
    strong justification for this.

De-emphasizing Technology
Technology is just one competency needed
for successful software/systems implementation.
Three others are coordination
with strategy, change management and
process re-engineering. All too often technology
is chosen based on a bits-and-bytes
assessment; rather, it is how that technology
is deployed that is critical to success.
A control provider that integrates logic
with continuous control; has algorithms
and optimization software appropriate
to generation, for example; and has
credible experience in the industry is
far more valuable than is any specific
underlying technology.

Promote User Involvement
Lack of user participation is the most
significant cause of project failure, a lesson
that’s not been lost on enterprise IT.
User involvement promotes more effective
use of system features, avoids undue
complexity and ensures timely retirement
of costly legacy systems. Change management
is often equated with “training,” but
traditional classroom training is a small,
albeit important, component of the overall
picture. Equally critical to success is user
participation in developing requirements,
consultation with an appropriate cross
section of users during the design process
and an effective rollout strategy.

Effective training is also critical,
especially as plant systems grow more
sophisticated. At the same time, there is
the need to improve operating efficiencies,
meet emissions requirements and
manipulate a unit in response to varying
market demands. If we consider EPRI’s
findings, as reported by Power Magazine,
that 30 percent of the utility workforce
is over 50 years old and will be gone in
10 years, training becomes an even more
urgent need. Operators must know how to
operate the unit competently – not simply
access the features of a particular control
platform. And depending on the specifics
of their situation, they must be periodically
retrained. Fortunately simulator-based
training tools are available and enhanced
versions are being developed.

Recognize Value, Not Costs
Finally, when one considers the efficiency
impacts of marginally designed systems
and inadequately trained operators,
appropriate funding for a cross-competency
approach to operational systems is
justifiable. Many of the cost issues encountered
stem from operational systems not
being viewed as on par with enterprise
applications. Elevating operational systems
to enterprise status would establish
standards, implementation methodologies
and funding regimes, thus mitigating
financial obstacles that have a detrimental
effect on final results.

Often it is not even the costs associated
with operational systems, but rather
the justification of those costs that is
the real issue. Control and information
systems providers recognize the need
to architect, implement and manage
systems in line with business strategies.
While no single source of expertise can
provide a complete picture, control and
information systems providers have a
unique perspective on the industry – one
that utility executives would be wise to
consult in making decisions regarding
operational systems.

Operational systems are critical to the
core business of utilities: the safe and
efficient generation of electricity, in compliance
with environmental regulations.
These systems, long outside executive
purview, are critical to the success of utilities
in a changing market environment.