Energy & Utility Key Business and Technology Trends Kristian Steenstrup Research VP and Gartner Fellow

Transcription

1 Energy & Utility Key Business and Technology Trends Kristian Steenstrup Research VP and Gartner Fellow Industry Advisory Services Energy & Utilities August 2008

2 Ten Business Trends That Are Shaping Energy and Utility Industry Understanding business trends is a crucial for creating a successful IT strategy and is a key requirement in an enterprise architecture planning process. Energy and utility companies must align their IT investments with regulatory initiatives, market restructuring, environmental concerns, energy sustainability, infrastructure reliability and compliance.

3 Top Business Trends 1. High Energy Prices 2. Utility Consolidation 3. Deregulation and Restructuring 4. Environmental Issues 5. Intelligent Grids 6. Consumerisation of Energy 7. Business Process Outsourcing 8. Compliance Software 9. Aging Assets 10. Aging Workforce

4 High Energy Prices Are Here to Stay! Affect low-margin downstream businesses, increases revenue destruction and creates major social impact! Impact on generation portfolio: - Alternative energy sources and DG/DER become more attractive! Impact on investment patterns and utility companies IT portfolios across energy value chain - Generation Fleet Optimization, ETRM, Loss minimization, Revenue protection systems, Demand response 4

5 Consolidation Continues Around the Globe! PUHCA repeal in EPA NA economies of scale! Regulators are playing significant role in M&A approval! In IT M&A benefits realization will depend on successful infrastructure consolidation, apps harmonization and sourcing - Utilities should focus on the data layer as a starting point for standardization. 5

6 Deregulation and Restructuring! Europe - Continental consistency - Integration of markets! Asia Pacific - Privatization matures - Liberalization takes root! North America - Continued inconsistency - Focus on wholesale, but large C&I consumers demand options! Energy market normalization will emerge longer term

7 Environmental Issues are Getting on the Main Stage! In 2006, 29% (33% US) of the anthropogenic CO2 emissions came from the power sector.! With Business as usual, it will go to 38% by 2030.! Options: - Supply side: Renewable, Nuclear, CCS - Demand side: energy efficiency, D/R! CO2 emissions is now a business issue: - Federal legislation to limit emissions likely - Cap and Trade, Liability, Carbon Disclosure Project CEO and Board: What is the risk? Are we doing enough? Consumers: What is my utility company doing? What can I do? 7

8 Intelligent Grids are Coming Innovative use of communications, information and energy technologies to create an electric delivery system of the future that is: Self-Healing and Adaptive Interactive with consumers and markets Empowering to customers Optimized to make the best use of resources and equipment Predictive rather than reactive, to prevent emergencies Integrated; merging monitoring, control, protection, maintenance, EMS, DMS, DG More Secure from attack 8

9 Energy Consumerization: Taking More Active Role Old Model: Reactive - Demand-Side Management Current Model: Corrective - Demand Response Future Model: Active - Consumer Energy Management Solar Panel Load Measure and Control Managed Circuits HVAC System Hot Water Pool Pump Other Loads Consumer Energy Management Battery Storage Wind Turbine Main Circuit Breaker Panel Comfort Lighting Accessories Meter Monitoring & Control Utility Utility Managed Consumer Generation and Storage

10 Defining Business Process Outsourcing (BPO)! BPO: Something old, something new - Scale and scope of current BPO efforts are typically much greater! Market drivers - Increasing business process performance demands - IT standardization - Regulatory mandates - Provider push & improved capabilities! From BPO to BTO - Ensuring continuous process improvement in process outsourcing - Transformation as BPO prerequisite? BPO is moving beyond just cost savings to include process improvement and transformation CRM/CC Top IT-Intensive Intensive BPO Areas F&A HR S&P CRM/CC: Customer Relationship Management/ Call Center F&A: Finance, Accounting, and Administration HR: Human Resources S&P: Sourcing and Procurement

11 New Compliance Software Processes Management! FCPM 21%! Audit 17%! BI 16%! Inventory 15%! BPM 13%! ERP 13%! Sales 11% Content Management! DM/RM 20%! 19%! Storage and archiving 16%! Information policy 12%! ECM 11%! LMS 7% Access and Control! IT change mgmt. 19%! Identity and access 16%! SoD 12%! Spreadsheet 12%! Txn. mon. 11% Environmental! Emissions Control 40%! Carbon trading 10%! Health and safety 50% FCPM = financial compliance process mgmt. BI = business intelligence BPM = business process management ERP = enterprise resource planning DM/RM = document and records management ECM = enterprise content management SoD = segregation of duties LMS = learning management system

12 Assets are Ageing! Lack of clear pricing signals results in transmission asset investment deferral! Because of the growth booms prior to the 1970s, many utilities are operating utility assets nearly at or beyond their designed useful lives. Maintain OR Fail

13 Aging Workforce: Understand Different Generations Value Baby Boomers ( )! Prefer face-to-face communication! Work long hours but prefer to be on site; want challenging, valuecontributing work in a field of expertise! Adapt to other cultural perspectives, but remain true to roots! Expect to be taken care of, such as being trained in technology; like to mentor others to ensure that their work is continued! Prefer to stay with their existing employer and work their way to the top Generation X ( )! Adept with CD and Webbased/ /voice communication! Value independence, committed to work, but expect reward; interested in work/life balance! Open to mix of cultures and well traveled! Independent learners; selfdirected; open to virtual learning; adapt to technology quickly! Challenge authority; willing to leave a job that does not satisfy them Generation Y (1978-Present)! Prefer instant messaging. Short, sharp no frills. Cell for voice.! Value work/life balance, working virtually and team orientation! Global perspective and awareness. Have diverse friends and contacts internationally! Quick learners, especially technically. Learn experientially. Video game training helps teach strategy. Need problem-solving skills.! Low expectations of a career for life; confident, know what they want and are prepared to change employers

14 Relevant research on gartner.com! Post-Merger Energy Risk Management and Reporting: A Data Warehouse Approach! CRM in the Utility Industry: Impact of Deregulation! Energy Market Restructuring: Market Models and Evolution Paths! Hype Cycle for Intelligent Grid Technologies, 2008! Energy Technology Consumerization: The Quest for Lean and Green! Dataquest Insight: BPO Trends in Utilities, 2008! North American Electric Utility Companies Must Comply With NERC CIP 2-9: What You Need to Know Now! Cost Cutting in Utilities Can Come From Better Asset Management! After ERP, Generating Companies Should Look to Work and Asset Optimization

15 Ten Technology Trends That Are Shaping Energy and Utility Industry Technical innovations and trends will emerge from within and from outside the industry. Some of these technologies are in the traditional IT space, but others involve the operational technology (OT) areas of the company. Some technologies will enable change to improve efficiency, and others may support cost avoidance, while others are emerging and their impact is as yet uncertain.

16 Top Technology Trends 1. Utility Software Enterprisation 2. Business Intelligence and Analytics 3. Web Services and Service-Oriented Architecture 4. Web Mobile Technology 6. Software as a Service 7. Advanced Metering Infrastructure 8. Enterprise Information Management 9. IT and OT Convergence 10. The Real-Time Enterprise and Agility

17 Enterprisation: Niche Energy Applications are Combining User! Energy companies are exploring cross-functional process improvement! Viable vendors are expending footprint to support larger cross-functional business processes Management Experienc New Business Process e Integrated Composition Technologies Business Service Repository Security! Begs the question what is the right architectural framework for application aggregation Packaged Custom Business Applications Applications External Services 17

18 BI and Analytics : Business Performance! CRM/CIS analytic architecture must transform operational data into useful information! Executive dashboards must provide real time access to analytics and KPIs, enabling betterinformed decisions and quicker actions Business Modeling CRM/CIS Metrics/Scorecard Processes Planning, Budgeting, Forecasting BI Platform CIS vendor s s investment in analytic architecture will help energy companies harness new business process optimization opportunities OMS Mgmt. and Financial Reporting EMS/DMS Tailored BPM Apps (e.g., HR, CRM, SCM) GIS Mobile

19 Service-Oriented Architecture: Put Architecture In Get Advantage Out Advantage Business-IT alignment B2B, BAM, scale Enterprise reuse Technical reuse, incremental engineering Business Process Management SOA Web services Internet Client/Server Architecture SOAP Distributed computing and Web services Business services w/registry 19 Business events Integrated services and events

20 Web 2.0 Defining Characteristics Technology! Principles: WOA, data-driven, syndicated content, rich semantics, mashable, rich client, build by example! Aspects: Architecture & Platforms Community! Principles: Participation, collaboration, social, transparent! Aspects: People, Interaction, Data Business! Principles: Continuous innovation, collaborative offerings, open business models! Aspects: "Ecosystem," process, value models

21 Mobile Technologies Drives Energy and Utility Performance! Optimizes and tracks crew work schedule and routing (increased wrench time)! Transferring field information (inspection, maintenance, construction red-lines) using mobile devices more efficient and less errorprone than clerks transcribing from paper! Enables real-time workforce, asset condition assessment (e.g., storms and major events), and inventory optimization! Reduces potential fines/lost revenue from SLA/regulatory/customer dissatisfaction! Drives greater value from IT systems by improving enterprise information management (data quality) Operational performance is enhanced by integrating device-enabled field forces with the IT enterprise.

22 SaaS: Software as a Service! Software License = Right to use a software copy may be perpetual or a time-limited renewable subscription! IT Services = Expert help delivering solutions to all types of IT-related problems! Software as a Service = software that is owned, delivered and managed remotely by one or more providers - Application is based on a single set of common code and data definitions - Consumed in a one-to-many model by all contracted customers - On a pay-for-use basis, or as a subscription based on usage metrics 22

23 Advanced Meter Infrastructure: AMI makes Metering an Enterprise Function Meter Local Power Lines Communication Meter Data Management Consumer Wireless Telephone Internet Wireless Network Utility Distribution Lines Supplier Operational Technology - OT IT

24 Enterprise Information Management From tightly coupled, self-contained applications Information Overload Where SOA = DOA! 85% say "they can't easily find information they need."! 75% omitted information in reporting/ research if not "findable" in 10 minutes.! Critical business information can be relational, XML, packaged applications or content repositories.! Integration, change and maintenance are extremely expensive.! World produces 250MB of information per person every year. Understanding location, structure, context and use of information assets is critical in service composition. To Loosely- Coupled Services No Single Version of the Truth! How can I access a single version of the truth?! How do I get a consolidated view of my customers?! How do we manage multiple implementations of custom and ERP applications?! Why do we re-invent the wheel for product and customer data when we develop a new application? Lack of Quality and Consistency

25 IT and Operational Technology are Getting Closer! Emerging opportunities are bringing IT and OT closer - intelligent grid, demand response, outage management systems, realtime monitoring of assets! OT systems increasingly use standard platforms (OS, RDBMS) and protocols (IP)! OT systems are usually outside of the scope of IT and the CIO! The lack of a successful IT/OT governance impedes performance! Impact on security and compliance 25 Enterprise " Enterprise resource planning (ERP) " Human resources IT CIO Vertical " Geographic info system (GIS) " Outage management (OMS) " Enterprise asset management (EAM) " Customer information (CIS) " Energy trading & risk management (ETRM) Corporate IT network Operational Technology (OT) Centralized " Supervisory control and data acquisition (SCADA) " Energy mgmt. system (EMS) " Automatic generation control (AGC) " Distribution Asset Analysis (DAA) CTO (?) Distributed " Programmable Logic Controllers (PLC) " Advanced Protection Relays " Sensors: e.g. PQ Monitors and Fault Indicators " Meters " Gateways/Subst ation Integration Control network(s)

26 Energy Utilities are Becoming More Agile Supply domain Optimize existing plants and portfolios Wholesale price volatility cuts planning horizons (scheduling) from day-ahead to hour-ahead Delivery domain Reliability, self-healing networks (sensors/intelligent agents) WMS/mobile workforce, better labor/hr utilization DAO optimizes asset utilization Retail domain Promote customer sense-and-respond behavior using real-time pricing signals Corporate domain Executive dashboards! Regulatory compliance Mass Market Retail Shared Services Distribution Retail Transmission Owner Large Customer Retail Generation Supply Wholesale and Trading Transmission Operator Delivery 26

27 The Road to the Real-Time Energy Enterprise Horizontally integrated processes, partnerships, people and information Balanced performance: customer satisfaction, regulatory compliance, profit, cash flow, asset utilization Timely response to customer needs, demand peaks, supply disruptions, physical and cyber threats, regulatory requirements & competition Real-time visibility across generation assets, T&D network & market transactions Real-time information delivered to drive factbased decision making Advanced communications and controls to optimize automation Innovative practices and partnerships to integrate the value chain

28 Recent research from gartner.com! Ventyx Acquiring Global Energy Decisions Gives More Potential Utility Hits! Utilities Have Ecosystems; Vendors Have Biospheres! Gartner's Business Intelligence and Performance Management Framework! User Survey Analysis: SOA, Web Services and Web 2.0, North America, 2H06! Future Developments in Utilities Mobile Workforce Management! Is SaaS Safe for Financial Governance, Risk and Compliance Solutions?! Automated Metering Infrastructure Security: Achilles' Heel of the Intelligent Grid?! CIM Adoption Is on the Rise, So Energy and Utility IT Leaders Should Prepare! Findings: OT Governance Becomes Front of Mind in the Back Office! Predicts 2008: Energy and Utility Companies' Outlook Shaped by Market Forces and Environmental Concerns

29 Questions, answers and discussion Kristian Steenstrup Research VP and Gartner Fellow Energy & Utility Key Business and Industry Advisory Services Energy & Utilities Technology Trends