White Paper: The Case for Utility Business Intelligence
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1 White Paper: The Case for Utility Business Intelligence The North American utility industry is now over 100 years old. Water utilities, in one form or another, have been delivering clean water and treating wastewater, for upwards of 150 years. Electric utilities have been generating, transmitting, and distributing electric power for over 100 years. For much of this time, many of the operations have remained remarkably the same. In fact, this steady state of affairs, while building an admirable record of consistency and continuity of service, has also brought us to today s reality of trying to manage an aging utility infrastructure. And the management of this infrastructure also requires the use of new information technology ( IT ) from the field to the back office to the executive suite. To this aging infrastructure add in increasingly scrutinized financial requirements, a complex regulatory environment, and a more demanding customer base and the industry is entering a very challenging era. To manage effectively in this environment, utility executives and their staffs will need information that provides insights into key operating areas, and does so in an integrated, timely, and cost-effective manner. One tool that has emerged in this arena is business intelligence. While there are many different definitions of just what business intelligence is, most definitions include a common theme around the use of computer hardware and software to perform analyses of an organization s business data and present information that functions to support more timely and accurate management decisions. Companies ranging from many of the
2 leading e-commerce providers, like Yahoo and Amazon, through smaller niche companies in many industries use business intelligence to run more efficiently, provide better customer choice and service, and ultimately for sustained growth and profitability. Examples of this from the business world would include KPIs, or Key performance Indicators, ranging from financial measures like revenue per employee to measures from different, sometimes seemingly arcane areas of the business, such as employee accidents per plant per year. From the Business World to Utility Needs The leap from the application of business intelligence in the business world to addressing the particular needs in the utility industry is not a big one. In fact, the very nature of business intelligence lends itself well to the utility industry. Utilities by necessity are very technically and organizationally complex businesses. While the general public in North America takes clean water and the lights being on for granted, treating and distributing water, collecting and treating wastewater, and the generation, transmission and distribution are not trivial tasks. The requirement for multiple systems to complete the mission of utilities has evolved into a series of functional and information silos. Consider the many systems required in a water or electric utility as in the examples in the following two figures.
3 An example of the many separate systems in a power delivery system and/or a water distribution systems, all of which generate information: Figure 1. Electric Distribution Systems Example. Plant instrumentation & Controls Substation and Distribution Automation Distribution SCADA Asset Management Work Management Customer Care & Billing Automated Meter Reading HR/Finance Geospatial Information These systems noted here are typically stand-alone systems that have little or no integration outside of their functional area, creating challenges for utility managers to have an enterprise view of the utility. Figure 2. Water Distribution System Example. Given that utilities have historically had these islands of automation, but have still managed to deliver clean water and keep the lights on, what is the imperative to create a more integrated, or enterprise, view of the utility? The answer to this question lies in today s operating environment, which requires a new way of working. At the core of the challenges utility leaders are facing today is an unprecedented convergence of regulatory, technological, financial, and customer issues. Let s look at a few examples.
4 Asset Management: As more electric and water utilities implement asset management systems, more data is available on the equipment, systems and processes used to operate and maintain their infrastructure. This data can be used to improve workforce efficiency, improve costly maintenance practices, and increase system reliability. The IT systems involved here in addition to the asset management system can include HR for scheduling and tracking staff hours (including overtime, a significant cost driver in many utilities); the SCADA system for getting information on temperatures, run times, and related equipment operating information; and a data warehouse or historian. System Monitoring & Control: While SCADA and related monitoring and control systems have been in existence for many years, today s communications layer associated with a smart grid deployment creates opportunities for pulling additional data from the distribution system via a roll out of intelligent devices across the system, meaning that there is now more data available on systems operations. Systems includes here would be SCADA, Distribution Automation & Management System, and a Smart Grid communications infrastructure. Customer Care: Utility billing systems have evolved into systems that house massive amounts of customer information that can be used to improve customer service, speed up service call response time, identify outages faster and more accurately, and even provide more customer choice and cost savings. Systems here can include the Customer Information System, Automated Meter Reading, Meter Data Management, and an Outage Management System. So while utilities move forward with solutions that address the convergence noted above, utility managers and executives still lack both visibility into these operations, AND the ability to measure, manage, and improve performance. Enter Business Intelligence.
5 Visibility -> Intelligence -> Results An effective Business Intelligence solution for the utility industry will enable standardized KPIs and metrics, intelligence across multiple departments, tracking of results over time, and benchmarking against industry segments and industry averages. A closer look at each of these follows. Standardized KPIs and metrics: The use of industry-standard, or commonly accepted KPIs and metrics will provide a basis for building a business intelligence solution. For water utilities this can include the KPIs identified in the Effective Utility Model developed in 2006 by six leading water/wastewater organizations. For electric utilities, this might include building KPIs from industry standard data sources such as FERC Form 1 data for Investor-Owned utilities or RUS Form 7 data for Rural Electric Cooperatives. Figure 3 below is an example of KPIs from the effective Utility Management model. Product Quality Service Delivery Drinking Water Flow And Pressure (%) Fire Suppression Water Flow And Pressure (%) Service Interruptions (%) Water Quality Goals Met / Not Met Sewer Backups (Amount & %) Sewer Overflows Water Reuse (Amount & %) Biosolids Put To Beneficial Use (%) Pressure Adequacy Drinking Water Supply Outages Drinking Water System Reliability Water Quality Complaints Turbidity Fire Hydrants Condition Fire Hydrant Flow Sewer Overflows Number Of Environmental Violations Problem Responsiveness Wastewater Treatment Effectiveness Rate Compliance Monitoring Measures
6 Figure 3. Product Quality Service Delivery KPIs from Effective Management model for water/wastewater utilities. Intelligence across multiple departments: With such a variety of activities that go on during any given 24 hour period, utility executives need to have an enterprise view of their organization that includes KPIs and metrics from many different departments and functions. This can include everything from financial information to treatment plant operating data and points in between. Tracking of results over time: The ability to manage, measure, and improve performance requires tracking data over time, be that from month-to-month, quarter-to-quarter, or annual. In some circles this is known as internal benchmarking. Tracking results and performance over time is useful from the shop floor to the board room, enabling improvements in business processes, budgeting, capital programs, public information, and more. Benchmarking against industry segments and industry averages: Taking this tracking concept to the next level can provide even more improvements in performance; specifically when looking at industry statistics from comparable industry segments and/or against the entire industry. The keys to successful benchmarking include: o reliable, consistent data from within your organization that is collected as seamlessly as possible (if data gathering is too labor-intensive, it will typically not last for the long term) o adherence to industry standard KPIs and metrics o a reliable source of industry data Once these elements are in place, the likelihood of a successful benchmarking program increases significantly. Executive Dashboard: The place where this all comes together is in the form of an executive dashboard that presents all of the intelligence that the utility leader needs to
7 make better informed decisions in a more timely manner and ultimately measurably improve on the performance of their organization. The executive dashboard should include consistently gathered data and the resulting measures that are aligned with industry-standard KPIs and metrics. The executive dashboard can also integrate benchmarking to enable tracking of the organization over time and against its industry and key industry segments. An example of an executive dashboard is provided below in Figure 4. Figure 4. Example of intelligence presented in an executive dashboard. (Courtesy of OneView Division of ea consulting, Inc.) One final consideration in putting a complete business intelligence solution to work in your organization is to engage a reputable consulting firm with expertise in specific utility business or technical areas to help you take what you have learned about the
8 organization from the BI process and apply it to effect real performance improvement. For example, consider if one of a utility s KPIs looks at maintenance costs associated with a water distribution system and the data over time is showing increased costs with no improvement in performance (as noted from other KPIs). This could be a function of aging infrastructure, a need to re-engineer some processes, or perhaps from other factors. Having an objective, third-party expert work on this problem is very likely to move the organization towards measurable improvement. Putting It All Together Ultimately, business intelligence is a tool towards larger organizational goals like meeting regulatory compliance, improving financial performance or customer service, and much more. A complete Business Intelligence solution will do three things for an organization using different components of the entire solution: Where are we? The KPIs that are part of the executive dashboard will show the utility management where they are today and possibly how they are improving (or not improving) over time. Having this type of reliable baseline intelligence is critical for organizational performance improvement. Where do we want to go? So if the utility leaders have a good idea of "where we are via their executive dashboard, they will want to identify goals and targets for improvement, in essence this is where do we want to go? The benchmarking component will provide some of these goals, particularly for KPIs where the utility is under-performing. How do we get there? Once the starting point and the destination are identified, the path from Point A to Point B must be built. The use of a third-party consultant is often the best way to build this path. With utility staffs typically busy running the utility, the objective, strategic perspectives and expertise that a top-notch consulting firm can bring
9 to the table can make a huge difference in navigating the path to performance improvement. Business Intelligence can be quite a daunting initiative in a large, complex organization. Having some of the basic framework in place, however, will greatly increase the likelihood for a business intelligence initiative that will drive significant change and improvement across the organization. NOTE: This White Paper was produced by the Business intelligence team at ea consulting ( and is intended to provide a framework for utility leaders to think about ways that they might deploy a business intelligence solution in their organization.
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