CHAPTER 1
CUSTOMERS AND MARKETS
Business Intelligence: The ‘Better Light
Bulb’ for Improved Decision Making
Getting real-time insight into fuel prices, competition and regulations
is critical for utilities seeking to improve operational efficiency.
www.UtilitiesProject.com/10806
A
lthough some utilities have
improved organizational agility
by providing high-level executives
with real-time visibility into operations, if
they’re to be truly effective, these businesses must do more than simply implement CEO-level dashboards. They must
provide this kind of visibility to every
employee who needs it. To achieve this,
utilities need to be able to collect data
from many disparate sources and present
it in a way that allows people company-
employees in different levels and roles
creates a new challenge. Technological
advances that produce exponentially
increasing volumes of data, coupled
with historical data silos, have made it
extremely difficult for utilities professionals to access, process and analyze data in
a way that allows them to make effective
decisions. What’s needed: BI technology tools that are not only available to
the C-level executive or the accounting
department, but to everyone – civil and
executives – can gain insight into the business and make better informed decisions.
RIGHT-TIME PERFORMANCE
MANAGEMENT
“The Gartner Magic Quadrant for Business
Intelligence Platforms, 2008,” by James
Richardson, Kurt Schlegel, Bill Hostmann
and Neil McMurchy (February 2008), has
this to say about the value of BI:
CIOs are coming under increasing pressure to invest in technologies that drive
15
Business intelligence solutions need to handle
data in a way that mirrors the way people work.
wide to access the right information at the
right time in the form of easy-to-use and
actionable business intelligence (BI).
The following statement from the Gartner
EXP CIO report “Creating Enterprise Leverage: The 2007 CIO Agenda,” led by Mark
McDonald and Tina Nunno (February 2007).
Success in 2007 requires making the
enterprise different to attract and retain
customers. In response, many CIOs are
looking for new sources of enterprise
leverage, including technical excellence,
agility, information and innovation.
This statement holds true. But converting data into useful information for
electrical engineers, technicians, planners, customer service representatives,
safety officers and others.
BI solutions also need to handle data in a
way that mirrors the way people work. Such
solutions should be capable of supporting
the full spectrum of use – from individuals’
personal content to information created
by team members for use by the team and
formal IT-created structured and controlled
content for use enterprisewide.
The good news is that BI has become
more accessible, easier to use and more
affordable so that people throughout the
enterprise – not just accountants or senior
WRITTEN BY
Larry Cochrane, Microsoft
Larry Cochrane brings his two decades of utilities information technology and operations systems
R&D, product development and support experience to Microsoft’s Worldwide Utilities Industry as
a technology strategist. He is a graduate of the University of Washington with a B.S. in mathematics,
a B.S. in electrical engineering and an M.B.A.
p22
U8_Ch1_final.indd 22
business transformation and strategic
change. BI can deliver on this promise if
deployed successfully, because it could
improve decision making and operational
efficiency, which in turn drive the top line
and the bottom line.
Greg Todd, Accenture Information
Management Services global lead for
resources at Accenture, advises that
monthly, or even weekly, reports just
aren’t enough for utilities to remain
agile. Says Todd, “The utilities industry is
dynamic. Everything from plant status and
market demand to generation capacity
and asset condition needs near real-time
performance management to provide the
insight for people enterprisewide to make
the right decisions in a timely fashion – not
days or weeks after the event.”
By having access to near real-time
performance monitoring across the enterprise, utilities executives, managers, engineers and frontline operations personnel
can rapidly analyze information and make
Innovating for the Future
5/2/08 8:38:18 AM
white paper
decisions to improve performance. This in
turn allows them more agility to respond
to today’s regulatory, competitive and
economic imperatives.
For example, Edipower, one of Italy’s
leading energy providers, has implemented an infrastructure that will grow
as its business grows and support the BI
technology it needs to guarantee power
plant availability as market conditions and
regulations dictate. According to Massimo
Pernigotti, CIO of Edison, consolidating
the family of companies’ technology platforms and centralizing its data network
allowed the utility to fully integrate its
financial and production data analyses.
Says Pernigotti, “Using the new application, staff can prepare scorecards and
business intelligence summaries that plant
managers can then access from portable
devices, ensuring near real-time performance management.”
To achieve this level of performance
management, utilities professionals
need easy access to both structured and
unstructured data from multiple sources,
as illustrated in Figure 1. This data can
be “owned” by many different departments and span multiple locations. It can
come from operational control systems,
meter data systems, customer information systems, financial systems and human
resources and enterprise resource planning (ERP) systems, to name a few sources.
New and more widely available BI tools
allow engineers and others to quickly view
near real-time information and use it to
create key performance indicators (KPIs)
that can be used to monitor and manage
the operational health of an organization.
KPIs commonly include things like
effective forced outage factors (EFOFs),
average customer downtime, average
customer call resolution time, fuel cost
per megawatt hour (MWh), heat rates,
capacity utilization, profit margin, total
sales and many other critical indicators.
Traditionally, this data would be reported
in dozens of documents that took days or
weeks to compile while problems continued to progress. Using BI, however, these
KPIs can be calculated in minutes.
With context-sensitive BI, safety professionals have the visibility to moni-
tor safety incidents and environmental
impacts. In addition, engineers can analyze an asset’s performance and energy
consumption – and solve problems before
they become critical.
One of the largest U.S.-based electric
power companies recently completed a
corporate acquisition and divestiture. As
part of its reorganization, the company
sought a way to reduce capital expenditures for producing power as well as
an effective way to capture and transfer
knowledge in light of an aging workforce.
By adopting a new BI platform and monitoring a comprehensive set of custom
KPIs in near real time, the company was
able to give employees access to its generation performance metrics, which in
turn led to improved generation demandand-surplus forecasts. As a result, the
company was able to better utilize its
existing power plants and reduce capital
expenditures for building new ones.
BI tools are also merging with collaboration tools to provide right-time
information about business performance
that employees at every organizational
level can access and which can be shared
across corporate boundaries and continents. This will truly change the way
people work. Indeed, the right solution
combines BI and collaboration, which not
only improves business insight, but also
enables staff to work together in real time
to make sound decisions more quickly and
easily and to proactively solve problems.
With these collaboration capabilities
increasingly built into today’s BI solutions, firms can create virtual teams that
interact using audio and video over large
geographical distances. When coupled with
real-time monitoring and alerting, this virtual collaboration enables employees – and
companies – to make more informed decisions and subsequently become more agile.
Andre Blumberg, group information
technology manager for Hong Kong’s
CLP Group, believes that user friendliness
and user empowerment are key success
factors for BI adoption. Says Blumberg,
“Enabling users to create reports and perform slice-and-dice analysis in a familiar
Windows user interface is important to
successfully leveraging BI capabilities.”
As more utilities implement KPI dashboards and scorecards as performance
management tools, they open the door for
next-generation technologies that feature
dynamic mashups and equipment animations, and create a 24x7 collaborative environment to help managers, engineers and
operations personnel detect and analyze
problems faster and more effectively in a
familiar and secure environment. The environment will be common across roles and
cost much less than other solutions with
similar capabilities. All this allows utilities
operations personnel to “see the needle in
the haystack” and make quicker and better
decisions that drive operational efficiency
Search, Collaboration,
Content Management
Reports
Dashboards
Excel
Workbooks
Analytic
Views
Scorecards
Plans
Data Analysis & Reporting Services
Data Warehouse
Data Integration Service
Customer
information
Systems
CRM
ERP
Settlement
and
Billing
Plant
Data
Energy/
Distribution/
Market
Management
System
FIGURE 1 A Business Intelligence Collaboration Platform
www.UtilitiesProject.com
U8_Ch1_final.indd 23
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CHAPTER 1
CUSTOMERS AND MARKETS
and improve the bottom line. Collaboration
enables personnel to engage in key issues in
a timely fashion via this new desktop environment. In addition, utilities can gain preemptive knowledge of operational problems
and act before the problems become critical.
BeTTer DeCISIONS
IMPrOVe BuSINeSS INSIghT
Everyone in the organization can benefit
from understanding what drives a utility, the key metrics for success and how
the company is performing against those
metrics (see Figure 2). By definition,
BI encompasses everyone, so logically
everyone should be able to use it.
According to Rick Nicholson, vice president of research for Energy Insights, an
IDC company, the nature of BI recently
changed dramatically. For many years,
BI was a reporting solution and capability used primarily by a small number of
business analysts. “Today, BI solutions
have become more accessible, easier
to use and more affordable, and they’re
being deployed to managers, supervisors,
line-of-business staff and external stakeholders,” says Nicholson. “We expect the
use of business intelligence in the utility
industry to continue to increase due to
factors such as new report and compliance requirements, changes in trading
markets, new customer programs such as
energy efficiency and demand response,
and intelligent grid initiatives.”
Accenture’s Todd believes that traditional BI focuses on analyzing the past,
whereas real-time BI today can provide
an immediate chance to affect the future.
Says Todd, “Smart users of BI today take
the growing volume of corporate operational data and the constant flow of raw
information and turn it into usable and
business-relevant insight – in near real
time – and even seek to manage future
events using analytics.” (See Figure 2.)
Most importantly, today’s BI gives utility information workers a way of understanding what’s going on in the business
that’s both practical and actionable. Dr.
J. Patrick Kennedy, the founder and CEO
of performance management vendor
OSIsoft, says that the transaction-level
detail provided from enterprise software
often offers a good long-term history, but
it does not answer many of the important
operations questions. Further, this type
of software typically represents a “pull”
rather than a “push” technology.
Says Kennedy, “People think in terms
of context, trends, interactions, risk and
reward – to answer these questions effectively requires actionable information to
help them make the right decisions. Integrating systems enables these decisions
by providing users with a dynamic BI application within a familiar platform.”
whaT gOOD BI SYSTeMS LOOK LIKe
FIgure 2 Organizations can improve
by providing business insights to all
employees, leading to better, faster,
more relevant decisions.
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U8_Ch1_final.indd 24
Here are some critical characteristics to
look for in an enterprise-class BI solution:
• The BI solution should integrate with the
existing IT infrastructure and not require
major infrastructure changes or replacement of legacy software applications.
• The technology should mirror day-today business processes already in place
(rather than expect users to adapt to it).
• The application should be easy to use
without extensive IT support.
• The BI solution should connect seamlessly to multiple data sources rather
•
•
•
•
than require workers to toggle in and
out of a broad range of proprietary
applications.
An effective BI solution will provide the
ability to forecast, plan, budget and create scorecards and consolidated financial
reports in a single, integrated product.
The BI solution should support navigation directly from each KPI to the
underlying data supporting that KPI.
Analysis and reporting capabilities
should be flexible and allow for everything from collecting complex data from
unique sources to heavy-duty analytics
and enterprisewide production reporting.
The BI solution should support security by
role, location and more. If access to certain data needs to be restricted, access
management should be automated.
The true measure of BI success is that
users actually use it. For this to happen,
BI must be easy to learn and use. It
should provide the right information in
the right amount of detail to the right
people. And it must present this information in easily customized scorecards,
dashboards and wikis, and be available
to anyone. If utilities can achieve this,
they’ll be able to make better decisions
much more quickly.
SeeINg The LIghT
BI is about empowering people to make
decisions based on relevant and current
information so that they can focus on the
right problems and pay attention to the
right customers. By using BI to monitor
performance and analyze both financial
and operational data, organizations can
perform real-time collaboration and make
truly transformational decisions. Given
the dynamic nature of the utilities industry, BI is a critical tool for making organizations more flexible and agile – and for
enabling them to easily anticipate and
manage change. ■
weBLINK
>>>>>>
More information and additional
material can be found online at
www.utilitiesProject.com/10806
Innovating for the Future
5/2/08 8:38:20 AM