Chief tech officers discuss how they are using their data to beat the competitition.
This year's first IT commandment: Use what you've got. And the second is like unto it: Data is king. Those are the strong themes that emerged from this year's CIO Forum. Fortnightly interviewed three chief information officers at three diverse companies: a traditional utility, Cinergy; a merchant generator, Calpine; and an independent system operator (ISO), the Electric Reliability Council of Texas (ERCOT).
Calpine and Cinergy weren't immune to the economic woes of the industry, nor were their information technology (IT) departments. At Calpine, CIO Dennis Fishback focused on taking information the company already had from multiple systems, and combining it in different ways for competitive advantage-without extra spending. Cinergy's chief technology officer (CTO), Bennett Gaines, spent most of last year trying to maximize the returns from prior years' heavy technology investments. Even though ERCOT had what CIO Ken Shoquist called a healthy year, the budget wasn't limitless. "We watch every penny," he notes. "We have a fiduciary responsibility to do that." Shoquist's time over the last year was taken up with hiring staff to replace ERCOT's heavy reliance on consultants and improve the ISO's bottom line.
Despite their companies' differing business models, all the CIOs emphasized how important easy access to all types of company data is to their bottom lines. At Calpine, for example, Fishback says that linking up data between an environmental monitoring system and an operations system allowed the company to trade emissions credits in the Houston area. "Most companies would go out and buy a system to track that. We didn't," he says. The project was completed in 2002, and due to handling it in-house, it had a fairly low price tag, Fishback notes. "But the real benefit came to the surface this year, when it looked like it could be as much as a $7 million benefit."
Another similar Fishback brainchild was linking up Calpine's automated dispatching system (ADS) and energy management system (EMS) for its plants in California. From his time spent as the California ISO's CIO, Fishback knew that Cal-ISO sent out new dispatch orders every 10 minutes. He explains that before linking up ADS and EMS, "the way we were dealing with these dispatch orders was the way most companies do: Go to a generation dispatcher, the generation dispatcher turns around and calls the plant and tells the plant what to do." A manual system like that often meant a 10- to 15-minute lag between new dispatch orders and response by Calpine. By eliminating all the human intervention and directly linking the ADS to the EMS, Calpine now automatically responds to commands from Cal-ISO. "What that does is allow us to ramp up and ramp down a lot more quickly, so you either make more money going up, or you avoid spending money you don't need to going down," Fishback observes.
The cost for the project? "It was virtually no cost. All we had to do is put the code in place to link the two," says Fishback. And the result? At one plant, the company saw a $250,000 revenue increase, just by ramping up and ramping down more quickly.
Not too shabby during a downturn.
Cinergy, too, is trying to maximize its existing investment in technology, says CTO Gaines. The emphasis has shifted from replacing customer management, billing, and financial systems with more robust applications. Instead, the name of the game, Gaines says, "is to take the best those applications still have to offer, and utilize those, but look at data as the thing you need to manage and change more effectively."
How will he do it? "We were making a tremendous investment, building these applications silo project by project. Now, we think about how that integrates not only on the front-end side, but on the back-end side, via the technology of a data warehouse," Gaines says.
The most important aspect of a data warehouse, from Gaines' perspective, is not the placement of information inside a single silo. Rather, the crucial feature is having a way to index common data elements across the business. Sounds easy, but in reality, it's not. Gaines gives the example of a customer. "In any business [a customer] probably has 20 definitions. When you look at it from a data standpoint, depending on whether you're talking at the customer level, paying their bill, or on a 10-Q, as it relates to the number of customers we have, regulated or unregulated, it has a completely different context. From the data side, though, if you're talking about integrating your business, it has to all fit together."
One upside of Cinergy's data warehouse, Gaines says, is that the company has created a fairly robust set of analytics in reporting that help it make better decisions. For example, Cinergy's traders have more visibility, more timely information, and are able to be more responsive to managing the assets in light of market conditions.
ERCOT also has spent a great deal of time, effort, and money on building a data warehouse. As Shoquist points out, "We have an incredible amount-and very detailed-data about our market. Getting access to that large amount of data is a chore and a challenge."
Shoquist compares ERCOT's information needs to MasterCard, where he worked for a number of years. A data warehouse for ERCOT is one way, Shoquist says, of eliminating seams between ERCOT and its market participants. Instead of sending ERCOT a transaction and duplicating data, he says, market participants can simply use ERCOT's data, and also update ERCOT's data with their own. "Instantaneously, [data is] spread to those who need to know it, throughout the marketplace. It's more of a real-time transaction management flow than a batch transaction flow," Shoquist notes.
The stakes for good data management are pretty high. As Shoquist points out, "If you were to look at ERCOT, and describe what we have, we are in essence like a New York Stock Exchange that happens to have a huge power grid attached to it. We have the reality of the financial transactions, coupled with the reality of turning the lights out if we mess this up."
Naturally, data security issues rank high in the list of concerns of CIOs, though that has not always been the case. As Gaines points out, "In the past security was an afterthought. Now, it is a part of the development cycle of a data warehouse."
Similarly, Shoquist notes that ERCOT is only as strong a market as its weakest link. "So we could have the tightest walls in the world at ERCOT, [but] any external activity that would hamper any of our trading partners for either receiving or sending information to us essentially shuts down the market." He adds that data security "is definitely high on my radar, very very important to me, to ensure that not only are we secure, but we secure the entire market."
Of course, data warehouses weren't the only issue confronting CIOs this past year, nor is that issue the only item on their agendas in the months ahead. For a further peek into the minds of these CIOs, we've included excerpts from their interviews in the following pages.
Making Data Warehouse Projects Work
Data warehousing is hot, but it can burn a company. A recent study by the Cutter Consortium shows that as many as 41 percent of data warehousing projects fail.
In essence, data warehousing consolidates data and information from across the corporation, regardless of the application that generates the data. The reason consultants get paid big bucks to create a data warehouse lies in the fact that not all bits and bytes play well together, unless coaxed and massaged.
What can help make a data warehouse project a success?
- Don't underestimate how critical it is to get the extracting, transforming, and loading of data right. It's boring, but it's crucial to making a warehouse work.
- Have a clear idea of the business problem(s) to be solved by using a data warehouse.
- Avoid adding more and more features to the project as it progresses. It will cost more to make mid-stream changes than to plan features up front.
- Beware of scope creep-expanding the scope of the original project virtually guarantees missed implementation deadlines.
- Get end-user buy-in and input during all phases of the project, particularly in the planning and development stages.
- Expect to spend money to maintain the warehouse once it's up and running.
-J.A.
Senior Vice-president and Chief Information Officer, Calpine
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Q: Did any big projects go on line for you last year?
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Q: Do you come up with these ideas on your own?
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Q: How do you look for personnel? It's not every IT person that knows the energy industry.
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Q: Looking ahead for the next year or two, what's on your agenda?
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Chief Technology Officer, Cinergy
"We're bringing data into one repository, with a set of standard terminologies so it means the same thing no matter who's looking at it."
Q: Did you have any big IT projects that went on line for you last year?
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Q: So what kinds of data are you trying to link up?
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Q: Are you doing this work in-house, or are you using vendors?
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Q: It sounds like a precise, defined quantity of outside help.
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Q: So in a way, is this a move back toward utilities creating their own legacy systems?
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Q: What about going forward in the next couple years? Any plans to replace an aging system, or adopt a new technology?
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Vice-president and Chief Information Officer, ERCOT
"Data and data access is a very hot topic for ERCOT. We have major spending efforts in building data warehouses for ourselves, for market participants, and for our [PUC]."
Q: Are there any particular projects that have come on line for you in the last year?
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Q: Are you working on projects that better connect up data?
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Q: So when you say you're making this data more accessible, is that through a Web portal or other means?
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Q: What were your budget trade-offs in the last year?
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Q: Does decreasing the use of consultants mean that you're using outsourcing less?
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Q: So how much has your hiring increased in the past year?
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Q: Do you worry about running the risk of creating, in effect, another sort of legacy system?
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