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The Future of Energy Management


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Energy and consumption management, rapidly evolving to include smart grids and other innovations, must take into account energy utilization patterns from all aspects of the enterprise not just utility/HVAC needs.

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The Future of Energy Management

  1. 1. • Cognizant 20-20 InsightsThe Future of Energy ManagementTo reduce operating costs and cut wastage, manufacturers must taketheir energy management optimization efforts beyond utility consumptionmonitoring and focus on the total work stream: building infrastructure,supply chains, product design, transportation, plant equipment andcontrols and smart metering. Executive Summary Current Operating Model The global downturn is testing the resiliency of It has become imperative for businesses to build businesses across industries by putting pressure dedicated teams and departments to implement on margins and constraining operating options. processes and technologies that can help reduce The challenge is particularly difficult in the area consumption. However, with numerous avenues of of energy management, where rising utility costs, energy consumption to consider, such teams have a lack of discounted tariffs and restrictive legisla- been struggling to measure it, let alone control it. tions are creating major headaches for the entire Seeing this as an opportunity, some IT service C suite. Amid the prolonged global economic providers, environmental consultants, energy con- downturn, businesses continue to see energy sultants and technology manufacturers dealing management as a concept limited to monitoring in energy consumption monitoring services and controlling utility consumption and reducing are building software products and suggesting leakage. Few businesses have successfully process reforms that can help businesses monitor identified emerging energy management oppor- and control their energy usage. However, these tunities beyond utility consumption. services deliver only basic consumption data The scope of energy management should not only without any detailed analysis that traces the be limited to utility consumption by heating, ven- patterns of usage based upon various influencing tilation and air conditioning (HVAC) systems in factors, such as the impact of the weather or the facilities or IT infrastructure, but must extend to scale of operations. optimization of waste management, building infra- Currently, there is no single consolidated structure, supply chain networks, product design, solution that addresses the entire gamut of transportation networks and plant controls and energy management. Through this paper, we equipment. Moreover, enterprises must embrace attempt to unearth all the major areas of energy smart grid/meter systems and renewable energy management, the limitations of the current set of sources to enact more effective cost-manage- solutions and how by improving visibility across ment strategies and utility consumption, thereby the value chain, businesses will be able to create improving their long-term sustainability. an environment of accountability and achieve sus- cognizant 20-20 insights | december 2012
  2. 2. Sample Energy Consumption Profile Figure 1 depicts an approximate energy con- sumption profile for a typical manufacturing organization. In order to obtain detailed insight about loca- tion-specific or equipment-specific consumption 25% of resources, organizations need to leverage 35% technologies such as smart meters, sub-meters, Facilities building management systems and data loggers. & Buildings 20% What Next? Manufacturing 20% Such location or equipment-specific consump- Logistics tion data can be coupled with other factors, such Enterprise as consumption at a similar property, weather, number of employees, floor area equipment type, insulation type, etc., thereby empowering deci-Figure 1 sion-makers to keep in check the consumption of energy resources.tainability goals. Efficient energy management Four variables that drive the concept of energycan enhance the image of a company as a respon- management are:sible green supplier to key stakeholders includinginvestors, partners and customers. • Potential areas of resource usage. • Opportunities within these potential areas thatDemystifying the Sources can be tapped to minimize resource usage.An organization’s energy portfolio can be exceed- • Stakeholders who need to own the implemen-ingly complex and vast. In large and mid-size tation of candidate projects to address thebusinesses, resources are treated as a free opportunities.commodity since there are no restrictions andemployees use them rather liberally. Due to • Potential benefits which the stakeholders and the organization stand to gain.this behavior, it is a challenge to find “where”resources are being used and, more important, Figure 2 depicts the relationship between thesewasted. four components and how they work together to maximize energy management benefits.Scope of Energy Management AREAS Facilities/Buildings Manufacturing Logistics Enterprise • Selection/installation of • Installation systems to of energy • Green supply chain. • Redesign process for a advanced building monitoring • Manage responsible sourcing paperless office. management systems and equipment. control plant equipment. • Attain energy efficiency and optimal inventory management. • Rationalization of IT infrastructure. • Use of energy efficient ENERGY STAR certified through advanced process control. • Reduce carbon footprint by • Virtualization and OPPORTUNITIES optimizing routes, efficient consolidation. equipment. • Real-time energy load-building, etc. • Data center optimization. • Monitor consumption based monitoring. • Manage reverse logistics for • Green readiness assessment. upon budgets and alerts. • Product/process design waste management. • Moderate consumption based optimization. • Reuse parts using recycling • Carbon footprint assessment. upon external factors such as humidity, temperature, • Design for reduced energy programs. • Sustainability reporting for green readiness and consumption. pressure, etc. regulatory compliance. • Optimized(facility simulator). design of green • Design for reduced material. buildings GOALS HOLDERS • Facility manager. • Plant manager. • CIO &&IT leadership. STAKE- • CSR team. • CXOs and leadership. • Operations manager. • Risk compliance. Reduce energy consumption Reduce energy consumption Reduce energy consumption & Reduce energy consumption & & improve brand & investor & improve brand & investor manage regulatory compliance. manage customer expectations. perception. perception.Figure 2 cognizant 20-20 insights 2
  3. 3. Shortcomings of Today’s Energy on external insights by an energy consultant/ Management Products specialist. Clearly, these products can’t be sold in isolation and must be accompanied with The limited benefits of today’s energy consulting insights as a service provided by a management products can be attributed to third-party provider/systems integrator. ongoing economic pressures and regulatory- mandated reporting of carbon emissions that • Operational carbon and energy management: public companies must comply with. This segment comprises products that monitor and control equipment that consume electricity it is incumbent on According to Forrester,1 the intensively such as heating, ventilation and air- energy management market conditioning units (HVAC) or major production users to analyze their is divided into three product units. These products are not integrated with energy usage and segments with minimal other systems and do not provide any intel- interpret reasons overlap between them (see ligent analysis capabilities. Such systems Figure 3). These products primarily monitor consumption data and only for irregular peaks/ either address different cater to facility managers who need to continu-troughs or understand classes of users with limited ously monitor the performance of HVAC and the impact of data, or provide detailed intensive energy consumption units. information of a specific area consumption on the for a specific class of users. • Information and communication technology environment. Many suppliers are rapidly carbon and energy management: This segment refers to the systems that IT adminis- moving into this market but trators leverage to closely monitor the energy none at this time provides an end-to-end solution consumed by information technology infra- to a variety of users. The three segments are: structure such as data centers, PCs and servers. • Enterprise carbon and energy management: These systems do not have any analytical capa- This segment serves a set of executive/business bilities and only focus on the consumption of users across various lines of a business. energy by the IT infrastructure. The platforms and systems that belong to this segment help users monitor and report As can be deduced now, none of the platforms aggregated energy consumption and carbon or products aligned to the three segments of emissions across the corporation. However, due energy management has capabilities to intui- to limited analytical capabilities of products tively analyze the impact of energy consumption in this segment, there is a heavy dependence or provide any insights on opportunities to save. Hence, it is incumbent on users to analyze their energy usage and interpret reasons for irregular Three Segments of Energy peaks/troughs or understand the impact of con- Management Products sumption on the environment. Energy Management: An Advanced Approach Understanding the changing needs of the market Enterprise over the years, there is evidence that providers of Carbon and energy management products and services have Energy started taking stock of their offerings in order Management to include additional reporting and analytical features. ICT Operational (Information Clearly, the aim is to help businesses achieve a Carbon and and Communication wider objective. In fact, some companies are Energy Technology) seriously considering an extension of their Management Carbon and Energy current capabilities; for instance, CA has recently Management added enterprise sustainability metrics to its existing product, ecoMeter.2 While that may be one way of effecting better energy management, some providers are heading Figure 3 cognizant 20-20 insights 3
  4. 4. Key Metrics Across the Value Chain Value Chain Product Distribution, Design and Sourcing Manufacturing Retailing, Concept Recycle • Quantity of material used. • Number of units per • Energy usage by equipment. • CO 2 footprint due to • CO impact based upon 2 transport load. • Energy usage due to changing transportation of type and quantity of material. • CO2footprint due to external factors — temperature, finished goods. Key Metrics • Dimensions for efficient transport of goods. humidity, etc. • Energy usage for storage transport loading — number • Energy usage for • Time to manufacturing due to of finished goods. of units per load. managing inventory. product design. • CO 2 footprint due to • Time to manufacture • Energy usage due to changing reverse logistics for and assemble. internal factors — flow rate, recycling programs. • Recyclability percentage of pressure, etc. the material used. • CO impact due to waste. 2 • Reduction in CO footprint 2 based upon mix of recyclable material used. Metrics for Operations — Facility and Operations Resources Management • Energy usage due to IT infrastructure. • Energy usage due to HVAC. • Energy usage comparison between facilities. • Energy usage based upon number of people. floor area, working hours etc. • CO footprint due to employee travel. 2 • Forecast energy usage if energy efficient products are installed. • Usage based upon renewable and nonrenewable fuel composition. • Energy usage as per time of use. • Estimation and validation of bills. • Energy usage against industry benchmarks.Figure 4down the path of integrating their product lines Conclusionto offer a single solution. A case in point is IBM, Clearly, manufacturers stand to benefit greatlywhich is trying to address the issues raised in from technologies that various energy-man-a forum, Green Sigma™ Coalition,3 formed by agement service providers are implementing tolike-minded companies. This forum aims to help deliver an automated platform (with intelligentorganizations become more efficient and sustain- alerts and modeling tools) for data collection,able. IBM seeks to create intelligent systems that consolidation and analysis.optimize resources, including smart grids, waterand traffic, not only at the macro level but to also With some of these new methods, the energyprovide time-relevant data to gain insights and management market will advance to provideinform forward-looking decisions. intelligent analysis once energy usage data is seamlessly integrated with other systems acrossSuch new capabilities can reduce the dependency work streams, such as supply chains, plantof businesses on external agencies/consultants. controls, financial reporting systems, materialTaking such approaches can enable companies planning and product design, waste management,to automate, monitor and control the two-way facility management and smart grid/meters.flow of energy from power plant to plug, create The best way to achieve such advancement in thetransportation systems that optimize traffic flow industry is perhaps consolidation through acqui-and decrease CO2 emissions, provide advanced sitions of niche energy management consultingportfolio/task management capabilities, use companies by large ERP or IT product companies.predictive analytics for better management ofresources and suggest corrective action. Small players offering niche services will eventu- ally realize that the only way to avoid becomingThese can be achieved by addressing key obsolete with the change in paradigm is to bechallenges that can be measured by collecting acquired by larger companies since most business-metrics across an organization’s value chain (see es seek enterprise-wide solutions with a broaderFigure 4). set of capabilities than mere energy monitoring. cognizant 20-20 insights 4
  5. 5. This will help unlock a new environment for energy As an outcome, businesses will not only be able tomanagement that will empower businesses to lower costs and increase efficiency, but they willleverage sustainability investment opportuni- cap wastage and pollution, leaving a cleaner envi-ties within their value chain. They will be able ronment and more abundant resources to futureto develop custom dashboards and reports and generations.share relevant metrics with their customers,regulatory authorities and investors — leading togreater accountability.Footnotes1 Forrester study, The Evolution Of Enterprise Carbon And Energy Management Software, management_software.2 Computer Associates press release: gies-Extends-Leadership-of-Energy-and-Sustainability.aspx.3 “IBM’s Green Sigma Coalition Lines up Industry Leaders,” Environmental Leader News: the AuthorAnupam Gehani is a Senior Consultant within Cognizant Business Consulting’s Engineering and Manu-facturing Solutions Practice. He has six years of consulting and business analysis experience, workingwith U.S., UK and European customers. His areas of expertise include delivering transformation projectsthat entail vital processes in the utilities and industrial automation space. Anupam holds an M.B.A. fromSP Jain, Singapore, and a bachelor’s degree in chemical engineering from Mumbai University, India. Hecan be reached at CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered inTeaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industryand business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50delivery centers worldwide and approximately 150,400 employees as of September 30, 2012, Cognizant is a member ofthe NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performingand fastest growing companies in the world. Visit us online at or follow us on Twitter: Cognizant. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. 1 Kingdom Street #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA Paddington Central Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London W2 6BD Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 20 7297 7600 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 20 7121 0102 Fax: +91 (0) 44 4209 6060 Email: Email: Email:©­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein issubject to change without notice. All other trademarks mentioned herein are the property of their respective owners.