50 Years of Growth, Innovation and LeadershipSmarter Computing in Energy and UtilitiesThe IT systems infrastructure that e...
Frost & Sullivan                   Abstract..................................................................................
Smarter Computing in Energy & UtilitiesABSTRACTAs energy and utility companies around the world face challenges, they are ...
Frost & Sullivan                              from countries outside of the Organization for Economic Cooperation and Deve...
Smarter Computing in Energy & UtilitiesThe market forces in today’s energy and utility environment have shifted market pow...
Frost & Sullivan                             The imperatives shown in Figure 1 revolve around how a utility can transform ...
Smarter Computing in Energy & Utilitiesinvestment (ROI). To successfully deliver on the promise of increased business valu...
Frost & Sullivan                     utility network. The IT infrastructure that supports business operations in the IUN d...
Smarter Computing in Energy & UtilitiesTransform the Utility NetworkThe Energy & Utilities industry is changing its busine...
Frost & Sullivan                     Transform Customer Operations                     The transformation of the Energy & ...
Smarter Computing in Energy & Utilitiesoperations for generation modeling, forecasting, and simulation to predict performa...
Frost & Sullivan                            and it is blazing a trail with the IUN to become a leader in its market. Reali...
Smarter Computing in Energy & Utilitiesbegan with enhancing its current Customer Relationship Management (CRM) and Enterpr...
Frost & Sullivan                              The business value of the Smarter Computing approach to Vestas is central to...
Smarter Computing in Energy & Utilities     •	 Future-proofing their company against new regulations and requirements, as ...
Silicon Valley                           San Antonio                                   London  331 E. Evelyn Ave. Suite 10...
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Smarter computing in Energy and Utilities

  1. 1. 50 Years of Growth, Innovation and LeadershipSmarter Computing in Energy and UtilitiesThe IT systems infrastructure that enables Scalability, Resiliency and Security A Frost & Sullivan White Paper Juan Fernandez and Brian Cotton www.frost.com
  2. 2. Frost & Sullivan Abstract................................................................................................................................... 3 Navigating an Uncertain Future in the Energy and Utilities Industry.............................. 3 The Business Need for Smarter Computing in the Energy and Utilities Industry.......... 7 Introducing Smarter Computing.......................................................................................... 7 Transform the Utility Network............................................................................................. 9 Transform Customer Operations......................................................................................... 10 Improve Generation Performance....................................................................................... 10 The Business Value of Smarter Computing in the Energy and Utilities Industry............ 11 Oncor:Transforming the Network to Support a New Business Model............................. 11 Bluewater Power Transforms its Customer Operations with a Smarter Computing Approach............................................................................................. 12 Vestas:Turning to Big Data to Improve Generation Performance..................................... 13 Building the Intelligent Utility Network to Support a New Business Infrastructure...... 14 References................................................................................................................................ 15 CONTENTS
  3. 3. Smarter Computing in Energy & UtilitiesABSTRACTAs energy and utility companies around the world face challenges, they are changing businessmodels to remain relevant in a smarter energy value chain. Shifting climate patterns andenvironmental concerns are bringing renewable energy sources into energy producers’portfolios. More stringent regulatory mandates and increased security concerns are changingthe way businesses operate. At the same time, markets are opening up to new competitors,threatening the traditional stability of the industry. Energy and utility companies are faced withthe challenge to adapt their models in this new era, and many are now turning to a SmarterComputing approach to meet the challenges and stay competitive.Smarter Computing can help turn energy and utility companies into leaner, more responsivecompetitors, while helping ensure adherence to regulatory compliance objectives. It canguide the companies’ IT departments to transforming IT systems to support the imperativesof a scalable, secure, and resilient business infrastructure. A number of progressive energyand utility companies around the world are implementing a Smarter Computing approach,including Oncor, Bluewater Power, and Vestas. With IBM’s help, they are beginning to realizethe benefits of Smarter Computing and are better able to meet the demands of operating in arapidly changing, competitive environment.NAVIGATING AN UNCERTAIN FUTURE IN THEENERGY AND UTILITIES INDUSTRYEnergy utilities around the world are entering into a new environment, where risk andopportunity are disrupting a 100-year-old industry model. The energy and utilities industryis going through a phase of rapid transformation in a period of expanding global demandand significant changes in a number of areas. In what was traditionally a predictable andstable industry with a one-way value chain, from generation, transmission and distribution, tocustomer energy and information flow, new challenges are forcing energy and utility companiesto transform themselves to remain relevant and competitive.One significant challenge is the emergence of new entrants and disruptive technologies into thevalue chain. The increasing complexity of the value chain, which includes competing retailersand wholesalers, and the end-clients’ capability to create their own electricity, is compellingutilities to evolve their relationship with their customers beyond their historical role as amonopoly supplier. The transformation of the relationship between utility and customer isfurther complicated by new technologies around telecommunications, renewable energy,electric vehicles, and home automation that can blur the lines between a supplier of energyand the consumer. The resulting new value chain enables a bi-directional flow of energy andinformation among the various participants.Another challenge lies with environmental concerns that put pressure on traditional energysources that contribute to climate change through carbon emissions. Estimates by the UnitedStates Energy Information Administration indicate that the demand for energy will grow by53 percent between 2008 and 2035.1 The vast majority of this growth (85 percent) will come Frost.com 3
  4. 4. Frost & Sullivan from countries outside of the Organization for Economic Cooperation and Development (OECD), making this issue globally relevant. Meeting that demand will require expanding “In the 20th century energy generation, particularly with sustainable sources, but it will also demand increasing the the goal was universal efficiency of consumption, highlighting the impact of every watt consumed. Climate change and access to electricity… environmental awareness have become fixed points in consumers’ minds and in the wider area in the 21st century of public policy, and will continue to drive new regulations.2 it will be about modernization.” This challenge can have profound effects on the industry, and is related to another challenge around the ability to control grid stability in the presence and growth of distributed renewable Jim Rogers, CEO, generation resources. As wind and solar energy sources are added to the generation mix, Duke Energy their impact not only on local loading but also on the overall ability to balance the network is immense, driving a clear need for modifications in the utility network’s capabilities. As Jim Rogers, CEO of Duke Energy sees it, utilities have to change because “in the 20th century the goal was universal access to electricity…in the 21st century it will be about modernization, and by 2050 all our existing plants but hydro [electric] may be closed down or changed because of environmental regulations.” Utilities are also facing challenges that are more internal in nature, concerning their aging assets. An aging infrastructure, as well as an aging workforce, stresses a utility’s ability to maintain service reliably. This is compounded by the business need for higher efficiency from existing assets, reduced waste and increased return on capital investments, and the related drive to implement new strategies for improving energy delivery, efficiency and utilization. In an increasingly competitive environment, utilities have to deliver higher-quality services and more reliably, while keeping rates low. Perhaps the challenge that is most concerning is a change in the nature of the customers themselves. Customers are empowered by the shifts in the industry, are enabled by technology, and emboldened by social media.There is a growing desire for customers to have an active role in their own energy management, through interfaces such as mobile phones and tablets, and to manage their energy usage and control the devices that use energy. Some customers are also making supplier selections based on lifestyle choices, including those supplying renewable- sourced electricity. This is an epic change in the industry, which is forcing utilities to treat customers as more than ratepayers or “meters” of energy consumption; they are now powerful sources of revenue that can control both their level and pattern of consumption.3 The traditional business model of utilities does not lend itself well for meeting the demands of the future. Enabling the partnership with the customer requires significant communications resources—something that many utilities often lack in both human and system resources. The new paradigm demands constant generation and data processing to enable actionable responses by both provider and consumer. The implementation of smart grids is essential to the success of shifting onto the new paradigm. However, because creating the smart grid is taking place while the older power grid remains fully operational, it requires development and implementation of new control mechanisms and security innovation to protect all players in the value chain. 4 Frost.com
  5. 5. Smarter Computing in Energy & UtilitiesThe market forces in today’s energy and utility environment have shifted market power tothe consumer, which is forcing utilities to change business models to become more customer-centric. Utilities are searching for new strategic approaches to adapt to different industrydynamics that have added new participants, technologies, and business models. Utilities mustbecome more agile to compete in a rapidly evolving ecosystem.Therefore, the challenges and complexities of the new energy and utility industry are requiringutilities transform their business models, and the technology that supports them, to succeed.Utilities undergoing this process are shifting from the traditional energy value chain that is basedon a one-way network, to a smarter energy value chain based on an intelligent utility network(IUN). The transformation process is guided by three vital imperatives, as shown in Figure 1.Transform the utility network from rigid, one-way systems to dynamic, automated, andreliable information networks that are orchestrated to enable all participants to gain value inproportion to services delivered on them.Transform customer operations to empower customers, facilitate more choice, andimprove customer satisfaction by providing access to information, products, and services thatcan increase efficiency, reduce bills, and address energy needs.Improve generation performance by changing the generation portfolio to optimize thesupply mix to meet regulatory requirements, while continuously improving the efficiency of thecurrent assets and maintaining financial viability. Figure 1: Imperatives Guiding the Transformation of the Energy and Utility Industry Transform the Utility Network • Single View of Grid Data and Information • Meter & Grid Data and Information Management • Enterprise Data and Information Management • Risk and Regulatory Compliance • Risk and Scenario Modeling • Fraud Analysis and Reporting • Dynamic Resource Reallocation and Response • Unified Smart Grid Strategy Transform Customer Operations Energy and Utilities • Single View of the Customer Industry • Customer Care and Insight • Dynamic Rating and Billing Transformation • Enterprise Data and Information Management • Customer Relationship Management • Monitor Usage in Real-Time • Integrated Demand Management • Customer Information Applications Strategy Improve Generation Performance • Predict Energy Resource Availability • Risk and Regulatory Compliance • Asset Performance Management • Enterprise Data and Information Management • Plant Information Lifecycle Management • Power Generation Maximization and Operational Cost Reduction • Market Trading Management • Generation Strategy Source: Frost & Sullivan analysis and IBM Frost.com 5
  6. 6. Frost & Sullivan The imperatives shown in Figure 1 revolve around how a utility can transform its business model to be more attuned to the customer, using modern, multi-functional transmission andKey Infrastructure delivery networks, while broadening its generation and operational assets to meet regulatoryRequirements and financial goals. The transformed model equips the utility with tools to listen to its customer • Big Data Capable and develop services that fit their needs, while remaining relevant and competitive, and opening • Scalable the ecosystem to partners who can help increase the value of the network to all participants. • Optimal Performance It enables the utility to accommodate new power generation modes and improve the efficiency • Security and Resilience and sustainability of its operations. Finally, the new model empowers the customer to take • Flexible control of their energy consumption, and helps integrate the intelligent utility network to value incubators in the communications, consumer electronics, and transportation industries. The utility that embraces these imperatives will become an active participant in a smarter energy ecosystem, able to accommodate new partners and compete against new entrants, and take advantage of disruptive technologies. However, the transformation requires a common plan for IT and operational technology (OT) to support a utility data and information management strategy, so that IT systems and architecture can support and enable utility business drivers. The critical element of success is a scalable, resilient, and secure IT infrastructure to handle the demands imposed by these imperatives. Utilities are struggling to capture value from their operational and IT investments.To profitably grow and prepare for the IT complexities that are expected from the dramatic data and information growth across grid and various lines of businesses, they will need to modernize the IT infrastructure with scalable, reliable and secure systems that are workload optimized. Rather than engaging in a rip-and-replace exercise, IT managers need to carefully administer technology investments and reduce the total cost of IT ownership. Historically, the utility IT infrastructures were built to support the traditional business model, which made their IT systems sprawling and isolated from each other.This limits their scalability and agility. Moreover, new computing or storage capacity was often bought based on requirements of separate line- of-business (LOB) projects. This led to redundancy across a utility, and can inhibit IT managers from being able to deliver hardware capacity and performance optimization. It also limits the ability of the network to contribute to regulatory monitoring and adherence.The transformed infrastructure must be scalable to address the ever-changing demand and to enable potential new partners or services. The system must also support multiple workloads to accommodate large volumes of customers’ and operational data. The infrastructure also needs to bring a high level of automation to help adapt to changes in pricing and new applications, enabling IT managers to direct resources where they are needed most, and it must be reliable and robust to ensure constant uptime. Finally, it is crucial that the infrastructure be standardized and support interoperability to close gaps in the existing architecture, governance rules, and process management simultaneously across units and to support newly added businesses, such as merged or acquired partners. Energy and utility industry leaders are beginning to seek advanced IT solutions to help them deliver new value to customers, partners, and shareholders; support intelligent utility networks; and increase the efficiency of their operations. Forward-thinking CIOs are starting to transform their IT infrastructures to respond to the imperatives driving innovative business models that deliver increased business value and improved overall smart grid return on 6 Frost.com
  7. 7. Smarter Computing in Energy & Utilitiesinvestment (ROI). To successfully deliver on the promise of increased business value, utilitiesneed modern IT infrastructures. These IT systems must be capable of processing a constantlyupdated stream of information from customers and the supply network, and provide highapplication availability. They must enable powerful analytics providing insight into changingcustomer service preferences and operational conditions. They also need to perform atoptimal levels and be secure and resilient to any disruption. Finally, they need to be flexibleto support different types of business models to keep costs down. Smarter Computing is anapproach that can help energy and utility industry CIOs transform their IT infrastructures toaddress these imperatives.THE BUSINESS NEED FOR SMARTER COMPUTINGIN THE ENERGY AND UTILITIES INDUSTRYIntroducing Smarter ComputingSmarter Computing is a new approach to transform IT infrastructures to enable utilities tobuild and support an intelligent utility network. The Smarter Computing paradigm builds ITinfrastructures that are: • Designed for Data, meaning that the IT infrastructure is capable of harnessing all available information, including real-time streaming data from smart meters and devices on the grid, to unlock insights for better decision-making. It is about extending beyond traditional sources of data to generate insights by leveraging new forms of information, which can be incorporated into a utility’s grid operation management systems (like OMS or DMS) and enterprise systems (like supply chain management systems) to reduce operational costs, master a single version of a customer’s profile, enhance data security, and get insights from huge volumes of complex data. • Tuned to the Task, meaning that organizations consciously match workloads to IT systems that are optimized to the workload characteristics, ranging from monitoring asset performance and database management, to business intelligence and analytics, to managing energy source integration. Optimizing the IT systems to the workloads enables greater performance and efficiency, helping CIOs enhance application availability and maintain a lean operational profile. • Managed with Cloud Technologies, meaning that the IT infrastructure delivers virtualization, self-service provisioning, and other technologies that enable greater efficiencies out of existing IT assets, and supports the deployment of resources and new services in a flexible, dynamic, and cost-effective manner.The Smarter Computing paradigm supports business transformation by creating a technologyframework to enable business operations that realize the business imperatives, and generatesbusiness value in an increasingly competitive, cost-conscious environment. The SmarterComputing approach in the energy and utilities industry revolves around how generation,transmission and distribution, and customer data is collected, processed, analyzed, saved, andshared across lines of business in a utility, and with customers and partners on the intelligent Frost.com 7
  8. 8. Frost & Sullivan utility network. The IT infrastructure that supports business operations in the IUN delivers business value by using data to guide decisions, using optimized systems to maximize efficiency, and leveraging the cloud to transcend administrative silos and legacy system limitations. Figure 2 illustrates the application of the Smarter Computing approach to energy and utilities transformation to an IUN. Figure 2: Aligned to the guiding imperatives, Smarter Computing in Energy and Utilities enables the industry transformation Energy & Utility Organizational Transformation Transform the Utility Transform Customer Improve Generation Network Operations Performance Business • Single View of Grid Data and Information • Single View of the Customer • Predict Energy Resource Imperatives • Customer Care and Insight Availability • Meter & Grid Data and Information Management • Dynamic Rating and Billing • Risk and Regulatory • Enterprise Data and • Enterprise Data and Compliance Information Management Information Management • Enterprise Data and • Risk and Regulatory • Customer Relationship Information Management Compliance Management • Asset Performance • Risk and Scenario Modeling • Monitor Usage in Real-Time Management • Fraud Analysis and • Integrated Demand • Plant Information Reporting Management Lifecycle Management • Dynamic Resource • Customer Information • Power Generation Reallocation and Response Applications Strategy Maximization and • Unified Smart Grid Strategy Operational Cost Reduction • Market Trading Management • Generation Strategy DESIGNED FOR DATA CLOUD ENABLED WORKLOAD OPTIMIZED Smarter Computing Process Automation Business Analytics Business Process Management Infrastructure Supporting Messaging & Web Business Event Customer Business Transaction Services/Data & Processing Intelligence Intelligence Processing Operations info Presentation Data Processing, Storage, Collaboration & Sharing, Data and Information Management Data Acquisition and Physical World Interfaces SCALABILITY, RESILIENCY AND SECURITY Grid Orchestration Customer Satisfaction Generation Optimization Business Value Reduced Risk Lower Total Cost Faster Response of Ownership Reliable Utility Service Higher Efficiency Source: Frost & Sullivan analysis Energy and utility CIOs can use IT infrastructures that incorporate Smarter Computing principles to carry out the operations underlying their transformation imperatives. Using an infrastructure that is designed for big data and scalability, executives and IT managers can uncover insights into system performance and customer demand patterns, helping to achieve efficient balances between supply and demand. The new business models emerging in the industry require a business infrastructure that can support new customer services, as well as accommodate multiple new generating and retailing partners. A utility IT infrastructure that can be managed in the cloud can deliver these new sources of business value in the industry. Finally, the Smarter Computing approach gives CIOs control over capital and operational expenditures because existing IT infrastructures can be transformed and need not be completely replaced. Smarter Computing can help turn utilities into lean, agile competitors, while helping ensure adherence to regulatory compliance objectives. 8 Frost.com
  9. 9. Smarter Computing in Energy & UtilitiesTransform the Utility NetworkThe Energy & Utilities industry is changing its business model to accommodate a smarterenergy value chain and a substantial part of this activity is based on transforming the traditionalone-way utility network into the IUN. The ultimate goal of this imperative is to provide morereliable utility service with improved operational and financial efficiency, which will hinge oncollecting, integrating, processing, and storing data from the meters, devices, and sensors onthe grid. The business value of a transformed utility network will come from automation andability to use the insights from the network to anticipate changes in demand, and supply energyand utility services efficiently, while managing grid and utility assets to handle both normaland peak loads. At the same time, regulatory compliance and risk mitigation strategies willdepend heavily on grid and fulfillment information availability, security of the grid and criticalinformation, and robust fraud monitoring and reporting capabilities.A Smarter Computing approach can be an essential enabler of the IUN because it gives energyand utility CIOs the ability to measure, control, and gain insights from the network data, tohave a trusted “single view” of the infrastructure. By using a computing infrastructure thatis designed to handle large amounts of streaming data, while integrating it with historic datafrom a variety of sources, line of business and IT managers can apply advanced analytics tomonitor and predict grid performance. This gives them powerful real-time decision aids, andsupports business applications necessary for efficient performance and regulatory compliance.When the IUN is built with computing hardware optimized to energy and utility workloads,the operational system can have high data and information availability in a secure environment,making it more resilient and resistant to fraud and criminal intrusions. While implementingaspects of the IUN model in the cloud, CIOs can facilitate collaboration across the operationalpillars of business, and virtualize and consolidate processes and workloads to lower maintenanceand power requirements to support the IUN.Smarter Computing best practices can also help realize other business values by enhancinga range of areas from the utility network operations, enterprise applications themselves, andbusiness imperatives, including: In a proof-of-concept • Sustaining linear scalability while lowering the cost per transaction; test of the Smarter • Automatically setting operational and security parameters to match performance and Computing paradigm, compliance standards; and IBM and AMT- • Orchestrating partners across the value chain to assure an optimized, balanced, secure, SYBEX demonstrated and reliable network. efficient data capture and processing for upIBM and its business partner AMT-SYBEX are applying the Smarter Computing approach in to 100 million smarttransforming the utility network to handle data feeds from large numbers of smart meters. meters on a singleBy using a computing platform specifically designed to capture and process meter data, a test computing platform.system was able to load data from 10 million meters in 36 minutes and scale up to handle datafrom 100 million meters, on a single server platform.4 This suggests that utilities serving evenvery large customer bases would be able to maintain the data processing requirements of theIUN environment. Frost.com 9
  10. 10. Frost & Sullivan Transform Customer Operations The transformation of the Energy & Utility industry’s business model also represents a fundamental shift in the relationship between a utility and its customers. One aspect of this dynamic is an increasing importance of customer satisfaction to a utility. With more choice of energy suppliers in a competitive environment, coupled with the spread of social media, utility customers are becoming empowered consumers. They are able to not only demand more from their providers, but they are also able to influence others in their communities to demand more. Another aspect is that customers are able to take a more prominent role in managing their energy and utility usage, which can be a critical factor in a utility’s demand management activities. Utilities are realizing that they need to transform their customer operations in response to the changing nature of their relationships with their customers. This has implications throughout a utility organization, from customer care and billing, to sales and marketing, to generation and distribution. Energy and utility CIOs can employ a Smarter Computing approach to transforming their customer operations to help increase customer satisfaction and to better integrate customer usage information into demand management strategies. By implementing the designed-for-data principle, a utility can integrate a wide range of customer data and develop a master, “single view” of each customer. Applying advanced customer analytics to this data can yield detailed insight into customers’ preferences and usage patterns, which can be useful in developing customized offers and improve the quality of customer care agent interactions. In addition, systems would be able to collect data faster and reduce billing processing time, and increase billing accuracy. Moreover, a Smarter Computing-inspired customer operations system could accelerate the creation, testing, and deployment of new services in the cloud, including those to enable customers to more effectively manage their energy consumption. Smarter Computing can also help create additional business value in transformed customer operations, such as: • Dynamic rate plans based on intelligent devices and appliances in the home communicating with the utility through the cloud; • Improve the efficiency and effectiveness of the contact center performance across all channels, addressing customer needs, regulatory mandates, and organizational constraints; and • Provide customers with information, controls, and choices to better manage their consumption. Improve Generation Performance In today’s energy and utility industry environment, generation operations need to be integrated from generation equipment to the distribution network to the trading floor, for higher efficiency, lower costs and reduced risks, faster response to changes in demand, and increased control over carbon emissions. Improving generation performance requires an IT architecture that can provide a complete, contextual view of all aspects and components of the generation operations, including the mix of generating assets, considering fuel supply, carbon load, and variability in renewable sources.The architecture must also be able to support high-performance computing 10 Frost.com
  11. 11. Smarter Computing in Energy & Utilitiesoperations for generation modeling, forecasting, and simulation to predict performance underchanging generating supply, energy demand and policy-driven considerations.Smarter Computing principles can help CIOs meet this imperative by implementing workload-optimized systems that can efficiently monitor and predict conditions across generation assets,and to support analytic applications that forecast changes in demand so that operationaladjustments can be made in real time to accommodate them. An IT system that is designedfor data can feed critical data into high-performance computing applications, reducing theprocessing time for modeling and optimization activities. Implementing virtualization andsystems software capabilities enable IT task/processing optimization. Moreover, deploying anIT architecture within a cloud model can facilitate more productive ways of using technicalresources to accomplish a plant’s operational goals. A high-performance computing (HPC)cloud solution can move utility computing grids to the next level by empowering end users andsystem administrators to schedule, deploy, and manage a virtual pool of technical computingresources, provisioning and configuring resources based on users’ needs.Using a Smarter Computing approach to improving generation performance can deliveradditional business value, including: • Supporting a robust and secure data and information storage infrastructure, which can ensure adherence to various regulations, aiding emission, safety, and contractual compliance, for example. • Bring high-performance computing infrastructure into mainstream technical computing to enable analytics related to commodity, energy and trading, consolidating scattered computing clusters to streamline monitoring and control over diverse generation assets.THE BUSINESS VALUE OF SMARTER COMPUTINGIN THE ENERGY AND UTILITY INDUSTRYEnergy and utility companies are facing a wide range of changes in their industry that ischallenging the foundation of a 100-year-old business model. The traditional one-way valuechain is transforming into a dynamic value network in which energy and information flowsbi-directionally between utilities, customers, suppliers, and partners. Customers are taking amore active role in managing their energy consumption, regulators are imposing stringentcurbs on carbon emissions, and financial markets have sharp expectations for returns on assets.The IUN is being built to support new business models developed to take advantage of growthopportunities in the new industry environment, and leading energy and utility companies areembracing Smarter Computing principles to enable them to transform the IT infrastructuresneeded to support these models.Oncor:Transforming the Network to Support a New Business ModelTransforming a company’s business model to take advantage of the opportunities in newlyderegulated energy markets is a complicated task. Dallas-based Oncor is an energy servicesprovider serving more than 7 million customers with more than 3.1 million points of delivery, Frost.com 11
  12. 12. Frost & Sullivan and it is blazing a trail with the IUN to become a leader in its market. Realizing that reliable electric service delivery is an essential component of success in competitive markets, OncorOncor used a Smarter made the strategic decision to build an IUN as the backbone of its growth. An early step Computing approach was to replace its analog meters with advanced digital meters, which will greatly expand theto transition its digital intelligence with which Oncor can transform its relationship with customers and transform its infrastructure and operational models. However, the company also understood that its current IT infrastructure support an aggressive was not designed to handle the flood of data that digital meters provide.new business model to grow in a competitive Oncor selected IBM as a partner to help it establish the digital infrastructure on which it energy market. would base its IUN strategy.5 Because Oncor’s existing infrastructure was not designed to support the IUN, the team elected to implement a Smarter Computing approach to rebuild its IT infrastructure. This would not only preserve the value of its existing assets, but enhance the overall value of its IT infrastructure with new, targeted investments. The centerpiece of the implementation was an advanced storage system designed to accept tens of millions of records every day and analyze them quickly, then securely store the data. Even as Oncor’s system is designed for data, it is built from storage and server components explicitly designed to accommodate the massive batch processing workloads placed on it, yet retain the ability to scale out and up quickly. Oncor’s decision to implement a Smarter Computing approach is returning a variety of business advantages. The ability to quickly and reliably process and store its customer data enables Oncor to meet tough regulatory requirements active in the competitive Texan market. The new system is also helping the company to maintain a reliable service delivery reputation with deeper insights into its network. By analyzing the information, Oncor can detect when service interruptions and service restoration occurs. Finally, the Smarter Computing approach is saving Oncor money with a system that is easier to maintain, which lowers administrative costs. Bluewater Power Transforms its Customer Operations with a Bluewater Power Smarter Computing Approach implemented a Bluewater Power, a medium-sized utility in Ontario, also embarked on a large-scale transition Smarter Computing from analog to smart meters, but its situation was far different from Oncor’s.The utility industryapproach to transform and government in Ontario acknowledged that the growth in demand for electricity in Ontario its customer was growing faster than it could bring new generation capabilities online. Coupled with new operations to meet environmental regulations and financial reporting requirements, the government mandated stringent regulatory that smart meters be installed in all consumer premises.The smart meters would be part of an and reporting initiative to shape consumption patterns with time of use (TOU) pricing schemes, which are requirements. At intended to move consumer demand for power to less-expensively priced off-peak periods, the same time it was and thereby help optimize the overall generation capacity in the province. able to cut costs and position itself Bluewater faced three immediate business challenges: (1) the mandated introduction of smart for future growth metering in Ontario, (2) regulatory changes, and (3) new financial reporting requirements. The opportunities. company evaluated its IT infrastructure capabilities and concluded that its data centers were not prepared to meet these challenges, so it decided to apply Smarter Computing principles to help it transform its customer operations to meet these requirements. Bluewater’s transition 12 Frost.com
  13. 13. Smarter Computing in Energy & Utilitiesbegan with enhancing its current Customer Relationship Management (CRM) and EnterpriseResource Planning (ERP) applications on a Smarter Computing-inspired infrastructure. Thishelped the company collect, process, and store the data that would be generated fromsmart meters. This gave Bluewater the capacity, flexibility, and scalability to meet the businesschallenges it faced.The transformed infrastructure also gave Bluewater the ability to deliver new services toits customers using the TOU data, mandated by the Ontario government. By using AMI andSmarter Grid networks to develop better service offerings and optimize business processes,the utility can use the business challenges as an opportunity for growth, enabled by recordingand analyzing new streams of customer data. Bluewater is also controlling costs with theSmarter Computing approach. By implementing an IT infrastructure that is designed to handlethe large volumes of data and leveraging workload-optimized components in a virtualizedenvironment, Bluewater estimates that storage provisioning time improved by 60 to 70 percent,cutting physical rack space needs by 50 percent, and avoided the need to hire one additionalIT employee.Vestas:Turning to Big Data to Improve Generation PerformanceVestas, based in Denmark, is the world leader in high-tech wind power systems. To make winda sensible part of a utility’s generation portfolio, placing the wind turbines in locations withreliable wind is essential to the commercial viability of the technology. The optimal sites notonly equate to improved generation performance, but also to a reasonable rate of financialreturn to the utility using wind. The key to placing its turbines in the best sites, and ultimatelyto the success of its customers and itself, is Vestas’ wind library, which incorporates globalweather data and data gleaned from its existing, sited, turbines. Using its current library,Vestaswas able to provide relatively accurate assessments of wind flow, but this process would oftentake up to three weeks—an unacceptable duration in a highly competitive industry. Vestasdecided that it needed to greatly expand the power of its wind library to increase the accuracyof turbine siting and dramatically reduce the amount of time to produce the results to supportits customer and its own business cases.Vestas partnered with IBM to implement a Smarter Computing approach to upgrade thecapabilities of its wind library and siting projections, which would give it a substantial competitiveadvantage. At the same time, the company wanted to lower its IT operational and maintenancecosts, and lower its own carbon footprint. Using the approach, Vestas deployed a big data-capable, advanced analytics solution on a high-performance computing system.This system wasdesigned to analyze massive amounts of structured and unstructured data, including weatherreports, geospatial and sensor data, satellite images, maps, and weather modeling researchto increase siting accuracy and eliminate a month of development time for a given site. Thehigh-performance computing system, optimized for the complex forecasting workloads andmanaged with cloud technologies, enabled Vestas engineers to distribute tasks, effectivelyincreasing computational power while shrinking its IT footprint. Results were returned in 15minutes, compared with the three weeks it used to take, and energy consumption was reducedby 40 percent. Frost.com 13
  14. 14. Frost & Sullivan The business value of the Smarter Computing approach to Vestas is central to its survival. For Vestas, it means a stronger value proposition and a more efficient business operation. For “Vestas turbines operate Vestas’ customers, it means greater business case certainty, increased reliability on their for decades, and clients investment, and the potential for a faster return on their investment than before. “Vestas demand to know how turbines operate for decades, and clients demand to know how much energy they will produce much energy they will and what their return on investment will be before they are installed,” says Lars Christian produce and what their Christensen, vice president of Plant Siting and Forecasting, Vestas Technology R&D. “Using return on investment Smarter Computing, we can now answer these questions quickly to identify new markets for will be before they are wind energy and help our clients meet aggressive renewable energy goals.”6installed…Using Smarter Computing, we can now BUILDING THE INTELLIGENT UTILITY NETWORK TO answer these questions SUPPORT A NEW BUSINESS INFRASTRUCTURE quickly to identify new markets for wind energy Energy and utility CIOs and IT managers are being asked to transform their IT infrastructuresand help our clients meet to enable their companies to transform their business models, and themselves, into lean, aggressive renewable responsive organizations able to compete in a changing industry. Customers are becoming energy goals.” more empowered and are taking an active role in managing their consumption patterns. New and more stringent financial and environmental regulations are pressuring companies to beLars Christian Christensen, more accountable, while increased competition means customers are free to churn away Vestas Technology R&D to other service providers. To succeed in this market, energy and utility companies need to reinvent their business models to transform their network infrastructures and their customer operations, while ensuring improved generation performance and financial returns. The application and operational requirements to realize these imperatives come with substantive IT workloads and dramatically increasing volumes of data. Traditional utility IT strategies are unable to cope with these pressure points. Moreover, in today’s competitive climate, utility CIOs have the additional requirement for their IT operations to reduce costs and IT systems to be flexible and scalable to adapt to business needs that include regulatory, demand, and energy supply changes in the industry. The Smarter Computing approach is a holistic solution that can guide utilities’ IT and OT departments in establishing a common strategy for delivering IT infrastructures to support scalable, resilient, and secure operations. The efficient utility enterprise is built based on this transformed network infrastructure. A number of energy and utility companies around the world are beginning to realize the benefits of implementing a Smarter Computing approach. CIOs may wish to investigate using a Smarter Computing approach if they are considering: • Building capabilities to measure, control, and gain visibility over the entire network to visualize infrastructure availability and performance, while being able to track and document events to support decisions about all types of utility assets; • Aligning the utility’s values with the customers’ values, for example around environmental emphasis versus cost-effectiveness, and providing customers with information, controls, and choices to better manage their consumption; 14 Frost.com
  15. 15. Smarter Computing in Energy & Utilities • Future-proofing their company against new regulations and requirements, as well as ensuring that their company can achieve existing compliance objectives; or • Lowering the cost of operation and minimizing financial and security risks by avoiding multiple data input or data inconsistency issues.Forward thinking energy and utility companies, such as Oncor, Bluewater Power and Vestas, areemploying a Smarter Computing approach to help them transform their digital and businessinfrastructures to meet the demands of a changing and increasingly competitive industry.REFERENCES 1 United States Energy Information Administration. “International Energy Outlook 2011.” 19 September 2011. Report Number: DOE/EIA-0484(2011). 2 Walsh, Bryan. “Talking Energy with America’s Greenest Coal Exec.” Time 02 March 2011. http://www.time.com/ time/health/article/0,8599,2056447,00.html. Retrieved 13 December 2011. 3 Hobbs, C.D. “The Changing Face of the Utility Industry.” Forbes Custom.com. http://www.forbescustom.com/ EnergyPgs/utilipoint/UtilityIndustryP1.html, retrieved 12 December 2011. 4 “Unprecedented Performance and Scalability Demonstrated for Meter Data Management: Ten Million Meters Scalable to One Hundred Million Meters for Five Billion Daily Meter Readings.” IBM Case Study, September 2011. http://www.ibm.com/developerworks/forums/servlet/JiveServlet/download/548-391263-14685713-373005/ Informix%20TimeSeries%20Affinity%20Meterflow%20Benchmark.pdf. 5 “Oncor Powers Up Storage Capacity and Flexibility, Cuts Complexity.” IBM Case Study, November, 2011. Document TSC03136-USEN-00. 6 “Helping Wind Farms Grow the Future of Energy.” IBM Technical Computing Insights, November 2011. http:// www-148.ibm.com/tela/servlet/Asset/412299/VestaWind_HR.pdf. Retrieved 27 December 2011.This report was developed by Frost & Sullivan with IBM assistance and funding.This report mayutilize information, including publicly available data, provided by various companies and sources,including IBM. The opinions are those of the report’s author and do not necessarily representIBM’s position. XBL03017-USEN-00 Frost.com 15
  16. 16. Silicon Valley San Antonio London 331 E. Evelyn Ave. Suite 100 7550 West Interstate 10, Suite 400, 4, Grosvenor Gardens, Mountain View, CA 94041 San Antonio, Texas 78229-5616 London SWIW ODH,UK Tel 650.475.4500 Tel 210.348.1000 Tel 44(0)20 7730 3438 Fax 650.475.1570 Fax 210.348.1003 Fax 44(0)20 7730 3343 877.GoFrost • myfrost@frost.com http://www.frost.comABOUT FROST & SULLIVANFrost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company’sTEAM Research, Growth Consulting, and Growth Team Membership™ empower clients to create a growth-focusedculture that generates, evaluates, and implements effective growth strategies. Frost & Sullivan employs over 50 years ofexperience in partnering with Global 1000 companies, emerging businesses, and the investment community from morethan 40 offices on six continents. For more information about Frost & Sullivan’s Growth Partnership Services, visithttp://www.frost.com.For information regarding permission, write:Frost & Sullivan331 E. Evelyn Ave. Suite 100Mountain View, CA 94041Auckland Dubai Mumbai Sophia AntipolisBangkok Frankfurt Manhattan SydneyBeijing Hong Kong Oxford TaipeiBengaluru Istanbul Paris Tel AvivBogotá Jakarta Rockville Centre TokyoBuenos Aires Kolkata San Antonio TorontoCape Town Kuala Lumpur São Paulo WarsawChennai London Seoul Washington, DCColombo Mexico City ShanghaiDelhi / NCR Milan Silicon ValleyDhaka Moscow Singapore