What is service-oriented architecture (SOA) and why does it have the attention of CIOs at the enterprise level? And more importantly for UtiliPoint’s IssueAlertreaders, why do utilities have so much to gain from SOA?
Unlike traditional self-contained IT applications that draw on unique inputs to generate unique outputs, a trend gaining momentum, especially in large enterprises, is to use SOA methodology for greater flexibility and more rapid processing. By dividing functions into discrete “services” and standardizing functions to draw on common databases, a complex organization can eliminate process steps and improve coordination of different applications to improve process times and eliminate process errors to improve performance quality.
As complexity grows with organizational size, or over time with technology progress, SOA offers a method to manage complexity—not just by reducing process times, but also by getting more out of existing assets. For the electricity industry in particular, two major trends promote the value of SOA in the utility IT and operations technology (OT) strategy. First, the Smart Grid will produce massive amounts of new data, and as utilities craft new process to leverage this new data, utilities will be able to streamline IT and OT processes with SOA to keep applications in synch with common databases.
Consider how this would work in the increasingly complex Smart Grid environment. In Chapter 4 of our new book, The Advanced Smart Grid, my co-author Andres Carvallo and I discussed our experience at Austin Energy starting in 2006 with an SOA to prepare the IT system for Smart Grid operations, using the example of the customer service system. “By allowing a function to appear once but be usable for any application needing it, the SOA eliminated extra steps in call processing, such as ensuring the completion of a customer validation within the outage management system. Such validation is accomplished within the billing system, the work management system, and the financial system. Historically, network architectures would provide that every application must have all these services wrapped within the application. But in a service-oriented world, the first step was to create one customer verification service, then make that service available to any application that needs the service.” The result of the new orientation to SOA at Austin Energy was to drop the average time to complete a customer service call from five minutes down to one and a half minutes, nearly a 70 percent reduction in process time, which lowered costs and increased customer satisfaction.
The second trend driving SOA transitions derives from the need for utilities to manage new business approaches, including new energy services that complement traditional delivery of commodity kilowatt-hours (kWhs). SOA will enable the creation of new services to keep utilities competitive. Alternatives to grid power form a small, but growing, challenge to the monopoly of grid power, and faced with the potential dilutive effects of a variety of new energy services, electric utilities are beginning to investigate new business models that complement and build on their core business of commodity kWh delivery. Over the past 100 years, electric utilities became the go-to resource for the commodity that drove the industrial and economic revolution of the 20th Century: electricity. Operating the delivery system to provide the quintessential commodity—kilowatt-hours—electric utilities secured a place in the modern economy as an essential industry. Over time, utility system operators became experts at managing an increasingly complex grid. But now there appears to be a subtle, but fundamental, change occurring in the supply-demand picture. Consumption is tapering off from its predictable annual growth rate of 2.5% +. Alternatives to grid-delivered electricity are cropping up, from “negawatts” delivered via energy efficient buildings and appliances to distributed generation in the form of solar PV panels, community wind, combined heat and power and other forms of energy delivered at-the-point of consumption. To deliver these new services, utilities must reorganize their businesses and IT systems.
Whether a utility shuffles its IT and OT structures with SOA to get more out of its technology investments and enable the complexity of Smart Grid and its mountains of data, or uses SOA to enable new energy services to stay competitive with new alternative energy providers, SOA will be the enabler of choice to modernize the grid and keep the utility humming. The transition to SOA will not come easy, as it will require a comprehensive evaluation of utility business processes and the traditional functional silo organization, two tasks that will put the 100 year-old utility culture under the microscope and challenge the status quo. In future IssueAlertarticles, we will look at the changes coming to utility organizations and cultures, driven by Smart Grid and IT restructuring, as exemplified by SOA.
John Cooper, co-author of The Advanced Smart Grid, has recently joined the team at UtiliPoint and its sister company, Consonus, to further the goals and realize the vision he developed over the last 15 years as a smart grid pioneer and innovator, captured in this compelling and highly useful new book. John may be reached directly by e-mail at jcooper@utilipoint.com.
