GIS and the corporate board room: issues and strategies
Barry J, Kemble Executive Vice President, UGC Consulting ,6200 S. Syracuse Way, Suite 222, Englewood, Colo. 80111 303-773-6166, 303-773-6618 (f) Abstract A key business trend among energy sector utilities is the accelerated adoption of information technology, which is helping utilities achieve greater competitiveness and effectiveness, and is proving flexible and adaptable enough to meet changing market conditions at every level of the uti Iity organization. The actual rate of adoption appears to vary between and among electric and natural gas utilities. The dichotomy is especial Iy apparent when it comes to integrating two or more technologies. The paper presents an executive-level strategy for pursuing an integrated systems approach at both electric and natural gas utilities. Introduction Scan the recent trade press headlines and you’ll see an ongoing shift in just who sits in the executive board rooms of energy utilities across North America. The headlines show that more and more key management positions are being filled by men and women who have spent years in highly competitive industries outside of the energy sector. With their arrival, these executives bring an outlook that is highly focused on enhanced customer service, capitalizing on market opportunities and seizing strategic advantage. A somewhat less reported trend is the accelerated adoption by these same utilities of information technology. These technology tools are helping utilities achieve paral Iel goals of greater competitiveness and effectiveness by managing information about facilities, markets and competitive challenges. Like the new mix of corporate executives, information technology is proving flexible enough to meet changing market conditions and adaptable enough to have a positive effect at every level of the utility organization. Even so, the actual adoption of these technologies varies between utilities. The dichotomy is especially apparent when it comes to integrating two or more technologies. This type of integration strategy is of great importance as competitive-minded executives attempt to ful Iy leverage the corporate technology investment and pursue enterprisewide business strategies. A Dichotomy Broadly speaking, energy sector utilities appear to be adopting information technology solutions from slightly different points of view. Of course, this is a broad generalization and many cases can be cited where this trend is unfounded. Where it does exist, however, this dichotomy may point to subtle differences in how utilities view competitive markets and the need to adopt information technologies. In broadly general terms, natural gas uti Iities general Iy seek to adopt technology on a stand-alone basis such as Automated Mapping (AM), Faci Iities Management (FM), Geographic Information Systems (GIS) and other related spatially-based systems. The gas utility also looks to have these individual technologies up and running within 24 to 36 months, on average. Electric utilities or combination utilities generally adopt the same suite of spatially-based technologies. But they also, coincidentally, are specifying Work Management Systems (WMS), Mobile Data Terminals, Trouble Outage Entry/Analysis (TOE/A) and related business geographies applications of these technologies, for enhanced customer responsiveness and competitiveness. Not only that, they are specifying integrated systems--and in doing so are making the same type of information broadly available across the corporation. What’s more, electric utilities are expecting delivery of these integrated systems within 24 to 36 months, on average. This apparent difference in approach maybe explained in part by examining the different operating nature of electric and gas utilities. First, electric uti Iity faci Iities are more apt to be disrupted by accident or storm than are natural gas facilities. News reports following a storm or accident routinely cite the number of households without electricity. More rare are reports of natural gas service disruptions caused by simi Iar incidents. As a result, electric uti Iities typically have more of a need to integrate outage management, work management, customer information, and geographic information systems to help them provide a timely and effective response to an outage. Second, competition in the natural gas industry has placed more of an emphasis on commodity price, while competition in the electric industry is focusing on both price and services such as energy management. The services side of the business is more technology driven. This in turn maybe increasing the desire among electric utility executives to adopt technology capable of addressing competitive situations, while contributing to cost reduction. Three Forces of Change Viewed against the backdrop of competitive industries within the North American economy, even electric utilities historically have been relatively slow to adopt new information technology. This can be better understood by examining three forces that are underlying change in the utilities industry: the notion of a monochromic organization, the notion of a polychronic organization and the rapid introduction of hypercompetition. Each is examined in turn. Monochronic and Polychronic Organization Wi Iliam Pull en, writing in Optimum: )ourna/ of Public Sector Management,” states that regulation or legislation which are put in place to control large organizations that have strong hierarchical structures tend to create a “monochromic” orientation within the organization. Such organizations go about their work in strict sequential order; in other words, one step in the process must be completed before another can be taken. By contrast, Pullen calls organizations which are flatter, less rule bound and smaller, “polychronic” in orientation. This means that they are able to carry out many different activities simultaneously. To understand how this applies to energy sector utilities, consider an engineering department accustomed to operating in a monochromic world of well-defined sequences. When the department is suddenly called upon to respond in a competitive, unstructured—--polychroniway,y, it may fail badly because its organizational structur=not to mention its computer and communication systems-were never intended to respond in anything but a monochromic fashion. As a result, engineers-- and their systems--may be all but incapable of communicating with one another and of sharing critically important data that will help them achieve success. In other words, stand-alone systems that may have been well-suited to meeting the demands of a regulation-heavy business environment, are now solid impediments to achieving success in today’s competitive business environment. Hypercompetition This disadvantage may quickly cripple an organization operating in a world of hypercompetition, signs of which the utilities industry is exhibiting already. In his article “’Hypercompetition’ and the Strategic Reorientation of Asea Brown Boveri,” Edwin Ruhli describes hypercompetitive environments as follows** :
**Ruldi, Edwin. “’Hypercompetition’and the StrategicReorientationof AseaBrownBoveri.”Competitive Intelligence Review. Vol. 7(2) (1996),pp. 36-45. Indeed, Ruhli states that advantages of monopolistic or oligopolistic firms (and here we can think of the utility industry) cannot be sustained in such a business environment. Competition in a hypercompetitive state is characterized by intense, rapid, unexpected, and innovative strategic moves of competing firms. Ruhli’s conclusion is that hypercompetition stands for a new quality of competitive relations between firms, which goes beyond just a stronger form of traditional competition. To further i Ilustrate the point, Ruhli quotes Richard D’Aveni, who wrote in I-/ypercompetition, “Hypercompetition may be viewed.. .as just a faster version of traditional competition.* But that’s like saying that a hurricane is a faster version of a strong wind.” D’Aveni goes on to state, “The only enduring advantage results from the ability to generate new advantages.” A Shift in View The move from a monochromic to a polychronic orientation forced by the hypercompetition is forcing a fundamental change in how energy sector companies look at information technology and the data contained within various databases. Many companies now are looking for total enterprise-wide information technology solutions, and to integrate business systems so there is ready access to corporate data by a broader variety of users. In a poiychronic, hypercompetitive business environment, the orientation must be that information technology is less of a departmental tool and more of a corporate-wide tool for decision support for engineers, executives, marketers, and field personnel. Beyond this basic operation support functionality, corporations are looking toward integration with customer information systems, material management systems, finance and accounting systems, and human resource systems. Systems integration means that these traditional stand alone systems which have been segregated by department are being desegregated in order to provide broader decision support. For the remainder of the decade, the key issues facing the energy utility industry can be categorized under the following headings:
Alvin Toffler, writing in his book, Powershift, said, “We are interrelating data in more ways, giving them context, and thus forming them into information; and we are assembling chunks of information into larger and larger models and architectures of knowledge. None of this implies that the data are correct, information true, and knowledge wise. But all of these do imply vast changes in the way we see the world, create wealth, and exercise power.””* This statement can be easily applied to the energy utility industry of today that will lead into the next millennium. Systems integration provides economic leverage for each individual system investment. This holds true for investments in AM/FM/GIS and other gee-technology systems. Users must be able to access avai Iable data from different databases in order to improve responsiveness and decision support wi II increase shareholder value and create a competitive advantage. Energy sector uti Iities are no longer looking at AM/FM/GIS systems as stand-alone islands of technology. They are looking for integrated systems to provide integrated business solutions. The general contractor must therefore integrate the AM/FM/GIS system with existing business systems at the various companies. This role is significantly different from just a few short years ago. The participants within the AM/FM/GIS industry are, in fact, reacting to their customers’ needs by expanding their role, products, and services. There are more “one-stop-shop” and sole sources for strategic partners due to the shared interest nature of these relationships. Seen this way, the dichotomy identified earlier may bean anomaly that will quickly disappear as the energy sector continues to restructure in the face of enormous market changes. *Toffler, Alvin. Powershft: Knowledge, Wealth, and Violence at the Edge of the 21s’Century. New York BantamBooks, 1991. | ||
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