Value of Geo-Spatial Technology in a Utility a Statisical Approach
Chuck Howard President Geographic Information Technology, inc. 101 Inverness Dr. East, Suite 130 Englewood, Colorado 80112 Phone: 303-708-9352 Fax: 610-939-8516 E-mail: choward@geoit.com
The Issue
The implementation of complex information systems in utilities strikes fear in the hearts of many utility executives, and for good reason. Many utilities have a horror story or two to tell about sinking millions of dollars into a new information system that never goes online or only marginally meets expectations. Utility AM/FM/GIS has had their share of this type of failure, but it is important to note that most of these experiences occurred in the pioneering days of the technology and are infrequent today. The cost of modern GIS systems is still sufficiently high to require approval at the board of director’s level. Most of these boards are heavily represented by financial people who remember, all too well, the financial impact of every information technology (IT) failure. They want more than just a good feeling that the technology will be successfully implemented. They need assurances that the investment will make a better return than other projects they are considering. No matter how the justification is put together, they want proof that some other utility has actually achieved a positive return. This is a difficult assignment. As utilities become more and more competitive, they realize that information is their competitive advantage. Some middle managers will boast a little to their competitors about how successful their project was, but few will share real financial results. This is partly because few companies who have successfully implemented AM/FM/GIS have actually measured the difference before and after. A Case Study One company’s project team who was preparing a business case for their board anticipated that the board would want to know the magnitude of savings achieved by other companies. They learned quickly that querying implemented companies revealed little information of value. So they decided to take a statistical approach to see what could be learned. Earlier that year (1999), their company had paid a consultant to develop a database of performance metrics for investor-owned electric utilities. With this information, they could measure their performance against their peers and averages. The team believed that by comparing successful AM/FM/GIS companies against those who had not implemented the technology, they could determine if any real differences existed. The database that was used for this study is proprietary, and cannot be revealed in support of this paper. But the methodology and results of the study are not proprietary. This study can be recreated with information gathered from the Internet; and it would be a worthwhile exercise for anyone having trouble justifying the expense of a system. The Methodology The team defined a methodology before examining the data to ensure the study would be objective and that it would yield meaningful results. The methodology components are summarized below. The Measurement Criteria The teamed believed that of the metrics in their database, four measurements should be directly impacted by AM/FM/GIS. They are as follows:
Choosing the groups to be measured was difficult. The first thought was to measure utilities with GIS against those without. This turned out to be impossible because:
The Bottom Line The results were startlingly clear. The award winners’ average was better in every category. The table below shows the comparisons.
This study could be criticized for a number of reasons. For example, there was no effort made to ensure that the demographics of utilities in the two groups were similar. But the AM/FM/GIS group is a good representation of medium to large utilities covering both dense urban and rural service territories. This study can be considered a strong indicator of what would be found if a very rigorous study were to be undertaken. In addition, it would be beneficial for our industry if one of our university affiliates could be enticed to undertake such a challenge. An attempt was made to create a database for gas utilities that is similar to the electric one to see if the results would be similar. However, merger and acquisition activity in the past four years made it difficult to extract reliable data on the gita award winners. Rather than presenting a muddled picture for the gas industry, I leave you with a methodology and a hope that future results will be shared with the industry. | ||||||||||||||||||||||
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