IT Integration

Information technology plays a huge role for most utility companies these days, and Constellation Energy is no exception. As Jeff Johnson, VP for IT Infrastructure at the company, explains, “IT is viewed by our CEO and our CFO and the top management of the company as strategic. My boss, who is the CIO, reports directly to the CEO, and is part of the management committee. Technology has been viewed, for the last five years, as a significant strategic enabler.

“It’s important to note that our business is across the value chain, from a regulated utility to a very big presence in the deregulated merchant space from deregulated generation, trading, risk management and retail energy marketing. So across that spectrum, IT is viewed as absolutely critical. Some of the drivers, for me, within IT infrastructure are to continue to drive quality up, while at the same time driving unit costs down.”

According to Johnson, the main question is: how do you leverage technology within your own shop to drive productivity and efficiencies, at the same time that IT is becoming the business? The dividing lines between what is a business process, what is an operational process and what is an IT solution have become much less distinct.

Johnson says there is now a lot more understanding from boards of directors about the importance of IT. They understand the value it can bring for driving productivity, as opposed to just being a back office tool, and it is now recognized as being a vital driver.

“We have benchmarked IT from a cost perspective,” Johnson says. “We found that in some areas, we were higher than we would have expected to be. The comment from our business was: ‘Well, I bet Google is higher than you would expect them to be.’ The point being that IT is viewed as strategic, if you want to innovate, and if you want to lead the market in capturing the value that’s out there as a result of the changes we’re all adapting to.”

Changing times
The utilities sector has undergone a number of changes recently, as Johnson points out, “What’s interesting is that you’ve got several significant forces of change coming at the utilities space, a space that has historically been relatively calm. Obviously, we had deregulation, and that was a big deal. But now we’ve got an aging workforce. We have climate change and carbon regulation coming. And these are game-changing, tsunami levels of change.

“This makes it a fascinating and very challenging time to be in the industry. When you look at what’s becoming possible and in terms of technology, and what the business requires, it is a great to be in the middle of that intersection, in trying to make that happen as a business solution.”

Constellation currently has a major initiative under way to pilot AMI smart grid technologies. This is something of a challenge because they had gone down the path of advanced meter reading, and some of this business case had already been really absorbed by the AMR Initiative.

“Now we have a higher hurdle to show where the value is from an AMI perspective. Nevertheless, we are being pushed. We as a company also need to push in that direction, and thus have to be a little bit more creative on how we find that value proposition.”

Making these kinds of changes can have an effect on a company’s infrastructure, as Johnson points out. “The limitation for your data center, as most people are realizing, is no longer space. It’s power and cooling. We recently had to double our power and cooling capacity at our two data centers.

“What we have been pushing forward on is server virtualization, and adopting that technology wholesale, driving up our utilization rates to a very significant degree, and having a number of virtual servers hosted on a physical server, going up to industry-leading kinds of numeric metrics.”

This initiative is driving significant savings, while at the same time achieving a level of efficiency from an energy consumption perspective, this shows the company is being a good corporate citizen and a green-focused corporation.

Responding to demand
Constellation has a demand/response initiative within its retail energy marketing group, as a service to offer in the deregulated space. The company is heavily engaged in a multiyear program, called Vision 20/20, which will completely reengineer its business processes and platforms, so it can adapt to and respond to the aging workforce problem.

“We have to significantly drive our productivity higher, because there’s no way we can hire all of those people and replace them one-for-one – nor would we want to – from a financial perspective.

“We are reengineering the business on the fly, while at the same time driving new initiatives like AMI and demand/response. In the deregulated space, the market continues to evolve. What we’re seeing is the globalization of the energy market, and it’s driving a level of complexity and sophistication in our systems that I’ve never seen required until this point.

In terms of mobile workforce, the utility is looking to drive most of our field force to be automated through tools – computing tools and applications that interface directly to their business process – within the next five years. It already does a lot of work management and dispatch and field management processes using mobile technologies.

“From a specific technology perspective, our strategy right now is to move away from the BlackBerry technology. We’re a Microsoft-centric shop, because our trading and risk management business do a lot of custom software development that they view as a competitive differentiator. They want to be able to push applications to these devices, which means we need to go to a Microsoft-based strategy. So we’re looking to have one OS everywhere and be able to push applications to any device anywhere, in the same way that we manage desktops today.

“I won’t say that we have it all figured out. We have a lot of challenges, because the industry is evolving so rapidly. We’re looking to take advantage of new technology to greatly improve our ability to deliver higher service at lower cost, while at the same time being able to manage the IT mobility infrastructure at a much higher level than we currently can.”

Jeff Johnson is VP, IT Infrastructure at Constellation Energy. He leads the IT infrastructure organization that is responsible for the strategy, implementation and support processes for enterprise computing infrastructure.