The Challenges of Aligning IT with the Energy Business

By Wyndham Sellers, TeamQuest Corporation

The Challenges of Aligning IT with the Energy Business: The Smart Grid won’t ever happen unless IT and business units work tightly together to achieve common goals and fully understand each other's needs and limitations.

Technology used to be expensive. As a result, many business units would have limited or no access to IT due to prohibitive costs. Therefore, IT had less areas of alignment to address. Today, however, almost all areas have deployed technology due to its relatively low cost. This means every branch, every remote site and every single point of the grid is pervaded by computing resources – and IT has to align to them all.

There also used to be limited technology solutions and alternatives. In the sixties and seventies, for example, you had few choices if you wanted to put in a database system for a utility. Consequently, the business had to align to the available options. And to a certain degree, the business units became somewhat lazy, waiting for technology to take the lead.

That approach doesn’t work today. The new methodology is to decide where you want the business to go and find technology that can help you achieve those goals. In most cases, there are hundreds of solutions available.

Business pace is also far faster than it used to be. If you look at mergers, acquisitions, globalization and the sheer volume of competition, there is no room for slow movement in the commercial sector. This means that IT has to be much more flexible, faster and adaptable than it was even a decade ago.

The internet has really added to this. Businesses no longer have the option of deploying technology or not. The energy business, in point of fact, really can’t be done anymore without a strong internet presence and a sophisticated IT backbone. You have to implement technology and stay ahead of the curve or succumb to your rivals. These are significant changes that have taken place in a relatively short period of time. But they have served to make it abundantly clear that IT and the energy business have to be closely aligned.

Alignment – The Holy Grail
Let’s look at what alignment is and what it is not. What alignment isn’t is allocating two programmers to the smart grid, two to billing and two to energy dispatch and expecting them to take care of things. That won’t achieve any kind of alignment with business. In particular, such an approach falls far short as it fails to take into account overall strategy and existing or planned management initiatives.

So what is it? Alignment means seeking out business needs and translating them into prudent IT initiatives that support ongoing objectives. It is being ready to provide a solution that the business unit needs in a timely manner that delivers the services they require in order to move forward.

This is an important point. One of the key challenges in alignment, after all, is gaining agreement on what alignment is. Only by achieving that agreement is it possible to synchronize IT and business strategies. It is vital, therefore, that IT spends time getting to know the ins and outs of the various business units, and what they each consider the most important aspects of alignment so that everyone can get on the same page. If this is not done up front, failure is inevitable.

Statistics from analyst firms very much back up these assertions. 75 percent of those who attempt IT alignment fail. Of the other 25 percent, about half are only partially successful. So you end up with about 10 to 15 percent that eventually arrive at proper alignment. Faced with such statistics, it’s understandable that many in IT are reluctant to even attempt to attain alignment.  Yet alignment is vital if smart grid and other ambitious programs are to achieve any measure of long-term success.

Cultural Barriers to Alignment
There are many reasons for alignment failure. One of the big reasons is not appreciating that there are cultural issues, IT maturity issues and company issues that impact the ability to achieve alignment. Therefore, timing is important – you have to ensure these challenges are fully addressed before attempting any kind of alignment initiative.

The first thing you have to take stock of is the corporate culture. Is IT viewed as a cost center/expense or a profit center/investment? Both cost money, so what’s the difference? With an investment, you expect a return. You expect to get more out of it than you put into it. The viewpoint within management says a lot about the corporate culture. Are they mainly complaining about high IT costs, or are they intent on utilizing IT to facilitate growth into the future?  If the former is the case, this should be addressed before engaging in an IT/business alignment program.

Similarly, if IT is regarded as a service/support center, there is work to do from a cultural perspective. IT has to apply organizational best practices such as the IT Infrastructure Library (ITIL) if it is to move itself into the investment category and thereby bring about success. IT can’t just sit back and expect the various energy business units to grant it equal rights at the conference table. IT has to earn it. The way to accomplish that is to become fully professional as a business unit and learn to speak the same language as the various line-of-business leaders and C-level executives.

The organizational structure also plays a roll. Some companies have everything in silos that make alignment virtually impossible. Other organizational barriers come about when IT is lumped in with another C-level department or is positioned under Finance.  All this means that IT won’t have the clout it requires to do the job effectively. It must, must, must participate at a C level. To get there, however, you have to demonstrate tremendous business value. If you are not operating at a strategic level, your chances of aligning business with IT are very small as you have no real idea about where the business is heading.

Business Maturity
There are, too, several different kinds of decision making types that can be encountered in the commercial landscape. These include reactionary, opportunistic, strategic, trial and error and even happenstance. If the culture is reactionary, you never know what’s coming i.e. you are continually responding to one factor after another without long term direction. In such an environment, it is almost impossible to grow.

Let’s look at some of these other categories. In the happenstance category, things just tend to happen and the organization goes along with it. This is an unsuccessful stance. If the company is opportunistic, it means they may be good at responding to opportunities, but the culture is such that the organization has to wait for those opportunities to arise. In this setting, your best course of action is to align most closely to existing opportunities. However, your efforts in this climate will be largely hit and miss.

Where you need to be, then, is strategic. By strategic is meant more than just the creation of a document stating corporate strategy. It has to be an all-encompassing emphasis which drives all further decisions and propels the organization towards a stated and finite goal.

Further, everyone has to be on board.

But even with strategy in place and well known, IT may still have plenty of work to do. For example, most business units really don’t know what technology can do for them. If you go ask, they will look at you blankly. It is up to IT to drive technology into the various departments by educating the business heads on what can be accomplished.

Further, IT alignment will not fix bad business processes. If process weaknesses are not addressed, you end up importing bad processes into an IT framework. This is a recipe for disaster.

IT Maturity
Just as a business must be strategic, so is it the case with IT. Is your IT organization strategic or is it too busy fighting fires?  One road towards more strategic IT is via good practices such as ITIL. Note, however, that ITIL and other similar initiatives will not make you strategic. They help, but they don’t create alignment on their own.

To achieve maturity, IT staff has to embrace knowledge beyond the technology perimeter. If IT does not achieve a strong understanding of business as well as technology, it will not be capable of identifying technology solutions that meet business objectives. Therefore, you have to become visionaries in both business and technology. If you don’t have the people who can do this, obtain them from elsewhere.

Technology Support
Of course, there is technology that can help IT arrive at its destination. Automated capacity planning and performance management tools offer a step change in IT operations. Instead of working in reactionary or happenstance mode, these tools can immediately propel IT into a greater zone of effectiveness. They can provide, for example, the required flexibility to accurately predict traffic patterns and growth trends while being able to detect unexpected peaks and troughs, and make the necessary adjustments.

Capacity planning makes it possible to know if the current infrastructure is adequate to cope with the addition of new applications or a greatly increased traffic volume. If more resources are called for, capacity planning highlights how much extra equipment needs to be deployed. And with so much top management attention on smart grid initiatives, such automated tools enable IT to load up existing systems with greater workloads without causing a bottleneck. Thus it becomes possible to maximize the ability of systems to respond to market volatility.

Capacity planning also reaps big rewards by revealing what IT assets are already in place. There is hardly an energy company in the nation that can honestly say it knows the location and role of every server in its midst. By conducting such an inventory automatically, capacity planning software permits optimization of what is currently in place. In many cases, this action reveals large pockets of unharnessed resources that can be corralled to cope with ongoing expansion.

While capacity planning could be characterized as a crystal ball, performance management is the troubleshooter.  Despite the most meticulous planning, unforeseen circumstances sometimes result. Whether due to massive spikes in demand, a local blackout or the impact of uncontrolled application roll out, IT departments must occasionally deal with performance degradation. The challenge is to quickly isolate the source so the proper remedial actions can be executed. With the right tools in place, energy companies can stay one step ahead of trouble.

It is advisable, for instance, to always monitor metrics concerning the utilization of processing power, memory and the network. Thus when an issue shows up, it is relatively easy to drill down into the affected area to discover the application, server or business unit responsible.

This directly correlates to the bottom line. Instead of throwing more servers, more disk capacity, more bandwidth or more powerful processors at the issue, performance management often reveals specific areas of bottleneck that can be reorganized for optimum throughput and availability.

Recommendations
Achieve IT effectiveness before attempting alignment. This means improving business unit perception of IT either via better communication or greater demonstrated effectiveness. In other words, show business value at every opportunity and open all doors that lead to enhanced communications.

Secondly, take the initiative to learn the language of the business rather than waiting for the business to learn IT (which will never happen). That is the only way to become a partner with the business, and to create a truly strategic IT organization that is fully in alignment.

Further, TeamQuest offers a sophisticated suite of capacity and performance management tools that will materially help any energy company create, manage or interface with the smart grid. Known as the TeamQuest Performance Software suite, it consists of four integrated products to help organizations to optimize IT services. From performance management and reporting to event monitoring and capacity modeling, these tools can scale across an entire utility network.