of a strategic it architecture for the utility industry … · of a strategic it architecture for...

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Return on Investment & Cost Benefit Analysis of a Strategic IT Architecture for the Utility Industry

By Tony GirotiChairman & CEO, Bridge Energy Group

Dec 8th, 2011

Grid-Interop 2011

#GridInterop Phoenix, AZ, Dec 5-8, 2011 2

Agenda• Why ROI?

• Business Case: IT Challenges & Solution

• Industry Comparison

• Cost Model

• Utility’s Cost Model for Point to Point integration

• Calibrated Cost Model for SOA integration

• Return on Investment (ROI)

• Cost Benefit Analysis (CBA)

Grid-Interop 2011


Why do ROI for a Strategic IT?

3

• Future = OT + IT

• Today IT Integration: Static, Tactical & P2P

• Need Alternatives

• No Smart Grid without IT

• Cannot Scale & cannot deploy new Services

• P2P: Tactical, Not Scalable

• SOA: Strategic, Scalable

Fact Risk

Why ROI & CBA: Provides the Business Case

Grid-Interop 2011


Business Case: Current State of IT

4

Adele Mapping System

Banner CIS(Customer Information System)

EMS - ESCA (Energy

Management System)

Lodestar Billing

Expert -TASC

Rates Data Mart

CMS(ConstructionManagement

System)

STS (Services Tracking System)

Compatible Units

WMS(Work

Management System)

UDS(Utilty Design

System)

OMS - ABB (Outage

Management System)

Energy Accounting Sys

& Gas

Managment Sys

ITRON Meter

Reading

EnterpriseSystem

SPPC System

NPC System

Legend

ECAS

MapGuide(iConnect)

Pension Calc. Sys.

Paybase Check Print

DBM ARCS

Lodestar Client/ Server

Deposit/Refund Checks

AMS Meter Inventory

Bill Print (Opencsf)

Mobility

CheckFree

Landbase Processing

Microsoft Exchange/

Outlook

Capital Budget

Sys.

Description Now (Job

Desciption)

Career Architect

Auto Affirmative

Action Planning

Fleet Anywhere

CascadePI

(Substation Reads)

Mobile Dispatch

Paris

Enterprise Systems Diagram

Open Systems

Mainframe

Reno (Mail pymts (SP)EDS (SP)Bill Matrix (NP)Ready Pay (NP)FEDS (SP)STORES (SP)Collection Agency (NP)LIHEA Pymts (NP)

Remittances(Docutran)

CIS INQSCIS INQCall-in PriviledgeEquifax

Load Mgmt

ERPPeoplesoft

Human Capital Managment

FinancialsSupply Chain

OMS (Outage

Management System)

IVR / VRU

IVR / VRU

Loadstar

CQenceMail

Processor

MV90

ORCOM CIS

TMWA CIS

ERP

Primavera

HenwoodBook-

RunnerRisk / Credit

Oracle Historical

Data Tables

PowerPlant(Generation Fixed Asset Accounting)

TEA (Time Entry

Application)

eTrak

ERP

INDUS PassportPurchasingInventoryWork MngmntTag Out

Oracle Spatial

ShareholderSystem

OutSourced

HR Logix

NEW NEEDNEW NEED NEW DATA

• AMI Interval Data

• Sensor Data

NEW INTEGRATION

• New AMI System

• OMS, DMS

• Legacy Upgrades CIS, GIS, Financials

NEW CAPABILITY

• Cust Empowerment

• Transaction Volume

• Real Time Data

• Partner Integration

NEW OPPORTUNITY

• Dist. Generation

• PHEVs

• Settlement & Billing

The Accidental Architecture

P2P Interfaces

Ripple Effect

CURRENT STATECURRENT STATE

Grid-Interop 2011


Business Case: Why strategic IT ?

5



EMS - ESCA (Energy

Management System)

Lodestar Billing

Expert -TASC

Rates Data Mart

CMS(ConstructionManagement

System)


Compatible Units

WMS(Work

Management System)

UDS(Utilty Design

System)

OMS - ABB (Outage

Management System)


& Gas

Managment Sys

ITRON Meter

Reading

EnterpriseSystem

SPPC System

NPC System

Legend

ECAS

MapGuide(iConnect)

Pension Calc. Sys.

Paybase Check Print

DBM ARCS



AMS Meter Inventory


Mobility

CheckFree

Landbase Processing

Microsoft Exchange/

Outlook

Capital Budget

Sys.


Desciption)

Career Architect

Auto Affirmative

Action Planning

Fleet Anywhere

CascadePI

(Substation Reads)

Mobile Dispatch

Paris


Open Systems

Mainframe

Reno (Mail pymts (SP)EDS (SP)Bill Matrix (NP)Ready Pay (NP)FEDS (SP)STORES (SP)Collection Agency (NP)LIHEA Pymts (NP)



Load Mgmt

ERPPeoplesoft



OMS (Outage

Management System)

IVR / VRU

IVR / VRU

Loadstar

CQenceMail

Processor

MV90

ORCOM CIS

TMWA CIS

ERP

Primavera

HenwoodBook-

RunnerRisk / Credit

Oracle Historical

Data Tables

PowerPlant(Generation Fixed Asset Accounting)

TEA (Time Entry

Application)

eTrak

ERP


Oracle Spatial

ShareholderSystem

OutSourced

HR Logix

NEW NEEDNEW NEED NEW DATA

• AMI Interval Data

• Sensor Data

NEW INTEGRATION

• New AMI System

• OMS, DMS

• Legacy Upgrades CIS, GIS, Financials

NEW CAPABILITY

• Cust Empowerment

• Transaction Volume

• Real Time Data

• Partner Integration

NEW OPPORTUNITY

• Dist. Generation

• PHEVs

• Settlement & Billing

The Accidental Architecture

P2P Interfaces

Ripple Effect

CURRENT STATECURRENT STATE

Grid-Interop 2011


Limitations of Point to Point approach

6

Functional Changes in an application may or may

not be significant

Non Functional Changes (Communication, Trigger,

Messaging, data transformation) can be

significant

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How SOA Solves the Problem

7

OMS

AS-IS

IVR

AS-IS

AS-ISNew

CIS

Meter data1

Service I/F

UDDIService Registry

5Billing Determinants

Service I/F

XML Transformation

(Formatting)

Service I/F

OA & MBAM

Service I/F

SLA Exceptions

Management

Service I/F

Canonical Data Model

Service I/F

ProcessOrchestration



EMS - ESCA (Energy

Management System)

Lodestar Billing

Expert -TASC

Rates Data Mart

CMS(Construc tionManagement

System)


Compatible Units

WMS(Work

Management System)

UDS(Utilty Design

System)

OMS - ABB (Outage

Management System)


& Gas

Managment Sys

ITRON Meter

Reading

EnterpriseSy stem

SPPC System

NPC System

Legend

ECAS

MapGuide(iConnect)

Pension Calc. Sys.

Paybase Check Print

DBM ARCS



AMS Meter Inventory


Mobility

CheckF ree

Landbase Processing

Microsoft Exchange/

Outlook

Capital Budget

Sys.


Descipt ion)

Career Architect

Auto Affirmative

Action Planning

Fleet Anywhere

CascadePI

(Substation Reads)

Mobile Dispatch

Paris


Open Systems

Mainframe

Reno (Mai l pym ts (SP)EDS (SP)Bi ll Matrix (NP)Ready Pay (NP)FEDS (SP)STORES (S P)Col lec tion Agency (NP)LIHEA Pymts (NP)



Load Mgmt

ERPPeoplesoft



OMS (Outage

Management System)

IVR / VRU

IVR / VRU

Loadstar

CQenceMail

Processor

MV90

ORCOM CIS

TMWA CIS

ERP

Primavera

Henwood Book-RunnerRisk /

Credit

Oracle His torical

Data Tables

PowerPlant(Generation Fixed Asset Account ing)

TEA (Time Entry

Application)

eTrak

ERP


Oracle Spatial

ShareholderSystem

OutSourced

HR Logix

MDM

New

2

3

4 5Outage

√√ √√ √√

Grid-Interop 2011


Strategic IT – What is it?

• Plan: – Strategic use of IT versus Tactical after the fact

• Develop: – Strategic IT Architecture (SOA)

– IT Governance

– IT / Organizational Transformation

• Execute: – Tactically without compromising strategy

– Catalyst Project

– Service Oriented Architecture (not P2P)

– Integration Center of Excellence

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ROI - Development Cost Comparison

9 Grid-Interop 2011


ROI - Maintenance Cost Comparison

10 Grid-Interop 2011


ROI - Total Cost of Ownership



ROI Cost Components –Units of work

12

# Cost Area Point to Point SOA

Source AppDestination

App Total CostSource

AppDestination

App Middleware Total Cost

1 Design Unit of Work

Unit of Work

Units of Work

Unit of Work Unit of Work Unit of Work

Units of Work

Functional Design 1 14

1 13

Non Functional Design 1 1 1

2 DevelopmentFunctional Design 1 1

41 1

3Non Functional Design 1 1 1

3 MaintenanceFunctionality Maint. 1 1

41 1

3Non Functional Maint. 1 1 1Proprietary Interf Maint. 1 1 2 1 1

4 Tools & TrainingVarious tools 1 1 2 N/A N/A N/A 3One middleware N/A N/A 3

Total Units of Work

With P2P In Src & Dest. Apps. 16

With SOA in Src, Dest & Middleware 13

Grid-Interop 2011


Utility’s Real Cost of one Interface $$

13

1 Internal Labor $33,3332 External Consultancy $66,6673 Changes to Code $13,3334 Maintenance (one interface) $17,000

$113,333Design & Development

Maintenance

5 Non Functional Changes (Error, Failure, Scalability) 33% $37,400

6 Maintenance (errors, failures) 15% $22,610

Total of Design, Development & Maintenance Cost $150,733 $37,610

7

Traditional P2P,Tactical Approach

Grid-Interop 2011


ROI -Estimated Dev. Cost (calibrated)

14

B. Design & Development Cost for a Range of Interfaces 1 2 to 5 6 to 10 11 to 15 16-20 21-25

P2P4 4 4 4 4 4

$113,333 113,333 113,333 113,333 $113,333 113,333$150,733 150,733 150,733 150,733 $150,733 150,733

SOA7 7 6 5 4 3.5

$263,783 263,783 226,100 188,417 $150,733 131,892

Grid-Interop 2011


ROI - Development Cost Comparison

15

$0$20,000$40,000$60,000$80,000

$100,000$120,000$140,000$160,000$180,000$200,000

1 2 3 4 5 6 7 8 9 10 11

Dev

elop

men

t ost

Per

Inte

rfac

e

Number of Interfaces

Development Cost per Interface: P2P vs SOA

*TPU P2P Development Cost ($/interface)

*TPU P2P Development Projected Cost with Error handling and more ($/interface)*TPU SOA Development Projected Cost

5 10 15 20 25 30 35 40 45 50

Grid-Interop 2011


ROI - Maintenance Cost Comparison

16

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

1 2 3 4 5 6 7 8 9 10 11

aint

enan

ce C

ost P

er In

terf

ace


Maintenance Cost per interface: P2P vs SOA

*TPU P2P Cost ($/interface)

*TPU P2P Projected Cost with Error handling and more ($/interface)*TPU SOA Projected Cost

5 10 15 20 25 30 35 40 45 50

Grid-Interop 2011


ROI-Total Cost of Ownership

17

$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,000$8,000,000$9,000,000

$10,000,000

1 2 3 4 5 6 7 8 9 10Tota

l Dev

elop

men

t & M

aint

enan

ce C

ost


Total Cost Comparison: P2P vs. SOA

P2P Approach (Estimated Cost based upon actual cost incurred by TPU)

P2P Approach (Estimated Cost based upon actual cost of TPU and adding robust error handing)SOA Approach (Projected based upon industry benchmarks and TPU's actual cost)

5 10 15 20 25 30 35 40 45 50

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Return on Investment – 2.5 years



CBA – Quantitative Benefits

19

• Reduction in Integration Cost over time

• Over 15 interfaces Development Cost for SOA less than P2P

• Over 14 interfaces Maintenance Cost for SOA less than P2P

• Over 16 interfaces Total Cost of Ownership for SOA less than P2P

• 2 to 2.5 year ROI Utility will save hard-dollars if they do a Strategic IT investment

• Increased Business Agility

Grid-Interop 2011


CBA – Qualitative Benefits

20

• Business Benefit• Lower Business Risk

• Increased Asset Use

• Business Enabler

• Customer Benefits• More Satisfied Customers ‒ Due to Business Agility & Integrated data provides instant customer resolution

• Self Service billing usage, outage status

• Technical Benefits• Simplified and Unified Integration

• Low technical risk

Grid-Interop 2011


Thank You.

21

Tony GirotiBridge Energy Group, [email protected]

Grid-Interop 2011

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