Harnessing the Power of Technology

New Orleans-based Entergy Corp has decided to outsource most of its computer

operations to Science Applications International Corp with a clear-cut mandate

to reduce costs and automate the procurement process. Once the systems are in

place, Entergy will be able to reduce its procurement cycle as well as cut down

on inventory.

Hot summer days don’t tax the power generation capacity of the

Pittsburgh-based natural gas utility Equitable Resources Inc anymore. The use of

IT-enabled power management systems has ensured that the gas supply is

sufficient at all times, besides providing controls for the utility to predict

loads and the influence of temperature on them.

Tennessee Valley Authority’s operation in Chattanooga, Tennessee involves

working with customers who want to save on energy costs by working during times

when power is cheapest. The company uses its automated telephone system to

notify customers when it is necessary to cut back on power supplies during

emergencies. The phone system also notifies billing systems of any change in

charges due to curtailment.

What Can India Offer?
	Consulting–both management as well as IT
	Professional IT services–application maintenance and development of new applications
	Products or customization of third-party products
	BPO/ITeS–bill processing, customer contact center management
	Engineering services–from SCADA and GIS to CAD/CAM

Utilities are also finding ways to use IT to work more closely with

customers. St Louis-based electric and gas utility Ameren Corp offers a Web

service called Amerenabacus that shows customers how they can get price breaks

if they don’t use energy during peak periods.

There is more interesting data from Nasscom’s market intelligence service

report... The utilities market in the US is estimated to have spent $16 billion

on IT services in 2001 and is expected to grow at the rate of 12% per annum till

2005.

Deregulation drives change



Historically, the US utilities industry value chain comprised three

monopolistic elements. Power generation companies that were responsible for

operating the generation stations, transmission companies that maintained and

controlled transmission networks, and distribution majors that managed

distribution, metering and billing.

However,

new legislation is breaking down these natural monopolies. To begin with, power

generation is being liberalized. Third parties now have access to transmission

lines. And customers now have the freedom to choose their service provider.

These regulations are creating new entities such as independent system operators

(ISO), power exchanges (PX) and scheduling co-ordinators (SCs). Deregulation is

also radically transforming the roles of existing entities and the results are

evident. With several states on the West Coast–California, Texas, New Mexico,

Washington–already enacting restructured legislation, the de-regulation

process seems to be moving ahead in full swing. According to the Nasscom report

on the US utilities market, over 50% of US electric customers would have retail

choice by 2003, up from under 20% in 2000.

New IT requirements



The Nasscom report suggests that in the wake of de-regulation, all

categories of utilities companies will have significantly new IT requirements.

The need for improving operational efficiency will first drive the power

generation companies to implement plant optimizers, geographic information

system (GIS), supervisory control and data acquisition (SCADA) and create asset

maps. These companies will also need to implement enterprise applications such

as enterprise asset management (EAM) and work management systems (WMS) to

streamline business processes. They will then need to integrate the EAM and WMS

to the plant optimizers, GIS and SCADA to create a shared plant information

network.

Similarly, power exchanges and exchange service providers will need to

implement front and back office systems for trading, risk management tools and

carry out web-enablement of key systems to participate in energy markets.

Utilities distribution companies, on the other hand, will need to invest in

systems for CRM, Electronic Bill Presentment and Payment (EBPP) and also for

billing and collection.

Opportunities for India



These IT requirements at different utility companies translate into at least

three key near term opportunities for Indian companies," says Nasscom

vice-president (research and KM) Sunil Mehta.

What are Top Indian Firms Doing?
Competition in the utility space is already beginning to heat up and several prestigious utility players are already working with Indian players.
	TCS recently won a well-publicized deal with United Utilities worth nearly $50 million
	Infosys has been serving large companies such as Dynergy, Vivendi and Schlumberger across a wide range of service lines. They have developed an integrated oil trading system for an oil major, built a comprehensive customer service system for a North American utility and implemented Passport 8.0 as the work management system for a North American T&D entity
	Wipro has been serving companies such as Energy.com, Transco and Npower on activities such as post merger regulatory compliance and implementing data warehousing solutions
	Patni Computers has long standing relationships with Southern California Edison and AGL Resources and has helped automate special contract handling and implemented billing solutions for these and several other gas and water companies

Mehta explains that ERP related opportunities will come first. Indian

companies are already well positioned in integration and implementation of ERP

systems in traditional areas like financial accounting. In addition, by building

an understanding of generation plant operations, Indian firms can venture into

areas such as EAM and WMS. SAP, JD Edwards and Oracle are the leading

applications in this space. Second, Indian companies can perform

intra-enterprise and cross enterprise integration across generation,

transmission, distribution companies and traders. This will require skills in

middleware platforms such as TIBCO, MQ Series and Mercator. Third, Indian

companies need to build skills and capabilities in applications such as

Peace-Software, SAP-ISU-CCS, Lodestar and Orcom to implement billing systems and

integrate retailers’ systems with those of credit bureaus and banks.

Finally, there will also be small opportunities for companies that can build

skills in Altra, Solarc, Cell Net and Ketek to implement risk management and

plant optimization tools.

SHUBHENDU PARTH in New Delhi



(For a full list of US utilities and their rankings, visit dqindia.com/usa_utilities)

Why is the Utilities Space Hot?

Worldwide, the Utilities sector is increasingly

looking at IT investment as part of the overall business strategy, as IT has emerged an enabler of management control and operational excellence. Worldwide, there are certain trends in the sector which indicates an enhanced investment in IT in the sector:

Capacity addition: The demand-supply mismatch in the utilities services is skewed towards demand and hence companies are involved in capacity addition (in terms of putting in power plants, distribution lines, search for more oilfields, laying gas pipelines, efficient distribution etc.). In fact, when it comes to additional capital investment, we assume 1% of the investment is towards IT for running or managing these new capacity additions.

Cost reduction: With the top line growth of companies under pressure, there is emphasis on savings that can be derived from lowered cost of operations. The MRO (maintain, repair and operate) cost is a major expense associated with the running of utilities firms and hence firms are putting in efforts to minimise this cost. IT is playing a major role in this initiative as deployment of IT across the organisation can streamline maintenance processes, enhance asset management, reduce inventory, minimize transaction time (internal/external), streamline workflow management and provide reliable information for decision support among others. 

Emerging trends: The utilities sector is itself undergoing major transformation with the emergence of newer concepts–from energy trading, risk management and an asset management program (AMP) to merit order generation, securitization of bills receivables, customer relationship management

(CRM), waste water management and time of day (ToD) pricing of utilities services. And while most of the utilities companies are moving towards adopting these, it is important that they have a robust IT



system with knowledge management in place.

Restructuring Initiatives: Restructuring is a pre-condition for receiving grants from the World Bank, DFID and other international funding agencies for the state run utilities in developing countries. Further, the governments of these countries have taken initiatives

to encourage restructuring of the state run utilities by suitable legislation and statutory provisioning like



Power Bill 2000 and accelerated power development program (APDP) in India. IT will play a major role in these restructuring initiatives, be it in billing and charging (distribution activity) or operation and materials management (generating activity) or minimizing the transmission and distribution losses (transmission activity).

Convergence: Convergence of power, gas, oil (as

also with telecom) business areas has thrown open new opportunities for IT.

The convergence makes a mammoth company to be better managed

and efficiently operated and thus IT would play a major role towards achieving this end.

Regulations: Utilities throughout the world are heavily regulated as they form a part of the essential services. Business and financial prudence are guiding

lawmakers across the globe to formulate new policies for the utilities sector in their respective

countries so that utilities provide better customer and stakeholder value e.g. the BETTA initiatives of UK, Power Bill 2000 of India.

These major regulations impact the organizations as a whole and for compliance towards these regulations or harnessing the opportunities

arising out of these regulations, the firms need to have an enhanced IT system.

Source: Tata Consultancy Services