Queensland energy providers Energex and Ergon Energy have been on a journey to transform their business intelligence capabilities. Peter Effeney, CEO of SPARQ Solutions, shared insights from this journey at the SAUG Summit 2014.
Energex manages sophisticated energy distribution networks and delivers world-class energy products, services and expertise to one of Australia’s fastest growing communities, South East Queensland. Ergon Energy is an electricity retailer serving homes and businesses in regional Queensland, and also maintains and expands the regional Queensland electricity network. Both companies have around $10 billion in assets and more than $2 billion in annual revenue.
SPARQ Solutions was formed as a separate company in 2004, as a merger of the ICT functions of Energex and Ergon, and provides services and holds the licences and assets for both companies.
“We provide the full stack of services as an IT operation would, from strategy, architecture, and CIO-type services through to project delivery services. We typically do in the order of $80 million to $100 million worth of IT capital expenditure per year for the two companies’ ICT operations,” Effeney said.
Challenges facing the energy sector
The energy industry is becoming much more information intensive and enabled, according to Effeney.
“The old mode of just run the power station through the high voltage transmission grid and down to the customer without any intervention is one very much in the past,” he said.
Indeed, even the dynamics of supply and demand have shifted, with customers moving to generate their own electricity. Queensland is not called the Sunshine State for nothing – and almost one in 10 houses now has solar panels on its roof. This is transforming the grid from a single directional flow from large power stations, to small customers having an interconnected and bi-directional flow of energy.
The Queensland Government’s 30-year power strategy also picks up on the themes of information enablement and open data, and Energex and Ergon carry these through into their individual plans.
“In SPARQ, we try to bring together the delivery of the capability for both of those companies, and look for synergy opportunities wherever we can. So we have a plan around information enabling the two business, and that’s leading to quite substantial programs of IT investment in both companies,” Effeney said.
Ergon CEO and SPARQ chairman Ian McLeod, who is the project sponsor for Ergon’s major program of work, also speaks of the critical nature of information enablement for the future of the company – in terms of how customers use energy and environmental factors affecting their assets.
An additional complicating factor is that at Ergon Energy, the retail operation is currently being separated from the distribution component of the business, which is also requiring a major reinvestment in customer systems, as well as similar projects including field force automation using mobile devices, and distribution monitoring and analytics.
The enterprise BI journey
Both Energex and Ergon have undertaken major ICT programs in the last decade, and overlaid on top of this has been the enterprise business intelligence (BI) components.
Back in 2006-07, the first BI platform was established as part of an implementation of the Mincom Ellipse ERP across Energex and Ergon.
“With that, we introduced BusinessObjects 6.5, and that became the first reporting platform largely on that ERP,” Effeney said.
Ergon went on to establish its first data warehouse using SAP BusinessObjects XI in 2008, and by 2009, Ergon was building various business unit-specific data marts, including one for network analytics, and one for customer service.
In 2010, Energex mounted a business case to make a substantial investment over three years in what was called the Energex Performance Management (EPM) system.
“This was very much led by a strong vision and leadership from their CFO,” said Effeney.
The foundation for this system was built in 2010, with the EPM program running for three years from 2011-2013, bringing a full stack of SAP solutions into play.
“The full EPM program did cover pretty much the full spectrum, so that we could produce a whole of company corporate scorecard – through finance, HR, customer safety works, network, but it also included the data domains, the change management of the information management governance and disciplines, as well a whole lot of work to get KPIs aligned across the business. Then the visualisation built on top of that to make it friendly for users,” Effeney said.
Meanwhile, the BI foundation was implemented at Ergon in 2011, which brought SAP Enterprise Information Management, Data Services, and Information Steward products into the tool set. During 2012 and 2013, a number of discrete projects were run in BI ‘hotspots’ – for example, around network reliability, capital works program or financial HR data. In 2014, the SAP HANA product was implemented for data discovery for Ergon.
“It is early days on that, but we have been able to take our end-of-month big data sets … and be able to see outcomes very quickly. It may be not just about the speed, it’s about what that will enable in terms of the information outcomes that we will be able to produce now that just weren’t simply able to be produced before,” Effeney said.
At Energex, the success of the EPM solution, which was aimed at the general management of the solution, prompted the engineering division to request a solution as well. The result was the Distribution Monitoring Analytics (DMA) project, which commenced in 2014 and will run until 2016.
Drilling down on EPM
As a successful project, the Energex Performance Management System has provided the business with access to a single source of the truth via a user-friendly portal.
The EPM System has 100 management users, 100 performance reports, and draws on 80 million financial records.
The portal incorporates a number of power boards, as well as learning modules, definitions and a business glossary.
“So we are going to end up using the same term for different things across the business – all accessible from this one portal. It’s been a great transformation for the business, and we call that our tool shed,” Effeney said.
From this portal, a high-level report for both the executive management team and Board can be generated, while analysts can drill down in much more detail.
Ensuring that all reports are drawing from the original form of the data has been quite critical.
“It’s moved the conversation from, ‘Is the data right?’, to very much one about, ‘What are the consequences or implications of the data?’,” Effeney says.
For example, a network performance power board highlights statistics on the reliability of the network and the top five outages that have occurred in the month, and by drilling down, more specific statistics on outages by CBD, urban, or rural areas, and financial dimensions such as target versus actual can be obtained.
Easier access to more reliable data was not the only benefit of this system implementation.
“It came with a change to the way in which we ran management meetings. There was coaching and tools for leaders to be able to have the performance conversation that went with the way in which we are presenting the data, so tracking the actions that are required to get things back on track.”
Structuring their architecture
For all IT planning, SPARQ has used the Gartner Pace-Layered Application Strategy, which Effeney said helps his staff to talk with managers and end users about where their interest fits into the overall framework. This model covers:
- Foundation Systems: “I know what I want and it is common across most businesses. The processes are stable and mature.”
- Systems of Differentiation: “I know what I want, but it is unique to our business. The processes may still be evolving in maturity or changing to support changing business needs.”
- Systems of Innovation: “I don’t know exactly what I want. I need to test a hypothesis. I need to validate some information requirements with my users.”
“Foundational systems are the ones that are long lived, fairly stable processes, and we conventionally know what the user wants and how we are going to deliver. The systems of differentiation are [those] where there is a bit more flexibility, more industry-specific parameters about them, like our asset and work systems, and therefore expecting it will have more uniqueness and will need more agility and flexibility with the approach we take,” Effeney said.
“The systems of innovation are where we are really testing out some ideas, or where we are doing something which may well have a very short lifecycle, and we’ll take perhaps a more agile, but less rigorous approach to provisioning something until we see that impact. Then maybe it will become a system of differentiation into the next cycle.”
Lessons learned
As SPARQ has worked through these programs of change with Energex and Ergon, there have been some lessons learned along the way about the importance of sponsorship and governance, getting the right people on the job, change and training, delivery models, and investing in the foundational layer.
Sponsorship and governance. While this is obviously important for all projects, Effeney said there is something about the BI area “that does shine a more significant light on the need for really strong and passionate sponsorship and governance ownership”.
“The outcomes are not always quite as tangible as you might get from some other investments in technology. It sometimes can get a little bit lost along the way, and you do need to have the sticking power of a sponsor to help bring that through,” Effeney said.
He believes project sponsors for great business analytics projects must have the vision and drive to see the project through, actively guide the integration with other activities or initiatives in the enterprise, and be a passionate user of BI themselves so that they can do the appropriate role-modelling.
Getting the right people on the job. Effeney said having run many individual initiatives during this period, the projects that have run better and delivered greater results are those where there was a 50/50 mix of key business people invested in and engaged with the project, and skilled technical resources.
“We get people full-time onto the project, get a passionate project manager who is really going to bind them together as a single team, and make sure that you keep the dynamic of the team very strong,” he said.
Change and training. Especially where the solution will be adopted by a variety of users with different skill levels, providing a range of training is important, as well as putting effort into making sure user groups understand what the solution is all about. Also use different channels to communicate change, to ensure the message is received.
Delivery models. Effeney said they continue to use a range of delivery models, including individually contracted specialists for particular functional roles, and packaging work for an outsourced delivery centre.
“We use project services and partners who are effectively turning more to the turnkey style of delivery, and again we are looking for those to have the right combination of onshore and offshore delivery capability. We found that one size doesn’t fit all, and we do need to really pick on a case-by-case basis how we take this forward,” he said. “A delivery model and methodology that provides flexibility and the ability to scale up or down to meet demand is critical to delivering BI business outcomes.”
The solid foundation. While it might be challenging to get a significant upfront investment without so many tangible outcomes across the line, Effeney said building a solid foundation is crucial, as has been found particularly at Energex.
“It really has paid dividends in the technology infrastructure, but also in the governance and information management capability, you need to get the right architecture in place, the standards, and then the hardware and platforms,” he said.
Future plans
Now that Energex and Ergon have that solid foundation in place, moving to using predictive analytics, mobile enablement and geospatial information will be on the agenda for the future.
“In an electricity utility, when you look at things like major weather events, and potentially thousands of customers off supply, situational awareness is a big area of opportunity for us.
“They are looking forward at areas of predictive, with large capital investment decisions on assets that have 40-year lives being put in the field depending upon forecasting of load and customer training.”
Another key area will be spatial data representation.
“A lot of our data has geo-referencing. The relevance is in trends across not only our own data, but the external data from local authorities and economic development agencies about what’s happening where in the state,” Effeney said.
“We are only scratching the surface on real-time operational data. The volume of data that’s coming through there is a great opportunity area for us.”
This article first appeared in the Inside SAP Yearbook 2015.
