An industry full of clones is an opportunity for any company that isn’t locked into the dominant managerial frame.” – Gary Hamel & C.K. Prahalad, Competing for the Future
What defined successful utilities in the regulated era? It certainly wasn’t analyzing market drivers, issues and trends to establish a unique selling proposition. Nor was it their willingness to risk failure on the way to creating winning business strategies. (We all know how comfortable most utilities are with taking on risk.) And, when it comes to automation–well, let’s just say that the role it has played so far has been an uphill climb for all concerned.
The mostly passive behavior that has characterized the market posture of utilities for nearly a century is in dire need of change. Going forward, utilities struggling to understand the complex (and exceedingly unfamiliar) context of an “open” marketplace will ultimately be challenged with defining and carving out a unique identity; one that makes them different in the eyes of market participants, their fellow utilities included.
Unfortunately, regulation’s legacy has been to leave most utilities woefully unprepared for the philosophical and behavioral modifications needed to survive and prosper in a fundamentally transformed utility marketplace where differences–not similarities–rule. One of the more important behavioral modifications needed is recognition of the changing role of automation from what many utilities still deem an “expensive luxury” to a “critical success factor” in the years ahead.
Regarded for decades as an expense item (one minimizes expenses; one does not invest in them!), automation has only recently begun to achieve true asset status, except perhaps for accounting purposes. Simply stated, automation has always been depreciated–but only recently has it begun to be appreciated. Paramount among the obstacles to harnessing the enormous potential of this technology is the way most utilities budget for automation projects; something that I call “departmentalized budgeting” or db (relevancy to the measurement of noise intentional). Here’s how it usually works:
This year we upgrade our SCADA system; next year we look at CIS; the year after we focus on AMR; then we tackle load management; then comes communications, GIS is next” and so on.
Undeniably, this process was learned when the various automation platforms and technologies were vastly different and utilities necessarily focused exclusively–and, for those times, appropriately–on internal requirements. By contrast, contemporary utilities not only must recognize the need to deal with enterprise interoperability and other long-term issues but must now also consider external (i.e., customers, suppliers, affiliates, etc.) wants, needs and expectations when planning and budgeting for automation.
In most cases, the db approach virtually guarantees that interoperability goals will never be met and that customer satisfaction improvements will never be achieved. It simply takes too long to get around all the bases; by the time you do, all the rules have changed. Adding these new dimensions means that decisions about automation must be expanded to include both internal and external issues and that a much more holistic technology strategy must be adopted if all of the benefits–and especially the tangible ROI that all utilities want–are to be realized.
Deciding what to do and where to go technologically can no longer be accomplished by simply looking around to see what other utilities are doing. On the contrary, it is up to each utility to create and promote its own unique identity and sculpt its resources into critical success factors rather than just following the crowd.
Indeed, daring to be different might ultimately mean daring to survive.
Mike Marullo is a principal and co-founder of InfoNetrix (www.InfoNetrix.com), an automation-centric market research and consulting firm providing market intelligence for electric, gas and water/wastewater utilities; energy companies; automation suppliers; technical and financial consulting firms; and others with automation market interests.