By Dana Bacciocco, Associate Editor
Energy companies demand for high-tech staff is hot and heavy, however””Many electric utilities are focused on the non-sexy work of mergers and acquisitions, which have placed a heavy burden on their IT departments,” according to David Putt, director of operations at Contractors Resources. “Look under the covers, and this is where you will find the contractors: doing the grunt work of integrating company operations.
“Walk into an IT department at most utilities, and with few exceptions, you will find 25 to 30 percent of the staff are contractors. The practice is necessitated by the sheer number of projects in progress,” said Putt. The most common projects deal with deregulation initiatives, M&A, new technology rollouts and system upgrades. And the beauty of contractors is, by design, they leave when the project ends.
IT staffing is a substantial area of outsourcing for utilities, like their telecom counterparts. Call centers and e-billing initiatives can be handed off to outside vendors, letting utilities focus on core business operations.
“We have observed over the last few years that the IT infrastructure has changed in all utility clients to include more outsourced resources. The shift toward this resource model is economic in nature,” according to Ed Cohen, chief technology officer for Plateau Systems, who works with electric utilities like Xcel Energy, Entergy, and TVA.
“The shift favors business goals and objectives over traditional employee relationships. Staff is project and goal driven. Discrepancies that are encountered by a vendor such as Plateau can include a lack of peripherals, as well as long-term objective vision with the staff that is engaged on a given project. To the same end, historical perspectives are not available or are ‘islands of knowledge’ for the few native utility IT staff,” said Cohen.
Economic variables do have influence and the current economy favors businesses, but “even prior to Sept. 11th, the economic downturn hit contractors ahead of company layoffs,” said Putt. “With the exception of utilities and health care, large numbers of contractors have been either cut or their contracts renegotiated.”
Macroeconomics have caused other industries to shed talent and allowed utilities to renegotiate current contracts and save dollars. In the IT staffing picture, regulated utilities seem to be the beneficiaries of others’ misfortune. With deregulation, bundled services, mergers and acquisitions and partnerships, utilities are expanding their need for contractors.
“If the economic downturn stays with us for a while, it will cool the strategic technology spending by utilities that drives the need for contract labor,” said Putt.
Cohen agreed with the economics. “Nothing happens that does not have a business objective attached to it-as it should be. Challenges are introduced when history, peripherals and vision are not taken fully into account when the economic benefit analysis is calculated. Also, the role of those chosen to perform the calculations is not always clearly defined. IT should remain engaged in the infrastructure and not the business processes.”
As utilities change and search for ways to create new profits, they should review lessons learned in the telecom, airline and other once-regulated industries as role models for change, especially as it relates to the workforce.
“The biggest workforce trend across all industries that we see is something called ‘disintermediation.’ Organizations that use a lot of contract labor have figured out that staffing providers have enjoyed large profits by bundling recruiting and employment services. Users of these services now want to gain efficiencies in the supply chain by closely managing the process, cutting out the layers, and paying only for the services they need,” said Putt. “This is where our business focus is in the future.”
However, utilities are not truly ripe for this phase yet. They’re about five years behind the curve.
For more information about Contractors resources call 800-556-0270 or visit www.contractorsresources.com. For more information about Plateau Systems, call 703-292-0200 or visit www.plateau.com.
e-Learning upgrades nuclear edge
“Utilities are combining and pooling resources like never before. Nuclear power plants are a classic example,” said Ed Cohen, CTO for Plateau Systems. “A majority of the nuclear plants in the U.S. have entered into ‘management company’ agreements for the operation of these plants. When a generating station joins the management group, all of the IT software, hardware and infrastructure are thrown up into the air. A huge undertaking to determine the best standing products for the enterprise follows.
“This monumental task is left to a staff that is smaller than the staff that implemented any of the two dozen or more enterprise systems thrown into the mix. This inevitably extends the implementation time frame, and creates an environment where it is difficult to find ways to collectively use the enterprise packages together-for a combined value exponentially greater than a single enterprise application.
“e-Learning is an opportunity for utility IT staff to gain knowledge quickly and understand those perspectives that are missing in a largely project/outsourced arena. A better understanding, use and buy-in of e-learning by utility IT staff would provide for better client services to the IT staff customers. This is particularly applicable to new organizations engaged in e-learning initiatives,” said Cohen.
e-Learning systems can provide a competitive advantage for utilities. Nuclear plants in particular face higher stranded costs than other kinds of utilities, and many plants look to staff reduction or retraining to compete. With experience in regulated environments and with energy utilities, Plateau said 60 percent of U.S. nuclear power plants have turned to them to automate training programs. PSEG Nuclear, which operates New Jersey’s Salem and Hope Creek Nuclear Generating Stations, was one of the first, and it has seen more than $3 million in training-related savings.