By Kathleen Davis, Associate Editor
Recently, we spoke with Michael Carlson, CIO and vice president for Xcel Energy, about what a CIO does and just how they are important to a utility. In other words, we made him justify his position to us-though we did so very nicely. We think he managed a very good argument for the rise of CIOs and why you might want to run out and pick one up, if you don’t have one handy.
UAE: In layman’s terms, how do you explain what a CIO does?
Carlson: The role of a CIO varies depending on the company culture and leadership in place. While becoming more “standard” in terms of the general job descriptions, responsibilities and influence still vary greatly from company to company. In layman’s terms for what a generic CIO does, I would describe it as lead and manage the development, deployment and utilization of technology and information to meet a company’s strategic and operational objectives.
UAE: Do you still have to justify the importance of a CIO in comparison to a CFO or a CEO? Is that need to justify more or less in the power industry?
Carlson: I don’t think there is a need to justify the importance of the CIO, but there is still a need to justify the specific role and responsibility of the CIO. Again, depending on company culture and leadership style, the role of the CIO can vary greatly from company to company. From a low point of the CIO being considered as an order-taker/deliverer of technology to the high point of the CIO being considered a strategic leader of the company, the roles and authorities will vary. The more successful the individual, the more they will want to be “at the table” in leading an organization toward success, and that role can take more justification than the role of “keep the lights on.”
I believe the CEO sets the tone for the role of the CIO and drives it from the top down, providing that the CIO can step up to their expectations. In the power industry, I believe this “justification” is, on average, a somewhat higher requirement than in other industries. While being driven by technology, the power industry has a tradition of engineer- or financial-managed leadership, so the role of a strategic, change-agent CIO is not the norm for the industry and requires more justification than might be experienced in other industries.
UAE: What’s the importance of a CIO to an energy company like Xcel? What do they bring to the table?
Carlson: The ability to be a change agent for business transformation through the convergence of people, business process, technology and information is critical to a company that is driven to and wants to transform an industry. While the traditional role of keeping the lights on is critical and “table stakes,” it is really not the entire value prop for an effective CIO. On the other hand, if you can’t deliver the minimum expectation from your organization, you will never get the opportunity to deliver the strategic value, given the reliance on trust and confidence in your service. Forward-looking CIOs who can manage the business while looking for new ways to transform the business (with the trust and confidence of the business) can clearly bring economic and value-add opportunities to the company’s customers, employees and shareholders. Leveraging technology for multiples of return on investment-whether it be on day-to-day operations management or long-term strategic investment-is key to establishing your company as a premium performer in the industry by whatever KPI you want to measure with.
UAE: What projects are you personally overseeing these days at Xcel? What’s your favorite?
Carlson: I have direct leadership involvement in three projects at Xcel, including our utility innovations/smart grid efforts, our proactive monitoring and portfolio management program and, finally, our business continuity and crisis management effort.
I’m most excited about the smart grid program, which is forward-looking and concentrates on how the energy industry will redefine itself and its products by leveraging technology and information. The strategic nature of the effort along with the fact that it’s an opportunity to redefine an industry model is extremely exciting and challenging. Equally, the proactive monitoring/portfolio management program is all about continuing to up the stakes on accountability and transparency of IT operations at the company. This effort is key to building our decision-making processes around investment and maximizing the return around a total cost-of-ownership (TCO) model while using real-time performance measures to ensure stability and recognize investment needs.
UAE: What words of advice would you give to other power company CIOs?
Carlson: Identify the culture of your organization and how it will best respond to the positioning of technology to drive transformation and achieve the company’s objectives. Then, based on that information, tailor your organization’s approach to engage the rest of the company to embrace the solutions you can offer rather than resist or debate them. The utility industry is in one of the best positions to benefit from the application of technology for transformation given its past practices and the rapid changes that are taking place within the industry. Finding the best way to positively introduce those technology opportunities and solutions should be one of the highest priorities for a power company CIO.
UAE: Turning to Europe and looking at the changes on tap there in the next few years, would your advice for European CIOs be a little different? If so, what would you say to them?
Carlson: Fundamentally, my advice would be the same.
UAE: What have you learned from this job? What has it taught you?
Carlson: I’ve learned a great deal from this job: from specific areas of technology strategy/management to tactical delivery of reliable services, strategic and operational management and leverage of outsourcing solutions and leverage of the business to drive incremental gains from technology investment. The role of CIO is one of both strategist and sales agent. Trust and transparency can facilitate the success of a CIO and their organization, while at the same time lack thereof will significantly reduce the return from IT spend, whether strategic or tactical. To be a trusted business partner, you must deliver trusted solutions and demonstrate a command of the business as well as the application of technology. Managing the appropriate amount of promotion with the demonstrated delivery is clearly required to be successful in any organization, regardless of its culture and bias to the role of the CIO.
UAE: The T&D areas that would connect with your job-cyber security and SCADA for examples-how are they faring these days in terms of monetary and time commitments from the company? From the industry overall?
Carlson: Both cyber and SCADA are receiving multiples in terms of time and money investment. The ability to provide automation in terms of monitoring, analysis and control is key to the expansion of the company’s smart grid strategy and delivers a much more reliable infrastructure while minimizing the operational costs. As part of the critical infrastructure that is relied on in all circumstances and driven by the convergence of system connectivity and data interchange, cyber security will continue to be a time- and budget-consuming function. Working with the industry to develop effective and expandable deployments for these increasingly inter-connected systems is also critical to obtaining a reasonable return on the technology investment. The industry overall is demonstrating the same kind of focus and priority.
Within the last six months, the clarity and vision of smart grid solutions is improving on almost a daily basis. It’s an exciting time to be in the utility industry.
UAE: Looking specifically at T&D issues as they apply to your area of information technology, what, in your opinion, will be the focus in the next few years? Smart grids? Smarter IT-enhanced substations? Where’s the future of T&D in your specific area?
Carlson: Interconnected systems that combine real-time data into effective and automated decision models will be the focus. While existing vertical solutions exist across the T&D spectrum, the integration of these into an effective and actionable decision framework that can be automated is where the major areas of improvement and capability development will exist. Smarter components that integrate into smarter data models that deliver smarter decisions that optimize existing infrastructure while protecting it from over-utilization will be one an example of how we truly create smart grids in our industry.
Carlson is CIO and vice president for Xcel Energy responsible for increasing the value business systems delivers to the organization. Prior to his current position, he was vice president for business transformation. He started with Xcel in June of 2002 as the director of the program management office. He has 20 years of experience in finance and technology. Carlson earned a BA in accounting and management systems and an MBA in finance from Pepperdine.