Business Service Management Case Study: EnergyCorp, a Mid-Sized Utility
The objective of this case study is to demonstrate how assumptions and recommendations of the BSM Maturity Model have been used to improve the value perception and deliverables of EnergyCorp's (the name of the entity has been changed for confidentiality) IT organization.
Specifically, we look at the following questions:
THE CURRENT STATE
The mid-sized utility - EnergyCorp - has been experiencing rapid growth and considerable success in leveraging technology investments for the purpose of corporate expansion. EnergyCorp is already operating at an “Aligned” level 3 of business maturity with growth plans in place for creating an “Optimized” level 4 business operations
The historical challenge for the IT organization was to keep pace with the rapid growth and aggressive business goals of EnergyCorp, while expanding IT’s contribution to enhancing the competitive position of EnergyCorp through product and service leadership. Expectations by the business entities of EnergyCorp were changing to reflect increased focus on many of the attributes of BSM Maturity Level 4, including:
While the business was forging ahead in prioritizing 2010 investments for increased penetration of energy (provider) markets for electrical and natural gas services, the challenges of this “growth by acquisition strategy” was placing enormous demands upon the human resources, tools and processes of the IT team. While delivering an enviable level of IT service to EnergyCorp business customers, the IT organization was struggling to move their own IT maturity curve “rightward” from a desired “integrated” level of service management to the challenging “proactive” level of service management. We examine the tactics that IT leveraged to better align with the technology expectations of EnergyCorp’s business units.
Past IT investments within EnergyCorp were noteworthy in their ability to successfully accommodate 150% annual growth for the last three years. When EnergyCorp needed to move from a predictive business model that required secure and reliable operations to an aligned business model where business value was determined and assessed by the customer, IT was effective in accommodating that kind of momentous change. EnergyCorp's IT was not only stepping up to level 3 metrics associated with customer acquisition and retention, but was creating a foundation to move on to level 4 metrics associated with product and service leadership for competitive differentiation.
Given the high number of acquisitions (requiring complex software integration,) rapid customer expansion (with multiple CRM and accounting procedures and tools,) and high dependency upon data files for transmission and billing (with glaring inconsistencies and access methodologies,) the significance of achieving project transparency, ROI analysis, budget accuracy, on time project delivery and consistent system uptime as noted by IT management was definitely noteworthy.
IT INITIATIVES for 2010
The analysis opportunity was to review progress of the top four IT initiatives identified by EnergyCorp for 2010 against the implications of the BSM Maturity Model. Those initiatives included:
Initiative #1: In-house development and extension
Development resources required for EnergyCorp’s competitive “utility” had to be preserved and protected in order to respond to the product and service leadership that was setting EnergyCorp apart from most energy provider competitors. However, the past “open checkbook” for in-house development was becoming increasingly restricted. EnergyCorp identified that the number of IT staff as % of all staff was five times higher than the industry norm for utilities. While good for in-house development, such internal staffing was a fatal flaw for responding to the skyrocketing demand for new applications.
For example, the document management project identified as a top 2010 initiative for in-house development was classified as a generic code (vendor supplied) opportunity. While it was clear how this application was essential to EnergyCorp’s business operations (BSM Level 2), it was unclear how it was considered competitively differentiating (BSM Level 4). Vendor approaches to document management represent years of experience that have coalesced into current implementations. Rather than disregard the hard knocks that were behind the learning curve for managing multiple types and characteristics of hard copy and online documents within enterprises, EnergyCorp benefitted from buying these basics and adapting code to EnergyCorp’s unique requirements.
Greater use of Agile or “lightweight” software development was investigated within EnergyCorp. While there had been some explorations of Scrum and Extreme Programming within EnergyCorp, a healthy dependence upon a closely managed, waterfall model of development remained the norm. Given the continued rapid expansion of EnergyCorp, there needed to be more consistency in adapting to changing circumstances.
Working software that was delivered in weeks instead of months became a more recognized measure of progress. Agile concepts of simplicity, self-organizing teams, technical excellence and motivated individuals proved beneficial to more rapid delivery and higher quality of code for EnergyCorp’s unique differentiating software solutions.
Initiative #2: Compliance and security
Initiative #3: IT operational support systems
By 2010, many larger enterprises had already moved to ITIL V2 or V3 predefined service, asset and change processes. While avoiding the use of ITIL as methodology checklists, effective service desk implementations used ITIL as guidelines for moving from an integrated service management focus to a proactive service management, which would be required for alignment with an energy provider business working towards a level 4 competitive differentiation. It was unclear how EnergyCorp had achieved an “integrated” level of IT management maturity without having previously implemented a “production oriented service desk” and it became imperative that this initiative be completed in 2010 in order to move IT closer to a “proactive” level of IT management maturity and subsequently to move EnergyCorp to their goal of an “Optimized” level 4 of business maturity.
Another curiosity that surfaced was the lack of a 24/7 live Network Operations Center (NOC). Given the geographical disbursement of EnergyCorp’s customer base, the high vulnerability to any downtime in electrical and natural gas services, and massive degree of consolidation that was ongoing from the existing M&A strategy, the development of a 24/7 live Operating Center was obvious re: how these mission critical needs were to be met. Such tasks are normally mandatory for achieving secure and reliable operations assumed by “Predictive” level 2 of business maturity. The cost of human resources to staff a 24/7 NOC was considered insignificant to the risk of downtime that could surface when proactive behavior needed to be initiated on-site from alarms, reports and other notification mechanisms of potential issues. Centralized control into one or more Operating Centers was declared essential for a $200M multi-state energy provider. Given the expertise that was readily available through outsourcing to deliver a Network Operating Center, EnergyCorp decided this was a worthy alternative to building such capability in house, and focus was created on ensuring the right service level agreements, performance accountability and penalties were established.
Initiative #4: Private Cloud Migration
IT for EnergyCorp needed to determine how to invest and implement the burgeoning new technology requirements dictated by the aggressiveness of EnergyCorp business goals …given competing demands for IT funding. Anything that increased the delivery of differentiating EnergyCorp’s energy products and services at reduced or existing levels of investment was the means whereby EnergyCorp could legitimately continue its aggressive revenue growth rate.
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