Changing Industry, Changing CIO: How One Utility Is Cultivating Innovation
There is an old joke about the three utility managers who go to lunch one day, each one expressing greater frustration with the industry than the last. By dessert, they have reached such a state that they decide to end it all, and so step in front of a glacier.
This remains a familiar stereotype of our industry: We are wary, methodical organizations, distinguished by a uniquely conservative calculus when it comes to change. To be fair, this may have been a somewhat well earned generalization a few decades ago. But the world we occupy today is quite different. Big data, cybersecurity, IoT and a host of other influences are forcing us to rethink how we do business, or risk being left behind.
New innovation drives new opportunities
As CIO at NW Natural, a local natural gas distribution company headquartered in Portland, Oregon, my job involves blending time-honored industry wisdom with the thoughtful consideration of new, innovative solutions. That balance will help us keep pace with our changing world and ever-changing customer expectations.
Our efforts include the pursuit of next-generation industrial control systems designed for the cybersecurity age. Utility-based supervisory control and data acquisition (SCADA) has been slow to evolve. We need systems that not only provide sensor-based telemetry, but also enhance the authentication requests from remote controllers and communicate over continuously encrypted, secure protocols.
Industry executives also have high expectations for the IoT revolution. As CIOs, we want to incorporate the data from intelligent sensors into intelligent data systems that equip us to translate this new wealth of real-time data into actionable insight.
At NW Natural, our focus is on safely and reliably delivering natural gas with exemplary customer service. But more than ever, that aim requires a true 360-degree view of the customer. Our customers expect us to understand their needs. They expect us to have access to every interaction they have had with us. To achieve that level of seamlessness we must create ecosystems within the enterprise that span the customer’s complete application portfolio.
Technology can help with that goal, but only if relevant systems are connected with a logical integration model. Building a management taxonomy into all systems and paying attention to system integration and portfolio rationalization when upgrading an infrastructure can also contribute to a consolidated, consistent and robust 360-degree picture of our customers.
Overcoming technology challenges
But just as it can help drive the industry forward, technology is also generating no shortage of challenges. Companies such as Nest and Smappee are striking examples. By providing energy use analytics directly to the customer, they are establishing new forms of customer relationships. If we fail to respond, we risk becoming merely a commodity service, our customer connections brokered and managed by these new intermediaries.
In other cases, technology has not moved fast enough. While we’ve made great strides in many facets of the business, data science has not matured as quickly as we had hoped, remaining largely an infant discipline within IT. As a result, we are only scratching the surface of the potential that correlated operational data and trend analysis could bring for improved predictive analysis.
“Understand your environment first. Start by exploring the balance of operations, business and regulations”
Perhaps even more pressing are today’s escalating cybersecurity demands. These remain a constant technological challenge for the average CIO. While hackers are unrestricted by rules, governance or budgets, our tools are very constrained and mostly defensive, focused on monitoring and alerting. This is one area in which machine learning at the application layer would be beneficial.
Some observers claim a dedicated chief information security officer (CISO) is the answer. My view is that such a response is an overreaction. It promises to dilute accountability, while creating a set of potentially conflicting priorities and agendas. Our goals are better served by adopting controls and risk assessment frameworks, and then placing them under the direction of the CIO. The CIO must then be empowered to execute on the plan.
The changing role of the CIO
It should come as little surprise that given such industry shifts, the role of the CIO is being forced to change. IT is no longer confined to the provision of infrastructure and support services. It is now an important player in expanding revenue opportunities, and optimizing net income and cash flow. It is looked to as a central driver of business process efficiencies, bringing the tools and expertise to help enhance business operations. The modern CIO must straddle two worlds, with one foot planted in the present and the other in the future.
As part of my response at NW Natural, I’ve helped cultivate a new partnership between IT and our marketing leadership. This alliance is helping us leverage the power of data models and geographic information systems (GIS) to create a very powerful platform for the analysis of potential new customers. We’ve also been able to jointly develop a comprehensive portal to support our valued trade allies.
A word to the next generation
Even after 20 years in IT, I still feel like a rookie in this business. But if I were to offer one piece of advice to a new utility CIO, it would be this: Understand your environment first. Start by exploring the balance of operations, business and regulations. Learn how the system functions end to end. Only then can you hope to meaningfully enhance those long-standing traditions, and avoid that oncoming glacier.