Realizing the Smart Grid Transformation: The CenterPoint Energy Business Transformation Strategy and Implementation Roadmap
CenterPoint Energy Houston Electric (CenterPoint Energy) and IBM jointly develop a business transformation strategy and implementation roadmap, focused on operational, financial and organizational considerations, to realize business goals driven by smart grid initiatives
By John E. Slanina, CenterPoint Energy and Khalid A. Behairy, IBM
The introduction of smart grid technologies requires utilities to reevaluate work processes, tools, and organization to ensure optimal, effective utilization of the new technology while minimizing expense and increasing customer satisfaction. In mid-2010, CenterPoint Energy established a Business Transformation organization with a charter to refine the company’s vision and strategy around smart grid and customer technologies, and to develop a strategic roadmap that, when implemented, would realize the strategic objectives of the Business Transformation unit. In 2010, Center Point Energy received a U.S. Department of Energy smart grid investment grant to accelerate its deployment of an Advanced Metering System (AMS), and to further develop and begin deploying its Intelligent Grid (IG) technologies. As the AMS project transitions from deployment to operations, and as IG technologies begin to be deployed, CenterPoint Energy has developed a prioritized roadmap of initiatives that leverage smart technology with a goal of providing innovative services and solutions to consumers and other stakeholders. CenterPoint Energy believes the new systems will change the way in which consumers manage their energy use, and how the utility manages the grid.
CenterPoint Energy’s Smart Grid and Customer Vision
A number of important focal points were considered when establishing CenterPoint Energy’s smart grid and customer vision; they include not only operational efficiencies for the utility, but also the empowerment of consumers to become active participants in energy management. A central focus is placed on developing optimized, end-to-end processes to improve electric operations and customer service through smart grid technology. From an organizational perspective, CenterPoint Energy is preparing its workforce for the smart energy future by enhancing employees’ skills through targeted training while ensuring the company has organizational structures in place to fully leverage emerging smart technologies. Another area of focus is maximizing the use of real-time information to support real-time decision-making in managing the electric grid. Additionally, supporting adoption of the new technologies emerging in the Texas market, and promoting device and program standards, is essential to allow consumers to take advantage of new products and services. A final focus is enabling customer engagement and service by providing helpful and timely information to them via the communication channel of their choice, as a means to help them manage their energy use.
The Smart Grid Strategic Roadmap Development Methodology
When the Business Transformation team launched the effort, its specific goal was to develop a business transformation roadmap that reflects CenterPoint’s smart grid strategy and conveys achievable outcomes.
The roadmap would contribute to a plan to operationalize the many smart grid capabilities and transform CenterPoint Energy into an organization that is more efficient, more resilient and more responsive.
A defined set of project objectives that are essential to successful implementation of this roadmap was established at the outset, with an eye to realizing the value of the company’s investment in the smart grid:
- Confirm the smart grid vision and perform a gap analysis;
- Develop a prioritized roadmap of initiatives to achieve the smart grid vision;
- Quantify the business value of each initiative;
- Design end-to-end processes for each initiative and identify organizational readiness and impacts;
- Establish governance to support the processes implemented; and
- Adopt methodology and assign CenterPoint Energy leadership and resources to begin the transformation.
Instrumental to the success of the roadmap is ensuring that initiatives are prioritized and planned with all critical organizational, financial, regulatory and other drivers considered, while also making sure it aligns with the company’s IT roadmap.
The effort involved collaboration across the organization to include electric, gas, marketing, finance, strategic planning and other departments. This collaboration will serve as a basis for longer-term integration across divisions and business units.
In support of the project objectives, the development of the roadmap was organized into five major steps, as depicted in Figure 1.
Vision and capability assessment leveraged a “smart grid capabilities framework,” a comprehensive set of capabilities required to successfully implement the smart grid. The business domains considered were Grid Operations, Work and Asset Management, Customer Experience, and Emerging Technologies. This framework of capabilities and associated organizational maturity levels accelerated identification of the target capabilities for CenterPoint Energy. The comparison between the as-is and to-be states called out the gaps that represented a set of actionable initiatives—the initial stage for planning the transformation.
Smart grid transformation roadmap development
established an integrated timeline to support CenterPoint Energy’s smart grid strategy through assessments, strategic plans, pilots and projects. A product of carefully executed processes used to leverage leading practices, subject matter expertise and in-progress initiatives, the roadmap was structured by business domain and included a set of foundational and enabling initiatives. These initiatives streamlined organizational and process-related activities, creating synergies and highlighting the strategy’s transformational benefits. Consideration was given to how best to logically prioritize initiatives in the strategic plan, including strategic alignment, potential value, technical viability, budgetary and resource constraints, and organizational impact.
Business case and net present value analyses were performed on a set of targeted initiatives to identify capital, as well as operations and maintenance, cost variables and benefit drivers. Workshops were conducted with CenterPoint Energy subject matter experts to develop and validate cost and benefit requirements. Developing financial models provides a uniform foundation for measuring financial metrics across different initiatives and business units as a means of performing ongoing assessments.
Process model design and impact assessment ensured that the strategic initiatives support the transforming corporate vision for reliability, safety and regulation, and leading business practices. Each initiative was deconstructed to its functional areas, describing the business functions that are impacted by the initiative, and the processes were detailed representing the set of activities within each of the functional areas. Modeling the processes established a common understanding of the business boundaries related to each process, the events that create work within those boundaries, and process ownership. Identification of the process changes by department allowed for development of a detailed training impact assessment.
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