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FERC Software Technical Conference

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FERC Software Technical Conference . IT Guidelines and Best Practices. July 14, 2004. Purpose. (1) Present concepts and methods for: Defining the characteristics of effective IT organizations - PowerPoint PPT Presentation
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FERC Software Technical Conference IT Guidelines and Best Practices July 14, 2004
Page 1: FERC Software Technical Conference

FERCSoftware Technical Conference IT Guidelines and Best Practices

July 14, 2004

Page 2: FERC Software Technical Conference



(1) Present concepts and methods for: • Defining the characteristics of effective IT organizations• Controlling technology costs within power system operations

organizations and across the industry.

(2) Set the stage for an on-going dialog regarding ways to address critical industry-wide technology management issues:• The cost to implement new information technology.• The time to implement new information technology. • The lack of technology standards.• The inability to easily share information and data.• The need to enhance security to meet new threats.


Page 3: FERC Software Technical Conference


Power System Operations Organizations




People, process and technology aligned to provide grid & market

monitoring and management services.

• System Operations Centers • Control Area Operators • Reliability Coordinators• Market Operators

Two Primary Cost Components arePeople & Technology.


Page 4: FERC Software Technical Conference


Reliability & MarketTechnology Foundation and Component Elements

Technical Infrastructure and IT Services(Routers, Switches, Lines, RTU’s, Desk Top Computers, Phones, Servers…)

Market Settlement

Transmission Mgt


Tariff Admin

Scheduling,Dispatch, AGC,



Data Acquisition

Energy & Ancillary Service Markets FTR Markets

Planning Transactions SecurityCoordination

Congestion Management

Corporate (HR, Payroll, Finance, Customer Service, Administration)

Business Functions and Applications

Corporate Functions and Applications

Technical Infrastructure & IT Services.


Page 5: FERC Software Technical Conference


Major Applications for Key Functions

Congestion Management

Transmission Mgt


Scheduling,Dispatch, AGC,


Transactions SecurityCoordination

Energy & Ancillary Service Markets

• EMS System• Contingency Analysis tools• IDC• RCIS

• Day-ahead & Real-time LMP• Ancillary service market clearing applications

• EMS System• AGC, SCUC, SCED• Contingency Analysis tools• Outage Scheduler• Load Forecast

• OASIS application• Transaction Scheduler• TTC & ATC Calculator

• EMS System• SCUC, SCED• Contingency Analysis tools• IDC


Page 6: FERC Software Technical Conference


Business Models Influence on Technology, Infrastructure and Applications

Moving from functional model to more demanding functional models, the amount of infrastructure and applications required increases.






limited extensive





Control Area& ReliabilityCoordinator

Control Area


Market Operator

• Infrastructure Established• Enterprise Applications Installed• Basic Control Functions Supported

• Significant Infrastructure Investment required to support both CA/RC functions.

• Incremental Applications Investments required.

• Significant Infrastructure and Applications Investments required.

Page 7: FERC Software Technical Conference


Characteristics of Highly Effective, Mature IT Organizations

Clear Purpose, Strategy and Business Alignment. Integrated, Routine, and Flexible Planning. Committed, Effective Leadership and Governance. Skilled, Experienced, and Productive Employees. Clear Roles, Responsibility, and Accountability. Well Defined, Documented, and Communicated

Processes and Standards. Project Management Discipline. Operation and Service Orientation. Architectural Aligned Investment Strategy. Performance and Cost Measurement Management and



Page 8: FERC Software Technical Conference


Indicators of Well Managed and Aligned IT Organizations

IT Plan linked and aligned with the Business Plan. IT Budget and Asset Management process. Implementation and use of a rigorous Project Justification

process. Implementation and use of a rigorous Project

Management process. Implementation and use of a rigorous Vendor/Contract

Management process with service level agreements (SLAs).

Implementation and use of a rigorous systems development life cycle (SDLC) Methodology.


Page 9: FERC Software Technical Conference


The Annual IT Budget

Annual IT Spend

On-going Operating Expenses

Project Based Expenses

IT Management

Applications Support

Desktop Computing Services

Communications Services

IT Infrastructure

Project 1

Project 3

Project 4

Project 5

Project 2

Annual Project Related Costs • Labor • Consultants• Applications Hardware/ Software• Systems and Component Refresh• New IT Infrastructure

Represents cost to Manage, Operate & Maintain the existing

IT Environment.


Page 10: FERC Software Technical Conference


IT Operating Expenses

Operating Expense levels should be tracked and trended to evaluate reasonableness.

Drivers provide a way to tie the expense level to a measurable business parameter.

Category Cost Elements Drivers Management CIO & Staff Functions – budget,

planning, HR, Supply …FTEs

Applications Support

Staff, Licensing Fees, Maintenance Fees, Hardware Support & Lease Expenses, Consultants

Number, size & complexity of applications

Number of servers and environments

Release schedule Maintenance approach….

IT Infrastructure Router, Switches, RTU’s, back-up sites, facilities costs, servers, storage, utilities, Line leases, etc…

Number of sites, usersGeographic footprintSLAs (back-up requirements, response times, availability)

Desktop Computing Expenses

PCs, printers, software, licensing fees, servers, Desk side support/help desk, maintenance.


Communications Services

Phones, Pagers, PDAs, Cell Phones, usage charges, maintenance charges



Page 11: FERC Software Technical Conference


IT Operating Cost Management Strategies Employ organization-wide technology standards for architecture,

hardware, software, operating systems, databases, and protocols to minimize development, maintenance, and support costs.

Maintain up-to-date policies, procedures, guidelines and configuration documentation to minimize maintenance and replacement costs.

Employ release management, refresh, and retirement strategies to manage total life cycle costs.

Employ supply and contract management strategies to maintain checks and balances with contractors and vendors.

Track, trend, and analyze usage and cost data to identify cost management opportunities

Provide user organizations with usage and cost data to enable frontline cost management.

Maintain accurate asset database and link it to warranty, license, maintenance and support agreement information.

Common/open architectures, protocols and platforms enable re-use, ensure interoperability and reduce cost.

Non-IT operating groups must take an active role in helping to manage technology costs.


Page 12: FERC Software Technical Conference


Typical Applications Projects

New applications development or significant replacement projects can range in size from several million to $100 Million and in duration from 6 to 36 months.

EMS System Security Constrained Unit Commitment (SCUC) Security Constrained Economic Dispatch (SCED) Contingency Analysis tools Transaction Scheduler TTC & ATC Calculator IDC AGC Outage Scheduler Load Forecast Day- ahead & Real-time LMP Ancillary service market clearing applications RCIS OASIS application


Page 13: FERC Software Technical Conference


Applications Project Expenses

Total Life Cycle Costs must be used to justify projects and evaluate alternatives. Do-nothing, buy vs. build, and re-use should all be considered.

Actual expenses should be tracked and routinely compared to forecasts. Avoid the sunk cost syndrome.

Forecasts and justification should be revisited annually and whenever major assumptions change.

Categories Cost Elements Drivers Initial Implementation

Costs Direct Labor Hardware Software Systems ManagementConsultants

Size, complexity and number of applications

Duration of project Availability of off-the-shelf

products, packages, and standard solutions.

Degree of customization Competitive nature of market

Additional On-going Costs

Support CostsStaff Related CostsInfrastructure Costs

Number, size & complexity of applications

Number of servers, storage devices, environments

Release schedule Maintenance approach…. Number of sites, users,

geographic footprint…


Page 14: FERC Software Technical Conference


Applications Project Cost Management Strategies

Build flexibility into the design - Reliability policies and rules will change over time and applications must be able to easily accommodate and reflect changes.

Ensure that project is tied to clear business need. Employ a life cycle development methodology which encompasses

requirements gathering, design, build, test, deploy and maintain phase – and don’t skimp on the front end.

Evaluate multiple project alternatives – including do nothing. Ensure that requirements are clear and locked down prior to design,

build, or purchase decision is made. Adhere to technology standards and optimize reuse, if appropriate. Build in enough time to perform application, integration, and

performance testing. Use a project management process to manage scope, budget, and

schedule. Require periodic project reviews; re-visit justification, budget, scope,

and schedule when assumptions change.

Life Cycle Project costs must be identified before the project is approved and initiated so that long term costs of support and maintenance are understood in the total cost.


Page 15: FERC Software Technical Conference


Key IssuesVendor Open Architecture

Reduces cost of operations by allowing common hardware platforms to be used within an organization.- Hardware can be reused.- Common skill sets are exploited.- Hardware maintenance cost is reduced.

Reduces cost of operations by allowing common database platforms to be used within an organization.- Support is simplified (e.g. backup & recovery).- Common skill sets are exploited.- Software maintenance cost is reduced.- Promotes data access by external technology services.

Reduces risk of technical obsolescence.

Industry stakeholders should work together to ‘push’ software vendors to adopt more open architectures that are hardware and database independent.

Page 16: FERC Software Technical Conference


Key Issues Information Technology Standards

Creates a common definition of key data elements. Promotes efficient data exchange between internal and

external systems. Minimizes platforms required to exchange data with

multiple entities. Enables interoperability between multiple vendors’

systems / tools. Enables common user interface across applications. Enables security considerations to be more uniformly

approached and addressed.

Industry stakeholders should continue to work together to adopt information technology standards to reduce cost across the industry.

Page 17: FERC Software Technical Conference


Key IssuesSoftware Application Flexibility

Business rules are separate from system code and Stakeholders have access to modify these.

Modular system design should be used when appropriate. Non-proprietary coding languages are used. Assessment of longer term migration to web services

must be conducted. (Subject to security) Security approaches and protocols are planned for and

built into applications. Off-the-shelf software should be used to facilitate system

development where appropriate.

Industry stakeholders should work together to encourage software vendors to develop more flexible solutions. Internally developed solutions should follow the same principles.

Page 18: FERC Software Technical Conference


Key Issues Other Considerations

Lack of common market rules result in significant application modifications and increased costs for each new function and market.

Changing market rules and ambiguous specifications and requirements result in costly redesign and coding.

Bypassing of planning, analysis and design of market applications and interfaces and jump to vendor coding will require tradeoff between costly rework and meeting stakeholder needs.

Setting an unattainable schedule results in: - rushed planning and under-researched solutions.- less informed decision making, poor/costly technology selections.- over reliance on vendors.- higher overall costs.

Inadequate design/capacity planning will result in shortened system life and require large and costly replacements.

Governance, Adherence to SDLC and Project Management methodologies and strong vendor management practices will provide the discipline required to implement Markets Projects.

Page 19: FERC Software Technical Conference


Follow–up Issues

Further Analysis of critical issues: When to Buy vs. Build ? When should technology be recycled & re-used ? When should sunk cost be abandoned and new solutions

sought ? What should be considered the normal life span of power

system operations technologies ? What are the issues that arise when a limited number of

vendors participate in a technology market and how can the risks be mitigated ?

Publish the results and recommendations for FERC and distribute to conference participants.