FERCSoftware Technical Conference IT Guidelines and Best Practices
July 14, 2004
(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.
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.
Reliability & MarketTechnology Foundation and Component Elements
Technical Infrastructure and IT Services(Routers, Switches, Lines, RTU’s, Desk Top Computers, Phones, Servers…)
Energy & Ancillary Service Markets FTR Markets
Planning Transactions SecurityCoordination
Corporate (HR, Payroll, Finance, Customer Service, Administration)
Business Functions and Applications
Corporate Functions and Applications
Technical Infrastructure & IT Services.
Major Applications for Key Functions
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
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.
Control Area& ReliabilityCoordinator
• 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.
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
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.
The Annual IT Budget
Annual IT Spend
On-going Operating Expenses
Project Based Expenses
Desktop Computing Services
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 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
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.
Phones, Pagers, PDAs, Cell Phones, usage charges, maintenance charges
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.
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
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,
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.
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.
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.
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.
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.
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.