August 17, 2017

Ecosystem thinking and multi-vendor management skills will be of great value in the new energy business

Aki Kupiainen

Senior Management Advisor, Technology Services and Modernization, Tieto

The solar eclipse witnessed in 2015 was the first to occur during the era of solar energy. It was closely followed, not only by public enjoying this magnificent nature show, but by the energy markets. Especially in Germany where on sunny days some 40% of the energy is provided by the sun. Although no major problems were reported in Europe, the electricity prices went up and down during the three hours in which the sun was obscured by the moon.

Solar power is one of the energy sources Europe is currently focusing on while taking into use new renewable energy sources. Renewables aren´t promoted by energy companies just because they think green and care about the environment. There is heavy pressure from EU directives forcing a migration to energy generated from renewables.

Renewables mean different things to different players. For the EU, focus is on wind and solar. Norway is heavy on hydro, Estonia focuses on wind, while Finland - because of the forest industry's role in energy consumption and generation - concentrates on use of biomass. As the main source differs, an important element in renewables is how to integrate energy/electricity from different sources. Self-consumption is one interesting area; however, its impact to the big picture in regards to energy generation is a bit unclear.

Although the generation of energy from renewables is practically free, it is very CAPEX intensive because the needed technology is new and expensive. Also, renewables are replacing the lowest unit price energy, therefore the business case for migrating into renewables on a grand scale is challenging.

A common concern for all kinds of renewable energy is its uncertainty and distributed generation. The wind might not blow or the clouds might block out the sun, so predicting the energy generation becomes more challenging. Also, the need to predict becomes more local. In energy business, forecasting the demand makes only half of the success, and predicting the energy generation is just as important.

As renewables typically are not controllable (you cannot make wind to blow harder), renewables require other energy sources to step in for peaks. As this supplemented energy is typically expensive, at least from unit price point of view, the demand forecasting should be as precise as possible. The reason for EU´s 15 min measuring and forecasting requirement comes partly from this.  

Locality and distributed generation plays an important role in renewables. Another key to success - according to the EU - are pricing models that support local price. Local price elements should be as small as one node in the grid.

This is where ICT can help. The Internet of Things can both collect the data from weather sensors and analyse how energy users are behaving. Probing what is happening in social life, such as anticipating the impact of any forthcoming major public events, might be more challenging but not impossible, especially with the help from Big Data analysis.

The challenge is not technical but more about us in ICT being able to think small and wide enough simultaneously. Wide enough to expand our thinking from remote reading of electricity meters to predicting how people and nature will behave. Small enough to be able to manage entities that may consist of geographical areas as small as a village with vast  diversity between neighbouring villages.

Too much for an IT manager to cope with? 

Some months after the eclipse, I spoke about this ICT opportunity with my friend who is in charge of IT at an energy company. Her first reaction was a deep sigh and then a long monologue about how difficult life for IT already is. The combination of adding on new technologies, new suppliers, and new locations would create an ecosystem which she would not be able to manage with her thin organisation. The duality she was facing – the demand to be effective with legacy while expanding into new areas – was just, as she put it, “too much”.

The world is not getting any simpler. Digital businesses are creating a new economy; new business models across industries will emerge and vanish as quickly as they appeared. In our future visions, everything will be connected via cloud and consumed as a service. The extended enterprise and its ecosystem are a source of competitive advantage. To survive, enterprises must focus and be part of an ecosystem. Unfortunately, “too much” is the reality for many IT managers today.

The answer is… SIAM

Luckily, Service Integration and Management (SIAM) and other multi-vendor management approaches have reached the maturity where IT can expect real help and solutions to be more effective.

SIAM is the coordination and management of individual services from internal and/or external service providers; consolidating end-to-end services for end users so that these services meet business objectives and requirements for performance, quality and cost. A robust SIAM approach can accelerate the benefits of digitalization and ensure that IT services are delivered throughout the extended enterprise in a structured manner.

I advised my friend to check the markets. Today, there are a number of excellent services available for SIAM, ranging from creating a SIAM roadmap for your own organisation to out-tasking SIAM processes and outsourcing SIAM services.

The key is to start early, before the “too much” becomes “too late”.

Read our whitepaper: Creating business value with Service Integration and Management

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