Utilities know power. They know it intimately, from the inside out. They’ve been working with it for years; they’ve been working with it for generations. But, today, we’re in the digital age, and, along with knowing that power, utilities also have to know data—about their systems, about their customers, about the weather, about load, about end-use. That’s new, and that’s a little scary.
To get to know their own data as intimately as they know their own power, utilities have turned to a new type of executive to help them weather this change: the chief information officer (CIO). CIOs have been commonplace in other industries for years, but they’re a rather new field (relatively) to the utility arena.
Tom Turco, Deloitte Consulting’s power and utilities practice leader, noted that while the gig is indeed fairly new, it’s already evolving.
A few years ago, the typical utility CIO was promoted from within, coming up through IT or even operations to take over the job. These days, however, it’s not uncommon for utility CIOs to be pulled from outside of the industry: from retail, from banking, from telecommunications.
Turco sees this trend as, perhaps, reflective of a change in need and philosophy from a CIO who had to understand the technology of what was going on right now to someone who has a plan for the future.
“Newer CIOs are looking to define an IT strategy and investment road map to meet the business strategic priorities and required business capabilities to be enabled by technology,” Turco said. “Candidates from outside the utility industry can bring in new ideas and thinking into the role.”
Still, just because you bring in the strategy capability from outside doesn’t mean your team will fully support it. You can call in Warren Buffett to do your financial planning, but if you’re not willing to put your money behind his plan, what good has that done you?
Here’s a CIO take on that analogy: In a survey of 300 across-the-board CIOs (including utilities) titled “The DNA of the CIO” by Ernst & Young last year, the third-highest barrier cited by CIOs was a lack of a clear corporate strategy. Number one was a real big-boy seat at the executive table. (The report noted that many CIOs feel like executives in title only and, well, like they were seen as support people in bigger britches, to return to that note.) Those two items together can certainly be a barrier to strategic thinking.
But, whether intentions or mere perceptions, if that thinking needs to be more rah-rah and strategy-oriented, do you replace the tech-head with an MBA graduate to compensate?
Both Turco and the report added that there’s been a real shift recently to a business-driven position with the CIO from five years ago.
If that’s true, it’s entirely possible that the hurdles of support and overall company strategy noted by Ernst & Young may simply be lagging behind obvious growing pains for the position—a ripple effect that hasn’t yet rippled all the way.
And, while understanding how the technology works was definitely the place to start (that translates as hiring the tech guy for CIO), transitioning to a plan for future technology investment takes a different, more ROI-oriented bit of thinking (that’s the new strategy guy). All positions, from peon to president, get more complicated and more layered as time goes on. (Perhaps utilities now need an engineer with an MBA for CIO.)
In fact, this CIO evolution is mirrored in the current tech transition from the smart grid that we’ve been talking about for years to a convergence of operations and the digital side of utilities commonly called IT/OT integration. We started with smart meters, but now there are layers of sensors and SCADA and back-office and customer data—a similar change in thinking to the CIO tech-to-strategy flip.
Turco noted that this change in CIO thinking isn’t right for all utilities and certainly isn’t going to be right for every utility, but it is a growing trend in the utilities industry, with pros and cons on each side of the arena.
An inside guy knows your business. He knows your equipment, your people and your processes. He doesn’t have to learn those things and can hit the ground running with a wealth of knowledge on how technology and trends may work (or not work) for your specific company. An outside fellow, on the other hand, brings a more objective view, can pipe in new techniques and strategies and doesn’t have blinders on when it comes to corporate policy.
Whether your CIO is a tech-head or planning ahead (or, delightfully, has the skills of both), Turco has some advice on areas of focus (beyond the bottom line) for the utility CIO over the next five years or so. First and foremost is cybersecurity, which is now a priority requirement across all industries. Turco also suggests a focus on the value of investments and a tighter partnership with business leaders, along with an eye on the customer, business efficiency and cost management (right back to Ernst & Young’s second hurdle there), with analytics, mobility and other technology investments to enhance the experience and results for both customers and workers.
And, more than anything, Turco says a utility CIO needs to be all about value—for the shareholder and for the consumer. And that sounds very strategic indeed.
This is a shortened version of our longer report. Look for the full article in our Sept/Oct print issue of Intelligent Utility magazine.
Read more from Knowledge Summit insiders with the other articles in this series:
- Letters from the Knowledge Summit: Chuck Newton and operational changes
- Letters from the Knowledge Summit: Nuts, bolts and BHAGs at SMUD
- Letters from the Knowledge Summit: PPL’s Ling and customer service
- Look for upcoming articles in this series featuring CenterPoint Energy & former Exelon CIO Dan HIll