Vertical Focus

Focus On: POWER

2009 finds CIOs in the power sector having worked out processes and strategies and a clear road map for deploying technology. They are anticipating new business challenges in the current year, given the economic slowdown, where IT's role is enhanced.

The economy is going through a tough phase thanks to the financial crisis and the scenario has alerted the power sector to be more cautious about its growth plans.

However, the rising demand for power and the Government of India's ambitious mission of 'Power for all by 2012', have fuelled demand for installed generation capacity to be at least 2,00,000 MW by 2012 from the present level of 1,14,000 MW.

As per the Ministry of Power's expectations, to be able to transmit this power to the entire country, an expansion of the regional transmission network and inter regional capacity to transmit power is essential. Interestingly, the actual generation of power has significantly improved. As compared to an annual growth rate of about 3.1% at the end of 9th five-year Plan and initial years of the 10th Plan, the growth in generation during 2006-07 and 2007-08 was of the order of 7.3% and 6.33% respectively. The Ministry of Power has projected the electricity generation target for the year 2008-09 at 744.344 BU consisting of 631.3 BU thermal; 118.5 BU hydro; 19 BU nuclear; and 5.6 BU import from Bhutan.

Besides generation, the Ministry's thrust is on transmission planning as well. Transmission system planning in the country, in the past, had traditionally been linked to generation projects as part of the evacuation system, but it has now moved to integrated system planning for bulk transmission of power over long distances.

Another encouraging aspect is with regard to certain provisions of the Electricity Act 2003 such as open access to the transmission and distribution network, recognition of power trading as a distinct activity, the liberal definition of a captive generating plant and provision for supply in rural areas. These will introduce and encourage competition in the electricity sector. All the above measures on the generation, transmission and distribution front would result in the formation of a robust national electricity grid.

The plans have put tremendous pressure on CIOs from the power sector to ensure that IT acts as a catalyst for growth. These CIOs are bullish about growth and are optimistic about the IT spending pattern despite the economic slowdown. The effort of CIOs is to ensure that losses incurred during commercial and technical electricity transmission come down to a large extent, which by itself will be a booster for growth.

Analyst firms like IDC India point out that the power sector has evolved an integrated energy policy to build up strategic reserves, augment commercial inventories, sign-up long term supply contracts and acquire overseas hydrocarbon assets. Another initiative according to IDC is that the procurement of power generated from unconventional and renewable sources will account for 5% of total procurement by 2010. Co-generation with allied industries with a focus on alternative fuels as the profit margins shrink is another area to look at. Having rural electrification and open access as the criteria for growth, the power sector is to witness heightened competition with technology being the differentiator. Vijayender Kumar Gupta, Head-IT of NDPL with a turn over of Rs 2,400 Crore maintains that the company has witnessed a growth between 5 to 7 % during 2008 having 10 million consumers stretching to 510 Sq Kms, while witnessing 4.5% reduction in commercial losses. V Sivaji, GM-IT, Andhra Pradesh Central Power Corporation (APCL) found grey areas to be predominant particularly the subsidies sanctioned by the state government to farmers offering free power were an obstacle to growth. "Despite the challenges and recession, the demand for power has not dipped. The peak demand in the state was around 4,000 MW and the average demand was to the tune of 3,000 MW in 2008," said Sivaji. APCL has grown spreading across 85,000 sq.kms providing 58 lakh connections. "While the growth has been good, we have been successful in reducing the AT & C losses to 15%," claimed Sivaji.

However, Dinesh Kumar, CIO of the Rs 40,000 crore National Thermal Power Corporation (NTPC) does not seem to be happy with the country not meeting the target of power requirement as a whole. "The power sector should have witnessed a growth rate of 7% in 2008 and would be about 8% in 2009, as the demand for power as estimated for 2030 is 6.28 lakh MW, while the country has been catering to only 1.5 lakh MW," maintained Kumar.

Taking cognizance of the constraints that the power sector faces, H Y Dora, director-projects of Visakhapatnam based Andhra Pradesh Eastern Power Development Corporation Ltd., (APEPDCL) observed that the sector has observed a growth of 10.98% in 2008 mainly in high tension, industrial and LT commercial sector. "We saw our energy sales increasing from 7,265.4 MU to 8,063.12 MU and revenue collections increasing from Rs 2,008.91 crores to Rs 2,363.05 crores, with the AT&C losses decreasing to 8.9%," said Dora.

Uttaranchal Power Corporation Ltd., (UPCL)'s DGM-IT, Jayant Sinha said that the total installed capacity (MW) of electricity in India as on Dec 31, 2008 was 1,47,402 MW, including the contribution of the Central Sector (48,971 MW), State Sector (76,185 MW) and Private Sector (22,246 MW). "Much remains to be done as the demand has consistently outstripped supply leading to an overall energy shortage of about 9% and peak shortage of about 16%," he added.

Sinha opined that the States, through APDRP, had implemented various reform initiatives particularly in the Power Distribution sector, with a focus on improving operational efficiency, increasing commercial viability, curbing thefts, stricter energy accounting and providing better consumer services.

Sinha found that enforcing legislation and policy within the framework of the Indian Electricity Act, 2003, and the active role played by some of the State Electricity Regulatory Commissions had helped in augmenting growth. From UPCL's point of view certain technological deployments such as ATP (any-time payment), updating databases, Web-based MIS to capture key data related to finance, commercial, operations, project and HR in all the circles have increased operational efficiency. "We deployed a business analytics software application for analyzing, monitoring and reporting of the billing data of high-value key consumers, having sanctioned load greater than 25 KW and contributing nearly two-thirds of the total revenue for UPCL," maintained Sinha.

While the growth is escalating for most companies in the power sector fuelled by ever-rising demand, CIOs are facing newer challenges, which make it imperative for them to adopt technologies that enable growth.

Challenges in 2009

Vijayender Kumar Gupta NDPL

As they get into the new fiscal year, the CIOs of the power companies face newer challenges that they must address strategically. Kumar said, "The New Year's challenge is just not about forward or backward integration of technologies to drive operational efficiency, but it is about meeting the escalating demand."

Kumar also listed bringing changes in the working environment to tackle the recession with IT as a tool.

Having implemented ERP across locations, managing and meeting the service expectation of the internal and external customers is a vital task for him. Security being the prime concern, NTPC finds acquiring appropriate skill sets to manage infrastructure of multiple partners to be a tough proposition.

Sivaji named a plethora of business challenges where IT plays a critical role. While auditing energy systems is a priority, appropriate calculation and analysis of consumer AT&C losses are mandatory for efficient operations. "Constant revision of GIS-based networking systems to analyze the load flow in a scientific manner, integrating customer services centre for enhancing customer satisfaction etc., are growing challenges for us," said Sivaji.

NDPL's Gupta's major task is to work towards retention of consumers by leveraging IT to the maximum. The regulated market also poses a major challenge for Gupta, besides working towards ensuring effective usage of the funds provided by APDRP for network augmentation & technology upgradation.

Dora's task for 2009 is to ensure higher customer satisfaction, providing reliable and quality of power to consumers. Besides this, he said that CIOs in the power sector had to address the abnormal decrease in power drawn particularly in the case of Ferro alloy Industries and also other major industries which were already in operation since most industries have cut down their production targets due to economic recessions which may affect the power sector and in APEPDCL the Industrial sector power drawn constitutes 54.5%.

Jayant Sinha UPCL

While Sinha does not foresee any significant impact of the economic slowdown in the power sector with demand being inelastic in nature, he does not rule out aligning IT solutions with business needs, internal capacity building being the biggest challenge. "Since fresh recruitments are few and far between, the task of training an ageing and computer-agnostic workforce is a real challenge, besides process re-engineering being another major challenge for any enterprise-wide IT implementation," he said.

Sinha's concern is the issue of tackling obsolescence of IT infrastructure, absorption of new technologies, timely upgrades are other key factors, keeping enterprise data secure from both internal and external threats like unauthorized access, willful data manipulation, and malicious programs are also crucial.

IDC finds transmission related challenge for CIOs with regard to problems of capacity addition, costs of transmission across multiple regions and states, resulting in losses as high as 30-35%. Congestion with regard to technology to pitch in to maintain records of loads, to avoid excess load is also a challenge.

2008 recap

Dinesh Kumar NTPC

Power companies, that were not so IT savvy to begin with, have had major transitions with regard to technological deployments as the CIOs in this sector have brought several reforms into their companies in the area of IT. For instance, the three focused areas of deployment for NDPL's Gupta in 2008 were deploying blade servers as part of server consolidation move, upgrading Microsoft Exchange to 2008 and upgrading Billing software to latest software (Websphere as front end & Oracle 10g as backend) /hardware (AIX P6 Servers with high availability mode). Other deployments included Automated Meter Reading and Data Analysis (AMRDA) - an automated system for meter reading and data analysis that remotely downloads all data from meters to a central location, acquiring SCADA to track load management and deploying GIS for mapping. Having deployed these, Gupta finds IT driving reduction in losses and streamlining business processes with reduced cycle time. Supplier relationship management as well as governance, risk and compliance have benefited thanks to the use of IT.

IDC India found that the present installed capacity is only capable of meeting 70% of demand and that only technology could come to the rescue. According to IDC, the power sector had been focusing on data warehousing, automated meter reading technologies, energy accounting solutions, online communities and business intelligence.

Sivaji deployed SAP for finance, accounting, materials management and other functionalities during 2008. A Java-based billing collection system was another area that APCL looked at, besides having GIS solutions that it developed in-house. "We also focused on streamlining customer care units to attain service efficiency. APCL saw immense advantages of providing accurate and timely information to all of its employees and customers, besides reducing technical losses compared to previous years."

Having migrated to SAP sometime back, 2008 saw NTPC deploying CRM and business intelligence solutions for all business processes and locations. "We deployed the RWEP module for online data and analysis, besides going in for video conferencing tools in a big way during the previous year," maintained Kumar. The benefits that NTPC accrued were to resolve day-to-day information related issues, reduce inventory, facilitate smooth inter-plant communication flow, and create better employee benefits. While increasing service efficiency, NTPC also brought in greater transparency to its transaction systems through e-Procurement.

Dora laid his thrust on server consolidation during 2008, while deploying a centralized EPIMRS application, evolved network security policy for the DIScom and upgrading SAP extending it to all business functions.

For Dora, a wide area network for all division and EROs for effective data transmission were on the cards. A comprehensive revenue accounting system (RAS) was launched to provide an integrated software for billing and revenue accounting. "We took up a pilot project on PLCC based automatic meter reading in one part of Visakhapatnam, besides the introduction of bill payment through the Internet," said Dora adding, "Repairs and maintenance of existing network started with an allocation of about Rs 20 crores to further improve supply reliability and customer delight besides technical loss reduction." APEPDCL saw improvement in internal efficiency, improved customer care with the use of IT tools and applications.

As far as 2008 was concerned, UPCL's Sinha went in for deploying HT and LT billing system with supporting MIS, using Oracle at the backend. The application tier comprised of J2EE for billing application and .Net for the MIS application.

"The hardware included RISC servers, EPIC servers and Xeon servers for different applications, besides deploying the WAN, a managed leased line network and secured IPSec VPN, while conventional Ethernet technology supports the corporate LAN," said Sinha.

UPCL initiated its network security roll out to be implemented with a combination of Firewall, Proxy Server, User/ Group policies and end-to-end anti-virus/anti-spam protection with content filtering. Sinha decided that storage system needed to be managed by a SAN-supported RAID L5 implementation, with a LTO-2 system for automated data backups.

For UPCL, the use of IT tools has aided in faster and reliable data access, availability of structured information and efficient MIS reporting. According to Sinha, the IT tools have also been effective in the capture, analysis and reporting of key performance parameters in all operational areas, enhancing the quality of decisions.

While 2008 saw investments on IT infrastructure towards billing and other applications, CIOs are clear on their vision for 2009 as well in terms of technology deployments.

Priority areas in 2009

While most industry sectors are revising their IT budgets, the CIOs of power sector companies are being practical in their moves. While the budget is not becoming a major constraint, the aim is towards increasing the overall efficiency of the company, and leverage IT effectively so that it helps the company move along on its growth path.

According to IDC the Indian Power sector, though a little perturbed by the current global slowdown, has its own structural and core issues to deal with. It is looking at technology to come to its rescue in order to reach its goals within a shorter period. IDC predicts that 2009 would be the year for an increased focus on application architecture, data architecture, IT infrastructure build-up, payment solutions, online presence and knowledge management.

Kumar observed, "We spent a huge amount implementing ERP during the previous year, however, we constantly analyze the investment and spend only on those things that add value."

"The top technologies where IT spending would go into in 2009 would be on building up networking infrastructure, creating a robust e-mail platform and enhancing SAP modules across various functions and locations," averred Kumar.

However, he intends to look beyond ERP to solutions such as business intelligence, mobile computing and RFID this year to enable faster decision-making.

In a new initiative, NTPC and the Nuclear Power Corporation announced a joint venture to invest Rs 15,000 crore over the next eight years to set up nuclear power plants in the country. This initiative will escalate the role of the CIO to drive additional technological initiatives and also increase the challenges of integrating the two technologies.

Investment is not a constraint for APCL's Sivaji who has invested Rs 20 crores on implementing billing system across various locations. With APDRP sanctioning Rs 400 crores to the power sector in the state, Sivaji finds Rs 200 crores will be the IT spend in the current year. "Some of the thrust areas where these investments would go in would be implementing a consumer index system, automatic meter reading across geographies, customer care centers, deploying various applications including Siebel CRM, extending ERP to finance and accounting and also deploying remote metering to increase efficiency.

NDPL's Gupta finds 2009 to be having a good amount of IT investments. "The year 2008 saw an IT spend of Rs 12 crores and it would be Rs 20 crores in this year to be spent on implementing DR Sites at a different seismic zone, deploying SAP - ISU which includes consulting, implementation of modules across CRM, billing system and so on", says Gupta. Gupta also intends to deploy solutions around virtualization, bio-metric solutions & upgrading Automated Meter Reading and Data Analysis (AMRDA) - an automated system for meter reading and data analysis that remotely downloads all data from meters to a central location, to a state of art technology to reduce data acquisition time and thus reducing cycle billing time.

Having deployed these Gupta finds IT will help in further reduction of losses and streamlining business processes with reduced cycle time. Also Supplier relationship management, Governance risk and compliance has been effectively benefited by the use of IT.

UPCL is in the process of finalizing processes for IT enablement, DPR preparation and complete project-based plan allocation and will soon have its budgets in place. However, UPCL's Sinha has certain priority areas with regard to technologies that call for an investment. "In the Distribution Sector, the three technology areas where IT spend are essential are Integrated Meter Management, Utility Billing and Energy Accounting System."

Consumer indexing and Distribution asset management, Distribution automation and SCADA (Supervisory Control and Data Acquisition System) are on the agenda. "As UPCL is preparing the Detailed Project Report (DPR) for central plan funding under Restructured APDRP, IT investment will be an integral part of the larger business model, and it cannot be treated in isolation," said Sinha.

Interestingly, APEPDCL has proposed that roughly Rs. 79 Crores be spent on a data center for Visakhapatnam town and for 28 other towns in the Discom. With this, Dora's priority areas would be server consolidation deploying hardware along with data consolidation and establishing a DR site for secure IT infrastructure. Dora also believes that network connectivity will be required for all end users of applications as data security and network security go hand in hand, besides a centralized database and applications related to workflow automation.

Having set their technology investment plans in place, the CIOs are also observing certain emerging trends.

Trends and aspirations

While having a clear technology roadmap in place, the IT heads of the power companies carry personal aspirations as well to be part of their organizational growth. For instance, NDPL's Gupta aspires to be the adopter of the best technologies in the company and has an agenda deploying technologies across its 130 locations in 2009.

"Unified Communications from Microsoft will be the next move for us and we have outsourced all our implementation activities to CMC," said Gupta.

Sivaji too aspires to bring the best customer care services through effective billing systems and also drive reduction in power losses. "Going forward I would like to look at SCADA to be integrated with the ERP and other IT tools, while looking at GPS and RFID as emerging technologies to suit our needs, " maintained Sivaji. NTPC's Kumar opined that the role of IT should reach such a height and be an integral part of the business so that the management should be able to consult the CIO on every decision related to the business and its growth. Unified communications is also on the agenda for Kumar as he goes along.

As the IT head, Dora believes that there should be a single window interface for end users, which can give the user a glimpse of all areas including operational, revenue and customer service parameters. Going forward Dora intends to integrate SAP seamlessly with legacy applications, which shall cover the entire gamut of activities, besides working towards creating a single window interface for all end users of both the operations and accounts wings to ensure workflow automation.

UPCL's Sinha aspires to provide IT solutions that are simple, user-friendly, and easily deployable, uniformly accepted and enable the business. "If an IT system is able to energize users into loving their business and acts as a catalyst to process reforms and business productivity, then I think my aspirations are more than fulfilled," remarked Sinha.

Sinha intends to leverage the restructured APDRP under the XI plan to promote strategic business solutions with significant IT interventions. "Technologies such as Remote automated meter reading (AMR), Substation Automation for managing Feeders and Distribution transformers, business intelligence for mining consumer, meter and billing database, IVRS-based consumer care and trouble call management are some areas that we have planned for implementation in 2009," maintained Sinha.n

geetha.nandikotkur@expressindia.com