Digitizing Infrastructures - Creating Value in the Era of Hybridity
Hybridity Gains Momentum
Today, our lives depend on energy, water, transportation and telecommunication services provided by utility companies. In many parts of the world, these physical infrastructures-the cornerstone of modernity, were built more than 50 years ago and are aging fast. Stories of explosions in manholes, water main breaks, sagging power lines, burning electric power transformers and cables, low performance buildings and highly inefficient water and power delivery systems are common. Power blackouts and other infrastructure shutdowns causing disruption in the supply of services to millions of customers are becoming more frequent. To address this it is estimated that by the year 2050, at least 40 trillion dollars of investment will be needed to modernize existing or build completely new infrastructures globally.
We are facing this overdue transformation of our critical infrastructure while at the same time we are seeing unprecedented advances in the miniaturization, capacity, capability and reach of new game-changing technologies for sensing, computing, controlling and interconnecting our existing environment. The operation of these infrastructures must be done in ways that ensure we continue receiving secure, reliable and affordable services without negatively impacting the planet. This new 21st century infrastructure must also be resilient to extreme events caused by weather, financial crisis and externalities.
As utilities determine their strategies on how to modernize their infrastructures, they must tackle several interrelated challenges which impact their business models. These include: customer choice, regulatory and policy uncertainties, which technology platform to implement, how much to invest and when and, most importantly, how fast to make this inevitable transition. This period of phasing out our old and antiquated infrastructure systems with the new ones is what I call the “Era of Hybridity”. This era is based on the fact that utilities, for a several decades will have to manage interdependent infrastructures replete with both the old and new assets. The process of modernizing our infrastructures will be further challenged by the impacts of an aging and retiring utility workforce which needs to be replaced by an equally trained and certified workforce.
Digitization to Bridge the Old and New
For decades past the conventional way of operating utility infrastructures has relied on a small set of, often analog, data collected from a few sensors installed on selected equipment. Today, the advances in digital sensing, measurement and communications technologies allow utilities to develop morein depth and real-time knowledge of infrastructures based on information derived from audio, visual, and temperature signals for devices, and from ambient conditions. As most new assets are built with a wide array of sensors and communications capabilities, one can manage the hybrid nature of infrastructure components by embedding old assets with the communications-enabled sensors so that all the equipment are able to exchange and respond to information. This optimizes the performance of the individual assets, the integrated system of interconnected assets, and the multiple systems in a network of systems.
In the era of hybridity, as more infrastructures are digitized, data thus become perhaps the most critical asset of anyutility. However, most utilities use only a tiny fraction of the volumes of data collected daily. In current discussions around ‘Big Data’, there is potential for utilities to create new value streams by extracting new insights from their full wealth of available data. Instead of looking only at smaller data sets, utilities can now take a broad view of larger volumes of data captured from the myriad systems and subsystems that comprise their entire enterprise. For example, the largest consumers and producers of power grid data are the hundreds of millions of sensors and controls embedded in devices or installed in buildings, at a substation, in generators, transformers and other equipment in electricity transmission and distribution networks. Discretely, continuously and/or heuristically, these controls interact alone or in combination with other controllers using historical or real-time data and generating new data which make up the utility’s data. With advanced analytics utilities can simultaneously capture greater value from all its assets.
New Metrics for a Changing and Uncertain Hybrid Environment
The need for metrics to predict the performance of hybrid infrastructures with old and new assets is gaining the attention utility executives. In particular, the CIO who is, typically, responsible for managing the disparate data systems within the utility as well as the diverse analytical computational capability offered as a service using cloud computing must find means to quantify the benefits of increasing investments in emerging technologies such as the Internet of Things (IoT). Those benefits range from ways in which the transition to smarter infrastructures improves resilience to other system “abilities” such as flexibility, vulnerability, controllability, interoperability and securability.
Driving Value with Correlation and Predictive Analytics
Performing causal analysis in human-cyber-physical systems (HCPS), like, smart grid, smart water, intelligent transportation; it is difficult due to the complexity of such systems, which in reality are system-of-systems (SOS) impacted by large number of variables, with known and unknown emergent phenomena. Causality-based metrics are useful understanding why the infrastructures perform in a certain way. However, in hybrid environments with significant interdependencies, it may not be possible to identify and explain causal relationships. On the other hand, correlational analysis of large amounts of data, coupled with predictive, statistical and data mining tools can help utility CIOs discover the degree to which two variables or metrics are correlated and the likelihood that one will impact the other. Correlation analysis does not negate the need to understand causation, but it does provide additional valuable insight to predict what-affects-what, and to optimize the performance of a system which is comprised of both old and new assets. With this information more in depth analysis can be carried out to better understand the causal dimension of the problem and how to resolve it.
Digitization Creates Renewable and Extensible Value
To maximize the value extracted from their old and new assets, utilities must look beyond the primary reason for capturing and storing data. Because data is reusable, its value can be extensible. The total value of data will depend on the ability of the holder to find innovative ways to use it. With correlation analysis and other big data analytics, utilities can discover how to adapt their existing business models in response to the changing industry landscape. The CIO and other in the utility C-suite can make better decisions by monitoring changes in key performance metrics based on predictive analytics.
CIOs become “Chief Value Creator”
Ultimately, with new hyper-digitized infrastructures and their massive amounts of data assets, utility CIOs will increasingly play an important role in determining how additional value is created across their enterprise. The CIO will also play a pivotal role, like, Chief Value Creator (CVC) in ensuring that IT systems across the entire utility have the advanced analytics and the appropriate levels of cyber security. Protecting cyber-physical systems will require a new mindset for how to operate infrastructures with highly networked old and new assets in the face during the long transition to full modernization.