Utility Transformation: Information Supply Chains and Information Flow Modeling Light the Way
“Many senior executives talk about information as one of their most important assets, but few behave as if it is.” – Douglas Laney, Infonomics
In my last article (if you haven’t read it, please go here first) I stressed the importance of taking an information-centric approach to business transformation and new technology projects. Why you might ask? Excellent question. Because while most organizations have IT, only 16% of them achieve transformation with it. There is a large movement afoot for Enterprise Information Management, Information Asset Management, Master Data Management, Data Governance, and more. As the names imply, data and information are at the core of all these methodologies. However, most utilities still approach these projects from an information technology perspective without enough attention on the information. Because of this, most of these efforts result in unactionable technical reports that effectively leveled entire forests and the core problems remain:
• Business executives struggle to execute transformational strategies
• Boards are unable to assess & mitigate technical risk
• Finance teams are unable to contribute to technical business cases
• IT experts have difficulty establishing/communicating the value/impact of a project on the business
• Executive leaders are forced into a position of becoming reluctant followers of IT rather than drivers of business transformation
A Change in Perspective
Let’s back up and take a broad view of a utility. It is not hard to see that information is the lifeblood of any organization, and utilities are no exception. Information is fundamental to each and every process. Whether it is taking customer calls or installing facilities in the field, information is the driver. With this in mind, it is helpful to look at the utility information ecosystem as a series of interconnected Information Supply Chains. In the world of physical assets, “a supply chain is a system of organizations, people, technology, activities, information, and resources involved in moving a product or service from supplier to customer.” If we take this definition and modify it slightly, we can define an Information Supply Chain as a model of your organization’s information flow. It connects every asset (information, process, system, person) to the purpose it is supporting. It is the flow of data and information through your business in support of business outcomes. Ultimately, your Information Supply Chains convert data and information into actionable insights so you can more effectively:
– Manage your network
– Serve your customers
– Comply with regulations
– Compete in the marketplace
Information Flow Modelling
Now that we have a concept of what an Information Supply Chain is and what this view of our organization can provide, I will show you how to model it. An Information Flow Model is a graphical representation of the flow of data through an information system or organization. It is roughly composed of inputs, actions that systems and people perform on the information, and outputs. We use a simple “language” to model this, as depicted below. As can be seen, actions create information which in turn support actions and so on. People or systems can perform these actions. Systems can support people and supply and store information.
©LINQ Ltd 2018
Information Flow Modeling is fundamentally different from Business Process Modeling (BPM) as BPM requires business analysts and subject matter experts along with a technical knowledge of the BPM representations. Further, BPM seldom accounts for the cost of capturing data and information or the value of the business outcome of the process. In a moment, I’ll show you how value and cost can be assigned to every node in our model.
The image below moves beyond abstraction to a simple example.
In this image, we can see the nodes taking on the character required to narrate the information flow. Starting at the bottom, we can read this flow as follows:
©LINQ Ltd 2018
1. A customer calls using an Interactive Voice Response (IVR) system.
2. The IVR gathers customer account and current outage information using information services
3. The IVR then presents outage info to the customer and presents options
4. The customer, using the IVR, then records an outage
5. This results in the creation of a database record
(If you work for a utility, you know that this is not the end of the story, but I have kept it brief for the purposes of illustration.)
Using this model, we have connected people to actions and the information created. In this example, we can also see that everything is automated. But what if it’s not?
The next example will illustrate how we can assign rates and values to processes, people, and information to show us where we are spending our money. Assigning the rates to the people and their actions is straightforward as the rates are based on hourly costs. Values are assigned at the level of information output. In the example, the value is assigned on the node labeled “Outage Record Created.” Information that is generated by people and systems are assigned values ranging from 0 (no value) to 10 (high value). Although this is a very subjective process, it provides a measure of value for a given information output that can be agreed upon by the people producing and consuming the data. Values are cascaded ‘upstream’ against the information flow direction and summed where information reuse occurs. The example below illustrates the process.
In the diagram, instead of using automation, we are using a customer service rep (in today’s world this might be a bit unrealistic, but again, it serves to illustrate a point). A customer service rep is a human that has an hourly rate associated with them. We can record that in our system along with the frequency and duration of each action to come up with a yearly cost. We have made the following assumptions:
• An electric utility with 1 million meters may receive one million calls per year
• Of those calls, 30% are outage related
• It takes a CSR an average of five minutes to field any calls
• It takes 15 seconds to retrieve current outage information
• It could take two minutes to record the outage (entering it manually into yet another system)
• The CSR makes $45/hour
By looking at things this way, we can determine whether the action being performed adds value to the business or whether the action needs to be performed by a human at all. The first thing we notice is that the flow has become more complex. As we assign rates and costs to the people and systems performing the actions, costs get aggregated into a total cost of the information being produced in support of the business outcome. Below, we can see how duration and frequency can be associated with any action.
©LINQ Ltd 2018
There is a yearly cost associated with each action. On our dashboards, we can see how this gets aggregated, and in our hypothetical situation, we see that it is costing $2.4M to have a team of customer service reps handle our calls.
You will notice as well that we have a value of 10 associated with the “Outage Record Created” information output node. Clearly, getting outage information to a utility is of the highest importance.
©LINQ Ltd 2018
Where the assignment of value becomes, well… valuable is where Information Supply Chains become interrelated. In other words, where supply chains share information, the value becomes additive. Another example might serve here. In the image below, we can see that the “Completed Order” node has also been assigned a value of 10. Since the “Outage Restoration Flow” is using the output of the “Outage Call Flow”, the values are aggregated so that everything in the “Outage Call Flow” now has a value of 20.
This allows us to see where the most highly valued information flows exist in our organization so that investments can be allocated accordingly.
The Value of Information
“When considering how to put information to work for your organization, it’s essential to go beyond thinking and talking about information as an asset, to actually valuing and treating it as one.” Now that we have a value for our information assets, both dollar amounts and a rating, we can consider just how much time and money could be released back into the business by modifying the Information Supply Chain. And now we know where and how to focus our investments since this tool can be used to produce our business cases as well (a topic for yet another article).
Putting it All Together to Transform the Business
Business transformation is about gaining a competitive edge, improving profitability, creating new market opportunities, and continuously improving operations. With an information-centric approach, utilities can move beyond the typical transactional outcomes of IT and begin achieving economic benefits that serve to transform the business.
Information Flow Modeling is the catalyst for transformation. The result of assigning the value to every action and piece of information in the chain:
• Information flow (not systems & functions) becomes the basis for improvement
• High-value improvements are easily identified
• Emotion, platform, vendor, and technical considerations are removed from the evaluation
• The complexity of a system-centric view of evaluating investments is eliminated.
When the current state of your information ecosystem is clear:
• Decisions can be made quickly and in the best interest of the business
• The value and cost/benefit of improvements are immediately visible
• Projects become smaller, more clearly defined, and yield greater success
• It becomes possible for all executives to see the transformational opportunities of IT.
 Laney, Douglas. Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage. Bibliomotion, Inc., 2018.
 “What is a Supply Chain?” Canadian Supply Chain Sector Council, Accessed February 27, 2018. http://www.supplychaincanada.org/assets/u/HandoutWhatisaSupplyChain.pdf.
Information Flow Modeling concepts and images from LINQ: http://www.linq.it.