Academic journal article Management Quarterly

Linking Computerized Applications in a Distribution Cooperative

Academic journal article Management Quarterly

Linking Computerized Applications in a Distribution Cooperative

Article excerpt

Information systems have been installed at distribution cooperatives to improve: (1) operational efficiency, (2) customer service, and (3) the quality of management decision-making. For a number of reasons, these systems have sometimes failed to deliver the level of improvements expected, been more expensive than planned, and have taken more time to deploy than was anticipated. Even after such systems have been successfully installed, one particularly troubling drawback has been the inability to exchange data freely among disparate computer applications, such as engineering analysis and billing.

There have been a variety of root causes underlying these shortcomings, including limitations in both software and hardware. Data integration is the process of finding ways to link such computer systems in order to allow them to share common information, avoid duplication, ensure that all responsible parties have access to up-to-date information, and limit access of sensitive materials to only those individuals with a need to know.

This article presents a summary of some of the findings from a recent Rural Electric Research project, Enterprise-Wide Data Integration in a Distribution Cooperative. This project investigated the current data integration challenges facing the cooperatives, the tools currently available to deal with those problems, and developed a practical framework to guide co-ops towards a more tightly integrated computing environment.

The Challenge to Distribution Cooperatives

The electric utility industry is in the midst of change to a more competitive environment. In any competitive market, a supplier must choose the basis on which to differentiate its product from its competitors. There is significant business literature on strategic options including: focusing on becoming the lowest possible cost supplier, providing superior customer service, providing a range of products, or other means of differentiation. For cooperatives, the success of any of these strategic options can be enhanced by the proper application of automation and information systems. Industry-wide, electric utilities spent between 1.8 and 2.5 percent of annual revenues, about $5 billion, on information systems during 1994, according to Newton-Evans Research[1]. Many experts believe that this proportion will rise to between three and four percent during the 1995-97 timeframe.

Despite past expenditures for computerized systems, often management access to quality data and staff productivity increases have failed to be realized. Several factors contribute to this failure:

* a lack of flexibility in the design of the automated system,

* a vendor-specific (proprietary) means of data storage or data communications,

* the inability to easily gather or input the data necessary for optimal system operation, and

* the inability to exchange data among related application programs.

According to the Electric Power Research Institute, nearly half of the $5 billion spent by electric utilities on information systems during 1994 was spent in order to integrate computer systems which were not designed to work together.[2] This figure does not include the costs of duplicated data entry, staff time wasted while searching for inaccessible information nor the cost of sub-optimal management direction due to the lack of quality information upon which to base decisions.

Every department within the typical distribution cooperative has common, labor-intensive frustrations that result from the technology shortcomings listed above. A small sampling of these challenges include:

Engineering

* Maintaining up-to-date load data in the engineering database, despite the fact that such records are compiled in the billing database.

* Having an easy means to provide answers to customer queries about the status of new construction. This is particularly frustrating if paper records are passed among departments. …

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