Exploring the upside of risk optimize the IT portfolio

“Opportunities multiply as they are seized.”

Sun Tzu

Alliander IT CIO Office Michel de Goede

1. Introduction of Alliander

2. The EU (1/3)

Low prices for all, better quality, more choice

Innovation

Better competitors in global markets

2. The EU (2/3)

Sustainable, secure and affordable energy for Europeans

2. The EU (3/3)

2020 Goals:

• 20% reduction of greenhouse gas emission

• 20% share for renewable energy sources

• 20% saving in energy consumption

Measures:

• Step up energy performance

• Improve energy transformation

• Financing

• Change behaviour

3. Issues of a grid operator: Electric vehicles (1/5)

• Roll out of thousands of electric vehicle charging stations

• Grid Capacity is insufficient

• What if we use cars as backup energy storage?

3. Issues of a grid operator: Two way traffic (2/5)

Monetary flow

Information flow

Transmission Trade/PRP/

Shipper Distribution Supply Metering Production

Physical flow

© Jeroen Scheer, Alliander, 2011

• Flows change

• Capacity increase

3. Issues of a grid operator: Smart metering and home automation (3/5)

• Roll out of 5 Million Smart Meters (Gas + Electricity)

• Inform customer regarding energy consumption and create

awareness

• Respect privacy concerns

• Manage the potential data ocean

3. Issues of a grid operator: Smart city initiatives (4/5)

• Combination of various techniques (Amsterdam)

• Self healing and self regulating micro grid (Bronsbergen)

3. Issues of a grid operator: Smart grid (5/5)

• Accommodate higher peaks and two-way traffic through intelligence

• Accomodate energy transition scenario’s through intelligence

• Provide the necessary information to all parties involved

4. Innovation: sixth Schumpeter / Kondratiev wave of innovation (1/5)

4. Innovation: The semantic wave (2/5)

4. Innovation: And then there is also..... (3/5)

Source: Sogeti VINT

4. Innovation: And then there is also..... (4/5)

Sources: Wired, PSFK, Google, Motorola, Artefact Group, Glow Caps

Business Processes

4. Innovation: into the virtual world (5/5)

Virtual World Personal

Devices

Home Automation Operational Technology

IT Connected

Organizations

Crime

5. Business Model Innovation: Steering on output (1/5)

5. Business Model Innovaton: create composite services (2/5)

5. Business Model Innovation: choose your battles well (3/5)

There typically are 6 potential treatments for both the up and downside of risk:

• Ignore, the ostrich ‘see-no-evil-hear-no-evil’ tactic;

• Accept, the potential impact of some risks may be deemed acceptable to your

organization;

• Reduce, e.g. the potential impact or probability of occurrence of a risk, like the

banking app;

• Transfer, use insurance or subcontracting to transfer potential consequences of risk;

• Avoid , not entering the type of business that may incur potential risk impact deemed

too high;

• Exploit, risk is also an opportunity and high risk investments may yield high returns.

5. Business Model Innovation: Real option planning (4/5)

Source: Ronald Poppe, Reader Financial Engineering, Rotterdam School of Management / Erasmus University

Bankers understand steady cash-flows

Insurance companies understand risk

1. Calculate future cash-flows

2. Calculate volatility

3. Calculate option value

5. Business Model Innovation: Lean startup methods (5/5)

Source: Alexander Cowan, Steve Blank

Agile

6. Implementation: Learn from the past (1/6)

0% 20% 40% 60% 80% 100%

Traditional

Ad-Hoc

Lean

Agile

Iterative

Successful Challenged Failed

Copyright: Scott W. Ambler (see www.ambysoft.com/surveys/)

6. Implementation: use the different speeds in your landscape (2/6)

Source: ING

6. Implementation: separate your systems by type (3/6)

Source: Forrester

Cross functional teams

• Product driven

• No projects

• No ITIL

Self Service

• Automated Testing

• Automated Configuration

Streamlined Operating Procedures

• Continuous Integration

• Collaborative Development

• Continuous Monitoring & Feedback

DevOps properties1

Preconditions DevOps

Impact our time1 Lead to business outcomes1

Agility

Resiliency

1 See also:: http://www.pwc.com/us/en/technology-forecast/2013/issue2/features/cios-agility-stability-paradox.jhtml

6. Implementation: Use DevOps if possible, PMO if necessary (4/6)

6. Implementation: 1 size fits all architecture pattern (5/6)

Internet (open)

Access Management

(access layer)

Representation

(presentation layer)

Authorization Management

(application layer)

Application

1

Application

n

May I enter the house?

What goods and services

am I allowed to

use in these rooms?

Any device

Offices (closed)

For which rooms do you

give me the key(s)?

What goods and services

am I allowed to

use in these rooms?

Protocol and data-

format decoupling

such as: Citrix,

HTML 5, JSON,

XML, Sybase SUP

and so on

Application

2 Application

3

6. Implementation: Allow for pro-active business scenario’s (6/6)

© Wim Bouman, Alliander IT

Needs semantics

7. Governance: Extend GRC structure

GRC

controls testing Operations

Yearly audits

& escalations

7. Governance: Allow for quality driven IT using ISO and OCEG

Source: OCEG

7. Governance: The optimized portfolio

Source: http://toolsformoney.com/portfolio_optimization.htm/

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Questions?

Alliander IT CIO Office Michel de Goede

Thank you!