Microsoft's Jon Arnold: think strategy
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Officially, Microsoft has three things to get across this week: it is scaling its global efforts through its partnerships, it's introducing a new version of its smart energy reference architecture (SERA) and it has a global survey being released today. (Our overnight publication process precluded a sneak peek, but the survey results will be all over town by the time you read this.)
You can get the details elsewhere. I'm the color commentator.
Now, with the company's official messages out of the way, let's turn to the parts of my chat with Jon Arnold, managing director for Microsoft's worldwide power and utilities industry practice, that might spark your thinking. At least I can share the parts of the conversation that I think I understood. I mean, Arnold is out hunting big game across the globe while I sit around typing compulsively in a hermetically sealed room, so during our chat I occasionally wondered whether Rod Serling would be putting in an appearance.
You may recall we last spoke with Arnold in "Microsoft's Bear Hug of the Smart Grid," nearly two years ago.
Probably the most interesting thing that Arnold shared with me yesterday during an hour-long chat was that big things are happening in Australia (an early adopter of smart grid initiatives), in India (a developing economy with huge "social losses," i.e., theft) and Japan (suddenly capacity-constrained and moving from a tradition of energy frugality to serious shortages in light of its loss of nuclear power generation).
The United States? Arnold, perhaps inadvertently, expressed a smidge of ennui. "Predictable," he said. Perhaps familiarity breeds ... well, "contempt" would be too strong a word, but he ticked off a few aspects of this market that make it less compelling to a seasoned globetrotter. No federal carbon policy, at a standstill on strong emissions standards and 50+ regulatory regimes. Not exactly a region with strong, dynamic drivers for grid innovation, at least in contrast to Australia, India and Japan.
But the point made me think. What unforeseen events could conceivably change that scenario in this country? The re-election of the current president and the continued hold on Congress by the opposition party virtually guarantees political gridlock, so federal policy inertia is likely. Where's the exposure to unforeseen events in a power mix that's half coal, two-fifths nuclear and natural gas, with relatively fixed amounts of hydropower and the uncertainties surrounding renewables?
This, dear reader, is the definition of a rhetorical question. Right now, I'd have to say that state-level renewable portfolio standards are driving a lot of innovation here. And electric vehicles could get a boost if the Arab Spring's aftermath or trouble with Iran disrupts oil supplies. Perhaps the natural gas industry will take a hit if hydraulic fracturing proves much more expensive, if and when its environmental impacts are built into the price of that commodity. But, the world being the dynamic place it is, I wouldn't discount the possibility of disruption here driving more energetic pursuit of grid modernization.
In a way, perhaps the seemingly staid nature of the United States market for grid modernization says only that Americans are complacent about their energy-rich lifestyles and the relatively inexpensive energy sources that fuel them. I'd say that "fat and happy" ought to raise its own alarm. Point being, disruptive forces have hit us before and they will again, most likely originating in a blind spot that, by definition, we don't see.
Oh yeah, that conversation with Arnold. He said a number of things worth sharing here, beyond what sparked my doomsday daydream.
A shift from advanced metering infrastructure efforts to distribution management systems is underway across the globe, according to Microsoft's new survey. Home energy management, which Microsoft attempted with Hohm ("we were too early"), remains one of the industry's holy grails. But to motivate people to be involved, it must be integrated with all their other lifestyle interests such as work, school, sports, entertainment, etc. Presenting it as a standalone pursuit hasn't seemed to generate the requisite traction, Arnold acknowledged.
Silos within utilities remain a major impediment to enterprise-wide value creation, he said. Nearly half the utilities surveyed by Microsoft expect major changes in customer information systems (CIS) to accommodate new business processes. But the CIS is an expensive creature and likely the sought-after changes will be accommodated by add-on systems that avoid major capital outlays and prematurely stranded assets, according to Larry Cochrane, a technology strategist in Microsoft's Enterprise Partner Group.
Data analytics, the logical follow-on to the advent of Big Data, likely will become a hybrid practice, with utilities developing their own sense of business strategy, then seeking outside support for extracting business intelligence from their data repositories, Arnold suggested. ("Nothing is black and white," he said.)
"You've got to have a well-thought-out strategy," Arnold said, emphasizing the notion that you can't go mining data without first developing the pertinent questions.
Did I mention that Microsoft claims to have answers to most of these challenges? But don't take it from me. I've got a sense that if you haven't heard from Microsoft lately, you're likely to hear from it soon. And be forewarned: Arnold is a pretty nice guy, the perfect messenger for the Redmond Behemoth.
I asked, incidentally, where Arnold traveled from to reach San Antonio. (Earlier, he had looked to a colleague to confirm that they'd been in Japan within the past two weeks.)
"I'm in the cloud," he said, checking his smartphone. "Literally."
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