Powering Digital Innovation by Harnessing Cloud Computing

Joseph Santamaria, Senior Vice President, Chief Information and Digital Officer, PSEG [NYSE:PEG] and Michal Szopinski, Senior Director of Infrastructure DevOps and Architecture, PSEG [NYSE:PEG]
Joseph Santamaria, Senior Vice President, Chief Information and Digital Officer, PSEG [NYSE:PEG]

Joseph Santamaria, Senior Vice President, Chief Information and Digital Officer, PSEG [NYSE:PEG]

The capabilities of businesses are expanding and evolving constantly. Even the smallest business can compete or disrupt larger businesses halfway around the world. The pace of innovation and learning is what will create the sustainable businesses of the future. This is why CIOs are quickly becoming critical advisers to future-focused CEOs. Continuously improving existing business models and the development of new products and services are, in many cases, no longer separable from the technology that enables them.

This reliance on technology within innovative enterprises creates challenges for the CIO – such as the need to sustain technical debt while quickly incorporating the necessary technology innovation, or the challenges to attract and retain talent, and the imperative to evolve delivery processes and culture to premium speed to value. All of this, of course, in a secure architecture.

In 2016, PSE Grecognized that the pace of innovation and new player entries into the technology world, together with the breadth of required technical capabilities stemming from the increasing penetration of technology across the energy sector, required a cost-effective, scalable and flexible new approach to our historically “on-premise”-centric architectural paradigm.

We shifted to a “cloud-first” strategy that has served as an accelerator for “Art of the Possible”-type innovation, as well as a source of cultural change and lower operational cost. The undertaken work resulted in the selection and ongoing partnership with Amazon Web Services on our innovation journey.

  Leveraging innovation and the drive of innovative partners allows enterprises to significantly ramp up the pace and breadth of their own innovation while also lowering costs 

Today, in 2019, PSEG has created a number of innovation tracks with a partnership with Amazon Web Services (AWS). These cover various areas of company operations, such as work management or customer service. PSEG has been able to introduce new capabilities previously not envisioned, such as an Alexa skill-based customer channel and machine learning-based energy trading forecast functions. The entire IT department has become AWS-certified to enable a common language and foundational knowledge that provides a baseline of operation. The implementation of the new capabilities and pace of AWS’ innovation has energized our IT department to deliver more impactful outcomes for the company.

Building blocks of enterprise innovation

PSEG has hosted a number of internal cross-functional sessions focused on the Art of the Possible. The idea was to incubate the innovative use of AWS and PSEG IT digital capabilities to deliver impactful business outcomes for the company and advance the construction of PSE&G’s Energy Cloud, a platform on which PSE&G is building the utility services of the future, leveraging old tools such as robotics or mobile apps mixed with new tools like Machine Learning or Internet of Things-distributed networks. The fast ramp-up of cloud platforms like AWS has enabled PSEG to quickly launch more than 70 Agile product teams across the utility, which delivered the award-winning PSE&G Alexa skill, a mobile app to quickly on board and manage foreign crews and contractors supporting storm restoration, and our first ”sensor-to-wrench,” fully automated processes where a condition detected by a sensor is kitted, assigned and dispatched to the individual responsible for addressing it without manual intervention.Michal Szopinski, Senior Director of Infrastructure DevOps and Architecture, PSEG [NYSE:PEG]

Cost and innovation

One of the questions we are asked most is whether public cloud is more economical than on premise infrastructure in total cost and in O&M only. For us, the answer has been yes. Our fully loaded internal P&L cost per virtual machine cost $275 a month. Lowering it was difficult as we already had implemented many of the latest technologies. Taking automation to the next level required material investments. We believed we were at the end of the “S-curve” for on-premise costs. On the other hand, a VM in public cloud cost more than $350 a month. Yet we were not using spot or reserved instances, and we were not automatically right-sizing servers or shutting them down when not in use. We also had not applied volume types to match performance requirements, or dynamically decreased volume sizes when data footprint shrank, using Amazon Linux when possible. We knew that we were at the beginning of theS-curve with public cloud.

In 2017, we committed to scaling our infrastructure to public cloud and launched two strategic initiatives: CloudQuest, tasked with moving 25% of our workloads to public cloud, and RoadTo200, an initiative focused on fully leveraging automation and the AWS marketplace to drive VM costs to $200 per VM per month. The results did not disappoint. Large amounts of our infrastructure run currently in public cloud with significantly lower costs than our on-premise$275 a month per VM. We continue to identify ways to optimize our spend and expect costs to decline for some time to come.

Conclusion

Digital transformation and technology innovation are and will be critical to the sustainability of any enterprise business. Leveraging innovation and the drive of innovative partners such as AWS allows enterprises to significantly ramp up the pace and breadth of their own innovation while also lowering costs. The innovation impact that enterprises will feel through the partnership are not just the broad catalogue of services. The impact includes adoption of new ways of working, faster clock speed, improved processes and an ability to self-fund many of those improvements through lower operating costs.

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