Yesterday, we announced that BlueStar Energy is the special recognition winner for Energy/Utility in the SOA Consortium | CIO magazine case study contest. Highlights from the BlueStar Energy Case follow.
Company Background
BlueStar Energy is an independent retail electric supplier, certified to sell electricity in Illinois, Maryland and the District of Columbia. In addition, BlueStar provides green power and energy efficiency solutions to home and business customers.
Business Scenario
Business Agility: BlueStar’s business is in a very fluid regulatory environment. Business conditions change all the time, and the IT infrastructure has to adapt to those changes immediately. The BlueStar executive team formulated a strong strategy and needed a foundation for business execution.
Unite Business & Technology: In mid 2006, BlueStar sponsored an enterprise-wide SOA initiative to unite business and technology based on a strategic enterprise vision to increase competitive advantage. The goal was to provide BlueStar with a rock-solid IT platform and digitized business processes to automate the company's core capabilities.
Enterprise Architecture Evolution: BlueStar adopted the concepts of a mature EA methodology and embraced service orientation (SOA) as their enterprise architecture style. The EA methodology allow the CTO to make tough decisions about which processes BlueStar had to execute well, then implement the IT systems needed to automate those processes.
NextStar™: The enterprise architecture would be named NextStar™ (for the “next” BlueStar) with the goal of streamlining and automating core business processes including eCommerce, B-to-B Integration, Accounting, Automated Provisioning, Risk/Energy Management, Pricing and Product Management, Sales Force Automation, Customer Relationship Management and Billing Systems. Millions of dollars in revenue are tied to timely access to information and the ability to act on that information.
Incremental Delivery: Key to BlueStar’s success was thinking big and starting small—partitioning BlueStar into narrowly defined business domains, processes and services, building out features iteratively, and, showing early value and success—instead of attempting to define the architecture for the entire company at once.
Their services and applications have been architected leveraging SOA constructs such as standard-based interface, consumer heterogeneity, loosely coupling, and, composability, among others. Said services and applications as well as existing legacy systems, workflows and third-party service providers interact with each other in a standard, loosely coupled manner via their Business Integration Suite, which consists of open source distributed, scalable and reliable components such as enterprise service bus, business process management system and messaging fabric.
ROI
BlueStar’s CEO Guy Morgan attributes much of the company's recent growth to the NextStar initiative. BlueStar has grown 12,197% over five years.
In addition to growth contribution, between the adoption of enterprise architecture, open source and offshore development, the company estimates saving $24 million over the course of five (5) years.
Business benefits:
- Improve business agility by streamlining core business processes, accelerating supply chain integration and providing business tools to offer new products in new geographies for new demographics, at an attractive price
- Reduce business operational expense and cycle time through automation of manual processes and seamless integration with trading partners and value-added vendor-supplied services
- Position the company to compete with Illinois utilities to serve residential and small-business customers after the discounted rate the state required utilities to charge for 10 years, ended in January 2007
- 50% reduction in billing staff
- Met per account operational cost targets for small business and residential customers through 100% automation of account management
- Ability to cope with frequent regulatory requirements changes from states where BlueStar operates
- Ability to enter new energy markets such as natural gas
- Ability to either in-source or outsource business processes to respond to market conditions
- Facilitate merger and acquisition (M&A) activity due to likely industry consolidation
IT benefits:
- Ability to scale from thousands of customers to tens of millions of customers nationwide
- Serve as a foundation for massively scalable solutions
- 10% reduction in IT expense associated with enrollment and billing processing
- Reduced IT capital investment and ongoing operational expense through 100% use of open source technologies
Project Organization
Business & IT Collaboration: From inception to deployment, this project has been a collaborative effort between business and technology teams. As a first step in the governance and change management areas, BlueStar established a Steering Committee comprising the company’s executives. Then, with executive management sponsorship, the company formed several domain-based change control boards consisting of multi-disciplinary teams including business, legal and IT members. The change control board members meet weekly to discuss prioritization, progress, change and control management, and release planning.
In-house Effort: NextStar was developed 100% in house. The Chief Technology Officer, Director of Enterprise Architecture and Lead Solutions Architect worked in Chicago, IL. Software Engineering and Quality Assurance teams worked in Lima, Peru.
Enterprise Architecture: The Enterprise Architecture team was responsible for providing leadership, mentorship and oversight of the Business, Solutions, Information and Technology Architectures, all of this under the SOA paradigm.
Lessons
BlueStar discovered early on that these actions would make the project more successful:
- Increased focus on program management (strategy) versus project management (tactical)
- Importance to address and agree on budgetary planning and allocation
- More strict adoption of the architecture and software engineering methodologies
- More strict management and governance of IT assets
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