(Georgia Institute of Technology, 2021)
Farhat, Karim; Mueller, Milton L.
This paper identifies the factors shaping Industrial Data (ID) use and sharing among Southeastern energy firms. The research questions underlying this study are:
1. What factors affect an energy firm’s decision to use and share ID
2. To what extent does ID use entail strategic or collaborative sharing arrangements with other firms
3. What are the procedures by which these arrangements take shape?
Contrary to other research findings, agglomeration economies and locational advantages
based on Information Technology (IT) infrastructure were not drivers of ID development in the
Southeast. Data localization and data protection laws were also not found to influence how Original Equipment Manufacturers (OEM) handle transnational data flows. The decision-making
procedures by which ID arrangements take shape instead depend on strategic choices around data management and the evolution of the cloud services market. Business model adaptation among OEMs has significant impacts on data management practices.
While diversified energy service offerings remain sparse among Investor-Owned Utilities (IOUs), OEMs are experiencing an increased complementarity of demand between goods and services
as they start to divest from central power generation. For example, demand for gas turbines or transformers coupled with demand for analytics services to minimize failure and downtimes
was indicative of a shift from isolated products to services built around products. In the ongoing convergence environment between IT and legacy Operational Technology (OT), access to
data is more relevant than ownership. The ownership of intellectual property in software and
algorithms that enable the continued use and reuse of data for various business ends drives
firms’ competitive advantages. However, despite the flexibility afforded by the latest opensource
developments in data management, such as container platforms, we found no evidence of energy firms sufficiently leveraging these tools. Our analysis of the role of standards in the ID ecosystem’s evolution shows no risk of serious harm due to vendor lock-in, particularly in the smart grid. The path-dependent inertia
of IEEE 1815/DNP3, lack of awareness and perceived benefit of IEC 61850, and strategic OEM preferences for DNP3 involve the kinds of switching costs that are to be expected in a competitive market environment. These costs are dependent on the economic and organizational barriers defining the position of the utility in question along its technological migration path (legacy infrastructure, hybrid systems, or fully digital substations). Costs for
deployment may progressively shrink as legacy infrastructure continues to be replaced. We recommend that Investor-Owned Utilities better leverage the capabilities that data science
has to offer and foster ongoing relationships with large OEMs or third-party energy service providers with proven track-records of providing added business value. As a matter of regional
economic policy, methods to facilitate market entry for third-party energy service providers should be explored.