Ahead in the Cloud: A customer-focused cloud transformation with Richard Donaldson

Chad Watt: Welcome to Ahead in the Cloud where business leaders share what they've learned on their cloud journey. I'm Chad Watt, Infosys Knowledge Institute, researcher and writer here today with Richard Donaldson, Vice President of digital transformation at Duke Energy. Duke Energy is 118 year old power company with 9.8 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio, Tennessee, and Kentucky. The company has 28,000 employees in generating capacity of 50,000 megawatts. Duke is big and a lot of people rely on its services. It's also going through some big changes. In addition to the cloud and digital transformation efforts we're talking about, Duke is pursuing a clean energy transition, which includes a goal of reducing carbon from electricity generation by 50% in the next eight years. Richard, a lot on your plate. Welcome to Ahead in the Cloud.

Richard Donaldson: Great, thanks for having me.

Chad Watt: I'd say a lot of utilities tend to be run by engineers who focus on that uptime and want to use the tried and true method. How is it that Duke has kind of moved from system to system? How do you make the decision to take that jump to a new technology or a new process?

Richard Donaldson: Yeah, it's a really good question. I mean, as a company, we are extraordinarily focused on reliability and proudly so. And when I was first starting out in IT here, we ran a lot of our IT projects much like you would a construction project for a generating station, very methodical, measure twice or three or four times cut once. So it was a lot of testing, get perfect, get into production and not have any issues because that's what was expected.

Chad Watt: Right. That's what you know. Yeah. How did that work for you on the IT side, taking the utility approach to IT?

Richard Donaldson: Yeah. I think, I mean at the time in IT we didn't really, this was before the world of agile and rapid development and prototyping and innovation from a technology standpoint, although the dot coms might disagree, but for us this was our culture. We wanted things to be up all the time so that our business partners could do what they needed to do, which was serve our customers in a safe and reliable fashion. And so we were very well adjusted to it. We did not introduce new technologies. Well, I say we did, but we were never on the bleeding edge. We would always let somebody else go first or second or third, and then we'd eventually get there. And we were okay with that and it served us well.

Chad Watt: Do you find yourself being more in that agile kind of move quick domain now? And kind of how did that evolve?

Richard Donaldson: The short answer is yes, we very much do. For a larger percentage of our system and project portfolio, we still have certain initiatives where we need to take that very, very cautious approach. So think of systems that we use to actually operate a nuclear plant. Right. Experiment and fail are not words you want to use in that climate, but we've had a couple really big initiatives that have kind of taken our business partners on the journey with us. I mean, IT is typically used to testing and trial and error and experimenting. And so getting the business partners comfortable with working in that domain has been a pretty fun journey I'd say the last five to seven years.

Chad Watt: Can you kind of elaborate maybe on some of the things that you and your team have done to kind of build a culture that embraces new technologies more readily or new ways of doing things in technology?

Richard Donaldson: Sure. Well, I mean, to be fair, we got a lot of help from external factors. So if you think about how people have changed, how they interact with their service providers over the last 10 years, thanks to the likes of Amazon, the expectations of even a utility customer have changed dramatically. And so probably for the last 10 years, almost, we've been extremely focused on meeting the ever-changing needs of our Duke Energy customers, which has forced us to be a little more agile and a little bit more quick to market with our products. The other thing we've done is we have about a 80,000 square foot innovation center here in Charlotte, which that's not to say you build an innovation center and the rest is easy. It's actually quite the opposite. Many people have started there, but we found when you have a place to point to where innovation happens and people can go out and see demos and prototypes, it tends to drive the culture forward in a meaningful way.

Chad Watt: So tell me, when did Duke really begin to get serious about its digital transformation and kind of what was the catalyst there?

Richard Donaldson: I think the customer experience journey was part of that at the time. Just like every electric utility customer, the two biggest components of your interaction when you think about your utility the most is when the power's out and when you get your bill. And so we really focused on those journeys using an outside in approach. What does the customer want? What are the outcomes they're looking for? And that started kind of the conceptual part of the journey. I'd say, mechanically, we really got in and set up structured product teams with strong business partners playing the role of product owner and product manager around 2017.

And again, I'll say thanks to external forces, it was just a really tough time for utilities. And so it was incumbent upon us to figure out how to use technology, to create efficiencies and capacity for all of our field workforce. So that was a big kind of catalyst we got and helped us move the journey forward.

Chad Watt: Got it. So there's the customer and there's also your internal customer. You're empowering your workers to do better with what they do. So you guys move to a private cloud. You're running your own private cloud first and before you've continued the journey closer to public cloud. Can you talk to me about the adoption curve to private cloud and now to your current arrangements?

Richard Donaldson: So from an infrastructure and operations standpoint, there was a lot of eagerness for adoption, but there was, remember the expectation is you have five, six, seven nines of availability. So we kind of didn't move to even the private cloud as quickly as we would like. Certainly from the developer standpoint, they couldn't get there fast enough, because it meant they got the push buttons and create servers and do the things that they wanted to very quickly. So the nice thing about it is when you have private cloud on-prem, you start to do things like, well, it doesn't really matter if I'm going to build software in the cloud or in my private cloud on-prem, I'm going to use cloud native principles. So that regardless of where I run, I'm using those techniques to get the most out of my infrastructure and services that I can.

Chad Watt: At the beginning, I mentioned that Duke is pretty big. Can you give us some idea of the magnitude of your kind of digital estate that Duke has? How many bills, what's your ratio of envelopes to emails? How much data are you handling? How many applications are you working in, those sort of things.

Richard Donaldson: And I'm guessing if I say paper envelopes to online payments. Ironically, that tends to be a generational thing. We see our younger customer base as they move through their career and their life, they start to drive up the more digital traffic. But I know that a focus of ours for a number of reasons is to drive the digital traffic up. It's a lot easier for us to manage volumes if someone is using a mobile app versus calling our call center. But we also, we like to have that kind of intimate interaction with our customers. So we like to meet them where they are, if they want to call, if they want to send an email or we try to make it so that we have whatever channel it is that will help them get the outcomes that they look for.

Chad Watt: Gotcha. So you've got to meet them where they are. That takes today, I guess, software and applications. Can you talk to me about how you go about that? I mean, there's was a time when utilities would've custom built their CRM, custom built their billing systems. What's your take on buy versus bill?

Richard Donaldson: Yeah, it's funny because I've gone 180 degrees, 360 degrees, however you want to put it since I came to Duke. My first 10 years here, we considered software developers to be a commodity. We didn't really use employee head count on those. We used contingent workers and managed service partners because we felt like we aren't any different. We should be able to buy any software we need and lean towards configurations versus customizations to keep the cost of ownership down. Well, we all know how that story ends is you end up with fill in the blank system of record that has more customizations and lines of code that you've written than the actual software vendors written. And it gets really expensive to do upgrades and to keep up to date.

So somewhere around 2015, we started shifting more towards this model where we want to build software that either is focused on the end user experience and whether that's our field workforce or our customer, we want to build that integration layer so we have scalable and speedy APIs that make it easy to get the data flowing around. And then we want to build where there's a differentiator in the marketplace. So something that would give us a leg up against, I'll say competition. I know it feels like there's not competition in the regulated utilities, but there are disruptors out there who would love to become closer to our customers than we are. And so when I say competitive advantage, that's kind of what I mean. And so we still buy, I would say 80% of our software, but if you think about it for a portfolio for the size of our company, that's 20% that we're building. That's a lot of lines of code, a lot of software and a lot of opportunity to make a difference.

Chad Watt: Wow. That's really something. Now kind of give me an idea of where you are on the cloud. What systems does Duke have in the cloud and what's going next? Where are you guys?

Richard Donaldson: Yeah, so we've got a lot of our homegrown software that we've written the last five years. I mean, it's kind of a digital native. We built it on the cloud to begin with or we built it on our on-prem cloud and migrated it up. So that was kind of what the initial focus was. We started, we have a couple different tracks we're chasing. One is called infrastructure modernization where it's a little more of a lift and shift to try to get our heavy assets, particularly low environments up on the cloud where we don't want to have to compete with square footage in a data center that's already at capacity when, especially if you think of a test environment or a performance test environment, those are good candidates for do it in the cloud, only spin it up when you need it and then spin it back down and maximize your investment.

We've got some really big systems, some work management systems, some customer billing systems, et cetera, the same large systems that just about any company has. And those are the ones that are getting a lot of focus from a planning and timing perspective. And I'll give you an example. We have one of the larger data hubs in terms of database instances, number of ETLs that are run every day in the United States and we are running that on-prem. And so that will probably be when you ask me what's next, that's really the focus. Because once we get that up in the cloud, we've got tremendous data gravity and the other things will kind of fall behind with a lot of pace.

Chad Watt: Gosh, I hadn't thought about that. But in terms of data, you have customers in one, two, three, four, five, six, you got many states. And then in addition to those states, you have some who are not gas customers, some who only take electricity. You couldn't put that all in one database, you've got to have different tailored systems to put those together to their needs.

Richard Donaldson: Yeah, well we just recently consolidated all of our electric billing systems off the mainframe, believe it or not onto a common system. So we have kind of a new bill design and a new customer system that we're pretty proud of. And so that's from a customer data, but if you think about it, there's so many elements of data we have, whether it's around the worker, whether it's around the premise, whether it's around meter usage information that we really need to think about in terms of once I put the repository for that data up in the cloud, who needs that, and if there's still running on-prem, do we have the right ability to do that quickly, not worry about latency. And one word I haven't said yet before, but really is at the top of the list for anything we do, whether it's cloud or not is security. And we want to make sure every step we take, we are at least as secure, but hopefully with the services available in the cloud environment, we're more secure than we were before we started.

Chad Watt: Is there something in your world that will never go to the cloud? We're here singing the virtues of the cloud, but you also, I mean between security and regulation and compliance, there's some things, I mean, maybe cloud's not the place for it.

Richard Donaldson: Never is a long time. I have to think at some point what will happen is those sacred cows if you will, the cloud providers will find a way to offer that. Whether it's through a gov cloud or something that is just super secure. But I will tell you that for now, there are some things when it comes to operating the bulk electric systems, things that fall under [inaudible 00:12:26] oversight, that we're just not ready to start moving those to the cloud. We've got IT assets that are involved with the nuclear plants that we're going to be really careful about.

We have a lot of confidence that we could move them to the cloud, but we don't want to jump the gun. Particularly when you think about, I mean, it's going to take us five years just to move the things that we have earmarked for the cloud to get those up to the cloud. And so it's not like we're searching for people to go first. We've got plenty of time. We've got plenty of applications that don't present any risk to what we do as a company. And we're going to focus on those first.

Chad Watt: So on another point, another angle related to development software, you are recruiting and you want to bring talented people in to be kind of cloud engineers or work within in your digital transformation team. What's a cloud engineer look like to you and what does it take to do this job versus being a computer scientist or a programmer or a coder?

Richard Donaldson: I think talent is talent. Right. If you think about being able to move the ones and zeros around, using the languages, writing algorithms, if you're doing machine learning, et cetera, et cetera. So those are kind of the table stakes, if you will. And I make it sound like there's a gazillion of them floating around out there. And we all know how tight that talent market is right now, but where we are seeing people be successful in this environment is they have to be curious. So you have to want to ask why seven times. You have to really, really entrench yourself in the problem you're trying to solve and not just focus on the solution. And we say, don't fall in love with the solution. Fall in love with the problem. That's a motto of ours. And then empathy for whoever is going to be using your software at the end of the day is paramount.

So understanding what are their pain points? What problems are you solving for them? And then how do you know when you solved it? How are you able to measure? So I think those kinds of things are really factor the top and then your collaboration strengths, being able to work within a team, making it about the team and not the individual is just, is inherent in I would say everyone who's been successful in this environment at Duke.

Chad Watt: Okay. So let me just let you finish it. Why would someone join Duke instead of some other kind of software operation?

Richard Donaldson: So I spent a lot of time answering this question because historically when you are on the outside, looking in, you see this sleepy old utility that they damned up some rivers and built some new plants, but when it comes to software and IT, they're not going to do anything sexy and nothing could be further from the truth right now. Because if you look, I mean, just pick up the newspaper and look at everybody's climate goals across the country, not just the corporate goals, but the federal goals. And then you think about the role that a fully integrated utility plays in that. So everything from, we have got to use internet of things, complex data science calculations, to be able to understand what's going on up and down the grid at any point in time. Meanwhile, we have to completely transform our ability to operate such that we're not just generating a bunch of electrons at one end and then distributing them out like a water distribution system.

We've got people that have solar panels, maybe four electric vehicles in their garage. And all those batteries now, all of a sudden they can either be load on the grid or they can create energy to put back on the grid. And so the complexity of this is such that, I mean, these are problems I would like to have my name associated with. And I think once people understand that there's an opportunity to do something more than just help a company make an extra buck. When you come to Duke Energy, you can actually make a difference in something as important as saving the earth if I could be so bold.

Chad Watt: Richard, thank you so much for your insights in this discussion today. This podcast is produced by the Infosys Knowledge Institute as part of our collaboration with MIT tech review in partnership with Infosys Cobalt. Visit our content hub on technologyreview.com to learn more about how businesses across the globe are moving from cloud chaos to cloud clarity. Be sure to follow Ahead in the Cloud, wherever you get your podcast. You can find more details in our show notes and transcripts at infosys.com/iki. Thanks to our producers, Catherine Burdette, Christine Calhoun and Yulia De Bari. Dode Bigley is our audio technician and I'm Chad Watt with the Infosys Knowledge Institute. Until next time, keep learning and keep sharing.