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Cisco's Smart Grid Ecosystem - Big Picture Thinking

Smart Grid

October 08, 2009

Cisco's Smart Grid Ecosystem - Big Picture Thinking

By Jon Arnold (ICP)
Co-founder, Intelligent Communications Partners
In mid-September, Cisco (News - Alert) announced their Smart Grid Ecosystem, something that has been in the works since the spring. True to form, Cisco never does anything with half measures, and they are clearly intending to become a major Smart Grid player from the start. I’ve often said that Smart Grid is VoIP all over again, and I have no doubt that the IP comms vendors think exactly the same, and are determined to lead the network transformation with utilities much like they have done with enterprises, and to some extent, telcos.

I’m not going to revisit all the details of Cisco’s news, but there is a lot to digest. This has been their pattern recently, with broad ranging announcements that cover more ground than most anyone else. There must be a strategy behind all this, as it takes a bit of effort to gauge the scope of their plans, and I don’t think casual followers will quite follow all that’s being said. As such, this article will distill Cisco’s Smart Grid ecosystem around three key messages. My comments are based not just on the public news, but a recent Cisco briefing with Inbar Lasser-Raab, Senior Director of Network Systems, and Scott Fawcett, Business Development Manager for Energy at Cisco Canada.

First is the partner ecosystem. I found this notable, not just for the breadth, but the depth. They’ve announced 30 partners, which is quite extensive considering how new Smart Grid is, especially from a company not normally associated with energy. While Cisco has an extensive footprint enabling the IT networks for many utilities, they are not a Smart Grid vendor per se. Establishing this ecosystem goes a long way to changing that, and that’s where the breadth comes in. Aside from the utility vendors you’d expect to see – such as Echelon, Itron and GridPoint – their ecosystem includes both system integrators and utility integrators, as well as service providers and services/sales companies.

Before moving on to the other two themes, it’s worth commenting on why Cisco is so keen on this market. As with IT and telecom, Cisco is basing their entry on the need to help utilities create a clear migration path to IP. Of course this presupposes that utilities want IP, and there is some convincing still required. While energy companies generally recognize the trend to IP, there is some concern – or perhaps misperception – that Smart Grid IP networks will run over the public Internet.
Of course that’s a valid concern, and IP-based vendors like Cisco need to make it clear that Smart Grid will run over private IP networks. Not only that, but these networks are secure, reliable and can scale. This will take some convincing, and a strong ecosystem goes a long way towards doing that. Underlying this, of course, is the idea that Cisco is in the middle of everything, creating the network infrastructure around which all these partners will seamlessly interoperate.  Cisco notes that the U.S. utility infrastructure is aging and inefficient compared to other advanced economies. Smart Grid can address many of these inefficiencies, and Cisco sees this as a $20 billion market opportunity, making as important as any other sector they serve today.

This brings us to the second theme – their Technical Advisory Board. They have about 20 utilities on board so far, drawn from Europe and North America – but none can be identified at this time. The basic idea is to create a forum to share Smart Grid architectures, which provides valuable insight for Cisco in developing its offerings as well as which companies to partner with. It’s actually a great way for Cisco to embed themselves in the thought processes of utilities, and demonstrate openness for collaborating on best practices for their Smart Grid deployments.

That’s a very 2.0 idea, and shows how well Cisco has adopted this thinking in its own business. Perhaps more importantly, the TAB by its nature provides a showcase for utilities to understand Cisco’s capabilities, and the success they have had developing end-to-end IP networks. Ultimately, the TAB will serve to allow utilities and Cisco-friendly Smart Grid solutions to align their plans and make it easier to do business. As things progress, I have no doubt this concept will expand to other geographies, allowing Cisco to truly globalize its Smart Grid roadmap.

There is actually a sub-theme to mention here that adds industry credibility to Cisco’s plans. They have recently joined the ZigBee Alliance in support of IPv6, and this adds to the list of other standards-based initiatives supported by Cisco, namely GWAC – GridWise Architecture Council – NIST and NERC in the U.S., and IEEE (News - Alert) for global standards.

Finally, the third theme is security. This is the most complex item to follow here, but is likely the most important one overall. Of all the concerns about IP that utilities have, security is the most pressing, especially if we move to a highly-centralized national grid architecture. Cisco has a very extensive portfolio of security solutions, and for utilities, there is a particular focus on both cyber security (protection from malicious attackers, terrorism, etc.) and physical security to protect the grid and ensure reliable power transmission. Today, many forms of grid monitoring and alerts are done manually, and Cisco sees a key role for their security solutions to automate these processes – not just to make them more efficient, but to reduce the element of human error that is inherent with the status quo.

That said, unlike telecom, energy is highly regulated, and Smart Grid will only work if utilities are confident of virtually 100% uptime, which is required by law. These requirements are even more stringent than either telephony or enterprise IT, and coming from these worlds, this will likely be the key deal maker or breaker for Cisco in its pursuit of Smart Grid wins.

We expect to hear more from Cisco soon on these fronts, and hope to see them at our next Smart Grid Summit where they can showcase their initiatives in real time with our audience.

Jon Arnold (News - Alert) is co-founder of Intelligent Communications Partners (ICP), a strategic advisory consultancy focused on the emerging Smart Grid opportunity. To read more of his Smart Grid articles, please visit his columnist page.

Edited by Stefania Viscusi

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