Case study of PKP Energetyka · Distribution of reliability 50 30 38 22 2 Smart effectiveness...

HARVARD BUSINESS REVIEW POLSKA presents

Case study of PKP Energetyka

Distribution of reliability

EDITOR - IN - CHIEFMateusz Żurawik

CONTENT EDITORKatarzyna Koper

EDITORIAL ASSISTANTUrszula Gabryelska

AUTHORSWitold AbramowiczIain BeggGrzegorz BenysekRyszard BryłaPiotr DubnoJanusz DyduchBent FlyvbjergZbigniew HanzelkaPaulina KostroHubert MalinowskiMarek MazierskiAgnieszka NosalMarek PawełczykKrzysztof PerlickiJohn ReinersRobert RyszkowskiAndrzej SobczakAdam SzelągFilip SzumowskiAndrzej ŻurkowskiMateusz Żurawik

COVER PHOTOS: iSTOCK / GETTY IMAGES, B. BANASZAK

GRAPHIC DESIGN AND DTPAlicja Gliwa

PRODUCTION MANAGERMarcin Opoński

TRANSLATIONBireta

DIRECTOR OF MEDIA & MARKETING SOLUTIONSEwa Szczesik-Czerwińskaphone 664 933 232

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ICAN Instituteal. Niepodległości 1802-653 Warsawe-mail: [email protected]

PKP Energetykaul. Hoża 63/6700-681 [email protected]

http://www.ican.pl

http://www.pkpenergetyka.pl

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Smart effectivenessSolutions allowing prompt and effective rearrange-ment of the connections in real time are fundamental to reliability. Each part of the distribution network is critical for the entire system to perform well.

How to predict failureThe advanced integration of individual systems has greatly improved the management of specific elements comprising the railway infrastructure. Additionally, it has opened up opportunities for the company to carry on with the implementation of innovative IT solutions.

Resource management in the digital ageOne of the vital resources of PKP Energetyka is the time of the personnel servicing the individual elements of infrastructure. Digital transformation has made it possible to use the involvement of the company’s em-ployees more efficiently, thus improving their reliability.

Ready for future challengesRailway is the backbone of electromobility. Pre-paring this mode of transport for increased use requires a long-term management strategy to consider the most important trends which are ex-pected to shape the reality in the coming years.

Destination: reliabilityThe distribution network is a complex system in which the operation of every component is of key importance. This is why solutions facilitating quick and effective connection rearrangement are so vital.

High IQ of the Polish railway power sectorCooperation between research and business goes beyond mere declarations. PKP Energetyka is able to face new technological advancements by drawing on the skills and experience of the Innovation Committee members.

A comprehensive overview of the infrastructureThe company’s transformation process was based on a comprehensive digital mapping of the infrastruc-ture managed by PKP Energetyka. It not only allowed a more efficient asset management but it also helped to prepare the company for upcoming projects.

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The strong team of PKP EnergetykaFrom the left: Leszek Hołda, Robert Ryszkowski, Agnieszka Nosal, Ryszard Bryła, Christopher Biedermann, Wojciech Orzech, Rafał Ciećwierz, Konrad Tyrajski, Beata Górniak, Marek Mazierski.

Destination: reliabilityDigitialization, decentralization and decarbonization are the

key factors for the transformation of the power and railway

sectors. PKP Energetyka has been actively involved in this

process for four years – following successful digitalization,

the company is ready to take the next steps.

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AS POINTED OUT by McKinsey & Company in their analysis, the digital revolution is bound to happen in the power sector. Renewable energy sources or distributed cogeneration are trends which are making their presence in the sector increasingly stronger. The area of energy distribution, also for railway companies, is no exception either. Development of rail transport means shorter and more comfortable travel for passengers but also more economic carriage of goods over a long distance. The railway will, therefore, require a reliable and stable distribution network. On the other hand, the growing demand for the supply of electricity to increasingly technologically advanced passenger and freight trains stimulates investments in an infrastructure that will be ready to face future challenges. Hence, it will have to ensure the supply of electricity with as few and as short interruptions as possible, and at the same time, it will have to meet environmental standards that are becoming even more stringent. The railway is thus expected to be based on a stable and environmentally friendly distribution network which, in practical terms, forms a vast and complex ecosystem built of interrelated and technically advanced secondtier systems. When analyzing the company’s transformation towards digital maturity, one can notice a similarity of the actual transformation process to one of the most popular management models – the McKinsey 7S Framework. It provides a line of reference for the complexity of the transformation conditions. Tom Peters and Robert Waterman – the authors of the 7S Framework – have listed seven key factors which may facilitate or obstruct an effective transformation process within a company: the systems (the

formal and informal procedures), strategy (the plans, actions and forecasts), structure (the formal relationships between the units of an organization), management style (mutual contacts), staff (resources of an organization), skills (qualifications of the employees and the organization as a whole) as well as shared values (the code of conduct, the philosophy of the organization). The 7S Framework puts the intellectual values of an organization above material factors. That is why the guidelines resulting from the company’s strategy and the choice of systems it uses are based on employees capable of demonstrating the essential skills. This approach also provided the grounds for transformation in PKP Energetyka, which relied on the experience of the staff members. Their commitment and involvement in the implementation

of technological solutions were key to the success of the entire venture.

Transformation experiencePKP Energetyka – a distributor of electricity for the Polish railways – plays a special role in this ecosystem. Its task is to ensure the reliability and quality of power supply for the entire rail transport system in Poland. To understand the difficulty of adapting the company’s infrastructure to the new requirements, one should consider the scale of the undertaking. PKP Energetyka operates in three key business areas: the supply and sale of electricity through its own distribution network and the provision of power system services focusing mainly on maintenance of the catenary system. As many as 600,000 different facilities and system components are used

7S FRAMEWORK

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Case study of PKP Energetyka4

throughout Poland to power the overhead catenary system, including 21,500 km of power lines supplying electricity to the individual pieces of equipment and ultimately to trains. PKP Energetyka is, therefore, one of the largest power companies in Poland. Its customers are mostly business consumers, mainly including railway companies such as PKP Intercity and Polregio (passenger transport), PKP Cargo and Lotos Kolej (freight transport). The entire complex network managed by PKP Energetyka has undergone a fouryear transformation process aimed at making the company ready for the upcoming restrictions – both technological and related to climate changes – which Poland will face in the near future.

A farreaching transformation process is nothing new for PKP Energetyka. Formally, it has existed for less than two decades as a separate company. It was established in 2001 during a division of the enormous stateowned company, which PKP (the Polish State Railways) had been so far, into several specialized companies. PKP Energetyka was separated from the previous Directorate of the Railway Power Systems and continued to operate as a stateowned company for almost 15 years afterwards. The privatization took place in the autumn of 2015 when the company was acquired from PKP by CVC Capital Partners – an international private equity fund established in 1981, with a large network of 22 offices in Europe, the United States and Asia. The fund successfully manages an investment portfolio worth more than USD 50 billion in total. CVC’s philosophy behind every new project is a “better company”. Its aim is to introduce changes to allow continuous service quality improvement while approaching the

employees through partnership and by creating a better workplace.

This was also true in the case of investment in PKP Energetyka. The fund focused on the implementation of a longterm development strategy for the company. It mainly assumes modernization of the company to meet global standards, both in terms of operations and management. One of the elements of this strategy was to create a stateoftheart and integrated electricity distribution ecosystem for the railway, which would ensure high quality for the company’s customers and security of supplies in the coming decades.

Key challengesThe most important reliability index in the power sector is SAIDI (System Average Interruption Duration Index) defining the average duration of an interruption to the supply of electricity per single consumer. At the start of the transformation process, in 2016 the index exceeded 400 minutes per year, as demonstrated by an independent audit conducted by international consultants. This was much above the European average of 150200 minutes per year. The primary task was, therefore, to bring the SAIDI down to a European level.

The next objective the company set for itself was to carry out the largest investment program in the history of railways, focused

on the modernization of the utility assets. The result was not only to renew the individual facilities undergoing natural aging and wear processes but also to gradually replace them with increasingly efficient and less failureprone equipment, which would have a direct effect on reducing the SAIDI index. Replacing older infrastructure with more innovative solutions was also expected to reduce its negative impact on the natural environment in the long run. In 20162018, almost PLN 800 million was allocated for this purpose.

The environmental aspect is the third of the priority issues identified at the beginning of the transformation process. The ambition of the company’s management has been to increase the attractiveness of the railway and to encourage passengers to choose this form of transport. However, this increase in the demand for traveling by train is to take place in a manner that is less harmful to the environment. As a result of the transformation process at PKP Energetyka, the company’s infrastructure is now ready for an energy revolution embracing the whole country and for a transition to ecofriendly energy sources. Therefore, PKP Energetyka has the ability and real ambitions to become a leader in the pursuit of zero emissions. The time horizon defined for achieving the aforesaid objectives is much shorter than

Such a broad scope of the prospective transformation required multiple processes to be run simultaneously. The whole project was completed by taking a comprehensive approach and by using a set of required data.

5Distribution of reliability

in the case of the entire economy. In other words, the railway infrastructure is to use renewable energy sources, among other solutions, even before they are widely used throughout the country.

Precise investmentsSuch a broad scope of the prospective transformation required multiple processes to be run simultaneously. The individual implementations can be divided into four “layers” defining specific aspects of the usual business of PKP Energetyka. The whole project was completed through a comprehensive approach and a set of required data. The first layer is the energy infrastructure, i.e. buildings, equipment and networks located across Poland along the railway lines. Their maintenance and extension is a key task since a modern electricity distribution company is only as good as its infrastructure which – depending on the types of the individual pieces of equipment – ages in 20 to 40 years. At the same time, the life cycle of the infrastructure is constantly shortening, which results from the pace of technological development. The increased advancement of innovative tools and systems requires the implementation of increasingly modern solutions.

That is why it has become so important for the company to prepare a complete digital map of its nationwide utility assets. The complete infrastructure has been described in a standardized digital manner. All physical structures and facilities have been reflected in the IT system in the form of “digital passports” which were then linked to each other based on key parameters. In this way, a digital map was created representing both the structures and the relations between them.

The digital map provided detailed information on the existing condition of the infrastructure, which allowed directing the investments to areas which most required improvement. This made it possible to continuously reproduce exactly those sections of the infrastructure that required it. This is exactly what the Network Asset Management System (Polish acronym: ZMS) is for. It maps all investment, modernization and maintenance processes running in the distribution infrastructure in real time. The basis for this system is the GIS (Geographic Information System) tool which allows locating specific processes taking place on a given section of the network. Thus, infrastructure managers receive complete data on the technical condition of equipment, thanks to which engineers can precisely define the network development plans while optimizing the labor and costs.

These processes were made possible by increasing the company’s capital expenditure. In 20092015 (i.e. before the privatization of the company), the average annual capital expenditure amounted to PLN 90 million. In 20152018, PKP Energetyka allocated on average around PLN 260 million per year to investments. This transformation layer is described in the chapter

”A comprehensive overview”.

A smarter networkIn the times of rapid technological progress, every Distribution System Operator needs advanced tools, both in terms of IT (Infor-mation Technology) and OT (Oper-ational Technology). Therefore, 2016 also marked the beginning of a longterm process of IT architecture development in the area of electricity distribution. It is a project with a total value of hundreds of millions of Polish zlotys.

The first step was to plan the digitalization and automation of all distribution processes. This step prepared the company for closer cooperation between IT and OT components. The objective was to create a distribution network based on smart solutions.

In 2016 only, PKP Energetyka launched several supporting IT tools, including: an Advanced Metering Infrastructure system AMI), a central database of metering information and the Geographical Information System (GIS) which integrates all data concerning the operation of the distribution network and presents them on various layers of the map, e.g. on a survey, communication or topographic level. The function of these elements is to shorten the time of response to failures, which is becoming particularly important for maintaining railway traffic continuity. These investments are complemented by an electronic archive of technical documentation, which provides immediate access to information on any element of the distribution network. The aforementioned solutions are complemented by systems used e.g. to support salespeople’s work as well as a number of backoffice tools. This transformation layer is described in the chapter ”How to predict failure”.

Modern managementPKP Energetyka has decided to implement innovative IT solutions also in the layer of railway traffic management. A crucial element of the whole transformation process is the SCADA (Supervisory Control and Data Acquisition) system which oversees the power flow in the power network and the electricity supply to the customers. In fact, it is a multifunctional map of the entire power network in Poland, designed to ensure uninterrupted railway traffic. The system


allows constant monitoring and control of the distribution system. It is equipped with e.g. functions supporting the fastest possible resumption of traffic on the affected sections. It is made up of networkconnected sensors, integrated into the power equipment, which are components of the ”Internet of Things”. This layer is described in the chapter ”How to predict failure”.

The last layer in which the transformation process was implemented involved coordination of the works of teams supported by algorithms to manage information, both related to human resources and equipment, operating as part of the Internet of Things. The aim was to increase the operational efficiency of the teams and their effectiveness in the field in order to improve the service quality. This was achieved, for instance, by implementing a WFM (Workforce Management) class PLANER system which supports the planning of work on the distribution network. This system covers all teams working in the field. It is fully integrated with other systems used in the company. The extensive integration of the individual technological tools used in different areas across the company allowed the farreaching automation of all the operational processes. The most important effect of these activities is a simpler, more reliable and faster matching of the specific teams and the choice of equipment to the individual tasks, including reactive maintenance works as part of a failure removal process.

All measures taken as part of the four layers of the transformation at PKP Energetyka were aimed at a significant reduction of interruptions to the power supply of individual customers and thus at a significant increase in their satisfaction level. #

SOURCE: PKP Energetyka

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This case study summarizes a certain stage of modifications which have undisputedly improved the quality of power supply to the Polish railways and provide firm grounds for further development.

THE MEMBERS OF THE INNOVATION COMMITTEE OF PKP ENERGETYKA

High IQ of the Polish railway power sector

NEW TECHNOLOGIES, innovations, smart network, highspeed rail system – the Innovation Committee of PKP Energetyka, through which we regularly cooperate, discuss these and many other issues during its work. We represent very different fields of expertise – from large scale power generation and railway sectors, through automation, power quality improvement, neural networks, machine learning, gene ral artificial intelligence and energy storage, to alternative power

sources, i.e. the energy of tomorrow. This allows our experience and qualifications to complement each other and create added value for programs and projects aimed at increasing the quality of railway power generating systems, with a special focus on the reliability of power supply to the Polish railways. This is an important mission and for this reason, every one of us has willingly accepted the invitation to join the group of experts forming the Innovation Committee.

The idea is to promote cooperation between the world of science and business – a slogan frequently discussed but rarely adopted. We have made it work. Not only do we individually evaluate and advise on the implementation of specific projects in areas of our expertise but we also meet regularly to look at the changes that are taking place both in PKP Energetyka and in the areas of the company’s operation. The railway and power sectors are fields that undergo significant

Prof. Witold Abramowicz, Ph.D.

Poznań University of Economics and Business – an expert in IT and data quality manage-

ment. He has gained experience by working not only at Polish,

German and Swiss universities but also in consulting companies

and for the industrial sector.

Prof. Janusz Dyduch, Ph.D. Eng.

The Kazimierz Pułaski University of Technology and Humanities

in Radom – the President of the Polish Association of Engineers and Technicians of Transportation; an expert in the area of railway sys-tems, especially interlocking and signaling systems. He combines his scientific career with coop-eration with business entities.

Prof. Grzegorz Benysek, Ph.D. Eng.

The University of Zielona Góra – an expert in power engineering,

especially in the area of RES, elec-tromobility and energy storage.

The author of numerous publica-tions and implementation projects

completed in cooperation with Polish and European companies.

Prof. Zbigniew Hanzelka, Ph.D. Eng.

AGH University of Science and Techno logy in Kraków – an expert in power quality. A member of scientific committees of many international and national confer-

ences as well as international and national technical organizations; an author of

numerous studies for industrial and large-scale power generation sectors; a member

of the Electrical Engineering Committee of the Polish Academy of Sciences and

the Power Engineering Problems Commit-tee of the Polish Academy of Sciences.


transformation all over the world due to customer needs, economic dynamics and restrictions related to climate changes.

First of all, we are very positive about the formula of the committee’s works based on openness, transparency and trust. It gives us an opportunity to watch the efforts of the entire team and to exert a real impact on the directions of development and specific technological implementation projects. At the same time, we are constantly learning and improving the cooperation model. The task is not easy but the company’s employees prove year after year that this effort is worth making. Each team we cooperate with has aspirations and strives after development and quality improvement.

The employees of PKP Energetyka want to implement innovations and have high hopes for us –representatives of the world of science. This openness to science, criticism

and new proposals is a great motivation for us. All the more so since we represent Polish universities and polytechnics as well as Polish institutes, which in many areas show world class in research and development. We have an opportunity to implement our expertise and experience in a company that invests in solutions increasing the reliability of the distribution network. It is also a valuable experience for us and for our researchers, who are often young doctoral students and assistants.

Polish energy companies must make a leap into the future. This requires, among other things, funding sources, technology development, and – perhaps most importantly – a continuous transformation of the organizational culture. As we represent the world of science, our involvement in everyday business practice is an important element of building such a culture. It is based on a team of

people open to new ideas and risks, who also draw on their academic achievements and knowledge. Moreover, it is based on people who test their assumptions, discuss possible consequences and accept suggestions for improvement.

As members of the Innovation Committee, who spend several dozen hours a year working with the company’s team, to some extent we consider ourselves the coauthors of the transformation process completed at PKP Energetyka. This is why we strongly encourage you to read this case study. It summarizes a certain stage of changes which have undisputedly improved the quality of power supply to the Polish railways. These modifications provide firm grounds for further development. At the same time, the work continues. Constant effort is needed to further develop the distribution ecosystem. We are glad to have the opportunity to take part in this process. #

Prof. Marek Pawełczyk, Ph.D. Eng.

Vice-Rector for Science and Develop-ment at the Silesian University of

Technology – an expert in measuring and control systems. A manager in multiple projects implemented in

cooperation with industrial entities and in numerous implementation projects. For many years he has been managing an international institute and organizes interna-

tional congress events every year.

Prof. Adam Szeląg, Ph.D. Eng.

The Warsaw University of Techno logy – an expert in

electric traction systems, power supply systems and electric vehicles. An author and co-

author of many publications, studies, patents and solutions

applied in rail transport.

Krzysztof Perlicki, Ph.D. Eng.

A professor at the Warsaw Univer-sity of Technology; an expert in telecommunications, including high speed networks. His scien-tific and teaching interests are complemented by cooperation with business entities in numer-ous implementation projects.

Andrzej Żurkowski, Ph.D. Eng.

The director of the Railway Institute; an expert in the railway sector, especially in passenger trans-

port. Since the beginning of his professional career, he has been

related with the Polish railways, for instance by holding managerial positions in railway sector units.


Heading towards best practicesThe transformation completed in 2016-2019 embraced a number of aspects of the company’s business directly and indirectly affecting its operational excellence in the area of electricity distribution. It required several process changes evaluated by an independent auditing company on a regular basis to enable effective reliability improvement in this area of business run by PKP Energetyka. The company started off from a “basic” level or even from a point “below the market average”. After four years of intensive work, all the processes are close to reaching or have already risen to the “best practice” level.

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AN INDEPENDENT AUDITOR has conducted an audit of ten key business areas of the company and evaluated potential areas for improvement. As shown in the graph presented below, there was untapped development potential in the majority of these areas. The audit was then repeated at regular intervals to periodically monitor the progress. Based on an analysis of the following graph, it can be concluded that not all areas developed evenly. For example, improvement in areas such as “IT systems” and “internal communication” took place in leaps and bounds during the first two years. This was a typical approach of PKP Energetyka to transformation – new technologies were introduced hand in hand with a dialog with the team. The “average market” level was

achieved very quickly also in the areas related to customer service (the end consumer came into focus from the very beginning) as well as finance and cost management discipline (competency and transparency in this regard were treated very seriously). In consequence, the overall operational effectiveness improved from “basic” to “advanced” within only two years, which naturally led to a considerable improvement of the company’s commercial performance.

The twoyear transformation of all ten areas was described in detail in last year’s edition of HBRP entitled “Managing change in the digital age”. Huge progress can be seen in all the areas which were classified as “advanced” at the end of 2017. At this point, it should be noted that the area of project

management – the IT network and organization, was classified as the

“best practice” already at that time.What changed during the con

secutive two years (20182019)? For obvious reasons, the delta change could no longer be so drastic. However, the company identified a number of elements requiring optimization. Special consideration should be given to the sustainable dynamics in the development of the HR and internal communication processes. In both cases, similarly to the IT processes, the company has already achieved the

“best practice” level. At this point, the following are worth mentioning: talent acquisition, regular measurement of the Organization Health Indices (OHI), consistent remuneration benchmarking, and digitalization of key process

PROGRESS EVALUATION

BELOW THE MARKET AVERAGE BASIC MARKET

AVERAGE ADVANCED BEST PRACTICE

Operational effectiveness

Commercial performance

Finance, controlling and accounting

Orders and logistics

Electricity sales and trading

IT systems

Project management – IT network and organization

Processes related to human resources

Internal communication

SOURCE: an independent audit firm Q4 2015 Q1 2017 Q4 2017 Q4 2019

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IMPROVEMENT OF THE EFFECTIVENESS OF MANAGEMENT PRACTICES AT PKP ENERGETYKA IN 2016-2019


related to human resources as well as new channels and formats of internal digital communication to collect feedback on a regular basis. The quality of these processes has been confirmed by an international certification and the award of the title “Top Employer 2019” for the best employers in Poland and in the world.

We would also like to pay attention to the continuous progress in the area of orders and logistics, which is particularly important for the implementation of the Moder nization of Power Supply Systems (MUZa) megaproject. In this area, the company is also just about to reach the “best practice” level, among others, thanks to the standardization of key categories and the reduction of stock keeping units (SKU) as well as by keeping the Net Promoter Score (NPS) as part of the Management By Objectives (MBO) approach. This enabled to improve the quality of area management and – most importantly – the transparency of process profitability.

Therefore, it is not surprising that as the company is going into 2020 the operational effectiveness of the company has been also rated as “best practice”. In this area, solutions such as automated planning and reporting of activities related to the maintenance of the distribution network and the project progress monitoring process (e.g. onsite inspections once a month) have been introduced in the past 24 months.

As a sustainable and socially responsible company, in many areas PKP Energetyka has implemented processes that mitigate the environmental impact and through which the company cares for the natural environment. In this regard, the auditor gave recognition for the launch of an industrywide initiative in the form of the Center

for Railway Energy Efficiency (Polish acronym: CEEK), thanks to which the railway sector will save 1.2 TWh of electricity in the next 10 years, which corresponds to 1 million tons of saved CO2 emissions. PKP Energetyka, as an advanced power distributor for the railways, plays a key role in this process, whereas owing to a developed of Smart Integrated Energy Distribution Management System for the Railway it can effectively support specific sustainable solutions for further development of this most ecofriendly means of transport.

The changes shifted PKP Energetyka to a new development path. The company has become more responsible in terms of cost control and the environment, and at the same time, it is more efficient in terms of management, particularly

in regards to reliable energy distribution. This is a sound basis for the entire railway system, which can benefit from the solutions developed.

In the next four chapters, we will take a more detailed look at how the distribution system has evolved, integrated and reached an increasingly intelligent level. Today this system is considered the most reliable in terms of power supply reliability and quality. Each of the four chapters corresponds to a single layer, i.e. a level of the organization viewed separately to facilitate this analysis. In the summary, we will see how the layers are integrated and interlinked, and how the transformation of the distribution area has been evaluated from the viewpoint of an independent audit firm. #

The company has become more responsible in terms of cost control and the environment, and at the same it is more efficient in terms of management.

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interdependent. The transformation of the railway network will not be possible without the modernization of the power supply systems. On the other hand, the transformation of the utility assets without the modernization of the railway network will not bring the expected benefits for the Polish railways and its passengers. The

of Power Supply Systems (MUZa) covering the upgrade and reconstruction of the energy infrastructure, for which PKP Energetyka is responsible. The Modernization of Power Supply Systems is a program worth over PLN 4 billion, whose impact on the KPK was estimated at PLN 25 billion. Both undertakings are fundamentally

THE CURRENT National Railway Program (KPK) is a giga project worth over PLN 75 billion. It consists of many socalled megaprojects (see the box Ambitious pro-grams – megaprojects). One of such project that is of key importance, considering the railway power supply system and its energy efficiency, is the Modernization

A comprehensive overview of the infrastructureModernization of railway lines and power supply systems represents a completely new chapter in the development of the Polish railways. An innovative energy infrastructure will allow to significantly increase the share of rail in Polish transportation system. Hence the great role played by the Modernization of Power Supply Systems (MUZa) for which PKP Energetyka is responsible. As it turned out, the main difficulty in this undertaking was to map all the existing utility assets in a correct manner to enable the company to properly manage them.

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of the railway energy infrastructure so that the entire railway system would remain competitive. The approach, as well as the technical and organizational experience, were, therefore, analyzed and conclusions were drawn based on failures in order to approach the new pending MUZa II program with maximum preparations, all the more so because MUZa I had been often being implemented at the expense of the quality of routine infrastructure maintenance, which resulted in a high failure rate of the overhead catenary system.

Following the customerThe investment plans of PKP Energetyka are strongly correlated with the works on modernization of railway lines carried out by PKP PLK. In fact, these works necessitate

This was a breakthrough in the history of PKP Energetyka. Before privatization and prior to the launch of this largest program in many years, the company invested very little in the assets and, therefore, had very limited experience in this area. PKP Energetyka thus faced a major challenge both in terms of organization and logistics.

When the CVC fund acquired the company, the first task given to the management of PKP Energetyka was to verify the implementation of the MUZa I project since the investment program assumed its subsequent stages. They were absolutely strategic since the success of the National Railway Program depended on their implementation. Hence, the role of PKP Energetyka was to care for the sustainable development and maintenance

success of both elements will decide whether Polish railways will become as popular as the railways in developed European countries, e.g. Austria or Switzerland (see the box Using passenger rail in Europe).

The MUZa breakthroughAt the beginning of 2011, PKP Energetyka started the implementation of the first phase of the investment program known as MUZa I worth PLN 1 billion. Its objective was to improve communication on the main railway lines, including WarsawGdynia and WarsawKraków/Katowice. The years 20112015 saw the modernization and construction of 86 railway power supply facilities, which made it possible to largely reduce the travel time along the routes running from north to south.


modernization and construction of a new energy infrastructure for the traction system. Currently, the scope of the MUZa II and MUZa III programs covers the connection or modernization of more than 200 such structures and facilities by 2023. This is a project worth PLN 3 billion in total. At the same time, the existing assets are also being modernized. As Agnieszka Nosal, the Director of the Distribution Branch of PKP Energetyka, points out: “MUZa II and MUZa III are not just 200 separate projects. In fact, they are one megaprogram. The structures and facilities in question are interdependent. Therefore, all the works should be strongly coordinated and adjusted to the operations of the customer, namely PKP PLK. Together we must care for proper planning and management of the work pace” – she adds.

The Modernization of Power Supply Systems program is also an administrative process requiring relevant building permits, developing detailed engineering designs, securing the supply chain, cooperation with local Distribution System Operators (DSOs) and Transmission System Operators (TSOs) and, ultimately, the technical implementation of the program in the field. “In this case we have also learned our lesson from the MUZa I project. For this reason we decided to form a team and implement advanced tools for monitoring the work in real time” – Agnieszka Nosal explains.

Faced with growing competition between economic entities, forcing a need to maintain the high quality of products and to ensure effective management between its own business units, PKP Energetyka while going through the digital

transformation process has decided to structure its operations through M.E. Porter’s value chain. It represents the company’s operations as a systematized sequence of events aimed at delivering a given product to the end customer as well as related management and consulting activities. According to Porter, the source of the company’s market strength is the efficiency of the measures it takes.

Competency developmentThe scale of the MUZa program and its importance for the Polish railways are unique on the electricity distribution market. It is a huge project task requiring implementation in a specific time period and based on a contract signed with the customer. In order to implement a program of such scale and importance, in 2016 it was decided to transform the organizational

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AVERAGE TRAVELS PER PASSENGER ANNUALLY69,1

47,1

35,132,9

26,325,3

23,421,8 20,8

17,815,9 15,3 14,7 14,3 13,9

12,710,5 9,0

7,9 6,6 5,9 4,93,3 3,0 1,8 1,7

0,3 0,1

Switz

erla

nd

Den

mar

k

Ger

man

y

Aus

tria

Gre

at B

ritai

n

Net

herla

nds

Swed

en

Bel

giu

m

Fran

ce

Finl

and

Hun

gar

y

Italy

Por

tug

al

Nor

way

Slov

akia

Spai

n

Latv

ia

Pol

and

Slov

enia

Esto

nia

Cro

atia

Rom

ania

Bul

gar

ia

Lith

uani

a

Gre

ece

Kos

ovo

Nor

th

Mac

edon

ia

Cze

ch

Rep

ublic

SOURCE: Fundacja Pro Kolej


Improvement of the railway infrastructure along the routes

to the sea ports in Szczecin, Świnoujście, Gdańsk and Gdynia.

Improvement of the service quality and safety both for the passenger trans-port and freight transport operators.

Improvement of the railway energy security in Poland

Reaching train travel times comparable to road transport.

structure of the PKP Energetyka Capital Group based on the conclusions drawn from the MUZa I project. At the same time, resources were provided to enable the simultaneous completion of several dozen projects, and a project structure was set up to bring together experienced project managers with appropriate certifications in project management standards according to the International Project Mana gement Association (IPMA), Projects In Controlled Environments (Prince2) and Agile Project Mana gement (AgilePM). In other words, the experience was concentrated in one place. In addition, PKPE established and delegated authority to a Steering Committee responsible for making immediate decisions in order to run projects using the agile approach, and carried out a technical staff development program by providing personnel with a number of technical training courses focused on work performance as part of the MUZa program.

As it turned out, it was also necessary to implement modern IT tools supporting, for instance, the agile project management process. These included continuous improvement models (KAIZEN), the Network Asset Management (ZMS), the Geographic Information System (GIS) providing spatial information about the distribution assets, management of work teams in the field (PLANER) and project portfolio management (PPM).

Establishing a partnership with subcontractorsPKP Energetyka implemented the MUZa I project using its own resources, which was undoubtedly a source of wide experience and important conclusions drawn based on failures. One of them was a decision to subcontract selected tasks such as the construction of

civil engineering structures and new facilities to external companies. Being the only company in Poland specializing in this field, PKP Energetyka handled the DC energy infrastructure elements on its own. “Outsourcing of tasks to highly specialized compa nies with experience in a given area enables risk diversification. When investing in new assets and

simultaneously maintaining the existing infrastructure, we must reasonably approach the tasks by securing ourselves against possible problems and risks related to potential contractors” – Agnieszka Nosal explains.

Combining the competencies of experts from PKP Energetyka and external companies allows efficient completion of the investment tasks. Standardization ensuring repeatability and efficiency also facilitated this process. As a result, the companies cooperating with PKP Energetyka know how to prepare before each task, for instance in terms of resources required to complete them.

The high effectiveness is confirmed by the fact that modernization and construction of structures and facilities under the MUZa program are carried out on time, frequently despite very tight schedules.

Heading towards digitalizationModernization or construction of new facilities and structures means that there will be more assets for the company to maintain

The national distribution network of PKP Energetyka has been mapped and described in the GIS system. It is a virtual map and a library of knowledge about the entire energy infrastructure, with a regular update feature.

THE MUZA OBJECTIVES

Improvement of technical condition of the Trans-European Transport Net-work (TEN-T) within the corridors C-E 30, E 20/ C-E 20, E 59/C- E 59, E 65/C-E 65, E 75 and the corridors used as international train connections.


and afterwards manage and ensure its maximum effectiveness of use for the next few decades. For PKP Energetyka it was a signal to reconsider the approach towards the comprehensive management of this system of interconnected elements (see the map of the national distribution network of PKP Energetyka). An inventory was conducted, which included the socalled network passporting and implementation of the GIS (Geographic Information System) IT tool. It consisted in the full digi talization of all information regarding the company’s assets.

For this purpose, a digital model of the entire network managed by PKP Energetyka was prepared. In practice, the task was to map all the structures and facilities included in the company’s assets located all over the country. However, it was not easy to mark the location of a given structure or facility on the map. A team was sent to each element of the infrastructure mana ged by PKP Energetyka. Its task was to thoroughly check and describe the condition of a given structure or facility. The documentation was supplemented by aerial photographs. They were made by helicopters flying over the entire network as well as by drones equipped with standard and thermal imaging cameras. In this way, photographic documentation of the whole network was prepared.

Nevertheless, at this stage the structures and facilities marked on the map described and photographed, still constituted only a group of separate points. However, since PKP Energetyka manages an incredibly complex and vast network of energy infrastructure, it was not enough to stop right there. It became necessary for the system to connect the individual structures and facilities based on the previously indicated key

parameters determining their mutual impact. In this way, a comprehensive digital map of the infrastructure mana ged by the company was created. It is hard to overestimate the importance of this map for the extended process of maintenance and gradual modernization of the railway network. The current solution provides a comprehensive overview of the infrastructure under the management of PKP Energetyka.

Due to the project complexity, no one should be surprised by the fact that the network passporting process took as long as nine months. It included digitalization of over 20 thousand kilometers of power lines in total. As many as 430 people were involved in this task, among whom the field staff played a key role. Regardless of weather conditions or fortuitous events, they systematically implemented the project by documenting the individual elements of the infrastructure.

A digital lessonThe process of creating a digital map of the network managed by PKP Energetyka has been a source of immense experience which will make a valuable contribution to future projects. “During an analysis of the approach towards the management of our assets, one of the most important conclusions drawn just after the implementation of the MUZa I project was the necessity to immediately digitize all our internal information and data” – Agnieszka Nosal emphasizes. “This gave us a full overview of our assets, available both from a computer in the headquarters and a tablet of field personnel. The processes were planned so that after each project the information regarding assets available in IT systems would be updated directly from the computer desktops and mobile devices”.

THREE LESSONS LEARNED FROM THE MUZA PROJECT

A necessity to establish a part-nership with subcontractors to ensure quality of the process:

risk diversification through outsour cing of tasks to highly specialized companies;

efficient completion of the investment tasks by combining competencies;

ensuring repeatability and effi-ciency of the measures through standardization.

A necessity to build teams with clearly defined roles

and responsibilities: structural reorganization of PKP Energetyka;

ensuring resources enabling simultaneous implementation of tens of projects;

setting up a project structure bringing together experienced project managers holding relevant certificates;

appointment and delegation of authority to a Steering Committee for immediate decision-making process;

technical personnel development through a number of tech training courses.

1

2

3

A necessity to implement modern IT tools supporting,

for instance, the agile project management process:

PPM – a project portfolio management software;

PLANER – a software for mana-ging work teams in the field;

GIS – the Geographic Information System (GIS) providing spatial information about the distribution assets;

ZMS – a network asset mana-gement software;

KAIZEN – a continuous improvement methodology.


This type of database is extremely important in the context of planned projects. By regularly updating the database it is possible to monitor the current condition of the infrastructure. Therefore, if any of the structures or facilities has just been modernized, such information is immediately entered into the database by the person responsible for the process.

Such an approach represents a major change in the way PKP Energetyka used to manage its assets. Before the privatization of the company, the data on the infrastructure was incomplete and very outdated. Most importantly, they were stored on paper. Therefore, in order to obtain the necessary information one had to refer to hard copy technical documentation or maps. Presently, the company has very precise information on the location and condition of all its facilities and structures. The practical dimension of such an operational model is extremely important as it supports the process of

issuing conditions for connection to the distribution network. The preparation of a digital map of the assets has, therefore, made an invaluable contribution to other elements of the company’s transformation. In this way, it is possible for PKP Energetyka to invest in the renewal of the distribution network in a consistent and precise manner.

Preventing today and predicting tomorrowUntil recently, the monitoring of the maintenance process for the assets of PKP Energetyka was based on paper and the findings of employees in the field. This approach was inherently encumbered with errors. The company decided to automate some of these tasks by introducing the Network Asset Management system (ZMS). It maps all investment, modernization and maintenance processes running in the distribution infrastructure. It is worthwhile noting that the solution is integrated

with the GIS (Geographic Information System). By bringing together complete knowledge of the tasks carried out on the assets and metho dological records of their technical condition, the maintenance staff has ongoing access to the history of the related maintenance activities.

Based on the current data regarding the infrastructure available through ZMS in real time, the engineers will soon be able to define both maintenance plans and the network development plans by optimizing the outlays and labor costs. What is more, the system also indicates the critical points requiring investment.

In the near future, PKP Energetyka will develop software and will implement tools to prioritize tasks on the distribution assets. The aim is to further implement a predictive maintenance system anticipating possible failures or wear of materials to replace potentially defective elements before the actual failure. #

AMBITIOUS PROGRAMS – THE MEGAPROJECTS

Megaprojects are large-scale, complex projects with an estimated value of USD 1 billion or more. They develop over many years and involve many stakeholders both from the public and private sectors. They are transformative, and exert an economic and social impact on millions of people. The economist Albert Otto Hirschman described such projects as “privileged parti-cles of the development process” and pointed out that they aim at an ambitious change in the structure of society as opposed to smaller and more conventional projects that fit into existing structures and do not attempt to modify them. Therefore, mega projects should not be mistaken for enlarged versions of smaller projects since they represent a completely different kind of projects – both in terms of the aspirational level and the lead time as well as complexity and in-terests of the stakeholders.

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AGNIESZKA NOSAL, Director of the Distribution Department. She has many years of experience in the power sector, including process management and restructuring. Her achievements include several dozen implementation projects, both in Poland and on Eastern European markets. She headed, among others, the implementation program of smart meters in Warsaw and managed a portfolio of efficiency improvement and IT projects, such as SCADA, MDM, GIS and network digitalization. She is a graduate of the Poznań University of Economics and Business and ESCP Europe in Berlin.


BENT FLYVBJERG: The Backbone of Economy

Major infrastructure projects are highly important for societies and economies. In our studies we found that between 35-40% of all economic wealth in developed economies is created through pro-jects. Major projects have shaped and continue to shape countries.

We find that of all major infrastruc-ture projects nearly 3 in 10 projects delivered on budget or better; but only 3 in 100 projects delivered on budget and on schedule or better; and an infinitesimal 1 in 500 delivered

on budget and on schedule and on benefits or better. In this context it is impressive to see that MUZa pro-ject consisting of more than 200 in-frastructure elements so far has been delivered wholly on time and within the budget.

Studying both success and failure, we found that a first step to avoid fail-ure and achieve success is to get the basics right. This entails to start with a realistic business case, getting the team right and creating effective gov-ernance structures.

Getting the basics right is neces-sary but not sufficient. We find that when projects set out to do things differently, productivity improve-ment and delivering to budget, time and benefits are possible. A case in point to learn from is the offshore wind industry. In the six years from 2012-2018 the industry reduced the levelized cost of energy by 63% in real terms. The industry achieved this by positive learning curves. When we studied what drives the positive learning curves and the resulting

In the case of Poland, infrastruc-ture investments are the backbone of the economy and also the founda-tion for future ambitious plans. Be-tween 2014-2020 Poland received more than EUR 28bn from the EU co-hesion fund and the regional devel-opment fund to invest in transport infrastructure. 40% of the EU’s invest-ment in transport infrastructure went into Poland.

At the same time Poland has new ambitious plans to invest further in transport infrastructure. Projects create employment, improve pro-ductivity, make a country more com-petitive, benefit consumers and have the potential for improving the environment. If they are done right. In Poland there have been several such projects recently, from National Road Construction Program through National Railway Program (KPK) and Moderni zation of the Power Supply (MUZ) to Solidarity Transport Hub (CPK), which is on the planning stage. My team and I have studied more than 3,000 major infrastructure pro-jects around the globe. And we found that major infrastructure projects struggle to live up to this promise. We found two challenges.

First, productivity improvements have been appalling. Data for the OECD countries show that con-struction productivity has flatlined between 1995-2016 with on aver-age a productivity improvement of

-0.01% p.a. In the same period, high performing sectors such as IT have nearly doubled their productivity, which translate into a real-term improvement of 3.3% p.a.

Second, major projects struggle to deliver their business propositions.

productivity improvement we found that the industry and government created an ambition loop.

Government started to demand more and provided incentives to invest in innovation and the supply chain. This created learning curves in the industry and drove down cost. The lower cost enabled the industry to re-invest in innovation and raise the ambition even more.

We also see that infrastructure projects are currently under big pres-sures to innovate. In particularly we find that three big trends are shaping the future of projects: manufacturing, digitization and addressing the cli-mate crisis. Finally, innovation and productivity improvements do not come without risk. Our data show that even prior to any innovation in-frastructure investments are a risky business.

To de-risk innovation we need to structure our projects differently. We find two strategies to deliver big pro-jects: modularity and speed. Conven-tionally projects at scale are done as one-off projects and are delivered only slowly. Instead, we need to scale smarter. The better way to deliver at scale is in a modular fashion, where modules are delivered fast and pro-vide a good learning opportunity for the next module of delivery, and so on with each iteration driving down cost and improving quality. This, modular scheme, has been adopted in case of MUZa project.

In sum, we find that projects can overcome the dual challenges of (a) improving productivity and (b) de-livering to budget, time and bene-fits if decision makers, planners and owners of projects focus on getting the basics right, create ambition loops, and focus on smart scaling.

Bent Flyvbjerg, management professor at the Saïd Business School at the Oxford University

Conventionally pro-jects at scale are done as one-off projects and are delivered only slowly. Instead, we need to scale smarter.


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where every component is of key importance. On the one hand, we have power supply sources, high and medium voltage substations where energy is received from other national distributors, high and medium voltage lines (110 kV and 15 kV), as well as rectifier substations where the voltage is transformed to 3 kV, rectified and supplied to the overhead catenary system” – explains Ryszard Bryła, the Director of the Architecture, Design and Informatics Department. When any of the elements

and turnouts. An important feature of the overhead catenary system in Poland is that it is supplied with direct current as opposed to all other equipment in the country: industrial plants and households make use of the alternating current. This means that before it is supplied to a locomotive, the current must be rectified using special transformers and rectifiers which ensure proper electrical parameters.

“Our distribution network takes the form of a complex system

DISTRIBUTION NETWORK PKP Energetyka supplies electrical energy, which is the core element of the company’s business operations. Its main task includes the transmission of electricity to cri tical elements of the railway infrastructure in order to maintain the supply of power to the railway. This does not only concern trains but a majority of railway equipment as well. Without a power supply, not only are electric locomotives immobilized, but also traffic control systems, signaling systems, semaphores

Smart effectivenessPKP Energetyka must be always ready for fortuitous events resulting in power loss. An efficient distribution network does not have to be indestructible. It just needs to remain flexible like a brain, where healthy parts can take over functions of damaged areas and maintain the smooth functioning of the entire organism.


operation technology needed to be modernized, that is, controllers used for switching operations (e.g. disconnecting a damaged network section and rerouting the electricity supply to a different section). Each implementation of modern software was doomed to fail without replacing this type of equipment.

Therefore, a vision and a plan were needed. Before the implementation of the digitalization program, a logical image of the information technology system was created as part of the cohesive vision of the architecture covering the entire company – not only just the energy distribution itself (see the box IT Archi-tecture in PKP Energetyka). All functional blocks necessary for PKP Energetyka and their interactions were described. We also focused on the virtualization of

in a situation in which we had no clear vision of the type of systems and tools we needed. In addition, we did not have areas defined which were to interoperate. For example, the distribution network was controlled by 23 SCADA systems operated in multiple points across the country. At the same time, it must be highlighted that the IT infrastructure was also quite obsolete, inflexible and containerized – each of the existing solutions operated in a certain limited area, which prevented the entire system from being managed effectively” – says Director Bryła. Processing centers both for the IT and SCADA systems were an element which needed to be quickly modernized. Their design did not allow rapid modifications, whereas their distribution prevented the network from being managed centrally. In addition, a part of the

scattered across Poland is inoperative, the entire network may become unstable. But, while considering the complexity and size of the entire system, is it possible to achieve the absolute reliability of the power supply along all sections? The answer is: no. “Failures, adverse weather conditions, falling trees and other similar events result in an interruption of the network, and thus power supply outages” – adds Bryła. The answer to this problem is an integration of solutions in the system enabling fast and efficient reconfiguration of connections in real time, while using stateoftheart operation technology (OT) equipment.

Beginning with a visionFour years ago, before the first changes were implemented, PKP Energetyka did not have a clearly defined goal to pursue. We were


Let’s assume that two applications exchange information about a particular line section or a station. We had to be absolutely sure that both systems define objects and their features in the same manner. We adopted the world standard Common Information Model (CIM). Based on this standard, we build information systems with all features and logical interdependencies between the data. In addition, the operation of the system prepared this way is based on virtual IT infrastructure” – Director Bryła describes.

We tried to achieve this using a stateoftheart data processing center based on virtualization technologies. Due to this, we achieved the possibility to transfer resources such as systems or software between servers as well as the possibility to manage them efficiently.

Virtual servers offer far more than physical servers, arrays, disks and network equipment. It is a dedicated disk space with Internet access provided with an operating system. Virtual servers of such structure allow handling of any information entities, each with dedicated processing power. This not only allows achieving higher effectiveness but also full compatibility and consistency of data between individual IT tools. Current resources of PKP Energetyka can be used to freely create new virtual servers for the operation of further applications compatible with the entire system. Allocation of new virtual storage space takes one day instead of a month as in the case of more conventional configurations.

“We began with creating a modern Data Center based on virtual technologies, therefore we could implement all systems and tools we needed at the same time. We can provide a uniform

index for the network operated by PKP Energetyka was still over 400 minutes. A smart network created in the modernization process automatically disconnects a damaged section, directs energy via a different route and sends the exact failure location information to the central unit. The system proves to be so effective that the best system operators achieve an index far lower than 100 minutes. At PKP Energetyka, we first reduced the SAIDI index to 150 minutes which represents the average European value. Further reduction requires an application of the smart distribution network which is currently being implemented.

It should be pointed out that the reduction of this value has a positive impact on many other indicators. Since failures are not urgent, the company does not need to tear the teams away from their current tasks, but calmly plans further repairs. “We also gain time, which translates into lower mean repair costs” – Bryła points out.

Flexibility above allThe main assumption adopted was to strive for maximum flexibility. We knew that complete information on the network condition, updated on an ongoing basis was necessary to achieve this. The first step was to build a base in the form of an IT model mapping the power system. This created the basis to apply all stateoftheart technologies, such as artificial intelligence. The idea lying behind the plan was to make the entire system clear and easy to operate by all organizational units of the company. The integration of different software components to enable their communication requires a specific master data model to be applied. “It is not that simple since information systems communicate using different languages.

the network and IT infrastructure. A road map was created on the basis of this architectural vision showing how to construct new systems in the years to come. The IT transformation program was also formed to construct the necessary infrastructure. “Thereby, we already knew what class of IT solutions we needed to build an advanced distribution network” – Ryszard Bryła summarizes.

Index of all indicesThe main index used by the distribution area, also in PKP Energetyka, is the System Average Interruption Duration Index (SAIDI). It describes the reliability of the distribution network and is commonly used worldwide. It shows the time of the network inoperability and the frequency of power outages. It goes without saying that all operators worldwide strive to minimize this index. PKP Energetyka also wants to be among the best in the world.

According to Ryszard Bryła “striving to reduce the SAIDI index to be as low as possible should consist in the construction of a smart network, that is, such a network which is continuously monitored and automatically responds to failures so when a certain part of the network fails, another part takes over its functions like neurons in the brain”. The precondition to reduce the number and duration of interruptions in the power supply is the capacity of the network for selfreconfiguration.

Let’s imagine that a certain network section fails, and the network is not capable of reconfiguring itself automatically. It means that the duration of the interruption in the power supply depends on the time needed by the repair team to arrive on location and commence the work. It comes as no surprise that four years ago the SAIDI


workspace for different implemen tation projects for the needs of production, test or development systems. With this we created a compatible platform ensuring not only data reliability and security but also comfortable working conditions for implementation and main tenance teams” – Bryła concludes.

Cybersecurity of the operation technologyWhen creating new network architecture, we must bear in mind its security. This is not only about protection against data theft but about something far more important. Operational safety is of the utmost importance for distribution networks. A hostile takeover of the network and performing operations by a third party for aggressive reasons may have disastrous consequences. We can imagine that someone shuts down the entire transport and railway network, or causes a collision of trains by the destabilization of railway systems. These are issues concerning the security of the state and its citizens, not only the company. Therefore, PKP Energetyka considers them with the utmost attention.

While the IT area includes servers and software, operation technology means electronics used for switching and shutting down network components. Previously, it was not easy for such equipment to communicate with IT tools in the company due to the lack of proper protocols. No special digital protections were used at that time in operation technology equipment. “The tools we use today to control the entire network in Poland have a lot in common with computers. It means that we have to spare no effort to protect them to the same extent as servers or personal computers. The OT and IT areas were once handled by

separate teams holding different competencies but due to the technological transformation, the line between both areas blurred to such an extent that viruses threatening computers may also damage network control equipment” – Ryszard Bryła points out.

In order to effectively protect the distribution network such as the network of PKP Energetyka, we need to focus on two areas. The first one includes the users’ awareness which is often underrated. Systems are most often hacked not because of the vulnerabilities of the protection systems, but due to the carelessness of users. “In order to increase awareness of our team, we had to train our employees in threats related to cybersecurity. The second area includes the proper techno logy. We could choose between two approaches. One of them is the

socalled hard line. It includes all protective provisions which prevent unauthorized takeover of control from the outside. The main shortcoming of such network protection at its borders is that if the protective provisions fail at any point, an unauthorized person would have unrestricted access to the entire network. The situation would be similar to that where we would focus on building the network which is very difficult to destroy, but inflexible at the same time: any failures – which cannot be excluded – would do damages which are difficult to remedy. As in the case of cybersecurity: we must always assume that someone will hack our system” – Ryszard Bryła describes.

The second approach to the technology and protective provisions that were finally selected at PKP Energetyka consist in the

IT ARCHITECTURE AT PKP ENERGETYKA

CoE

RPA

iValua

SAP ERP SAP BW/BO PLANERSAP HR & Success Factor

AMI/MDM ZMS/MaximoGIS/ESRI SCADA

Employee Self-service SAP Fiori

AI

Billings/SAP ISU

Workflow/DMS

Customer Self-service SAP Cloud

Software Defined Data Center & Software Defined Network – VMware

SOURCE: PKP Eneregetyka

Applications for the distribution area, integrated

in terms of the system within the IT architecture.


creation of an immune system of sorts. We focused on immediate identification and blocking of any suspected activity. In order to do so, we implemented systems searching for any irregularities both in operation of the corporate OT systems and in the exchange of information between them. As explained by Bryła: “Let’s assume that a given device in a station communicates with the central system. We investigate a statistical traffic distribution, that is, how many data bits are sent per second on average. With this, we are capable of identifying any anomalies in data quality and quantity. When the system detects such an irregularity, the network element at risk is automatically isolated, and only then do we begin to evaluate the character of a potentially hazardous incident. Of course, this is

a very simplified description of a very complex mechanism”.

Construction of a smart network requires the combination of IT and OT tools which now operate on the basis of the same mechanisms. This, however, paves the way for entirely different threats which must be prevented.

Coordination and synchronizationThe greatest issue encountered when developing a new architecture of the distribution network control systems was the coordination of implementations and ensuring full data compatibility. Four complex network management support systems were deployed at the same time in June 2019. These include an asset management module which can be used to plan inspections and repairs as well as

a billing system that reads meters and issues invoices automatically. This required not only precise engineering followed by implementation of their interdependencies, but also meticulous data cleansing and migration.

“We had to make sure that all data exchanged in the network is correctly read by the devices, and that it is true and correct. Therefore, we had to check all data stored in the systems being phased out and archived as hard copies concerning all relevant parameters of the equipment used in all network stations (station number, type, diagram, age and number of the equipment). Incorrect data and inconsistencies between the modules would result in immediate loss of confidence in the newly implemented solutions, and it would be very difficult to use them” – Ryszard Bryła says. Another problem is the vast amount of data exchanged by the systems. More than one million messages are exchanged by the entire system on a monthly basis, and each of them must reach its destination. The quality of signals and the integrity of the information contained in them must be maintained at all times.

After four years of implementing new network architecture, the company is at an advanced stage of implementation of a unified SCADA system, which can be used to control the network automatically. “The planning of implementations and their completion has taught us so far that an overall vision is the key to success. It cannot be too detailed but must allow changes in the direction of actions. Such a vision just needs to contain one master principle, on the basis of which different development paths are planned. Striving for full automation is such a principle for us” – Ryszard Bryła sums up. #

RYSZARD BRYŁA, is the Director of the Architecture, Design and IT Projects Department. He is an IT expert with over 25-year experience in utilities. He initiated and implemented a number of groundbreaking digital projects in the Polish power sector, including imple-mentation projects for AMI, SCADA, Asset Manage-ment, billing and data communication systems. He is a graduate and post-graduate from the Electrical Engineering Faculty of the Częstochowa University of Technology. He combines industry knowledge in power engineering with information technology, which was appreciated by the jury of the CIO of the Year 2018 Competition by granting him the CIO Diamond award for software digitalisation.

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PROF. ANDRZEJ SOBCZAK, PH.D., WARSAW SCHOOL OF ECONOMICS: Architectural thinking building long-term value of the organization

The real difficulty is to carry out the complex transformation of the organization both in terms of business and information. This may be aided by architectural thinking that promotes building the long-term value of the organization while breaking the silo mentality and short-termism.

processes, systems and compa-ny competence to make them flex-ible and immune to disturbances as much as possible (because we do not know what changes the future may bring, but we know that they will come). It results in an organiza-tion which is best suited for opera-tion in the VUCA world because as Nassim N. Taleb says, it becomes antifragile, i.e. such that in response to a crisis situation (e.g. a cyberse-curity incident) it reacts with adapta-tion and improvement.

Bundles of strategic objec-tives are starting points for the implementation of architectural thinking in a company. They are operationalized as the vision of ar-chitecture (showing the direction of development of key compo-nents in the organization on a high level of generality as agreed by main stakeholders both on the busi-ness and IT layer). Road maps of the architecture are then created including architecture govern-ance and ensuring the coherence of solutions created while maintain-ing the necessary adaptability to new needs.

PKP Energetyka (PKPE) has been implementing architectural think-ing from the very beginning of the ownership changes. It is based on recognized corporate architecture management standards. As a result, it has developed the vision and road maps of the architecture which can be used to implement projects effectively both with convention-al and agile methods. Implemen-tation of architectural governance

One of the main problems in today’s corporate management is the short-term planning perspective adopt-ed by the management staff. A new term has already been coined to de-scribe this phenomenon – short-ter-mism. In practice, it means that even if a company has adopted a strategy covering a period of 4 to 5 years, all employees starting from the presi-dent to line managers are interested in quarterly performance, or year-ly at best. This often results from the pressure imposed by shareholders, who set up the entire incentive sys-tem to achieve “quick success”. The second problem – which is very in-tensified in Poland – is silo mentality in operation of respective units of the company. Instead of searching for points of contact and possible synergistic effects, individual divi-sions implement projects indepen-dently of one another.

Both short-termism and silo men-tality are very efficient in hindering the implementation of advanced in-novations and creating a learning corporate culture, and finally, they are effective in curbing the building of long-term organization value. An alternative business model bases its development on architectural think-ing. It assumes that the company, but also its business partners (e.g. subcontractors) are perceived as a coherent whole, and ensures con-scious and sustainable development of both its business and techno-logical potential in order to take fu-ture challenges and customers’ ex-pectations into account. It involves, in particular, such preparation of

mechanisms is the real “icing on the cake”. Thereby, the company can successfully implement an array of very complex digital transforma-tion projects and programs. And it is not simple since the IT environment of PKPE is very complex due to its size, security requirements, and con-nection of a typical IT with industrial automatic control systems.

Is architectural thinking alone suf-ficient? It seems that the continuous improvement of advance digital competence in PKPE employees is of key importance. Despite PKPE being an infrastructural company, data is the key in the times of 4.0 industry. The first actions taken at PKPE can already be seen, also in this area, e.g. those related to data cleansing. The democratization of data analytics is trending worldwide. Representatives of business units at PKPE must learn the benefit which can be thereby attained in order to carry out complex business analy-ses independently.

At the same time, we must be aware that artificial intelligence is just around the corner. Its poten-tial to be used at PKPE is enormous. Take predictive analyses for infra-structural equipment as an exam-ple. Employees of PKPE – also in-cluding management staff – must make use of the potential lying dormant in AI and entwine it in the processes implemented.

Prof. Andrzej Sobczak, Ph.D. with the Warsaw School of Economics, Head of the IT Management Faculty, a leader of the cyfroweDNA.pl initiative for the development of digital competence in employees of business units. He specializes in corporate architecture management, data governance and automation of business processes.


JOHN REINERS: Keys to successful digital transformation projects

Companies fail when trying to modernise their processes accord-ing to current standards because they treat the change as one time technology shift. To succeed companies should not only constantly develop technologies but also consider soft aspects of management such as leadership and corporate culture.

of working, while bringing their workforce along with them.

While planning, it’s important to have a realistic vision of the extent and pace of the digital transformation, based on industry and technical evo-lution, anticipated competitor activity and awareness of your company’s own capabilities. Not every company needs to be a first mover, disrupting their industry. But there is probably a greater danger in leaving it too late or transforming at too slow a pace. Businesses where digital cannibaliz-es their existing business models may hedge their bets and not invest enough in digital alternatives (think car manufacturers). The key is to fre-quently scan the horizon for digital threats and opportunities, evaluating the impact that digital platforms, data and new digital business models could have for your industry.

To execute large scale digital trans-formation projects requires detailed planning, yet flexibility to adapt to changing business needs. For ex-ample, PKP Energetyka, adopted an “agile” approach and started with small scale pilot implementations to manage the technological complexity and build people’s engagement. There is often a tendency to manage digital transformation projects as a technology implementation given the scale and complexity involved.

Yet digital transformation projects fail most often because they don’t adequately address people related issues. And many fail to deliver the anticipated benefits because they don’t plan how to make best use of the vast amounts of data that digital operations generate, to improve

Digital transformation is not new and it feels as if people have been talking about it for even long-er. Oxford Economics’ research on “digital spillovers” estimates that the global economy is now al-most 20% digital. Yet digital pro-gress varies both between sectors and for business processes with-in sectors; for example the distribu-tion sector, a pioneer with the intro-duction of RFID and parcel tracking, most companies still rely on physi-cal and mechanical effort when pick-ing and moving goods in warehous-es, despite digital alternatives. As we are part way through the transition to a digital economy, we should have the experience from digital pioneers.

The term digital transformation can be misleading. It suggests a one-off change, but in fact, you are aiming at a moving target with unpredictable waves of technology and innovation. Beyond the implementation of the change itself, digital transformation needs a shift in mindset and new ways of working to ensure benefits are sustained. This can be seen in PKP Ergetyka’s approach to transfor-mation, where the managers from the beginning understood that “digi-tal transformation begins in the minds of employees”.

Digital transformation projects can be hugely rewarding, but they are difficult. Only a small minority are successful in achieving sustained benefits (as few as 10 to 20% accord-ing to some accounts). Largely this is because they are complex, particu-larly for large, traditional businesses that need to disentangle complex structures, legacy systems and ways

decision making or introduce new business models.

It will often be difficult to resource a large digital transformation project with in-house resources. Should the project be managed and staffed by existing employees or by specialist resource brought in? Ideally you need to combine the benefits of both as we can see in this case study; a team that is digital savvy, apart from the day to day running of the business, and un-encumbered by past thinking, that also has the full support of the ex-ecutive team and can convince the employees to adapt to new ways of working. Some projects fail because they don’t get this right; perhaps the project team is sidelined or staff are not sufficiently communicated with throughout the duration of the project.

To fully deliver the benefits of the digital investment will require new ways of working, and for senior exec-utives, new ways of leading and man-aging their businesses. Our recent research of the skills leaders need to thrive in the digital economy high-light expertise in technology and data, a more external, open outlook on market opportunities and threats, a flexible approach to adapt and scale strategy and operations quick-ly, plus the ability to nurture creativi-ty and innovation. All while continuing to run the business efficiently. These may not be the skills that executives learnt as they progressed through their organization, particularly in a tra-ditional command and control style environment. Senior executives need to look at themselves honestly and identify where they need to adapt themselves, as well as the implica-tions for their organisation’s structure, ways of working and culture.

John Reiners, digital transformation expert at Oxford Economics, a global institution specializing in forecasting and economic analysis.


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How to predict failurePower infrastructure management is an issue requiring an innovative approach both in regards to technology and organization. The integration of systems turned out to be crucial for PKP Energetyka as it opens the possibility for the company to implement further IT solutions.

components of the “Internet of Things” (IoT).

Versatile possibilitiesSCADA is connected with the Network Assets Management System and with the PLANER, i.e. the teams’ management system. Therefore, PKP Energetyka can effectively prepare, perform and settle works, support traffic

process. In other words, the tool – the “heart of the distribution system” – can be used to continuously monitor and control the distribution network. The SCADA system is equipped e.g. with functions supporting the fastest possible resumption of traffic on the affected sections. It is made up of networkconnected sensors, integrated into power equipment, which are

MODERN DISTRIBUTION of electricity is based on a combination of knowledge and dynamic infrastructure management. In order to optimize the distribution network operation and development processes, the company decided to implement a unified solution – SCADA (Supervisory Control And Data Acquisition), designed to monitor the electricity supply


The network image was also not complete, with a prolonged event response time, which is why the software was not actually supporting the dispatchers in restoring the power supply. The company decided to replace 22 separate systems with one integrated system which complies with the current guidelines concerning cybersecurity and is the standard in a majority of the European countries.

The heart of managementThe SCADA system is the heart of distribution management. Its key functions are the supervision of power flow by collecting data from

control equipment. When CVC acquired PKP Energetyka, it turned out that the company – despite its business operations throughout Poland, does not have any control and monitoring system to effi�ciently manage the power flow. In addition, the solutions used up to then failed to meet modern standards. Above all, they were not operated in a uniform manner, which strongly influenced their interoperation. Furthermore, since the infrastructure was managed at the level of individual systems, communication between the systems and areas, where the network traffic and reporting were performed, was very limited.

dispatching tasks, and manage the schedule and field works.

Apart from the development and maintenance of the power infrastructure for the overhead catenary system, the key area of responsibility for PKP Energetyka is the care and supervision of continuous power flow. This task is implemented in two dimensions: PKP Energetyka controls the power flow from the power system via substations to the railway network and as part of the same overhead catenary system. Advanced IT systems and data communication solutions are used for that purpose, including the SCADA system and remote


on current failures. All of this translates into a higher quality of customer service and higher reliability of the power supply.

The main advantages of this solution include the possibility to take over the management of a given area from any location. This functionality was necessary since the system is used to operate the distribution network and overhead catenary system in Poland. In emergency situations, each dispatching unit can

the metering equipment installed on individual components of the infrastructure, and sending information about alarms, event recording, and remote control of the infrastructure. The system provides full mapping of the network condition, i.e. both current interfaces between assets and power flow as well as individual events. With this solution, each dispatcher has ongoing access to information on how the assets are operated, how the energy flows, and to data

take over other units. In addition, the system ensures access to current events in the network, since it is mapped in real time. The dispatchers are also aided by modules supporting the management of scheduled shutdowns and failures.

Due to the integration of the automatic Fault Detection, Isolation and Restoration (FDIR) following an unexpected event, the SCADA system also ensures faster isolation of damaged infrastructure elements. It is a novelty and facilitation. Ultimately, the system will suggest scenarios for reconfiguration of the network operation to the dispatchers on the basis of the data collected. Additionally, better quality parameters can be ensured for

The main assumption for the individual IT tools to be implemented at PKP Energetyka is to create an IT ecosystem for network operation.

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energy supplies using the analytical modules and advanced control algorithms. In addition, the SCADA system is equipped with advanced computing modules aiding the dispatchers in optimizing the operation of the network.

The main assumption for the individual IT tools to be implemented at PKP Energetyka is to create an IT ecosystem for network operation as opposed to maps of individual systems. Therefore, the next key objective turned out to be integration with the remaining IT systems (GIS, ZMS, AMI, PLANER) to provide the dispatcher with access to all information about the infrastructure managed by the company, the current condition of the assets as well as works performed on the distribution network and overhead catenary system. It was important for the dispatcher not to switch between IT solutions due to the complexity of available data. Therefore, in the event of disturbances in the network operation, the dispatcher can quickly and efficiently perform switching operations, and – if necessary – delegate tasks and manage the teams working in the field and the catenary service. Such integration of multiple tools creates a Smart Integrated Energy Distribution Management System for the Railway.

To make the current flowIn Poland, the overhead catenary system is supplied from two sides, meaning that the power is taken from two traction substations. This is why when one substation fails, the other will supply the entire section between the two facilities. However, in order to safely supply power to a single catenary system section from two different sources, it is necessary to introduce socalled interlocking for highspeed circuit

breakers installed in two power supply facilities. This solution is designed to ensure the safe operation of the system. For instance, if there is a fault in the overhead catenary system, the power circuit breaker which is first actuated must (in a very short time) trip the active feeder installed in the opposite substation.

Therefore, due to similar situations, data communication cables are installed along the entire

railway network, e.g. optical fiber cables, which continuously exchange information about the operating condition of the second circuit breaker. In professional nomenclature, such a system is called “full duplex”. In an emergency situation, a proper signal is sent which results in the necessity to shut down the second circuit breaker via the automatic control system. Furthermore, PKP Energetyka, as a “railway DSO”,


sections the overhead catenary system using the socalled catenary system isolating switches. This is of the utmost importance when a failure occurs. The power supply must be then restored and a damaged catenary element must be isolated as soon as possible.

It should also be noted that dispatching services at PKP Energetyka perform shutdowns in the

catenary system on a daily basis in order to allow other contractors to perform investment and operational works. In such situations, the power supply dispatcher at PKP Energetyka is responsible for the safe isolation of a specific section. In order to ensure troublefree implementation of new tools, PKP Energetyka provides a training simulator to its employees

when such a solution is implemented. Therefore, the dispatchers are prepared for situations which can occur when managing the actual network – also critical situations.

Innovative alternativeA modern and reliable distribution system is not enough to ensure the uninterrupted operation of railway traffic. PKP Energetyka, which also maintains the overhead catenary system owned by PKP PLK, has invested in an intelligent “NoFrost” system, which prevents ice In the winter season, the combination of moisture and low temperatures often results in the freezing of catenary line conductors, and blocking pantographs and trains, thus causing delays of many hours.

“NoFrost” is the precise monitoring of critical parameters such as temperature or moisture content, which can be used to pinpoint locations where ice may form. When the system pinpoints such a location, it automatically makes the current of lowintensity flow there in order to preheat the network to a temperature preventing the formation of frost.

It is an innovative alternative to preventive actions used so far which consisted of timeconsuming lubrication of the entire network which was also hazardous to the employees. It takes many days to apply grease on 25 thousand kilometers of catenary conductors. However, preventive actions can be taken where they are really necessary due to the sensors collecting data in real time. It translates not only into higher safety of the employees but also higher reliability and savings. The solution has been developed in cooperation with the Warsaw University of Technology and the Polish State Railways. However, PKP

An innovative and reliable distribution system is not enough to ensure the uninterrupted operation of railway traffic.


Energetyka is the holder of the patent. Ultimately, the solution is to be implemented over approximately four thousand kilometers of the overhead catenary system.

With the vision for the futureDigital transformation of the distribution network does not only involve actions intended to improve the reliability indicators. When implementing individual systems, PKP Energetyka also takes into account the manner of the system development in the years to come, while predicting

trends as well as transport and technological needs. This is why the SCADA software contains advanced network operation computing modules which can be used in the future to optimize the operation in terms of its safety, reliability and stability. This is important since the energy acquisition methods will be changing before our eyes from conventional methods to renewable energy sources (distributed and less stable). In the event of a failure, the system will analyze the possibilities to reconfigure the network operation and prepare a scenario to

isolate the failure location and restore the power supply in the remaining area as soon as possible.

“In the event of a failure of a single system section, we will be able to change the network configuration much faster, therefore we are limiting the impact of potential disturbances on our customers” – Agnieszka Nosal, the Director of the Distribution Department at PKP Energetyka explains.

The implementation of this functionality is one of the first production deployments in Poland. Data acquired from the equipment distributed across the country will

MANAGEMENT OF THE POWER SYSTEM

ADMS

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AMI, WFM, CC&BOTHER SCADA

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Optimization algorithms

Coherent network model

Supporting the management of

failures and scheduling the works of OMS

Automation of switching sequences

TRAINING SIMULATORSCADA

NMS

FDIR

INTERNAL MODULES EXTERNAL SYSTEMS


not only allow quickly pinpointing the location of a failure occurrence. In future, the system will also predict failures using artificial intelligence (AI). Thus, it will be possible to perform maintenance works in advance and reduce maintenance costs due to predictive management.

As mentioned before, PKP Energetyka is also responsible for maintenance of the overhead catenary system. Therefore, the company plans to integrate weather condition data into the SCADA system. The system will acquire weather data from a reliable information source, i.e. the Institute of Meteorology and Water Management. “Weather forecasts will allow us to predict places where failures may occur both in the power system and in the overhead catenary system, meaning we’ll know in which region of the country we should be prepared to intervene. Considering typical weather conditions prevailing in Poland – strong winds, and blizzards and frost in winter – such actions are necessary” – Nosal points out.

PKP Energetyka is also a place where IoT technology is developed. It is intended to ensure continuous communication between equipment. Its main benefits include, among other things, cost reduction, better asset management and improvement of business processes. IoT is also used, as in the case of PKP Energetyka, to acquire infrastructure condition data.

One cannot imagine efficient management of the power infrastructure without using innovative process systems supporting the work of people. Thanks to the transformation conducted in the organization layer, time and energyconsuming tasks of field teams have now been considerably simplified. The solutions applied

events such as equipment failures or changes in weather conditions. It directly translates into increased reliability of electricity supplies, and thus shorter interruptions in the power supply of the railway network and, as a result, an improvement in the punctuality of train sets. #

allow eliminating certain events almost entirely.

The railway infrastructure is actually a very complex system of interdependent components. The implementation of modern assets management tools in PKP Energetyka makes it possible to react more efficiently to fortuitous

Data acquired from the equipment distributed across the country will not only allow to quickly pinpoint a location of a failure occurrence, but also to predict failures.

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AGNIESZKA NOSAL, Director of the Distribution Department


HUBERT MALINOWSKI: Better transformation due to communication

Resisting a change is a common phenomenon. Managers in charge of a digital transformation process should be ready for it. When they become aware that it will definitely occur, they will be able to plan actions to reduce it.

by discussing their suggestions as to the functioning of new solutions. People tend to notice that something does not work. Therefore, if a new so-lution is developed in the company, their comments may be very useful for the process. It should be empha-sized that any correctly introduced change involves the employees. This is all about giving them the feeling that they contribute.

At the beginning, it is all about the preparation of efficient commu-nication which gives people the feel-ing that the change is reasonable.

Before a given system is imple-mented completely, one should give people time to become familiar with it. For instance, when the digital trans-formation process was conducted, the managers at PKP Energetyka made sure that innovative tools were not introduced at once. The employ-ees were given a sufficiently long time to test them. Furthermore, we kept open lines with the vendor of a par-ticular system for the employees to ask questions when in doubt. There-fore, people experienced their grow-ing competence with each application of new tools, they had a better and better attitude and were convinced of the validity of their implementation.

When people are taken through a change, it is good to take into

According to the authors of the self-determination theory, Edward Deci and Richard Ryan, in order for em-ployees to be involved in their profes-sional duties, and for their work sat-isfaction to be on a high level, their needs must be satisfied in three ar-eas. The first of them is competence. Firstly, the employee needs to un-derstand what is his/her task and what results he/she is supposed to achieve. Secondly, it is important that at least once a week the employee receives positive feedback on his/her work. Thirdly, the employee should know the objective of his/her work, that is, what general purpose it serves. Another need is the need to relate. It is experienced as the de-sire to be accepted by the group, and an indication of where we are in so-cial systems, and how we behave in them. The last need is the need for autonomy, which the employee sat-isfies when the level of freedom to act is correctly selected for his/her competence.

At the beginning, it is all about preparing efficient communication which gives people the feeling that the change is reasonable. When demonstrated, it is the first step for the employees to open to the modifi-cation and be prepared for it. Another element is to make sure that the em-ployees have a sense of competence and to prove that they will be able to work more efficiently due to the change. It is also important to inform how the transformation will influence their freedom of action.

From the very beginning of the im-plementation of new tools, it is also important for the managers to involve the employees in the process, even

account individual differences in their approach to something new. One of the five personality traits (Big Five) is openness to experience (besides neuroticism, extraversion, agree-ableness and conscientiousness). It means that there are persons who are delighted to accept the fact that the company they work for is grow-ing. There are also people with low openness to experience. The cost of acquiring new skills and changing their way of thinking and functioning at work is too high for them. They like proven working methods and are dis-trustful of the progressive. Therefore, when introducing changes, it is worth identifying the so-called change lead-ers in the organization, who are de-scribed with high openness to experi-ence. Managers can use different test methods to identify those who will support the change in the company and those who will be reluctant.

When it comes to preparation for the introduction of changes before they are introduced, I recommend using two types of diagnostic tools: qualitative and quantitative. The first tool, e.g. focus groups, can be used to thoroughly understand the em-ployees’ way of thinking and their beliefs about current working meth-ods. In turn, quantitative tools can be used to evaluate which of the previ-ously listed subjects are commonly perceived as important. With such data the managers can stand in front of the employees and communicate proposed changes, not as imposed ones, but as worked out with the team. Taking part in the creation of changes promises future involvement of people in their implementation.

Hubert Malinowski, Ph.D., is a psy-chologist, trainer, coach and consult-ant. He specializes in human resources management, team building and communication in organizations.

At the beginning, it is all about preparing effi-�cient communication which gives people the feeling that the change is reasonable.


Resource management in the digital ageOne of the most important resources of PKP Energetyka is the time of field employees. These very teams maintain the network, remove failures and perform construction and assembly works. It should come as no surprise that the success of new implementation projects aimed at transferring resource management from a sheet of paper straight to digital media depended on their commitment as well.

main goal was to shorten the response time to the failures of the distribution network and, consequently, to increase the operational efficiency of field teams. How was it defined? PKP Energetyka has at its disposal a certain number of employees who provide network maintenance and extension services. Thus operational efficiency is understood as the best use of the resource, namely the time of these specialists. The aim was to optimize the planning

introduces many modern digital solutions, its organization is not ready for the challenge. The changes needed to be gradual.

In the area of Workforce Management, a single solution was selected, as it was expected to provide the most noticeable effects as well as to ensure its easy testing by the field teams. The company employed a simple and proven technology that allowed taking the first step towards digitalization in this area without undue delay. The

FOUR YEARS ago PKP Energetyka made a decision on a transition from analog to digital. Workforce Management, Asset Management and SCADA systems – each responding to a different need in the electricity supply chain for railways were implemented at that time. It was also obvious that such extensive changes could not be implemented right away across the entire organization. When a company heavily relying on analog solutions such as paper and pen


individual variables, such as network density or failure rate, local procedures or habits on system functionality assessment could be avoided”.

The key issue when introducing a new planning and reporting method was to provide users with appropriate substantive and technical support. The members of the field teams faced a comprehensive and very difficult change of their current way of working of their habits and customs. “First, we began to encourage, and then we required from the employees to report relevant and comprehensive information about the completed tasks using smartphones” – Mr. Mazierski says. “We expected resistance and we were right. Critical feedback which we received from the

managers, wasted valuable time to fill in forms. The most sophisticated administrative and analytical tool was MS Excel. It was the initial situation we wanted to change” – emphasizes Marek Mazierski, a member of the PKP Energetyka Obsługa management board.

Simultaneous implementation of PLANER in all PKP Energetyka plants, however, was too risky. The number of field units, called sections, was 67 at the time and each of them hired at least 40 employees. The scale of the change would, therefore, be too large. “We decided to start the implementation of the tool in six sections located in different areas of Poland” – Mr. Mazierski recalls. “We wanted to test PLANER under various conditions so that the impact of

of work sufficiently in advance as well as to ensure better management of time periods of starting and finishing a shift. PLANER – a modern IT system for field team management using mobile devices was the answer to all these issues.

Paper and penBefore proceeding to a description of the revolution consisting in the introduction of PLANER and the underlying change in the way of thinking about resources, one should outline the situation of PKP Energetyka four years ago. The line management used to fill out documents, pen and paper in hand, to dispatch appropriate teams and employees used the same method to report completion of the tasks after leaving a work site. “Everyone, from foremen to


employees at the beginning were related, among others, to a technological barrier that our people needed to overcome. There were also concerns about surveillance – after all, PLANER also tracks the current GPS location of our teams”. The system records a GPS track at fiveminute intervals, so you can not only accurately trace the path that teams travel from task to task but also show them a sequence of orders and a route. This conflicted with the need for autonomy and competence of the employees who had decided themselves so far what to do and in what sequence. Therefore, these first comments were found to be understandable. By limiting the scope of the initial implementation project to six sections, it was possible to respond more accurately and individually to emotions and difficulties reported. Obviously, it was not expected that work in the new system would be errorfree from the first day. A key issue at the beginning of the implementation was to overcome reluctance and to press ahead with the new tool every day. Therefore, the following were the first messages repeated to the teams: “You can make mistakes”,

“you are free to make mistakes but don’t be afraid of trying the new work method” “We accompanied them to work sites, observing, suggesting and listening carefully to any suggestions” – Mr. Mazierski emphasizes.

In his opinion, the PLANER implementation process was like one taken from a book on agile management. Thanks to the suggestions of the teams, the system was expanded to include new useful functionalities. Agile practices are important competencies described in the Digital Excellence Model proposed by the Digital Excellence organization. Involving the highest possible number of employees in

the transformation process unexpectedly yielded a good result and was an example of a smooth transformational leadership supporting openness to changes typical of the Digital Excellence Model. Thanks to the management initiatives, it turned out that PLANER could be implemented in the next sections in a short time.

The new technological waveAfter a record time of nine months and four implementation waves, all field departments used the modern planning system. Such a good result was possible also due to concurrent work according to the KAIZEN methodology. The continuous improvement program, called “Step by Step” in the company, facilitated adaptation to new challenges, showing in practice how much we can achieve thanks to small but consistent changes (see the comment by Piotr Dubno at the end of the chapter). Success was possible also thanks to the gradual adjustment of the tool. When the company invested in PLANER, it knew that it had to fit in with the specific nature of the company’s business. The version

currently used by PKP Energetyka is half based on the company’s own suggestions and feedback from employees. The simple, open system has been successively supplemented with useful functionalities. For example, the company’ teams work shifts to provide 24/7 coverage. Therefore, it is necessary to take into account the statutory 11 hours of rest as well as many other formal conditions such as the specific skills of a wireman or valid medical examination certificates. Now it all occurs automatically thanks to the algorithms collecting and processing information into specific planning tips facilitating the scheduling process and, above all, quick response in the event of a failure.

Once PLANER was implemented and the teams benefited from working with the new solution, the company began fundamental customization of the tool. Now the goal was to definitely abandon “analog” solutions in which paper and pen, although already dethroned, still played an important role, e.g. when recording the work time and settling fuel cards. Employees continued to fill out

PLANER is not only a digital readiness and a functional tool…


forms. This involved such information as the composition of the team, orders entrusted to individual employees, materials they used and their overtime. Then all this information had to be manually entered into the SAP HR system. So the next step was to integrate these two tools. “When we combined the functionalities of PLANER and SAP, a complete set of information could be exchanged between the systems automatically and in real time. Our employees have smartphones which not only show the exact location of work to be done (e.g. repairs) but the system also calculates overtime to the minute” – Mr. Mazierski emphasizes. “An employee just needs to click on predefined frames marking the beginning of the consecutive stages of task execution. All this information is available to foremen and section management who care about further increases in efficiency”.

At the moment, as per an independent audit firm, PLANER is one of the two best systems of this type in the world. More importantly, employees actually noticed the real value of digitalization which facilitates their daily settlements

and finally helps to ensure the high quality of their tasks.

Automatic planningShortening the duration of a power outage can be achieved in two ways, namely by modernization focused on increasing failure immunity of the distribution network and shortening the response time to emergency events. The first course of action is absolutely necessary but is also costly and takes a long time. The second one is necessary and relatively easy to implement.

What does a failure response look like? First, the dispatcher has to identify the location of the incident and then decide which team has the shortest distance to the power loss site and can perform the socalled shortest demobilization, i.e. can complete their current work and leave to handle a new task. Nowadays, such decisions made by a PKP Energetyka dispatcher are supported by the PLANER system. First of all, the software displays the current location of each team on a digital map and the status of progress of their current task. This knowledge enables dispatchers to make better

decisions as they are able to predict which team will be the first to reach the location of the failure. PKP Energetyka has additionally combined these functionalities with an Asset Management type system which is called ZMS (English: Network Asset Management).

“Thanks to the system, we know exactly what devices are available in a given substation. The teams use the application to download all necessary diagrams. In this way, they are provided with the necessary technical knowledge before arrival at the site. But these are not all the aspects of the implementation project that save our valuable time. Another one involves smart energy meters which we have installed across our network” – Mr. Mazierski explains.

AMI (Advanced Metering Infrastructure) meters provide a functionality called “last gasp”. They send information about power loss before the energy supply is completely cut off. “With this function, the meters indicate power loss before a customer is even able to identify it. By correlating many such signals from the same area our company is able to identify a major failure of the distribution network and immediately send an appropriate team to fix it. Meters operating in this way also guarantee very reliable reporting of SAIDI values informing about the quality of the distribution service provided to customers” – Mr. Mazierski explains. Advanced analysis is crucial for making proper use of the organization’s potential. It comes as no surprise that this is one of the most important aspects of the Digital Excellence Model.

Further plans assume modernization or construction of traction substations supplying rail lines with 3 kV voltage. “This means that in a few years most of our substations will be fully digital and

…but most of all it creates a positive attitude of the employees


digitally controlled”. As confirmed by Mr. Mazierski, the company continues to upgrade the SCADA system which, apart from the Asset Management, is a key distribution network management system.

From Opole to ŁapyNone of the planned PLANER implementations would have been possible had it not been for the commitment of a dedicated team formed not only by managers but, above all, the staff of the organization. People from Opole, Stargard, Łapy near Białystok, Malbork, the Tricity and from the Przemyśl region were active participants in the team. “Our intention was to map the entire country in this way to eliminate any differences between regions” – Mr. Mazierski explains. “The fact that the team members were young and committed meant that they wanted to use technologies that they had not previously seen in our company. They read a lot and were not afraid to ask questions and to search for

different ways to achieve the goal”.The project team set the stand

ards very high. Critical situations showing their commitment included site visits to test various smartphone models to select and recommend the one to become a standard for all teams. They tested them for battery life, range and even resistance to extreme temperatures.

Thanks to the commitment of staff at all levels of the organization in the project, it was possible to launch two fundamental capabilities across the company, as listed in the Digital Excellence Model, namely the digital and the transformational. Talent acquisition and management were implemented for the first capability. As far as the transformative capability is concerned, innovation culture development has been accelerated. Another benefit is also the fact that almost half of the implementation project team currently works at the company’s headquarters and manage efficiency

improvement at the level of the entire PKP Energetyka capital group. These are people who, according to Mr. Mazierski, have the most extensive knowledge of this modern system but are not complacent – they are continuously developing and trying new solutions.

Valuable lessonsThe most important lesson from the implementation of modern resource management tools at PKP Energetyka is that one should not implement all projects at once but in a certain logical sequence. The solutions that yield the most benefits should be on the focus first, and then supplementary systems should be added so that all the tools form a whole and complement each other. It is worthwhile to use agile methods in the case of implementation projects that affect the work of field teams. This makes the organization increasingly mature day by day, and employees feel that they can make an impact on the changes. Such projects cannot be successful without the involvement of team members at the implementation stage.

Today’s operational capacities of PKP Energetyka do not result only from the introduction of specific tools such as PLANER. “A real change was in the attitude of people who started to plan their own work and the work of their teams in a conscious way and to minimize breaks between tasks, the mobilization time in the morning and the demobilization time in the afternoon” – Mr. Mazierski sums up. “The system combining the functionalities of PLANER, ZMS and SAP provided clear guidelines for our daily operations but we would not have achieved such a success without a radical change in the way of thinking about resource management”. # P

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MAREK MAZIERSKI, a member of the PKP Energetyka Obsługa management board. He is a manager with many years of experience in network asset maintenance and development in the telecommunication and power sectors as well as in restructuring projects aimed at cost reduction and improvement of operational efficiency. He specializes in the implementation of modern resource and asset operational management systems. A graduate of the Faculty of Electrical Engineering at the Academy of Technology and Agriculture (ATR) in Bydgoszcz and postgraduate studies at the Gdańsk University of Technology.


PIOTR DUBNO: Kaizen philosophy in the 21st century

In today’s extremely competitive world, the Kaizen philosophy does not only mean a focus on operational efficiency understood as efficiency in the provision of products and services. There is probably no industry in this area where a multitude of consultants would not be able to provide countless benchmarks and compari-sons to the competition and do so without Kaizen.

If we want to maintain or improve our market position, our value chain must match the offer and evolve in the same way. It is the Kaizen philos-ophy that can help to build continu-ally adapting elements of competi-tive edge.

Individual stages of product or service development across the chain (from design through produc-tion, sales and after-sales service)

are no longer “costs that should be reduced or eliminated at any price” but instead represent stag-es of creating value for customers. This means that individual activities or components do not have to be the cheapest – they must change so that they constantly match our market offer.

Continuous evolution has become a key to success. This evolution not

In the 21st century, the essence and the greatest significance of the continuous improvement culture are rather focused on the value chain as a whole and its continuous adjust-ment to the evolving market offer. Today, the Kaizen philosophy is not only the main pillar of improvement as part of the so-called Lean Manu-facturing. It is far more important.

According to the Kaizen philoso-phy born in the Japanese factories, every employee should contribute to the improvement of a compa-ny’s operations. Any process taking place in individual departments of the company is subject to thorough assessment. Employees try to iden-tify three undesirable phenomena: muda (activities that do not gener-ate added value), mura (randomness and lack of standards) and muri (ex-cessive effort). Today, Kaizen has become an indispensable part of a value chain that provides a con-sistent advantage. One of the key restrictions faced by companies in the 21st century is the loss of oppor-tunities to leverage on one or more strategic competencies or resourc-es. This is because every compe-tency can be purchased or copied while resources can be acquired or replaced. Therefore, the value chain as a whole has become a key area of rivalry, including its internal coherence and continuous adjust-ment of performed activities to the market offer. The market offer, also known as a unique value proposi-tion, is constantly evolving due to the changing requirements of cus-tomers and activities of competitors.

only maintains the highest opera-tional efficiency but, above all, it con-stantly adjusts the chain of activities to changing market requirements. One of the most known examples in the application of this philosophy is the development of the iPad made by Apple. Its development program, in fact, became a program of contin-uous improvement, i.e. evolution of the product due to changing market requirements.

In Poland, apart from numerous smaller and larger companies that have implemented Kaizen philo-sophy, one of the most interesting examples of rebuilding the style of operation and the way of thinking about the value chain according to Kaizen is PKP Energetyka – a former state-owned company respon-sible for comprehensive power sup-ply, mainly to the railway. It is much more difficult to introduce Kaizen in this type of former state-owned companies than in private, typically market-oriented ones, where it is simply a “system of thinking and act-ing” which replaces a less effective concept of “achieving goals using all available means and methods”. Objectively speaking, the pre-estab-lished organizational culture of the state-owned company and its size in connection with the complexity of its operations created difficult conditions in the case of PKP Ener-getyka. Nevertheless, the philoso-phy of “continuous pursuit of excel-lence” seems to work very well here. The results of introducing the Kaizen philosophy include increased safety and comfort of work, easier imple-mentation of digitalization projects and even improved communication within the company.

Piotr Dubno is the lecturer at the MBA program of study at French Institute of Management

In Poland, apart from numerous smaller and larger companies, PKP Energetyka is one of the most interesting examples of rebuilding the style of operation and the way of thinking about the value chain according to the Kai-zen philosophy.


IAIN BEGG: Do not underestimate digitalization of legacy companies

Modernisation of certain companies, especially those previously owned by the state, can bring enormous benefit to the entire country. Potential benefits include better quality and lower cost of infrastructure use. Digitalization of “old” companies requires dealing with the fear of change among employees.

it is likely to detract from the aggre-gate efficiency of the economy. Macro economic productivity and competitiveness are, in part, the re-sult of the collective efforts of indi-vidual companies, but also depend on these complementary services, reliant on infrastructure as part of

the ‘plumbing’ of the economy. More efficient B2B infrastructure, be it in energy, transport or telecommunica-tions, can provide a valuable impetus to GDP growth, as will more stream-lined public administration.

A company such as PKP Energetyka exemplifies the opportunities for transformation capable of contribut-ing to a more efficient national econ-omy. To state the obvious: more reli-able and cheaper power supplied to the rail network, means – other things being equal – scope for lower transport costs, lowering the over-heads for other businesses, as well as (easily over-looked), cutting costs for rail commuters and leisure trav-ellers. Equally, digital and related transformations can provide a com-pany like PKP with scope for boost-ing sales to new customers and a more flexible organisation, leading to greater profitability.

Transformation of traditional econo-my companies is about product and process innovation, recognizing the need for both cost-cutting and qual-ity improvements. ‘Old’ companies able to embrace new ways of work-ing or supportive technologies (such as artificial intelligence or new forms of communication) can cut costs without compromising on quality, and have opportunities to enhance the latter. Hence, transformation is also about being able to add on services sought by customers, mak-ing more effective use of data to cus-tomize what is delivered to them and developing improved business mod-els. In addition, companies have to be attentive to an evolving competi-tive environment in which business to business (B2B) transactions are increasingly important and supply chains are ever more complex.

Economies are always in flux as innovative ideas emerge, sectors wax or wane and companies gain or lose competitiveness. Particularly where the new, dynamic companies have many options, their choices on where to invest will be influenced by the quality of the local network industries on which all companies depend. Reliable and affordable infrastructure is, therefore, crucial because of its significance for both attracting and retaining investment.

It follows that modernizing national infrastructure, a sizeable proportion of which has been under the control of ‘traditional’ economy providers (often originating as state-owned enterprises), can have a marked macro economic effect. If the infra-structure is deficient in any way,

A transformation does, never-theless, have to confront various challenges. Going more ‘Digital’ is disruptive becomes it means re- engineering established processes, developing new skills and shaking up existing human resources. Man-agement has to recognise that there will be some resistance inside the company and consider how to re-spond. A temptation will be to look at what needs to be done to de-liver digitalisation as being largely about solving technical challenges. But a holistic digital strategy entails going further to consider the wid-er impact on how the company is managed.

Generally, in today’s labour market, the nature of jobs is evolving and more frequent changes of func-tion are becoming the norm: increas-ingly the ‘job-for-life’ is in the past. Consequently, digitalisation should be seen not just as how to optimise investment in digital processes; it has to be accompanied by a re-thought HR policy. Does digital mean a signi-ficant reduction in the head-count of employees and, if so, how will redun-dant workers be treated if conflict is to be avoided? How much support should be offered for re-training of existing workers as opposed to re-cruiting new staff? If the new digi-tal functions within the company are located in a separate business unit, how can full integration into the company as a whole be ensured?

Many of these questions have been answered by PKP Energetyka, during its four-tear process of trans-formation. The journey proved to be demanding but clearly worth the effort.

Iain Begg, political economist, researcher of the European Institute at the London School of Economics and director of Dahrendorf Forum research project

Digitalisation should be seen not just as how to optimise investment in digital processes; it has to be accompa-nied by a re-thought HR policy.


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SMART INTEGRATED ENERGY DISTRIBUTION MANAGEMENT SYSTEM FOR THE RAILWAY

SCADA is the central solution of the third layer, which permanently monitors and controls the distribution network. A comprehensive set of sensors integrated with the power equipment transmits in real time a data stream to the related systems, including ZMS (first layer) or PLANER (fourth layer). This is an actual element of the “Internet of Things” (IoT). SCADA is used e.g. for an automatic network reconfiguration after an unexpected event (FDIR) and isolation of faulty infrastructure elements (to make the infrastructure ready for arrival of a repair team), suggesting reconfiguration scenarios to dispatchers, its analytical modules and control algorithms to ensure qualitative power supply and advanced computational patterns for optimization of the network operation. All these components are embedded in IT architecture (second layer) and their function is to recover full effectiveness of the actual energy infrastructure (first layer) so that, for instance, students travelling by train from Pabianice to Łask could arrive at their classes at the University of Łódź without problems.

Finally, the operation of the three system layers allows an efficient implementation of the fourth layer, i.e. works performed within the network. Firstly, the improvements have actually reduced the number of failures which the employees of PKP Energetyka have to remove and made it possible for

which has become more flexible. For example, it allows a quick reconfiguration of connections in real time. The processing centers for IT, SCADA and OT systems (electronic equipment for switching or shutting down the network elements) were retrofitted. In the field of IT, modern Data Centers were created based on virtual technologies and an environment was developed in which new virtual servers can be freely set up. Due to these measures, the developed IT architecture allows different systems and applications to communicate smoothly, thus influencing the OT operation (e.g. controllers). Nowadays, the majority of equipment freely communicates with IT systems, and the entire IT and OT architecture makes the

“heart” of the SCADA system beat continuously.

THE MANAGEMENT SYSTEM is based on a digital map of physical infrastructure elements: each kilometer of power lines, each element of stations and substations, switching stations, transformers, etc. Currently, a full overview of any network section is available, among others, to dispatchers (third layer) and teams sent to remove a distribution network failure (fourth layer). They are able to immediately check the condition of the system fragment that requires a quick response. In addition, they can view photographs and the history of repairs. They can also verify the location using GPS and apply changes to a digital map right after completion of a task.

Remote access to information on the infrastructure opened the possibilities of redesigning the IT architecture (second layer)

The new quality of the distribution network

A fully integrated systemUtility assets and their digital map, IT architecture, network traffic management and methodological planning of technical and human resources are the four layers of the Smart Integra-ted Energy Distribution Management System for the Railway. They are interconnected and cooperate closely. Therefore, only when we look at them as one ecosystem of sub-systems, processes and interrelations, are we able to fully understand and appreciate how this complicated mechanism operates, resulting in appropriate power and volume of energy continu-ously flowing to the railway system.


GRID DEVELOPMENT STRATEGY

PROJECT PORTFOLIO PLANNING

CONTRACTING (BUY OR MAKE)

EXECUTION AND SUPERVISION

MAINTENANCE STRATEGY

them to maintain the entire system in a more planned and systematic manner. Secondly, the transformation made it possible to respond to failures faster and to address the exact location of the failure. Thirdly, it provides a basis for working on innovative solutions that can predict a failure before it occurs (socalled predictive maintenance) – the digital

map, flexible IT architecture, sensors and network traffic management systems operate in order to diagnose the risk of a failure early enough and to keep the network healthy by using preventive measures and not just by treatment.

Quality improvement is an objective pursued above all with the customers in mind – mainly rail operators and passengers using

their services. At the same time, from the beginning of the transformation process, PKP Energetyka knew that reliability will be necessary for the railway power sector integration into the project to pursue a zero emission policy for the Polish economy, which requires an electricity distributor to provide evolved technologies and flexibility in balancing unstable RES.

The distribution system was assessed in three areas: network planning and development, maintenance and response to failures. It is worth emphasizing that the assessment tool benchmarked the processes and practices not only against the best national practice (5 on the scale) but also global practice (6 on the scale). This is important since we remember that in 2016 the company started from the “below average” or “basic” level. On the other hand, at the end of 2019, all the key distribution processes were within the green area – rated 4, 5 or 6 (see the chart below).

In terms of planning and development, it is worthwhile to note the global level of “execution and super vision”, in which the introduction of transparency in the status of deliveries of substation elements as part of the MUZa megaproject gained special recognition. The transparency of the investment process is a guarantee both for suppliers and the customer (PKP PLK). Therefore, it is difficult to overestimate the importance of such a high rating. For a company that extends the energy infrastructure, high rating for processes such as project planning, prioritization and structured approach based on expert opinions is important as well. This was also appreciated by the analysts. Maintenance is an area with the highest rating. Here, PKP

DISTRIBUTION NETWORK PLANNING AND DEVELOPMENT

Process step BasicPeer best

practice

Global best

practice

SOURCE: an independent audit firm

A fully verified systemThe progress was monitored by an independent auditor throughout the entire period of hard work of the PKP Energetyka team related to transformation of the distri-bution area. The aim of the monitoring was, first of all, to measure the effects and to respond to difficulties. Secondly, it was supposed to make the process trans-parent and sensitive to the company’s internal and ex-ternal environment. What does a four-year “certificate” for the company look like? The rating was from 4 to 6, and the average score was above 5. Thus according to external auditors, the Smart Integrated Energy Distribu-tion Management System for the Railway has certainly deserved distinction.


Energetyka received 5 and 6 points for all practices. Both the “planning” and “execution” process was given the highest score. This shows that the entire process is carried out in an informed and planned way. Everything that is planned wisely in the company is effectively “delivered” afterwards. The whole outcome was spectacular as confirmed by the lower SAIDI.

Any specific practices? First of all, the implementation of SCADA

and everything related to it, including the automation of substations, improvement of safety procedures and investing in employees: the creation of a digital database of valid skills and certificates and a digital catalog of available training courses and certification (based on individual knowledge acquisition schemes).

Responding to failures is also one of the company’s strengths. The “execution” in this area was

assessed to be at a global level, and the next key elements, namely the “failure reporting period”, the

“traffic management efficiency” and, consequently, the “disruption mini mization” in network operation, were also rated very high and are within the green area (see the box: distribution emergency repairs). It is also evident that PKP Energetyka focuses on preventing failures. In predictive maintenance, a strong 4 provides a basis for the introduction of solutions such as a structured analysis of the reasons for the individual failures due to the collection of monitoring data (big data from OT sensors interfaced with IT systems).

To sum up, the changes shifted PKP Energetyka to a new development path. The company has become more responsible in terms of cost control and the environment, and at the same time, it is more efficient in terms of management, particularly as regards to reliable energy distribution. This is a good basis for the entire railway system that can benefit today from a comprehensive network and advanced solutions. At the same time,

“green” practice is not only the color of operational excellence in the audit conducted by an independent company; it is also the direction of progress chosen by one of the key energy companies in Poland. PKP Energetyka is ready to assume responsibility for the integration of the Polish railways with renewable energy sources in order for the railway sector to be supplied with clean, green energy within the next 10 to 15 years. This is a response to the demands voiced by passengers and then heard and passed to PKP Energetyka by its partners, i.e. the rail operators. By noticing the system readiness described in this case study, PKP Energetyka is able to meet this challenge. #

NETWORK MONITORING AND CONTROL

PLANNING

SCHEDULING AND DISPATCHING

EXECUTION

PERFORMANCE MANAGEMENT

TRAINING

DISTRIBUTION NETWORK MAINTENANCE


practice

Global best

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FAILURE NOTIFICATION OR IDENTIFICATION

GRID DISRUPTION MINIMIZATION

DISPATCHING

EXECUTION

PREVENTIVE ACTION

DISTRIBUTION EMERGENCY REPAIRS


practice

Global best

practice




Ready for future challengesIn the upcoming years, the railway will develop

dynamically. At the same time, the entire sector, and

the railway power sector in particular, will have to face

the impact it makes on climate. New technologies will

be important in the transformation process. Wojciech Orzech, the CEO of PKP Energetyka, describes how to

meet the future challenges.

YOU HAVE COMPLETED a com-plex digital transformation process in the area of electricity distribu-tion. What are the most important conclusions from the project for the future?First of all, the transformation has clearly demonstrated the importance of a good understanding of the organization and clearly defined objectives. In other words, in the beginning, it is essential to define the result we want to achieve and the benefits it is supposed to provide. We went through this stage very quickly because earlier we had created a map of interfaces between the specific processes, persons and departments within the company.

We spent a lot of time to organize our processes and this was a good investment. Our operations are complex. We have IT systems composed of many layers, we conduct investment processes throughout Poland and employ nearly 5,000 employees with whom we conduct a regular dialog in order to manage issues natural for a transformation process, such as uncertainty. The transformation of a strategic area in a large organization always means the need to handle an intricate network of interfaces and interrelations. Therefore, the development of a complex map of processes before starting the transformation determines their success.

In my opinion, the basic conclusion is as follows: it is necessary to precisely define the pursued objective in order to be able to consciously and responsibly choose the appropriate tools for the task. The manager’s first thought should, therefore, relate to strategic objectives. This approach is well expressed in the title of the book Finding Your True North by Bill George, Nick Craig and Andrew McLean. First, we determine the strategic direction, and then we consequently move towards it.

The company’s environment is another issue which certainly needs to be remembered. No organization operates in a vacuum.


Therefore, when determining the strategic direction of our transformation, we also analyzed the most important changes occurring today all over the world, and not just in our sector, those expected to affect the economy and technologies in the next decades. While preparing our strategy we analyzed, among others, technological, ecological, demographic and even urban trends. All this was to make our company ready to face future difficulties after the transformation process. In our change process, we relied on solutions that are not only ahead of the market standards but are also open to different development scenarios and directions.

Let us talk about operational activities. How should such a comprehensive strategy be implemented in practice?The key is a flexible approach to your operations. Once the gene ral objective is set, it is very important to ensure that the entire team is aware of the direction in which the organization is heading. When they understand it, they will be ready to assume a delegated responsibility for the implementation of the tasks they are entrusted with. In this case, micromanagement should be avoided and the team should enjoy a lot of freedom to implement its individual tasks. I would like to refer to an analogy of determining north –

knowing where the organization is going, long hours should not be spent on setting a straight line leading to this objective. In today’s business conditions, high unpredictability is one of the key issues. Even if we set a straight line to the objective, individual actions will always deviate from it to a certain extent. If a small deviation from the assumed direction is needed while facing another challenge, this should be allowed. It is most important to reach the established objective.

The idea of a learning organization is very close to me. Every experience related to the implementation of a given project should be considered as a lesson. All this is P

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to make it possible to scale activities that met their objectives for future reference and to abandon those that did not bring the expected results. This is an empirical approach strongly emphasized by agile methods. We transformed our distribution area successfully. We have drawn conclusions and – as a learning organization – we know that this method of project implementation will accompany us also in subsequent challenges.

You mentioned the analysis of global trends directly trans-lating into business reality. What will be the main issues for PKP Energetyka?Definitely, the most important difficulty to be faced by companies supplying electricity is the impact the sector makes on the natural environment. The awareness of the planet’s limited resources and the environmental impact of human activity are growing. We addressed this issue in our strategy. Our longterm objective is to participate in the railway transformation so as to prevent, as far as possible, being a burden for the natural environment and to deliver solutions for its protection.

I have noticed here a great potential for the railway, being a real backbone of electromobility. According to statistics, the transport of one passenger or one ton of goods along one kilometer absorbs, in this case, less energy than all other means of transport and is several times less emissive. Just this advantage is a very important argument for considering the railway in terms of clean transport.

As an electricity distributor, we feel responsible for supporting the most ecological operations of individual companies. We would like to prepare for really clean energy from dispersed sources. We are constantly considering

the construction of an infrastructure allowing the use of renewable energy sources. To achieve this goal, it will certainly be necessary to combine two elements: advanced technology, on the one hand, and economic calculation, on the other. Generation of one megawatt hour using wind infrastructure is itself already justified in economic terms. But what to do with this energy if it is not consumed? In addition, wind and sun are very unstable sources. Energy storage may be the answer, but currently, this is a very expensive infrastructure. So this is a classic example of combing environmentally friendly innovations with a company’s economic calculation.

How to combine these two worlds?In the case of dispersed energy sources, it will be crucial to combine local supply with local demand. Please note that train travels are not continuous. This is a situation completely different from lighting a light bulb at home, for example, as the bulb will consume the same amount of energy all the time. Train travels are impulsedriven, which means that the distribution network supplies a passing train and then it goes back to an offload state. In addition, an accelerating train consumes more energy than one traveling at a constant speed. Thus, the travel is a very dynamic and complex process. The Pendolino train is an example of a train that travels at a given section approximately every hour. In order to respond to the problems related to costeffectiveness and to minimize the negative impact on the environment, the railway will have to develop towards innovation, digitalization and artificial intelligence.

In terms of innovations, currently we are cooperating with

the University of Zielona Góra on lithiumion energy storage and we are using it in the distribution network. Together with a Polish SME company, we are developing kinetic storage, and with Deutsche Bahn, we are discussing the options to use hydrogen. All this is due to the fact that we understand our role in the preparation of the railway to the issues related to climate change as the development of a coherent and technologically advanced system enabling the use and balancing of unstable RES. This will mean a real, specific reduction in the environmental impact of rail transport. The objective is to create conditions allowing transition of the railway to clean energy in the period of 20302035, i.e. much earlier than it is planned for the entire Polish economy.

Electrical energy is a strongly commoditized product, which means that its price and reliabil-ity of supplies is the most impor-tant for the consumer. What do you think will have the greatest influence on the provision of sta-ble power supplies in the years to come?We have already implemented a part of the solutions which considerably improve this element. We are one of the few companies in Europe that have replaced all meters with smart meters (the socalled AMI – Advanced Metering Infrastructure). In the past, interruptions in electricity supply were recorded by hand, which meant that the company did not know about them until they were reported. Naturally, it translated into the response time of the appropriate teams.

At present, we immediately receive information on the loss of voltage thanks to using intelligent meters. We can now respond much


faster. Even if our customer does not notice that there is a failure in a section, and the electricity supply is interrupted, we still receive the information and begin to work to restore the power supply. Customers definitely feel the improvement in quality and reliability. When three years ago, at the beginning of our transformation of the distribution network, we analyzed interruptions to the electricity supply, we noticed that the average consumer experienced power outages of more than 400 minutes. It meant that somewhere a semaphore did not work or a train could not pass. Today, the average interruption to the power supply is only 170 minutes per year. It is an enormous improvement in a very short time.

The modernization and development of the existing distribution network are key to ensure reliability. We are planning to spend as much as PLN 4.2 billion in our investment prospect until 2025. It is the largest project of this type in the history of the Polish railways.

Finally, the reliability of the electricity supply will be increasingly based on modern technologies using solutions in automation and artificial intelligence. Such devices will be used, for instance, to pinpoint the location of a failure without interrupting the power supply to remaining sections. Automation will increase the precision of our actions and will ensure high reliability combined with costeffectiveness. The reliability cannot be improved only by increasing investment expenditure in a traditional model. Today, we have to look for innovative solutions.

What level can the power supply reliability reach?Our visit to Japan has given us a certain idea. As part of the

learning process, we visited a local distribution company with our team, where the average customer does not have electricity for 5 minutes a year in total. We must also bear in mind that with typhoons and earthquakes this is a very hostile region in terms of natural phenomena. In spite of this, the local distribution network is almost 100% reliable. Our meters show that we are heading in the right direction. The road to the stability of power supply at the Japanese level leads through a very wellinvested network and multiple tasks performed by algorithms. We are already going in this direction today.

In what areas do you see the greatest use of artificial intelligence?Undoubtedly, we should first mention predictive analysis which

allows taking anticipated actions in locations with a high risk of failure. Artificial intelligence can draw conclusions from vast data sets and determine the probability of a power supply interruption.

At the same time, we are developing an automatic system preventing frost formation on the overhead catenary system (“Nofrost”) by applying a slightly higher voltage to a given section in order to increase the temperature at various points and prevent trains from stopping. These are efficient preventive actions without wasting money. We act exactly in the location where a problem may occur.

At present, we are also testing a solution which may significantly increase railway safety – a camera

based sign recognition system. Readings from such a system may support train drivers by providing

PETER SENGE’S LEARNING ORGANIZATION CHART

LEARNING ORGANIZATION

Shared vision

Mental models

Team learning

Personal excellence

Systems thinking


well in advance information about conditions prevailing in the vicinity. Initially, cameras recognized signs with an effectiveness of approx. 70% but today we are approaching 98%.

Finally, artificial intelligence can fulfill the role of a dispatcher of catenary system repair teams much more efficiently than a human being. The geographical proximity to a failure location is one of the factors to be considered. Additionally, the system can make a decision also based on whether

a particular team has to refuel on its way or has the proper equipment and qualifications. There are many factors affecting the final decision.

In what way is PKP Energe-tyka a part of the develop-ment plans of other railway companies?One of the most important issues is the National Railway Program, i.e. expansion of the connections network, electrification of the network and an increase of the

railway’s capacity in transporting passengers and cargo. This program is worth nearly PLN 76 billion. We are aware that a stronger railway is capable of handling a larger number of passengers and transporting more cargo. Of course, this translates into the environmental aspect.

Our role as the company supplying electricity is to support other companies in the sector. Therefore, we are already implementing the mentioned extensive investment program increasing the possibility

Demographic changes

Climate change

Development of electromobility

Artificial intelligence

Transformation of the power sector

Development of rail transport

Development of the smart distribution network

Construction and modernization of power supply systems

System balancing

Supporting efficient energy use by the railway

Integration of the railway power supply system with renewable energy sources

Power supply to the electric vehicle ecosystem

CHALLENGES TODAY AND TOMORROW

THE ROLE OF PKP ENERGETYKA TRENDS


to electrify the elements of the railway system where necessary.

Individual rail operators claim that they want to be more effective, and this is a great potential for us to act. We are participating with other entities in implementing a sectoral project named the Center for Railway Energy Effi�ciency (Polish acronym: CEEK), where we are hard at work to increase efficient energy use and, in fact, to decrease the demand for energy. This seems to be in conflict with our interest but paradoxically such an approach is reasonable in the longterm perspective. More effective rail operators will transport more passengers and cargo. Therefore, we prefer to accomplish our business objectives by selling more energy to effective operators. Per account balance, higher effectiveness is in our best interest. We assume that the energy demand in the sector can be reduced by 9% to 2030. This is approx. 1.2 TWh and 1 million fewer tons of CO2 emission, as if we planted eight Białowieża National Parks.

What was the role of employees in the transformation process?Any transformation, and digital transformation in particular, begins in the heads of employees. The availability of technologies and large budgets are important but it is of no avail without employees believing that they can change the company. Therefore, we have involved both the mana gement and the field staff at every stage of the transformation process – from planning to the evaluation of the results. We were happy when they talked about actual problems in the company and helped to set goals to pursue. We, as the team of managers in charge of the vision and its implementation, honestly and transparently specified the

goals we set and the measures we expected in order to achieve them. On the other hand, if it turned out in the process that an assumption did not work, we also talked about it openly.

The change in our company has been based on the culture of value. Four values we held in building the organizational culture at PKP Energetyka, namely quality (for the customer), safety (at work), involvement (we give more) and, finally, effectiveness were core during the transformation process. The values were a set of guidelines influencing our thoughts and behavior, with which we could realize our vision. This is not a very original set in and of itself. Its strength is in the authenticity and adaptation to the organization. A specific narration and a set of “dos and don’ts” are associated with each of them. In addition, we were successively creating good working conditions for our employees to make them stay with us longer. I mean not only a safe and comfortable workplace but also training, internal communication, job appraisal and incentives or the Kaizen methodology reflected in streamlining and arrangement of tools and processes. In 2018 alone, we completed a total of 383 trainings, and we were granted the Global Kaizen Award for implementation of the “Step by Step” program based on the Kaizen methodology. With such provisions, the employees feel respected and treated serious ly, and are motivated to overcome everyday problems. This is evident in the evaluation of involvement which grew from 46% to 56% just in three years. Outside experts have also recognized this fact – in 2019 we were certified as the Top Employer. Let me repeat what I usually say: qualified and involved employees are the

only real competitive advantage of a company in the long run. Involvement is one of the few elements which are very difficult to mimic. All the rest, including innovations, can be copied.

Let us sum up. What company will PKP Energetyka be in a few years?Our strategy for the years to come will consist of an analysis of the impact PKP Energetyka’s business has on the natural environment in its widest sense, including the entire supply chain. We believe that company growth can be combined with climate work. We have completed the digital transformation in order to implement solutions in the acquisition of clean energy for the railway using the 3D rule: digitalization, decentralization and decarbonization.

The organization itself will keep on changing for sure. On the one hand, we want to be stable because this is the nature of an infrastructural company whose assets are built for the future decades. On the other hand, flexibility understood as the ability to promptly respond to the needs in the years to come is also important. We rely on creative employees, especially those who can hold their own in a human and machine collaborative duet. We are in the process of generational change. Our experienced engineers or electricians who have often been creating PKP Energetyka for 30 years and longer, expect a smooth “succession” process from us, i.e. passing down the skills and work ethics to the next generation. This transformation is happening before our eyes and is very developing for both sides. We are becoming an increasingly diverse, open and transparent company. I know we are ready for future challenges. #P

HO

TO, G

RAP

HIC

S: S

HU

TTE

RST

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Selected awards granted to PKP Energetyka between 2017 and 2019

TOP Employer 2019 – top and certified employer

Safety Culture in UTK Rail Transport – one of the best companies in terms of safety

Global Kaizen Award – a finalist, one of the eight companies in the world

Digital Excellence Award – the winner in the category “Spectacular transformation”

Nielsen Norman Intranet Design Annual Award – Intranet on the international level

Eagle of Innovation – the best company in the category “Organizational innovations”

Socially Responsible Railway Company – a CSR leader, an award for a mature strategic approach to CSR and original innovative good practice projects

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