IT Security: Who's Investing In What?

Regulatory and market forces put the pressure on information technology to perform.

Technology isn't in the driver's seat at some energy companies, but it's not as if those companies have reverted to using typewriters, carbons and rotary dial phones. In fact, it's beyond dispute that information technology (IT), in particular, can improve business performance-and nothing is more important to energy companies right now. But with slashed budgets and collapsing credit ratings, how should energy companies spend their precious IT dollars?

Right now, cybersecurity is the hands-down winner for IT spending priorities. The need is pressing, due both to the post-Sept. 11 world we live in and to the imminent rule-making on standard market design (SMD), which has a substantial set of security requirements.

But don't count out other areas of IT. Wireless technologies that transfer data in real time to those who need it can substantially improve operational and customer service efficiency, and operations software that can assess the grid in real time is also much sought after.

At the End of the Double Barrel

The electricity industry is staring down the double-barreled shotgun of world events and regulatory pressure from the Federal Energy Regulatory Commission (FERC) to secure the grid from cyber threats. Efforts were made to improve computer security within the industry before Sept. 11-the electricity industry was already designated as a critical infrastructure sector by the government-but terrorist threats cranked up the urgency. And last July, when FERC issued its proposed SMD, it made it clear that cybersecurity was not optional for energy marketers, power generators or owners of transmission assets-pretty much the bulk of the industry.