BlueStar sparks energy services with SOA

2008 InfoWorld 100 finalist: Retail supplier seizes opportunity with infrastructure built for change

These days, the electrical power business has taken on a complexity akin to that of commodities trading. Deregulation, alternate energy sources, and customers seeking protection from rising prices have opened a world of opportunity to nimble electricity retailers such as BlueStar Energy Services, which -- thanks to a strategic investment in SOA, much of it open source -- has made the most of it.

Serving Illinois, Maryland, and the District of Columbia, BlueStar buys electricity on the broader market and resells it to residential and business customers, some of whom have complicated needs. The trick, as CTO Tom Keen explains, is to buy smart and schedule delivery in an optimal way. That requires managing the flow of information -- and purchase and billing transactions -- across multiple parties: power generators, transmission operators, local distribution companies, and last but not least, BlueStar customers.

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"We basically help customers define contracts that maximize their energy dollar," Keen says. "Some customers only want to use pure green energy. Some would like to run on brown energy and purchase what are called carbon offsets. We can do that as well. There's just a tremendous blend of how you buy power, plus how much risk you want to take on. So we can do fixed options. It's an extremely complex configuration."

Here, the challenge isn't just to design complex products, it's to bill them. Not only does BlueStar have to track each customer's hourly electricity usage, but it must also reconcile that usage with the cost of the power for each specific hour -- a task made more difficult by the myriad methods (EDI, XML, FTP, Excel, CSV, and so on) local distributors employ to provide that information.

To automate customer provisioning and payments to trading partners, BlueStar brought together a heady mix of open source software, including an ESB, JMS message broker, a business rule management system, and BPM. A b-to-b gateway integrates all of BlueStar's partners and translates all of the different feeds and data formats for BlueStar's back-end systems. The loosely coupled approach insulates BlueStar's accounting application and other systems against all the complexity of the outside world.

"The b-to-b gateway is a distributed implementation of an ESB," says Guillermo Tantachuco, director of enterprise architecture at BlueStar. "We don't have a huge monolithic server that handles all this. These are a bunch of services scattered across our network that are pretty resilient. If one instance dies, another one is ready to take over."

Before BlueStar built the business infrastructure from scratch, it did look at off-the-shelf ERP and CRM packages. The utility industry has a number of standard applications that do forecasting, pricing, billing, accounting, and even e-commerce, but these apps weren't flexible enough for BlueStar.

"We have to be able to respond to the market very, very quickly," says CTO Keen. "When green energy becomes extremely important to customers, we have to be able to clear that and schedule that. These systems that exist out there, they just don't do that." Ultimately, Keen and Tantachuco didn't believe the industry offerings could support the dynamics of the business.

The decision to build the business predominantly on open source was a practical one. First, open source offered a viable solution to nearly every technology requirement BlueStar had. Second, the functionality -- and particularly the stability -- of the open source solution typically beat the commercial options.

"Stability is twofold," Keen notes. "It's recognizing the problem and fixing it, but it's also recognizing the problem and communicating it. I can design around a known problem. But I can't do that with commercial, because they don't tell us."

In addition to open source, the other key investments BlueStar made were in enterprise architecture and an engineering discipline. Realizing they were building not only a business infrastructure but an entire organization, Keen and company committed early on to adopting certain engineering best practices -- a software engineering lifecycle, domain-driven design, model-driven development, continuous integration, CMMI, ITIL, COBIT -- and hiring developers who would buy into them. That entailed opening a development center in Lima, Peru, where the company has hired and trained more than 50 programmers. Between the adoption of open source and offshoring development, the company estimates it has saved $24 million over the past five years.

But the biggest effort, Keen and Tantachuco say, was establishing their enterprise architecture at the very beginning. That involved sitting down with the business executives and understanding their goals, then making sure they understood that -- in BlueStar's case -- an SOA was the way IT could meet them.

"There was a shift in thinking on the business side that enabled this," Keen says. "We think in the area of process, we think in the area of automation, we think in the area of business rules. Without that shift in thinking, you're going to get an IT person's version of what a service-oriented business would look like implemented in technology, and that's just not successful. Without [our CEO's and COO's] leadership it probably would not have succeeded."

2008 InfoWorld 100 Award winners

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Copyright © 2008 IDG Communications, Inc.