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Executive Summary
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Reliant Energy is an entity whose
departments and business units span the planet. Consequently, Reliant
Energy must ensure that its business processes are aligned with its goals
in the arenas of operations and information technology, environment, and
strategy. Should these dynamics fail to conform to the demands and
expectations of today's marketplace, the organizational processes that are
dependent upon these factors run the risk of poor functionality.
Operations and Information Technology
The operations of Reliant Energy are singularly dependent upon and
facilitated by the IT infrastructure. Energy trading is processed in an
online virtual auction. The availability, reliability, and speed of
execution of the transactions are a critical factor in the subordination
of the costs associated with energy transactions. Reliant Energy relies
heavily upon its IT network to facilitate internal information
distribution and organizational communications. Consequently, Reliant
Energy has invested millions of dollars to strengthen its IT
infrastructure, and has committed itself to continuous IT growth to ensure
its competitive edge in information and transaction processing.
Reliant Energy has also pledged to maintain a talented and highly
performing IT department. Reliant realizes this goal through its
engagement of recognized industry experts as consultants, and the
employment of individuals with extensive IT experience. These individuals
are chartered with the responsibility of maintaining and developing the IT
infrastructure; this allows Reliant to concentrate on its core business
practices, where subject matter expertise is an integral part of its
corporate employee base dossier.
A possibility that Reliant Energy should explore is the complete
outsourcing of its IT department, in order to disassociate itself from the
high level of complexity of maintaining such an environment. Reliant
Energy is required to expend an enormous amount of resources to continue
to sustain and further develop this infrastructure, which can lead to a
deviation in core processes. IT is not Reliant Energy's core competency;
it would be advisable to allow a third party to assume responsibility for
the maintenance of the infrastructure, and allow Reliant to continue to
improve on the core competencies of its business in the energy markets.
Environment
Reliant Energy has been compelled to create a complex and knowledge-based
culture due to the exigencies of its particular specific environment. The
energy industry is highly volatile and continues to mature into its
freedom from government regulation. This has resulted in dynamic
opportunities and potentials for immense returns; it has also created a
ruthless corporate environment. Monolithic companies are required to
adapt as quickly and efficiently as their smaller competitors in order to
keep abreast with the changing regulations and environmental constructs
that are a product of the industry's attempt to capitalize on new
markets. Moreover, the employment of creative constructs and ingenious
financing techniques by competitors has severely taxed Reliant Energy's
ability to keep its traders and employee base up-to-date. These factors,
coupled with the recent downturn of the US economy and the shocking demise
of Enron, have created a very difficult and merciless environment for
Reliant Energy to compete in.
Reliant Energy has pushed itself to
adapt to the demands of its competitors; in particular, it was heavily
influenced by the perceived success of energy trading competitor Enron.
Consequently, Reliant embarked upon an ill-advised campaign to strengthen
its bottom line through the utilization of questionable trading practices
which became commonplace after Enron's perceived successes. This has led
to an environment of distrust and open hostility between government
consumer protection agencies and the entire energy market. Reliant should
immediately dissociate itself from such practices and accept
responsibility for any breaches of ethical conduct, and install processes
that will prevent such knee-jerk reactions from ever gaining widespread
acceptance again.
Strategy
The organization of Reliant Energy can be expressed as a horizontal
structure with key elements of IT, commercial energy trading, and retail
energy sales. The horizontal structure is extended through functional
structures that provide support for departmental and geographically
disparate entities within Reliant. This organizational structure was not
produced through the clinical application of solutions to symptomatic
troubles; instead, a comprehensive strategic approach was employed at the
onset of deregulation. Reliant Energy employed experts from around the
United States that were familiar with deregulated energy markets and the
organizational requirements of those entities that competed in such
markets.
The corporate environment at Reliant Energy can best be described as a
collaborative information environment, which could be considered an
extension of Adhocracy. The processes at Reliant Energy are
information-dependent; without the proper information at any given time,
the business can lose money or opportunities. Therefore, Reliant has
established a strong focus upon the information-sharing process. The
company continually strives to keep its employees at the forefront of
economic theory and the application of this theory, and provides multiple
channels of communication to assist in the erudition of pertinent
employees.
Reliant Energy also provides a number of different venues for employees to
exploit in an attempt to offer real-time data from different
marketplaces. This allows the traders and other professionals to remain
current with the most recent market trends and directions, so that the
decision making process is based upon as much concrete information as
possible.
Reliant Energy has clearly demonstrated that its strategic initiatives
with respect to its organizational structure were crafted and implemented
in a comprehensive total solution package that has served it well.
Nevertheless, there is room for improvement. Reliant would do well to
flatten its structure. Information that comes from the top has to pass
through quite a few layers of managers, and much of it becomes omitted or
changed. For this reason, employees are not fully cognizant of "the big
picture" and have little to no knowledge of actual corporate directives;
they are only told about their small piece of the entire process.
Reliant Energy has clearly and comprehensively
aligned itself and its organizational structure with its needs and the
needs of the energy marketplace. If it continues to express such
innovative and forward-thinking processes, the future of Reliant Energy
will be an accomplished one.
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