Water Domiciliary Distribution Telemanagement Value Model

Ivo Jorge Magalhães da Costa

1,2

, José Henrique Pereira São Mamede

2,3

and Luísa Margarida Cagica Carvalho

4,5

Instituto Superior Técnico, Avenida Rovisco Pais, 1, 1049-001 Lisboa, Portugal

Universidade Aberta, Rua da Escola Politécnica, 147, 1269-001 Lisboa, Portugal

Institute for Systems and Computer Engineering, Technology and Science (INESC-TEC),

Campus da Faculdade de Engenharia da Universidade do Porto, Rua Dr. Roberto Frias, 4200-465 Porto, Portugal

Center for Advanced Studies in Management and Economics (CEFAGE), University of Évora,

Largo Marquês de Marialva, 8, 7000-809 Évora, Portugal

Universidade Aberta, Rua Braamcamp, 90, Piso 5, 1250-052 Lisboa, Portugal

Keywords: Telemanagement, Value Model, Intelligent Water Management, Internet of Things (IoT), Water

Distribution Networks.

Abstract: The Internet of Things (IoT) represents a technical innovation that is already starting to play an important

role in smarter water management, when a wide variety of sensors are incorporated into intelligent metering

equipment and connected through wireless networks throughout the domiciliary water distribution network,

being able to measure volume, flow, temperature, pressure, levels of chlorine, salinity and more. Water

scarcity, aging or inadequate water distribution infrastructure, population variation, pollution, more intense

and frequent droughts and floods, generate pressures that converge on the need to increase global

investment in water infrastructures and to develop solutions for the conservation and management of water.

The main stakeholders in the water distribution sector are the ones that can benefit most from the use of

telemanagement. However, the results of adopting this innovation are contrary to expectations, with a slow

change in traditional business models. The objective of this research is the construction of a value model

that allows the identification of actors and value markets and the exchange of value related to the adoption

of telemanagement in Portugal, having a solid theoretical basis and a real practical validation.

1 INTRODUCTION

Water distribution telemanagement is the "integrated

and innovative management system that allows

monitoring, managing and controlling reservoirs,

stations and their respective distribution networks,

through central supervision with adequate graphical

representation, associated to automatic processes of

alarms generated by control devices which detect

and transmit occurrences, such as levels, flows,

ruptures, leaks, among others”, according to site of

ESTEC (2018).

The adoption of intelligent water management

platforms is a strategy that is gaining more and more

acceptance but has been slowly evolving, although

the results obtained justify its application. Thus, in

order for the introduction and development of

telemanagement potential within the water

distribution sector to be carried out efficiently, it is

essential to have a solid understanding of the

technology as well as the business and management

issues underlying or adjacent to the subject. The

question of whether or not to change the way

business is developed today to a paradigm centered,

totally or partially, on telemanagement must be

seriously considered. Thus, it is important to find the

answer to the following question: How does the

adoption of telemanagement in Portugal show

efficiency gains?

Efficiency results from the relationship between

goods produced or services provided and the

resources used. Value modeling is a strategic tool to

identify new business opportunities and how the

company can position itself strategically to

maximize emerging opportunities that may or may

not require a substantial redefinition of the

company's infrastructure (Glova et al., 2014, pp.

1125).

340

Costa, I., Mamede, J. and Carvalho, L.

Water Domiciliary Distribution Telemanagement Value Model.

DOI: 10.5220/0007227203400347

In Proceedings of the 14th International Conference on Web Information Systems and Technologies (WEBIST 2018), pages 340-347

ISBN: 978-989-758-324-7

Hevner et al., (2004, p.78) argue that

organizations and their information systems (IS) are

intentionally designed to achieve a goal, being

composed of people, structures, technologies and

work processes, therefore, IS professionals and

managers in general use design to achieve the

essential alignments between business strategy and

IT strategy and, on the other hand, to achieve

alignment between the organizational infrastructure

and the information system infrastructure, as studied

by Henderson and Venkatraman (1993, p. 477).

The definition of the value model for

telemanagement of domiciliary water distribution

sector will contribute to the answer to the main

question based on the reality of the existing market

in Portugal, so that decision makers understand that

this new paradigm is based on the transformation of

the traditional value chain into a network of value,

characterized by the support of the activities of the

water sector in information systems.

The purpose of this paper is to describe this

emerging ecosystem with the various actors and

value markets and their value exchange

relationships. To achieve this, the research was

driven by the following derived questions:

 Who are the actors and value markets that can be

identified in the telemanagement of domiciliary

water distribution sector?

 How are value exchanges in the ecosystem

formed by actors and value markets?

Having determined the overall goal, we may need to

restrict the guidelines of the study, therefore,

the specific objectives will be as follows:

 Diagnose the state of art of water distribution

managing entities (MEs), identifying the main

problems that are pressing towards the

transformation;

 Indicate the main factors that condition the

efficient implementation of the telemanagement

of the domiciliary water distribution.

In this research, accordingly with the

methodology and methods chosen, it was considered

useful to adapt the diagram proposed by Laudon and

Laudon (2016, p.25) to represent the problem of the

efficiency of the information system of

telemanagement of domiciliary water distribution

sector, because it illustrates the relationship between

management and organization to use information

technologies (IT) as a solution to the challenges

created by the business environment, as shown in

figure 1.

The diagram summarizes how the management,

technology and organization elements work together

to create the systems and illustrates how the

telemanagement system can solve the problem

presented by the need for efficiency and cost

reduction in the domiciliary water distribution

sector, increase the quality of services for the

consumer, among others. However, even if a system

project supports an entity's strategic objectives and

responds to user information requirements, the

system needs to be a good investment for the

organization.

Figure 1: Diagram of the challenges and solutions in telemanagement, adapted from (Laudon and Laudon, 2016, p.25).

Water Domiciliary Distribution Telemanagement Value Model

341

2 RESEARCH METHODOLOGY

The methodology selected for structuring this study

is the design science research methodology

(DSRM). Blessing and Chakrabarti (2009, p.12)

define that design is the process by which a need is

identified and a solution or product developed to

respond to the need. The authors understand that

design research has two related objectives: the

formulation and validation of models and theories

about the phenomenon of design considering all

facets and, on the other hand, the development and

validation of support based on these models and

theories, to improve practice and results. Blessing

and Chakrabarti (2009, p.20) refer that models are

used in science to create conceptual organization,

are a resemblance of something that exists in reality

but restricted to some particular aspects of that

reality. Value modeling focuses on value creation,

how value is created, by whom and for whom

(Glova et al., 2014, p. 1125). Thus, initially, we will

construct the reference value model that in design

will represent the existing situation, constituting the

reference against which the desired improvements

are compared. The reference model represents the

level of understanding of the existing situation, then

will be constructed the impact model that represents

the desired situation and shows the impact of the

support to be developed.

DSRM is a research methodology that provides

specific guidelines for iteration in research and

evaluation when the academic research objectives

are in pragmatic nature. Hevner et al. (2004, p.76)

state that the main purpose of design science

research (DSR) is to achieve knowledge and

understanding of a problem domain through the

construction and application of an artifact design,

based on results. DSR has been considered as an

appropriate methodology for the conduction of

research focused on technology and information

systems, being an approach that, when well applied,

produces real scientific rigor.

Hevner (2007, p. 2) understands that knowledge

resulting from the DSR survey must be returned to

the environment in the field of application for study

and evaluation. The field study and evaluation of the

artefact can be performed by methods appropriate to

the implementation of technology, as is the case of

the action investigation method, case study,

simulation, among others.

After presenting DSRM as a research

methodology, we turn to the method Case Study,

considering that part of the research is supported in

telemanagement projects developed by companies in

operation, therefore it is pertinent that there is a

focus on this method. Martins and Belfo (2011,

p.44) define that the case study is a research method

that examines a social phenomenon in its natural

environment, through the collection and analysis of

empirical material from specific social sites, as is the

case of real organizations, with the fundamental

objectives of broadening or deepening knowledge

about certain social phenomena, being able to

construct a theory or test theoretical concepts and

relations between them.

The following research techniques are pertinent

to be used: bibliographic review, direct observation

and interviews. In order to know the current context

of telemanagement, to know how MEs of water

distribution and companies have dealt with the

transformation, to find out what are the greatest

difficulties faced and the solutions found for these

problems, it was necessary to consult documents, but

also by direct observation and interviews with

stakeholders in real institutions (Martins and Belfo,

2011, p.57). The direct observation is based on the

personal contact that the researcher established with

the people in charge of several information systems

companies and with the Water and Sanitation

Municipal Services of Caldas da Rainha

(SMASCR), which included a study visit to ME to

deepen knowledge. Considering that in this context

it is practically impossible to make a survey of the

whole, it has resulted in the possibility of

interviewing only a part of the population, namely

those responsible for the telemanagement projects

known in SMASCR.

Glova et al., (2014, p.1126) present the e

-value

technique designed to model value creation and

value exchange within an e-business network with

multiple business actors. With this approach,

commercial activity can be reduced to its main

elements, which, in the simplest case, make up the

value proposition, the distribution channels and the

company's customers, explaining how a multi-actor

network creates, distributes and consumes value by

producing a good or providing a service, so this tool

was selected for the development of this study.

3 RESULTS AND DISCUSSION

Westerlund et al., (2014, p. 5) state that the Internet of

Things (IoT), has become the new network paradigm

that aims to link all objects around us, allowing

anyone access to information at any place and time.

IoT describes the interconnection of objects or

"things" for various purposes including identification,

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communication, sensors, and data collection. IoT

includes the widespread use and distribution of

sensors, and several industries are exploring how to

create smart cities through the extensive use of remote

sensing and cloud computing.

The digital transformation of an organization

depends on two main dimensions: technology (digital

capabilities) and how to lead change (leadership

skills), which are two very distinct dimensions and

each one plays its own role, resulting in that none of

the dimensions is sufficient by itself, but only by

joining the components is it possible to create

advantage for the business as presented by

Westerman et al., (2014, p.13).

A continuous stream of information technologies

(IT) innovations is transforming the traditional

business world. At the level of the water distribution

sector, this transformation depends on the articulation

between the business strategy, the IT strategy and the

IT itself that is introduced and used to create an

infrastructure and IT services adequate to the

operation of the sector and that meets the needs of the

various stakeholders, namely, the State and entities of

the Central Administration, users, MEs, partners,

among others.

From the point of view of market structure, the

water sector is a typical case of natural monopoly

infrastructure management, for technological reasons,

with a single entity providing the service in each

geographical area, with no possibility of choosing an

alternative by users (ERSAR, 2017, p. 17).

In Portugal, downstream water supply is a

fragmented sector, marked by the large number of

management entities, 319, mostly with an intervention

area equal to or less than municipal, which is

explained in part by the majority of the service being

assured by municipal services, but also by the

existence of micro-entities that are composed of

parish councils (ERSAR, 2017, p.51).

The Government is committed to the strategy of

consolidating the downstream MEs, since a number

of relevant studies show that this is where the

significant margin of improvement of the sector is

concentrated, as the capture of these improvements

presupposes the creation of the basic conditions for

the introduction of greater efficiency in the operation

and management of services, which is essential to

meet the sector's main challenges (GAG, 2017, p. 17).

The promotion of regional managing entities with

scale is a great bet, and is part of the PENSAAR 2020

strategy through the "anchor projects".

At the level of telemanagement, the responsibility

matrix of the PENSAAR 2020 measures states that

the Ministry of the Environment and the Operational

Programme for Sustainability and Efficient Use of

Resources (PO SEUR) are the entities that drive

telemanagement and that the monitoring of the

implementation of the measure is the responsibility of

the Water and Waste Services Regulatory Entity

(ERSAR), between the period from 2016 to 2020.

Since this separation of responsibilities between the

various entities in the implementation of PENSAAR

2020 results, no executive function is attributed to the

Central Public Entities and, on the other hand, the

MEs execute almost all measures or actions, and

more, have no responsibility to promote or ensure

them. Considering that MEs have the enforceable

responsibility of telemanagement and that

Government and central services play a role in

boosting and promoting, this means that MEs are

investing to the extent of internal capacities in IT

infrastructure and own information systems that are

provided by business partners.

The implementation of telemanagement by the

MEs involves the conclusion of contracts with several

market partners, namely with the companies installing

and maintaining IoT things or sensors,

telecommunications infrastructure and computing

infrastructure, resulting in exchanges of value

between the parties. Considering the knowledge

acquired in the case study of SMASCR and based on

all the conceptual organization on the roles and the

value exchanges between the various actors and value

markets, it was possible to construct the reference

value model of the telemanagement of the water

domiciliary distribution, using the graphic editor of

the e

-value method, as shown in figure 2.

As can be seen from the analysis of the model, the

costs resulting from the implementation of remote

management are supported by the 3 T: State /

Community support, tariffs and taxes. The value path

established for this scenario has the initial stimulus in

the user and ends up in the central entities

representing the sector in the State. Contract costs for

the provision of IoT sensors and other IT infra-

structure and services for telemanagement or teleme-

try are normally supported indirectly by the end-user

who pays the tariffs for the water distribution service,

even if the amounts involved may be alleviated by

State or Community support that is granted directly to

managing entities, or by reducing the costs of such

services resulting from the tax benefits and subsidized

credit lines granted to business partners who market

and maintain the technology. The literature review

and the interviews conducted throughout this research

have confirmed the identified roles and their value-

exchange relationships for what we consider to be a

valid value model.

Water Domiciliary Distribution Telemanagement Value Model

343

Figure 2: Reference value model of the domiciliary water management.

In order to ensure success in digital transforma-

tion, the Government has been adopting strategies in

the field of Information and Communication

Technologies (ICT) in Public Administration (PA)

which aims to rationalize investments, reduce costs

with systems duplication and provide information

sharing between several institutions. In 2017, the

Council of Ministers approved the ICT Strategy 2020,

called the Strategy for Digital Transformation in

Public Administration, the respective Plan of Action

and the Sectorial Plans which are grounded in several

strategic principles like the creation of security,

resilience and data privacy, in order to ensure the

safeguarding of the information held by the PA and

strengthening the digital skills of PA employees and

sharing of resources, to achieve greater efficiency in

their use, adopting measures like the use of cloud

computation and telecommunications.

Laudon and Laudon (2016, p.39) report that,

currently, the success of organizations depends on the

ability to align business strategies and objectives with

available IT, specifying that there are three

interrelated changes in technology: the growth of

cloud computing, the mobile computing platform, and

the growing use of the big data and online software

business as service. These authors noted that cloud

computing is more attractive to small and medium-

sized businesses that can´t afford to buy and own their

own hardware and software. Considering that

organizations that use public clouds do not have the

infrastructure, they do not have to invest heavily in

their own hardware and software. Instead, they buy

the computing services from remote vendors and pay

only for the amount of computing power they actually

use or contract on a monthly or yearly subscription

basis.

The water distribution business depends on the

accuracy and reliability of the data in real time. The

strategic options refer water distribution managing

entities to extend business along the urban water

cycle, but both at the level of decision making and

operational management, the MEs are limited by the

data stored in legacy systems. Currently, it is found

that parts of this data are stored in many legacy

systems that make retrieval and correct unification

extremely difficult for them to be used in decision

making, concluding data is often redundant and

inconsistent, limiting its usefulness (SMASCR, 2017).

The distributed nature of MEs means that storing and

analyzing accurate sets of operational data and

monitoring the various types of equipment installed

along the water network has become increasingly

challenging and resource consuming, notably for

producing production reports.

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Bohm et al., (2010) refer that the most established

value chain approach was presented by Porter (1985),

who created an extended value chain, termed value

system, to account for the collaboration between

companies, representing an interconnected system of

value chains. Thus, the value chain of an organization

can be linked to the value chains of its suppliers,

distributors and customers by forming a value

network that is more customer oriented and operates

less linearly than the traditional value chain. The

technology of the Internet has made it possible to

create highly synchronized value chains, called web-

value networks.

In the digital economy, platform ecosystems are

the basis for creating new value. Success is based on

two key elements: platforms (technology) that are

built to support the business and the business model

that these platforms allow (Accenture, 2018). The

platform-based business model fundamentally

changes how businesses operate, resulting in many

industry sectors accelerating the adoption of digital

technologies backed by cloud computing as the first

crucial step in entering the platform world, according

to site of Accenture (2018).

In the IoT domain, the platform will allow not

only real-time knowledge of the state of the city, but

also direct control of the different systems, using a

user-friendly portal as well as automatic urban space

management through configuration rules that are

transversal to the different domains.

For example, the management entity named

“Empresa Portuguesa das Águas Livres, SA (EPAL)”

distributes water to domestic consumers in Lisbon

and uses the system called Water Optimization for

Network Efficiency (WONE®). The implementation

of WONE® allowed to reduce unbilled water levels

in the Lisbon distribution network from 23.5% in

2005 to around 8% in 2015, placing EPAL at the elite

group of the world's most efficient management

entities, as reported on EPAL's website. WONE®

provides integrated, permanent and systematic

analysis of data from different systems, namely

telemetry, customer system, Geographic Information

System (GIS), among others. The principal

differentiating factors of this approach are the

following: intuitive and user-friendly interface with

cloud technology, simultaneous multi-user

permission, responds to the needs of different areas of

the MEs, with indicators and attractive graphic

presentation, integrated alarms and alerts, easy to

adapt and develop.

Currently, the implementation of telemanagement

presents some problems, for example, the SMASCR

report that there are already shared platforms for the

public sector by National Communications Authority

(ANACOM) that allow public entities to register

infrastructures with GIS

, however, this solution does

not cover services of water, which is why MEs have

to lonely invest and develop a similar root system to

comply with the PENSAAR 2020, which implies a

significant investment for each management entity in

Portugal.

The SMASCR also report that there is currently

few information sharing between management entities

at the telemanagement level. Considering the

SMASCR case study, it is concluded that the invest-

ment in the computing infrastructure is significant and

high and although the ME has the financial capacity

to support the investment, it does not matter that this

effort is multiplied by the majority of the MEs in

Portugal, considering that it is a specialized sector and

there can be interoperability and sharing of resources

and information as defined in the ICT 2020 strategy,

increasing efficiency in the implementation and

ongoing development of IT solutions.

Usually, the implementation of strategic systems

has an impact on ME and requires a profound

organizational change and such strategic transitions

are often difficult to achieve. In addition, not all

expensive to build strategic systems are profitable,

and many of the strategic information systems are

easily copied between the various entities, so it is not

sustainable to invest simultaneously in the

development and refinement of several practically

identical systems. Thus, it is concluded that at the

level of telemanagement, the principles defined in the

ICT 2020 strategy are not being materialized, and

there is scope for improving the efficiency in

telemanagement implementation in Portugal,

increasing the opportunities of the ME with greater

difficulties, allowing greater rigor in allocating state

funds and support and avoiding the increase of the

tariffs applied to final consumers due to investments

at PENSAAR 2020 level.

Under these conditions, beyond the leadership

shown towards horizontal integration and the creation

of MEs with sufficient scale to implement the actions

of PENSAAR 2020 favoring the final consumers, it´s

relevant that the same leadership level is given to

telemanagement implementation by the integration of

MEs. This is possible through the contracting of IT

infrastructure and services with a sufficient level of

scale that allows the increase of the technological

capacities of the downstream and upstream MEs,

independently of the management model, creating

efficiency gains in the implementation of

telemanagement according to the principles of the

ICT 2020 strategy.

Water Domiciliary Distribution Telemanagement Value Model

345

Thus, the Government may appoint or create a

new central entity that is responsible for the

contracting and management of infrastructure and IT

services with support in market partners to respond to

the needs of the MEs at the level of the urban water

cycle. The principles foreseen in the PENSAAR 2020

and ICT 2020 strategies should be applied by the MEs

and the development of a cloud computing service

project is highly advisable for the telemanagement

and operational tasks of the water distribution service.

Based on the new roles of telemanagement

management entity and the partners that provide the

cloud computing service, it was possible to construct

the impact value model of the telemanagement of

domiciliary water distribution, using the e

-value

method, as shown in figure 3.

The telemanagement management entity will be

responsible for bridging the cloud computing system

partners, the ME and entities of the Central

Administration, facilitating an efficient integration of

the stakeholders in the value network. The managing

entity of telemanagement is an intervener that has

direct access to the platform to carry out activities of

management and supervision, monitoring of the

system and resolution of nonconformities.

Although we can derive some principles about

value creation and the flow of value within the

telemanagement ecosystem through the cloud

computing service, from the interviews, no valid

quantitative estimate can be made yet, resulting that

future research needs to investigate further on a

broader empirical basis. The proposed value network

can serve as a conceptual validated model for guiding

future research.

In this study, we also consider important to

discuss the process of management of the

telemanagement business model that results from the

value scenario illustrated in the telemanagement

impact model and proposes the iterative alignment of

business and IT strategies as well as the updating of

telemanagement model and objectives, based on the

interests of stakeholders, among other aspects.

Figure 3: Impact value model of the telemanagement network of domiciliary water distribution.

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4 CONCLUSIONS

The application of the methodology and methods

throughout the research, based mainly on the

bibliographic review and in the case study of the

reality lived at SMASCR, allowed the construction

of the reference value model and, subsequently, an

impact value model that allows to communicate the

current situation and the desired efficient situation,

respectively, in terms of domiciliary water

management in Portugal.

The study turned out the existing situation and

presents problems considering that the various MEs

are investing in telemanagement information

infrastructure and systems which is more expensive

than sharing a network of services with added value

to the consumers, and that there should be greater

leadership by the Government to achieve an

alignment of the business and IT strategies. The

value scenario built for the desired situation provides

for the appointment of an entity responsible for

telemanagement and will be responsible for the

management of the cloud computing system, which

will allow the development of a platform that

replaces the business model between the traditional

value chain to the value network, with significant

efficiency gains.

The value impact model represents a scenario

that allows greater strategic alignment along with the

adequacy of the organizational and SI

infrastructures, but it is considered relevant that

future research focuses on the empirical validation

of this model in an extended form and, on the other

hand, it will be pertinent to deepen the competences

of the telemanagement management entity in order

to maximize efficiency gains in the sector, beyond

the theme of telemanagement.

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