Sterling Yee and Philip Mow
Hawaiian Electric Industries, Inc.
Hawaiian Electric Industries, Inc. (HEI) is a diversified holding company providing essential services to the people of Hawaii. Its core businesses are electricity and banking. Other smaller subsidiaries are engaged in maritime freight transportation and residential real estate development. The major subsidiaries of HEI are Hawaiian Electric Company, Inc. (HECO), American Savings Bank, F.S.B., Hawaiian Tug & Barge and Young Brothers, Limited, and Malama Pacific Corp.
HECO and its subsidiaries, Maui Electric Company, Limited and Hawaii Electric Light Company, Inc., provide electricity to 95 percent of the state's 1.2 million residents. The utilities serve more than 375,000 residential, commercial and industrial accounts on the islands of Oahu, Maui, Hawaii, Lanai and Molokai. American Savings Bank, F.S.B., with assets of $3.1 billion, serves more than 294,000 accounts through a network of 46 branch offices. Hawaiian Tug & Barge Corp. and Young Brothers, Limited are the principal movers of maritime cargo within the state, operating a fleet of 11 tugs and 10 barges. Malama Pacific Corp. is a real estate development subsidiary.
HEI's Web address is http://www.hei.com
For corporate America, the Internet represents a real revolution in the areas of computing and communications. Those who have been involved with the evolution of the Internet understand this intimately. For corporate America, though, this is a new discovery. And as in anything that is not fully understood, it is something that is feared. This paper describes the implementation of Internet services at HEI and the socioeconomic barriers that had to be overcome.
As in any significant change in society, the impetus of the change tends to come from areas outside the traditional spheres of influence. This was the case of the Internet for HEI. The Internet represented a major shift, not just in technology, but in the influence and control of the traditional Information Services department in the dissemination and distribution of information. Such control is not relinquished easily. In the area of corporate finance, this Internet project was a maverick that did not fit the mold of the traditional business case. An entity such as the Internet has never existed before in the corporate arena. Definition of benefits and their quantification would be impossible to estimate. With that being the case, the typical cost/benefit analysis and business case could not be completed. Yet, there were those involved who knew this revolution would create a new corporate order and new opportunities. Implementation of such a system required an unorthodox approach. It is the hope of the authors that the information and experience gained in this project be documented and shared with others attempting a similar implementation.
Prior to 1990, the networking experience of HEI was limited to IBM mainframe terminal sessions using 3270 technology and SNA protocols. This was the direct result of the significant mainframe experience of HEI's largest subsidiary, HECO, the local electric utility. By 1992, HEI had implemented an ethernet-based Macintosh network for office automation and financial reporting. Also by that time, the internal audit department had implemented an auditing system using a Unix-based HP'9000 and the Sybase relational database as a server, with Macintosh clients. It would be leverage of this early experience with Unix and TCP/IP that HEI would begin pursuing a connection to the Internet.
By the fall of 1992, it became apparent to the authors that a connection to the Internet would become a business necessity. Research of then current literature confirmed the perceived necessity to establish a connection. A chance meeting with a manager of Information Technology Services at the University of Hawaii in late 1993 allowed the authors to gain access to the Internet. During the next nine months, significant Internet experience was obtained. Being relatively new Unix users, the authors' access to the Internet provided an opportunity to enhance their skills with the operating system.
The major objective of this project was somehow to get a direct connection to the Internet for HEI. However, before this could be accomplished, many hurdles, quantitative and nonquantitative, would need to be overcome.
At the time, the major obstacles were:
A direct high-speed connection in the area of T'1 represented a major financial commitment. The biggest obstacle at the time was financial justification. The formal proposal of an Internet connection to senior management would entail the preparation of a business case. A business case, as practiced by HEI, consisted of detailed quantification of costs and benefits in a financial capital budgeting framework.
In 1993, most corporations had never experienced anything like the Internet. Most business executives at that time had never heard of it. Those who had, really had no idea of what it was, let alone what it could do for them. The average middle manager did not know what the Internet was either. This situation would turn out to be quite significant, as it would be middle management that would be required to estimate and determine the benefits of an Internet connection. As expected, the authors were not able to obtain any meaningful estimates of benefits for the purpose of a business case.
This was the most formidable obstacle: The establishment of the business case.
Also in 1993, the only significant connection to the Internet in Hawaii was at the University of Hawaii. This was an educational connection and could not be used for commercial purposes. There was some street talk and rumor that Advanced Network & Services and possibly a few other national Internet providers would be offering local connections to the Internet. The only real alternative to the University of Hawaii was to establish a private T'1 connection to a site in California, a financially prohibitive proposition for HEI.
Security problems turned out to be both perceived and real. Much of the financial press was publicizing previous break'in attempts of various Internet sites. As a result of the high publicity, without the corresponding technical details of how the break'ins occurred, many members of management concluded the Internet was simply a playground of computer hackers and crackers, and as a result, something to be avoided at all costs.
On the other hand, the threat of a break'in to HEI's networks is a real one, and effective security would be required.
Maintenance of an Internet connection requires expertise in networking and TCP/IP, something HEI was new at. Further requirements would be expertise in maintaining the various services such as shell accounts, File Transfer Protocol servers, e'mail, Gopher, and a World Wide Web server.
Since it was not possible to complete the traditional business case with any chance of success, those involved believed it was best to proceed with obtaining a connection as inexpensively as possible. A low-cost connection would place this project below the corporate threshold of requiring the traditional business case. A low-cost connection would mean something less than a T'1 line, allowing far fewer people direct access than originally planned. However, by obtaining a low-cost connection, a team of representative users within the various subsidiaries of HEI could be assembled and placed onto the Internet. These users could then integrate Internet usage into the normal day-to-day functioning of their jobs. Such a strategy would allow the users to assist in defining the benefits of having a direct Internet connection.
During this timeframe, an initiative was under way to develop a business relationship with the newly opened Maui High Performance Computing Center (MHPCC). The authors and Mr. Charles Wall, Vice President and Chief Information Officer of HEI, had met several times with the principal investigators of MHPCC. The topic of discussion was the corporate use of MHPCC's parallel supercomputer to test various electrical generation and transmission and distribution models. Some of the existing models were currently running on the corporate mainframe, requiring sharing of time with the utility's accounting and financial systems. The proposal was to assess the viability of performing the engineering models on a parallel supercomputer. Since MHPCC was on the DS'3 backbone of the then NSFNet, a connection to MHPCC would place HEI on the Internet. The authors used this as an opportunity to advance the Internet connection issue and became involved in the project with MHPCC. Negotiations for a connection proved fruitful and a 56K frame relay line was established between HEI and MHPCC in September 1994.
To establish the connection at HEI, the authors proposed a Sun SparcServer 20 to Mr. Wall. This server would serve two purposes, a connection to MHPCC's supercomputer and a connection to the Internet. The server was purposely configured low, almost underconfigured, to ensure a low-cost solution. The SparcServer 20 was selected to ensure upward scalability in the event the project proved successful. The only commercial software on the server would be the operating system, Solaris. From the Internet connections through the University of Hawaii, the authors obtained the Gopher server from the University of Minnesota, the Web server from the CERN in Switzerland, the Pine electronic mail program from the University of Washington, and the POP3 daemon from an anonymous FTP site. A range of Class C addresses had been obtained from the InterNIC and was already in use at HEI and HECO.
The low-cost approach proposed to Mr. Wall assumed direct participation of the authors. The authors would be expected to apply their Unix expertise in setting up the server and the frame relay connection to MHPCC. In addition, the authors were also expected to design the security required by HEI.
With the Sun server and software in place, Internet connectivity was ready for deployment. At this time, the implementation plan was enhanced to include an internal and an external strategy.
The internal strategy was to select a pilot group to begin integrating Internet usage with their normal daily activities. The objective of this pilot group would be to document the value and usefulness of the Internet in a business environment. The selected pilot group consisted of members from HECO and members from HEI. Oversight of this group was performed by a member of HECO's information services. The pilot group represented the following functional areas: information services, safety, energy services, rates and regulatory affairs, corporate communications, risk management, engineering, human resources, system operations, transmission planning, library management, education and consumer affairs, accounting and finance, and internal audit.
The external strategy was to select another group to establish Internet services on the Sun SparcServer. The task assigned to this group was the implementation of user accounts, e'mail, Gopher, Web server and security. This group was also responsible for maintaining the connection to MHPCC and the Internet. This group consisted of members from information services, internal audit, government relations, community affairs, and marketing. These members were from HEI and HECO with oversight performed by HEI. The members from information services and internal audit were responsible primarily for the technical tasks of maintaining the Internet connection while the others were responsible for preparing content for the Gopher and Web services.
It should be noted that participation in both groups was completely voluntary. Those involved in preparing content for the Gopher and Web services completed their tasks outside the traditional work day since this was considered extracurricular activity. Both HEI and HECO have a history of encouraging extracurricular activities in the form of participation in civic and nonprofit organizations.
The Internet has proven to be a valuable business tool for both individual research and for cooperative work such as exchange of messages and files with those outside the organization. It makes employees more effective and efficient, but most importantly, it makes needed information available in a timely manner. While there is a lot of hype surrounding the Internet, as well as the concern about its (lack of) security, the pilot group demonstrated that:
Some of the comments expressed by the internal pilot group include:
The external pilot group required a more rigorous approach, since it required dealing with facilities on the server that would have an impact on everyone involved. After implementation of the e'mail, Gopher and Web software, the members from internal audit prepared a design for a firewall to maintain security. The major challenge was to implement security without expending more funds for actual firewall software. At that time, in late 1993, the team knew of no commercially available firewall software. Fortunately, firewall software was readily available on the Internet. Various software alternatives were reviewed and a recommendation was made.
In June 1995, Satan was used to attack the HEI Internet site from an external location as a test of security. At that time, no exposures existed according to the Satan software. A security review is now performed regularly and CERT advisories are closely monitored.
As a means of returning value to the Internet, Gopher and Web services were developed. Initially, a Gopher server containing educational materials offered by HECO to the public was placed on the Sun Server.
Soon after establishing HEI's Gopher server, the authors began to gain experience with the World Wide Web. It became evident that the Web provided a better means of providing community information because of its graphical multimedia capabilities, ease of use, and its potential for widespread acceptance.
The design, development, and maintenance of HEI's Web pages were performed by a two-person team. However, information contributors from each subsidiary were the key to providing the right kind of information needed for HEI's community Web server.
In addition to the electrical energy educational materials found on the Gopher server, information provided on the Web include the HEI Charitable Foundation; a section on employee-sponsored community organizations such as the Boy Scouts, The Epilepsy Foundation, Hale Kipa (an emergency youth shelter), and Aloha United Way (Hawaii's affiliate of the national United Way); recipes and images from "The Electric Kitchen," a company-produced television show; "Storm Tracks," a program to help residents monitor storm activity and prepare for hurricane disasters; personal financial tips from HEI's bank subsidiary, and many other community-related information pages based on existing publications. Hurricane season in Hawaii spans June through November, and "Storm Tracks" was especially timely in 1995. The team was able to get these pages up prior to the hurricane season.
Success of a Web site is difficult to measure, but in terms of statistics, within a year the team has seen server "hits" grow from 2,000 in February 1995 to a current count of over 17,000 a day. Although many are from the Hawaii community, HEI's Web site is also visited by over 30 countries in any given day.
Other measures of success include HEI's Web site being referenced several times by the local media and as far away as a newspaper in Salt Lake City, Utah. The Webmaster's account has also received many inquiries from other electric utilities wanting to create a Web site modeled after what HEI has accomplished. Community organizations have received monetary contributions as a result of their presence on HEI's Web site. Many investors living outside the State of Hawaii have sent messages of thanks for providing information on the Web site. These investors go on to explain how the Web version of the annual and quarterly reports keeps them informed of HEI's business. Many Internet search engines and directories, including America Online, maintain references to HEI's Web pages.
Today, HEI's connection to the Internet consists of a T'1 frame relay line to MHPCC. Over 1,000 HEI and HECO employees have access to Internet e'mail, and hundreds have direct access to the World Wide Web. To accommodate this, the Sun SparcServer has been upgraded with additional memory and disk storage, and a second processor was recently installed. In addition, a new FTP server was implemented at the request of HECO. Each month, HEI's Web pages offer more and more content. With the new multimedia initiatives taking place, it does not take much imagination to see integration of new software such as Java in the near future. As we embark upon the turn of a new century, times look very interesting indeed.
The Internet is an imperative tool for businesses. HEI's and HECO's connection to the Internet was inevitable, but the HEI initiative made early adoption possible. The participants of the pilot study have shown both an interest in its use and a payback for their efforts. The degree to which Internet access should be available within the company has yet to be determined. The results of the pilot project are positive from several perspectives, and it seems unlikely that HEI or HECO will significantly reduce its use or commitment. The ease and effectiveness of electronic mail alone justifies basic connectivity and is applicable to many employees. Use of information search, retrieval and publishing capabilities requires more time and skill, and will likely be self'regulating. The business benefit of HEI's Internet connection will be more effective, more efficient, and more empowered employees through the availability and application of new information technology.
Beyond its use as a business tool, the Internet has proven to be an effective medium for HEI to return value to its communities. As the Internet has evolved over the past two years, it has changed into a commercial environment. While this was inevitable, the authors were saddened to see it lose some of its sense of academia and the sense of the communities from which it came. Therefore, it was extremely encouraging to see the commitment by HEI management to establish the Web site as a community information service. Rather than becoming a true commercial site, HEI's Web pages remain a community service. The Web pages will continue to host other community organizations in addition to information related to HEI and its subsidiaries. The authors firmly believe the greater value of HEI's Internet connection is the ability to establish and maintain contact with its surrounding communities, whether they are shareholders, customers, vendors, citizens of Hawaii, or simply others on the Internet. It is being in touch with the grassroots of these communities, in the true sense of information sharing, that the Internet will bring long-term value to HEI.