At first glance, the security operations center for Constellation Energy Group is exactly what you'd expect from a high-tech Fortune 500 energy company. At the front of a windowless room twenty-some miles from the company's Baltimore headquarters, video monitors display office hallways, a trading floor, electrical substations and entrances to power plants. One screen is permanently tuned to CNN, which seems to be corporate America's ubiquitous intelligence source. Another shows a map of the world. Security operators are busy tracking and responding to events at facilities around the world. A smoke alarm goes off here, a door is held open too long there. The usual.
But that's not all that's being monitored.
The director of enterprise security checks his BlackBerry and then speaks in a low voice to the supervisor of the "information protection" unit, previously known as information technology security. The former is a onetime Marine, with closely cropped hair and a dark suit and tie, whose background is in corporate security and executive protection. The latter sports a well-groomed mass of curly locks, a soul patch beneath his lower lip, no necktie, and a handkerchief jutting out his jacket pocket. Until recently, he reported to the IT department rather than corporate security. Only a few feet from where security operators are monitoring gates and guards, these two very different men are assessing the security announcements from Microsoft on this "patch Tuesday." The particular workstation they stand in front of displays not a video feed but a security-incident management system that draws together information about the company's firewalls, intrusion-detection systems and other network operations.
Welcome to a converged security operations center
"We haven't made a full determination yet on how this is going to be integrated," says John Petruzzi, the former Marine who is director of enterprise security, as he surveys the room. Right now, two workstations are used to monitor physical systems, and a separate workstation is used to monitor logical or information systems. But Petruzzi thinks that may change within the year.
"We're leaning to the fact that we can get it to a point where the console operator will be integrated," he says. "I think we're almost there." That would mean that each security operator would monitor all kinds of security incidents, both physical and virtual.
Call it integration; call it convergence; call it holistic security. Whatever its name, it is budding in this room and others like it across the country. In 2006, according to Forrester Research, North American companies will spend $1.7 billion on projects that combine traditional physical security and IT security
Along the way, those involved with the project are facing political, logistical and cultural challenges, with little to guide them. "I have not seen a repeatable organizational model for a completely converged, centrally managed security operation [that includes] physical and IT security," Forrester analyst Steve Hunt warns. (After this story was reported, Hunt resigned from Forrester to launch 4AInternational, a security consultancy that will focus on convergence strategies.) But he's delighted that companies such as Constellation are trying. "With good management, anything is possible. There's a chance they could succeed and save a lot of money and be much better than they ever were before at mapping security to actual business value."
What's more, if Constellation has its way, it could even be mapping out how the next generation of security will look.The New GuardAt Constellation, the dramatic transformation to bring together information security and physical security can be traced straight to the top
Shattuck could hardly have chosen a more tumultuous time to leave his post as president of Alex Brown, a Baltimore-based unit of Deutsche Bank, to take the reins at Constellation, then a $3.9 billion energy generator and distributor. The energy industry had already been battered by the California energy crisis and concerns about terrorist attacks on the power grid. It was about to absorb another blow, with the collapse of Enron. And Constellation itself was in turmoil. On the heels of a failed attempt to merge with Potomac Electric Power, Constellation had just scrapped a plan to split into two companies: a regulated power distribution business and a nonregulated production and trading business. The company paid $355 million to Goldman Sachs, its investment partner, to get out of the deal.
It was time for a regime change. It was time to focus on risk.
"Coming from the banking world, I was struck by the lack of centralized risk management on day one," Shattuck says. "It was probably the afternoon of day one that I decided that immediately I needed to mirror the way in which a universal bank [approaches] risk."
As Shattuck remade his senior management team, one of the most prominent new players to emerge was John Collins, a longtime finance employee who became the company's first chief risk officer (CRO).
"Originally we looked primarily at the financial risks
In late 2002, Collins officially expanded his purview. He took control of the company's business continuity and corporate security operations, which had been part of the general services department. But information security wasn't ready to make the move just yet.
That's because Beth Perlman, the company's first-ever CIO, was still trying to get a handle on the piecemeal systems that had grown out of decades of the business lines operating independently. "When I came here, you could not tell that all the divisions were part of the same company," says Perlman, who was hired in April 2002. "If I wanted to access our HR system, I had to go through firewalls. We did not have one IT security department; we had many IT security departments. The first step of convergence was formulating one IT security group. The last thing I wanted to do was just dump something that didn't work."
By this point, though, the players were all in place. Brandon Dunlap, supervisor of the information protection unit under the risk-management organization, had been hired to manage IT security. And Shattuck himself had brought aboard Petruzzi, who had worked in executive protection at Alex Brown. Shattuck trusted Petruzzi, who had accompanied him on trips to South America to coordinate his protection, and thought that Constellation would be a good spot for Petruzzi to build and broaden his career.
As it turned out, Petruzzi, now just 34, would broaden a lot more than his own career.Not Just Another Project"We started [at Constellation] within, what, two weeks of each other, and started meeting almost regularly right after that," Dunlap says to Petruzzi, as Petruzzi settles into a chair in a conference room next door to the security operations center. Petruzzi has asked his three direct reports to gather here on this January afternoon to talk about how the convergence process is playing out.
There's Dunlap, with his cultivated eccentricity and deep technical know-how. (He's on the faculty of the Institute for Applied Network Security.) There's Frank Woods, a 25-year Constellation veteran who used to be supervisor of the security operations center but is now supervisor of a new access- management unit, which will handle all requests for logical and physical access companywide. Finally, there's Dave Feeney, the newly promoted supervisor of the security operations center, whose emphasis has been on making sure the operators hired to work in the center have plenty of tech savvy.
(Petruzzi's direct manager, Jack Ryan, declined to be interviewed for this story. Ryan, a 21-year Constellation employee who is head of corporate security, indicated through corporate communications that "all bases have been covered" by this story's other sources.)
There's an easy banter between the three men and their new manager, and a vitality that feels more like an Internet startup than a century-plus-old energy company. Petruzzi's crew had already dug into lunch by the time he arrived from headquarters with a reporter in tow. Dunlap makes a crack about Petruzzi still not letting him carry a gun. The conversation moves fluidly from network sensors to smart cards to concealed duress buttons that trigger alarms. Wasn't it always this way?
The convergence process didn't start as a big explicit project
As at many companies that have brought together physical and information security, the evolution began with the investigations group. Because investigations were conducted by corporate security but often involved data stored on computers or passed through e-mail, there were frequent handoffs between corporate security and IT. At the same time, the IT department was growing its monitoring capabilities. Dunlap's staff might notice inappropriate behavior on the network and report it to investigations.
"There was never this, 'We're shoving this down your throat,'" Dunlap recalls. "It was more like, 'Hey, if you're doing that, you really should get these guys involved.'"
Meanwhile, there was increasing recognition that information security belonged under risk management
"When you look at corporate security," Collins explains, "the evolution of it has to be with information technology security, because you won't address the whole security environment unless you're looking at it together. We also think that it's the right thing to do, because otherwise you have the IT department watching the IT security, and is that really good internal control?"
There were financial incentives too. Collins believed that combining physical and IT security would simply be more efficient and effective. For instance, he thought the company could save labor costs by merging network and physical access monitoring. Simply put, Constellation wouldn't need as many guards.
By summer 2004, executives started mapping out the split. IT systems maintenance would stay within the IT department, but IT security would keep track of any maintenance required from a security perspective. IT security
Here's how things would play out. If a change needed to be made to a firewall, the information protection group would make a request, and the IT infrastructure department would carry it out. If there was unusual activity on a port, information protection wouldn't disable it; they would call the network technicians. If a system needed to be patched, information protection would do the research and testing and then put the word out.
Complicated? Yes. But it made sense.
"We said, 'OK, this is a segregation of duties,'" says Perlman, the CIO. "You [security] are a consumer of the tools. We [IT] deploy the tools. Checks and balances."
Gradually, as the IT security function came together and started to operate more smoothly, its staff began working more closely with security, writ large. On Oct. 1, 2004, IT security employees officially started working for corporate security. The switch was thrown.Power ShiftAs CIO, Perlman stood to lose the most. After all, she was giving up employees and budget, and therefore power. But if this bothers her, she doesn't let on during a meeting with a reporter in her office on the top floor of Constellation's headquarters. Her lament instead? Now that IT isn't directly involved with investigations, she says with a laugh, "I don't get the dirt anymore. That's what I miss."
In truth, Perlman didn't lose much more than a few headaches. Only 12 IT employees and a handful of contractors made the move to corporate security
It also helps that she trusts Petruzzi. "If you don't trust the person you're giving the group to, forget it; it will never work," Perlman says. "While we were cleaning up our own shop, we were working on building trust with each other's groups."