Electric company gets down to business

There is a power shift afoot in Ontario.

Electricity, formerly the domain of government, is going to market on May 1, when the province’s electricity sector will be opened up to competition. This coming change has already forced a new mindset on Ontario

Power Generation (OPG).

OPG is the successor of the former government monopoly, Ontario Hydro, whose assets OPG has inherited along with a mandate to compete in a deregulated electricity market. That means a fresh dedication to efficiency in OPG operations, including those relating to the company’s IT infrastructure.

“”The mentality here has shifted from being a pseudo-government (entity) where we had an obligation to serve,”” says Tom Christensen, OPG’s director of e-supply and content management. “”It didn’t matter how much it cost; our job was to keep the lights on.

“”(Now) we’ll be operating under the rules and expectations of any other real company.””

The bottom line focus extends to purchase orders, where OPG, with the help of Compaq Canada, has re-jigged its supply chain to replace the manual handling of invoices and the need for buyers for standard purchases.

“”The big bang for us was in the procurement area,”” Christensen says. “”Every time we buy something through our B2B (application), we eliminate the needs for a buyer.

“”Up until this point, if someone wanted to buy PCs, they would fill out a requisition form, the requisition form would go to the buyer and the buyer would place the order.””

He estimates that eliminating the need for a buyer alone saves OPG between $100 and $200 per transaction. He says buyers can now focus on negotiating contracts that govern this kind of purchasing.

Compaq, whose relationship with OPG stretches back a decade, began integrating round-trip catalogue functionality into OPG’s e-procurement implementation in Nov. 2000. The challenge for Compaq was to implement a solution that would allow OPG employees to access and select products from a customized and secure Compaq product catalogue from within OPG’s SAP business to business application.

The solution would also need the ability to integrate OPG’s purchases with the company’s SAP enterprise resource planning application through the B2B purchasing application.

The implementation works like this: An OPG buyer accesses the company’s Compaq catalogue through OPG’s SAP B2B application and fills a shopping cart, sending the order to management for approval. Once the order is approved, the solution issues an electronic data exchange that is sent to General Electric Capital Corp.’s SAP system. GE Capital then ships the product(s) to the desired OPG site, where they are scanned, sending confirmation of receipt back into the asset management component of OPG’s SAP system.

“”We wanted to look at opportunities to use e-commerce technologies to provide an employee self-service model,”” Christensen says. “”A big criteria was how it would integrate with existing ERP . . . because that’s where we do all our reporting.””

Lyle Weber, Compaq’s OPG account executive, says the challenge of automating the buying process extended past the implementation to the actual use of the solution.

“”It’s a big change for a company to go to an electronic process, especially when it deals with money,”” he says, noting the importance of security with respect to financial controls.

“”This is what I call true e-procurement,”” says Bob Chambers, Compaq’s e-commerce strategy and planning manager.

Chistensen says the implementation has also made it easy for OPG to replace some purchases with leased product.

Habits are hard to change, so a 93-year-old company like Ontario Hydro/OPG is not necessarily the perfect open-market candidate. And though procurement is not the only department that needs adjustment, Christensen says it is a positive step.

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