Forward-thinking utility CEOs outsource: CGEY

Environmental groups preach the pooling of resources to help save money. An outsourcer is telling energy companies the same thing.

Cap Gemini Ernst & Young (CGEY) Canada Inc. vice-president Darren Saumur says not only is there

money to be saved through outsourcing, but sharing resources as well. Energy companies stand to save anywhere from 20 to 70 per cent, he says, and uses application management as an example. CGEY released results of a global study on deregulation and competition in the utilities sector Wednesday.

“”There’s a huge value to all the customers if they’re all on the exact same platform and they all decided to do a portal migration. They can leverage that cost across multiple customers,”” Saumur says. The same holds true for custom applications and cites custom-built programs used by nuclear power plants.

Liz Reid is the vice-president, IT services centre, New Horizon Systems Solutions, an outsourcing company owned by CGEY. She says money can be saved on the infrastructure front as well as improving security. Most companies, she says, can’t afford multiple mainframes for disaster recovery, for example.

“”What we were able to do is bring these clients together and draft an opportunity where they could share the large infrastructure and also share the costs,”” Reid says. Horizon customers include Bruce Power, Kinectrics Inc. and Ontario Power Generation.

“”Every time you drive a customer through, everybody wins, because you have the opportunity to lower the cost for everyone,”” Saumur adds.

Deciding exactly how much of your shop to farm out is an inexact science, but Saumur and Reid agree CIOs and CEOs tend to take different postions.

“”I think it’s important where the outsourcing decision is made. If the CEO is visionary and forward-looking you will see more of a trend towards outsourcing larger pieces of the business and concentrating on core,”” Reid says. On the other hand, if the CIO is leading the charge pieces like help desk and hosting get third party treatment, she says.

The most notable exception to the rule, however, is when customer programs are involved.

“”If they feel that their applications give them a competitive advantage they will not want to outsource their applications, or may only want to outsource certain parts of their applications,”” Reid says.

Deregulation and privatization have achieved buzzword status in the energy industry, but Saumur says both public and private utilities are looking to cut costs.

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