When end users at Contact Energy are unaware that they’re using IT, CIO Iain Graham is happy.
“I’ve tried to make that the norm in our business. If they’re too aware then it might not be working that well."
Last week the energy generator and retailer announced a $107 million tax-paid profit for the 12 months to September 30 -- a year when lower wholesale electricity prices were offset by growth in Contact’s retail customer load. The company now has half a million business and retail customers for its electricity and natural gas business.
Asked whether any IT projects in particular contributed to the results, Graham says IT is pervasive at the company.
“The company result is due to team effort. To attribute it to a single piece of IT, like e-business, is probably naive, but we are constantly working on initiatives to support the business. There’s very little you can do in the course of the business that doesn’t involve IT.”
Graham says that since 1996, when Contact Energy started operating, IT has been treated as any other investment.
“One of the refreshing things is that all the general managers, the CEO and the board have a good appreciation of IT and are supporters of it. So I don’t have difficulty in progressing projects and even in trying things that are a little bit leading-edge such as voice over IP. We’re not reckless but we will explore new technology if we think there is a business advantage. As a CIO I’m really lucky to be in an organisation that’s so progressive.”
Graham says part of the reason for the good relationship is that the IT department isn’t seen as pursuing technology for the sake of it.
“For us it’s not about projects meeting a hurdle rate. If I can see a better use for the money, even if it’s at the expense of a good IT project, I am more than happy that it be invested where it’s better used. It should benefit the whole. When you do that you get trust set up between the CEO, CIO and other business managers. They don’t feel that IT is a great big bucket that money falls into.”
One the of greatest challenges to the IT department has been merging the systems of the nine electricity companies acquired by Contact Energy since it began selling energy in 1998.
Most of its customers have been acquired through buyouts including Hawkes Bay Power, MainPower in North Canterbury, Top Energy in the Far North, Electra, which covered Horowhenua and the Kapiti Coast, Tasman Energy, covering Nelson and Tasman Bay, gas supplier Enerco and Dunedin-based United Electricity.
“Customers have come from one end of the country to the other and a lot of them are from rural areas. Everything had to be integrated very quickly and it was done through a large team effort.”
A key task was bringing everything on to a single billing platform, says Graham.
“It’s fair to say that with the number of companies that we bought we probably saw all the commercially available systems. Some had more than one billing system.”
Another difficulty is that being only four years old the retail electricity market is relatively immature compared to industry sectors such as banking and insurance.
“The rules are still being established. For IT systems and projects to be successful you really have to be clear about the rules and it's hard integrating platforms when the rules are constantly being defined.”
To overcome such obstacles Contact Energy has worked closely with its technology suppliers – mainly IBM, Telecom and Talgentra (formerly Sanderson Software), which provides billing system Gentrack.
“We have a very good relationship with our partners. We’ve certainly delegated -- but not abdicated -- and we’ve kept control of our strategy.”
Graham describes Contact Energy’s IT shop as an amalgam of IBM and Contact Energy staff, of which there are 43.
Major processing functions are carried out at IBM’s Newton data centre in Auckland – a 24 x 7, highly redundant facility housing its RS/6000 SP and one of two storage systems. A separate disaster recovery centre operates for major systems in Wellington.
“We were due to replace our RS/6000 SP this year but with clever tuning and performance gains achieved from an IBM Shark Enterprise System, we have been able to squeeze an extra year out of it with no degradation of service levels. The savings gained from this approach have gone back to business – or in some cases straight to the bottom line.”