As Hydro Tasmania approached its centenary, the company took on a major project to set its technology foundations for the future. Freya Purnell reports.
In 2014, Hydro Tasmania celebrated 100 years of leading renewable energy development in Australia. Its first hydropower development began operation in Tasmania in 1914, and Hydro is now Australia’s largest producer of renewable energy, using a combination of water and wind power to harness natural energy that is then sold on the national grid.
Owned by the Government of Tasmania, Hydro Tasmania employs 1100 people and has assets worth around $5 billion. The company also owns Momentum Energy, an electricity retailer, and operates international consulting business Entura, which offers expert power engineering, renewable energy, water and environmental solutions locally, nationally and internationally.
Background
Back in 2011, Hydro Tasmania’s system landscape was underpinned by a best of breed approach, with point solutions across many different business areas and processes. This created significant challenges around integration, with connectors having to be custom built and maintained, if it was possible to integrate at all.
Glenn Wickham, corporate delivery manager, Hydro Tasmania, says the state of the organisation’s finance system prompted a review of its future technology strategy.
“We hadn’t upgraded it for a long time, and it had got to the point where we were running out of support, and it was going to cost us a lot of money to upgrade, so that got the ball rolling,” Wickham says.
At the time, Hydro’s CEO came from an SAP background, and encouraged the business to examine whether choosing an ERP would be more beneficial than the best of breed approach.
Having undertaken the appropriate analysis and due diligence, Hydro did opt for an ERP, and commenced tender selection processes, first choosing SAP as the solution vendor, and then going through a second process to select an integration partner, which could also support the system on an ongoing basis.
“At that stage, the strategy was that we would only have business knowledge and process support retained within the business, whereas technical knowledge would all be done via the partner,” Wickham says.
UXC Oxygen was selected to run the implementation, and SAP was engaged as QA partner. The two companies worked closely together through the design of the solution.
Implementation
The project, known internally as CASPaR (Core Applications Systems/Processes and Redevelopment), was broad in its reach – it would affect all aspects of the Hydro Tasmania, Momentum and Entura businesses.
From a functional perspective, the SAP footprint would cover the following areas:
- Financial Management,
- Business Planning and Consolidation,
- Human Resource Management,
- Payroll,
- Environmental, Health and Safety,
- Governance, Risk and Compliance,
- Portfolio Management,
- Project Management,
- Asset Operations and Maintenance,
- Procurement and Supply Chain, and
- Customer Care and Billing.
Given the implementation touched all parts of the business, undertaking the appropriate organisational change management as a central component of the project was critical.
“The project was really a true case of software-based transformation. The technology was important, and also the outcomes from a change perspective were very important as well,” says Stuart Dickinson, CEO, UXC Oxygen.
Kicking off in 2012, the project had a very aggressive timeline of 18 months initially, though this stretched closer to two years over the course of the project.
One of the reasons for the tight timeline was that at the outset, Hydro Tasmania’s business strategy was to position for quite significant growth.
The implementation was planned in two main stages, with some components delivered separately due to business priority changes during the project.
The first release was the core ERP, including finance, supply chain, GRC and asset operations and maintenance, with HR/payroll and project/portfolio management comprising the second.
“We went through a very clear design phase right upfront to get everybody on the same page around the overall solution, and then validated their part of building and deploying a solution each time,” Dickinson says.
The project enjoyed very good engagement from the business, with clear direction and high-level support from then-CEO Roy Adair and his leadership team.
“It meant that when the project needed resources, we got the resources,” Wickham says.
Dickinson agrees that the level of engagement was a positive.
“They had very good executive sponsorship and leadership on the project, and the project sponsor, Andrew Catchpole [strategy and market development director, Hydro Tasmania], was very focused on making sure that the business was successful through the process,” Dickinson says.
There was a very large project team, both from a technical and a business perspective, and the way this was structured also paved the way for life after CASPaR.
Paul Molnar, manager, business process – assets and infrastructure, Hydro Tasmania, says, “That was a significant success story for us – the commitment and resources by the business to key roles, such as super users and subject matter experts, and business process ownership across the various process streams that really existed throughout the whole implementation, and even beyond, to work on embedding the business benefits. So we really set it up for the post-project environment in the delivery.”
Dickinson says from an implementation perspective, one of the most unique aspects of the project was its location in Hobart.
“We have all heard stories of projects based in locations where you have to bring the team in to deliver the project, so we were very conscious of that through the process,” Dickinson says.
Due to the length of the program, at 2.5 years, a number of UXC Oxygen team members were relocated to Hobart for the duration. While some of those working on the project moved on to other things as various phases were completed, program director David Hillman was a consistent presence throughout the life of the program.
“I sat on the steering committee for the whole project as well, making sure that we had strong indicative leadership across the program,” Dickinson says.
Initially, the project team was split over several floors of one building, but after they found that this caused some communication issues, the team was consolidated into one wing of a building, and this proved to be far more effective at keeping the team on the same page.
Jon Chadwick, managing partner of Litmus Group, which provided change management services on the project (as well as PMO, benefits realisation and process design), says the project also benefited from clear visibility of the benefits that would make the project a success, and close collaboration between the three key parties – Hydro, UXC Oxygen and Litmus.
“We went to dinner once a fortnight as a group to talk about issues. We didn’t fight it out in steering committee, if there was an issue that I saw coming up with UXC Oxygen work, I would call David or Stuart and we would fix it, and vice versa. There was that transparency across the whole program – everybody knew all the benefits, and had the measures for business readiness top of mind,” Chadwick says.
The first phase of the project was delivered on time and on budget on 1 July 2013, while phase two went live early in 2014.
One of the project’s greatest challenges was delivering phase two of the project at the same time as phase one was transitioning into business as usual (BAU) mode, and dealing with the inevitable bugs and issues that arise in this process.
“Having done the main drop in release one, then we had to cope with BAU operations and obviously all the transition activities, the learning and coming up to speed, and supporting a new system and a whole new set of business processes, and at the same time, kick off the next release of the project,” Wickham says.
“Making sure you keep the business engagement, trying to keep everyone happy and supporting the business as much as you can, and at the same time adding on the next release of the project, was difficult. Probably the biggest learning in retrospect would have been we should probably have had a couple of months’ break to let it bed in, but because of our aggressive timeline, we just didn’t have that option.”
Molnar agrees.
“There was a constant tension between delivery of the technical aspects of the project, getting it done on time and budget, and focusing resources and priorities on the organisational change aspects. There was always a tendency to prioritise the time and budget aspects. Obviously that’s important, but when push comes to shove, it was always a bit of a balancing act trying not to lose sight of the organisational change.”
Mobility for asset management
As part of the project, Hydro implemented the SAP Work Manager solution for its field service staff. Though included in the original implementation methodology, the mobility implementation was eventually separated from the main project and deployed using a slightly different approach.
“To enable the evolution of the work involving end users, we removed the constraints of the fixed price contract and treated it as more of an iterative development,” Molnar says.
Keeping a tight leash on the scope of the mobility aspect, and not letting the whole business get carried away with the possibilities of mobile, was also important, he adds.
“It excluded functionality that was being seen as useful for managers or office-bound people, but that wasn’t the intent of it – it was focused on our field-based maintenance people and their utilisation. To that extent, being strict about keeping to the scope and focus was valuable in the end. But it did need a lot of stakeholder management around expectations.”
Dickinson says part of the success of the mobility solution came from creating a proof of concept first, before it went into production, which allowed them to ascertain where the real business value was.
“This project was all about business value and change, and so looking across each of the areas to be clear around where business value is going to come from. In terms of asset maintenance, getting them mobile is a key part of that process,” Dickinson says.
The Work Manager implementation was also one of the surprise hits with Hydro staff, generating buy-in from the field staff and demonstrating just what technology could do for the business. This was especially welcome considering the team initially felt it was a risky deployment.
“I heard a couple of anecdotal stories around people being hesitant about the technology and saying, ‘What’s the use of this?’, and then coming back a few weeks later, saying, ‘This is fantastic’,” Wickham says. “It was almost like putting a toe in the water, proving the concept, getting people on board, and then post-project, we can then start looking at how else we can leverage that engagement we have with the employees to continually improve and provide more.”
“An unexpected benefit is how it’s helped with the organisational change management of the user acceptance and take-up, simply from having a different, simple user interface that’s working quite well,” Molnar says. “People have taken to that where they haven’t necessarily taken to the SAP interface. So that’s an aspect that we are trying to leverage more and more in different processes.”
Planning for change
With such a broad remit, almost everyone in the Hydro business was affected during the project delivery phase. This necessitated a well-managed and responsive change management process, which Hydro and Litmus Group planned from the ground up.
Chadwick says because there hadn’t been much system change in the Hydro business for a long time, not only were the systems antiquated, but their processes were also in clear need of an update. The speed of change was also a new element for Hydro.
“Even though it wasn’t very fast in most of our terms, it was [important to] manage the speed and the complexity of that implementation with the business. That all culminated into the transition to business as usual, getting the business ready, and measuring that readiness to make sure they were ready to take the stuff on,” Chadwick says.
Organisational change management was established as a dedicated stream within the project organisational structure, alongside the process and technical streams, and was resourced and managed accordingly.
“It was supported and managed in a range of ways, with various business resources like organised business process owners, super users and subject matter experts that were integrated into the project team, so there was a lot of knowledge and expertise getting built up ready to take back into the normal business environment,” Molnar says.
One of the forums which enabled that work was the business process ownership forum, which started in the early days of the project with the involvement of the project director, project managers, and key project personnel.
“It evolved to be a very integrated part of running the project – a lot of transparency across the business about what was going on and the decisions being made by the project team. All of the project deliverables and blueprint design documents were reviewed and approved by business process owners, generating acceptance along the way. I think those things helped with knowledge and buy-in, and having a whole range of stakeholders being prepared to take the change back into the business,” Molnar says.
The change methods employed had to ensure the diverse Hydro workforce, some of who were in different, remote locations, all received the information they needed about the new system.
Chadwick says one of the methods they found extremely effective was the ‘one team’ approach. Capability development was also a key part of the project’s mission.
“From the outset, we agreed with the CEO and the executive sponsors of the program that we would leave capability within Hydro Tasmania as a legacy of the project – so not just the SAP system itself and changes in the process, but also the capability to be able to do things like this again,” Chadwick says, adding that their task wasn’t just to send a large group of change managers through the company.
“It was us supplementing and choosing resources from within the company and training them up, and really getting that buy-in from the grassroots to be able to do that.”
For example, instead of holding big events as part of a roadshow, change managers briefed managers on messages to deliver at regular team meetings, and were present to provide support.
Litmus defined its measure of success in capability development as only having a small number of people still working on the project when it went live.
“We had one person left on the project when it went live. So they didn’t have us there as an insurance policy, they did it themselves,” Chadwick says.
An important differentiator on this project, which ultimately contributed to its success, according to Chadwick, was that as a client, Hydro was very open and ready to take advice on board.
“That was really refreshing for us. There was no pushback, these guys were really hungry to take on the change, hungry to learn new things, and hungry to make this a success.”
Business benefits
One of the challenges of the renewable energy sector is that it is subject to the morphing government policy landscape. With a change in government and major energy reforms in Tasmania in the past 18 months, this has certainly affected Hydro Tasmania.
While the initial business case and benefits expected at the outset of the project were targeted around the anticipated growth of the business, Hydro’s business strategy changed. Although the company is not currently in the growth phase envisaged at the time of the initial business case, it is reaping the benefits of increased efficiency, particularly in terms of a reduction in duplication of processes, and consistency of process.
“We had a lot of disparate applications and processes around the business, and we also had a lot of our key processes that really weren’t supported by systems at all. That’s been quite a dramatic change for the business – for example, in our major works, maintenance and capital works division, we do a lot of project management-related processes, and we had no single project management system or process. Now we have a centralised common process across the business that’s eliminated a lot of waste and brought consistency to how we are doing things across the business,” Molnar says.
From the UXC perspective, though the program has finished, it is only the beginning for Hydro, Dickinson says.
“The big achievement was getting Hydro onto a single platform where they could see and manage the entire business. Implementing SAP is a journey – so it gives them a very solid foundation now to be able to continue to move the business and really start to leverage the platform.”
This article was first published in Inside SAP Yearbook 2015. Photos courtesy of Hydro Tasmania.
