Imagine that you are set a challenge in your first CIO-level role. You have to take a substantial chunk of an existing nationwide organisation, along with all its staff, systems and processes, and you have to migrate all of them to your own internally developed or outsourced alternatives.
You have to do all this in 18 months, in parallel with moving to a new head office and all the time being open to public scrutiny through a regulatory body set up to monitor the new business.
You might think this is a pretty tall order and it almost certainly is, but it is the one Phil Pike, director of IT and procurement, faced when he joined the newly created Wales & West Utilities (WWU) company in 2005 as its first permanent IT director.
Pike’s background was not a technical one. He did a BSc in Economics with Computing and Statistics at Bath before going on to work for South Western Electricity (SWEB) in various non-IT roles. He then moved into pricing and product development management roles and was involved with SWEB’s first dual-fuel pricing model.
In 1999 Pike moved to MMT Energy, a software company in the global utilities pricing area. Here he got more involved with IT, consultancy and project management and after the company was bought out by Microgen he became programme director for energy trading software.
In 2005 Pike was hired by WWU, first reporting to the financial director and then to the chief executive. He got a place on the executive committee after a couple of years at the company, and he is now also responsible for procurement, logistics and a fleet of new “nice white vans” across the firm.
WWU was set up on June 1st 2005 to take over gas distribution in the Wales and West region previously managed by the formerly state-owned National Grid Transco. Transco disposed of four of the more geographically dispersed regions and retained another four.
WWU was bought and is now owned by a consortium of long-term investors led by the Macquarie European Infrastructure Fund that is managed by a member of Macquarie Group.
WWU’s HQ occupies an imposing office complex at Celtic Springs near Newport in Gwent which houses around 400 admin and management staff. The location puts it fairly centrally in the huge geographic area it covers as a supplier of gas services.
It is a sparsely populated area, covering a sixth of the UK’s geography, serving over seven million customers via 34,000 miles of pipes and taking about nine hours to travel from one end of the area to the other. The company is also currently replacing 400km of metallic mains gas pipes each year.
This was the new company Pike was recruited into in 2005. “There were no IT systems,” he recalls. “We had a contract to use National Grid systems for 18 months. It was massive challenge — I don’t think I knew what I had let myself in for...”
Pike had no choice but to set up new IT systems within the 18-month window because of the tough financial penalties of staying with the National Grid ones for too long.
“We had to achieve it,” he says. And, it turns out, he not only met, but beat this target.
“Successful delivery is about how you deal with challenges. We took the decision to do it quickly, and set ourselves a target of 15 months,” he adds.
Pike outlines three reasons for setting this deadline: “Costs, operational reasons — we wanted to avoid trying to complete as WWU hit peak winter period — and to gain independence and benefits of system transformation as soon as possible.”
The other key decision to be made was whether to “lift and shift” old national grid systems piece-by-piece or make a completely new start. Pike chose to start afresh.
“It was a chance to do it how we wanted to do it. Early on we did a business process review to look at best practice,” he explains.
Pike’s team saw different things done well in different places as far afield as the US, as no one had ever performed such a wholesale restart before.
The result of this research was a radical streamlined approach. “National Grid had 55 core systems. We consolidated this down to five or six,” he says. The opportunity was there for Pike to look at the way different parts of the organisation had traditionally done things and look for synergies and savings. “Each business process area had its own set of systems,” he recalls.
“For example, just looking at the pipe network and maintaining it required an asset repository, repairs schedule and field force mobile application. Other business processes such as responding to emergency gas leaks had a similar but different set of systems. Now all that data goes through the same set of streamlined systems and ends up on one SAP repository.”
The immediate benefit? Lower cost of ownership. “Obviously data and systems vary depending on requirements but we are dealing with one set of systems,” says Pike. “This is better for TCO because there are fewer people and systems to manage.”
And once you have brought these strands together in one place it also becomes easier to look for ways to optimise the allocation of work across this very widespread region.