Changing Direction | Article

Electricity towerMost Improved Relationship

1997 Editor’s Choice Award
TransAlta/ Digital

In 1995, TransAlta, a privately owned Canadian electrical utility company, and Digital Equipment Corporation (Compaq) were involved in an outsourcing relationship that was headed south in a hurry. They were three years into a contract for data center operations, but the computing landscape had changed from a data center to desktop PC. Users were demanding desktop support instead of the data center support called for in the contract.

“We were in this uncomfortable position of dealing with users that wanted a different type support than was contracted,” said Mik Kimura, TransAlta’s manager of IT infrastructure, who had just arrived on the scene. “That drove the relationship into confrontation.”

TransAlta stepped back and took a hard look at what was happening in their company. They saw an architecture that was expensive to maintain. A decision to move to SAP dictated the strategic value of dumping a fruit basket turnover of operating systems for a Windows NT-based infrastructure. A close look at the original contract also was revealing.”It had a two-and-a-half-inch binder packed with all sorts of terms and conditions,” said Kimura. “It was difficult to maintain, difficult to read and difficult to understand.”

Looking Forward

With the problems identified, TransAlta and Digital set out to solve them. The new contract focused on the service domain — the help desk, user support, data operations, NT servers, local area network, wide area network and voice services. In each of those areas, the parties looked at desired service levels and the cost drivers. Once those factors had been determined, they agreed on what level of service would be delivered at what cost. Then they benchmarked the price of service. To keep them moving in the right direction, they agreed to have an external agency come in each year to do a customer satisfaction survey in the user community.

“On one side, we’ve got the user satisfaction survey and, on the other hand, we have the benchmarking of price,” said Kimura. “And we don’t have to do it in a confrontational way — like bidding.”

Deregulation Looms

Having an outsourcing relationship that worked was imperative for TransAlta. As one of the largest electrical utilities in Western Canada, they are a major player in a changing industry. Deregulation appears to be just around the corner, which means that some of the company’s revenue stream is at risk. “We anticipate less revenue from our traditional lines of business, so our CEO is trying to keep the traditional businesses generating cash but is aggressively looking at other opportunities to make up the revenue shortfall,” said Kimura.

One way to address that shortfall is through operational excellence. That’s where Digital comes into the picture.

“We want to become excellent at just operating and maintaining the existing business line,” said Kimura. “One of the things we’ve done is look to Digital for operational support. All the infrastructure operations, plus the help desk, have been outsourced to Digital. We now hold them accountable for operations.”

That move allows TransAlta to focus on changes that need to be made to meet the challenges of their evolving industry.

“If a huge service delivery function like operations is moved to somebody else, less management attention on TransAlta’s part is required,” said Kimura. “I can look more at where we are headed in terms of what sort of technology we should be implementing and what our architecture should look like. I don’t have to worry that our help desk isn’t working.”

All Together Now…

One of Kimura’s first projects when he arrived at TransAlta in 1995 was the standardization of the infrastructure. Today, the networks are all Windows NT based, and a common desktop look has been established, making support easier.

“When we went through that exercise, Digital was there with us,” he said. “We subcontracted parts of that rollout to them. A lot of the people who were actually implementing networks and the NT servers were from Digital.

“What Digital did really well on the desktop was train their people,” he added. “So when we went live, callers were talking to reasonably informed people.”

With TransAlta in transition, their users are looking at different business lines and reengineering how they do their work. That has, on occasion, created situations where Digital is called on to provide support not included in their contract. Digital has responded by copying the Nike “Just Do It” line. They attempt to provide support whether the project is included in their contract or not.

“The Digital manager and I then try to determine if extra billing should kick in or not,” said Kimura. “We make those decisions at the management level. One of the things we’re trying to do this year is tighten up that process a bit.”

Perhaps the real test of this relationship that has turned itself around is the customer satisfaction survey. Last August, 2,200 employees were targeted, and 1,000 responded. The result, said Kimura, was positive.

“The bottom line is that we scored an 8 out of 10. That was in spite of things like SAP, which has been painful here. ”

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