Choosing the Right CIS and Other Key Systems for Utility Mergers in Ontario

The electricity utility landscape in Ontario, Canada, is undergoing significant transformation, driven by the increasing pressure to merge and achieve cost efficiencies. This transformation is essential as utility companies must upgrade their systems to cut costs, reduce operational risks, meet regulatory mandates, and cater to evolving customer demands. Notably, Hydro One, Alectra, Elexicon, and Enova have all emerged from the consolidation of municipally owned electric utilities.  

As utility companies navigate these mergers, a critical decision they must make is selecting the right CIS and other integrating systems to support the newly formed entity. In this blog post, we will explore the essential considerations for choosing the right CIS and other key systems during a utility merger.  

The Importance of Choosing the Right CIS 

When it comes to utility mergers, the selection of the right CIS plays a pivotal role in streamlining operations, improving customer service, and ensuring regulatory compliance both now and in the future. To make an informed decision, utilities should establish a framework of clear merger objectives, drivers, strategies, and constraints. Additionally, they must define specific evaluation criteria, considering factors such as functional and technical fit, risk assessment and vendor fit. This approach ensures an unbiased selection of a CIS that supports the merger’s goals and the evolving needs of the organization, improving operational efficiency and customer service.  

To make an informed choice, utilities should consider the following:  

Functional Fit 

Assess Business Requirements: Evaluate the CIS's capabilities to meet the combined business requirements of the merged companies. Consider factors such as metering, billing, collections, customer management, and data analytics, ensuring that the chosen CIS can handle the demands of the larger entity efficiently.  

Technical Fit 

• Alignment with Infrastructure: Determine whether the CIS aligns with the merged entity's technical infrastructure, technical requirements, and policies. Compatibility is crucial for a seamless transition, so the chosen CIS should seamlessly integrate with existing systems and infrastructure. 

• Security and Privacy: Evaluate the CIS's data security and privacy capabilities to ensure compliance with the stringent standards required in the utility sector. 

Risk Assessment 

• Data Migration Challenges: Evaluate the risks associated with each CIS option, including potential data migration challenges. Ensure that data can be seamlessly transferred to the chosen system without loss or corruption. 

• Technical Risks: Assess technical risks such as upgrading infrastructure and applications, considering the complexity of integrations and cybersecurity implications. 

• Business Risks: Consider operational risks, such as system downtime and the ability to meet regulatory changes within tight timelines. Evaluate any potential need for retraining and resource downsizing. 

• Financial and Shareholder Risks: Analyze financial risks, such as the potential need to write off a system that doesn't meet expectations and consider the impact on shareholders and investors. 

Vendor Analysis 

• Vendor Capabilities: Scrutinize the CIS vendors and their track records, evaluating their capability to meet the specific requirements of the merged entity. Consider their ability to provide ongoing support and updates.  

• Vendor Track Record: Consider brand awareness, reputation, customer satisfaction, and financial situation. 

• Flexibility: Assess the vendor's flexibility to adapt to future regulatory changes, ensuring that the chosen CIS can evolve with the industry and changing requirements. Assess the vendor’s Roadmap to ensure it is in line with and enables the digital strategy. 

Business Process Alignment 

Enhancing Efficiency: Ensure that the chosen CIS can effectively support and enhance the merged business processes, looking for opportunities to introduce efficiencies through reducing or eliminating manual tasks, automated workflow and potential for robotic process automation. 

Financials  

Before evaluating and assessing, it’s essential to gauge the significance of various costs: the expense of a retiring system, cost reductions/increases of moving to one system over another, system integration expenses, and the cost of supporting the recommended system. While costs should be a factor, they should not be overly emphasized. The primary objective is to select a CIS that effectively meets the merged company’s requirements now and in the future..  

By carefully weighing these factors against the predefined Evaluation Criteria, utilities can make an informed and objective choice to identify the CIS that aligns best with their specific needs. This approach fosters impartial decision-making, guaranteeing that the selected CIS aligns with the overarching objectives of the merger and the changing demands of the industry.  

The Roadmap to Success 

Choosing the right CIS and other key systems is just one part of the merger journey. It is vital to emphasize that this journey doesn’t end with system selection; the critical next step is to create a roadmap for successfully merging people, processes, and technology. In this endeavour, it is imperative for utilities to shift their focus from the past and to focus on the newly created entity, embracing the vision and strengths of the new company.  

In a future blog post, we will explore the importance of change management in this process and its role in driving the success of the merger. Change management ensures that the organization successfully adapts to the transformations, making it easier for employees to transition into the new environment and align with the vision of the newly created entity.  

In conclusion, navigating utility mergers in Ontario requires a strategic approach that includes a comprehensive system assessment and culminates in a well-executed business process transformation. As mergers become more prevalent in the industry, the decision-making process for selecting a CIS becomes increasingly critical. By following these steps and considering the key factors mentioned, utilities can embark on a journey toward a more efficient, customer-centric, and competitive future. 

Explore how Kaihen’s comprehensive approach can help your utility get business-ready. Our informative blog series is a reliable guide, assisting utilities in navigating critical stages of assessment, evaluation, selection, implementation and transformation. Drawing from our extensive experience in the utility sector, this series will serve as a blueprint for success, offering a wealth of industry insights and best practices. As industry experts and trusted advisors in the Canadian utility sector, our practice areas of Customer Experience, Outage Management, and Asset Management cover a range of specialized knowledge. Join our blog series to propel your utility’s business readiness, enriched by expert perspectives, proven strategies, and boutique-style support.