British Columbia Utilities Commission (BCUC or … · HCM Human Capital Management ... face is the future of our PeopleSoft applications. ... preferred application and implementationtiming

British Columbia Hydro and Power Authority, 333 Dunsmuir Street, Vancouver BC V6B 5R3 www.bchydro.com

Tom A. Loski

Chief Regulatory Officer Phone: 604-623-4046 Fax: 604-623-4407 [email protected]

September 30, 2016 Ms. Laurel Ross Acting Commission Secretary British Columbia Utilities Commission Sixth Floor – 900 Howe Street Vancouver, BC V6Z 2N3 Dear Ms. Ross: RE: Project No. 3698878

British Columbia Utilities Commission (BCUC or Commission) British Columbia Hydro and Power Authority (BC Hydro) Inquiry of Expenditures Related to the Adoption of the SAP Platform

BC Hydro submits its responses to information requests in the above noted proceeding, in accordance with Commission Order No. G-146-16.

BC Hydro has organized its responses and related Exhibit number references as set out in the table below, which was necessary to manage the overall bandwidth of the filing.

Exhibit Description

Exhibit B-6 BCUC IR - Public Responses & Attachments

Exhibit B-6-1 BCUC IR - Confidential Responses & Attachments

Exhibit B-7 Intervener IR (except Adrian Dix) - Responses & Attachments

Exhibit B-8 Adrian Dix IR - Responses

Exhibit B-8-1 Dix IR 1.1.0

Dix IR 1.3.0

Dix IR 1.4.0

Dix IR 1.6.0

Dix IR 1.8.0

Dix IR 1.9.0

Attachments 1-24

Attachments 1-2

Attachments 1-2

Attachments 1-2

Attachments 1-86

Attachments 1-63


Dix IR 1.11.0

Dix IR 1.15.0

Attachments 1-41

Attachment 1

Attachment 1

Exhibit B-8-3 Dix IR 1.16.0 Attachments 1-39

B-7

mailto:[email protected]

markhuds

BC Hydro Inquiry of Expenditures SAP Platform

markhuds

Highlight

September 30, 2016 Ms. Laurel Ross Acting Commission Secretary British Columbia Utilities Commission Inquiry of Expenditures Related to the Adoption of the SAP Platform Page 2 of 2

Exhibit Description





Dix IR 1.20.0

Dix IR 1.21.0

Attachments 152-182

Attachment 1

Attachment 1


Dix IR 1.24.0

Attachments 1-5

Attachment 1

As provided by section 42 of the B.C. Administrative Tribunals Act and section 18 of Commission Order No. G-1-16 Rules of Practice and Procedure, BC Hydro requests confidential filing with the Commission of Attachment 1 to the response to BCUC IR 1.14.2. The reasons for the request for confidentiality are set out in that IR response, and a public version of the attachment is provided at Attachment 9 to BC Hydro’s response to BCUC IR 1.15.4.

BC Hydro also notes that during our review of materials while preparing our January 8, 2016 submission, we reviewed a relevant Human Resource (HR) matter that arose in 2010. Due to the confidentiality of such matters, BC Hydro has not included this document herein but raises that fact to the attention of the Commission.

For further information, please contact the undersigned.

Yours sincerely,

Tom Loski Chief Regulatory Officer rg/af

Enclosure

Review of BC Hydro Information Technology Expenditures

Page i

Acronyms and Abbreviations

A

AFC Audit and Finance Committee ARMC Audit and Risk Management Committee ARRA Amended Revenue Requirements Application

B

BCH BC Hydro BCTC BC Transmission Corporation

C

CCFT Customer Connections Foundational Technology CCS Customer Care and Services CCM Construction and Contract Management CIDC Calgary Internet Data Centre CLE Common Logging and Exception Handling CRM Customer Relationship Management CSOPC Customer Service, Operations & Planning Committee

D

DEF Definition DMS Distribution Management System DR Disaster Recovery DWS Distribution Work Scheduling

E

EAR Expenditure Authorization Request



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ERP Enterprise Resource Planning ESB Enterprise Service Bus EXEC Executive

F

F Fiscal FSR Financial System Replacement

G

GIS Geographical Information System GRC Governance, Risk and Compliance

H

HCM Human Capital Management HR Human Resources

I

IDN Identification IDM Identity Management IMP Implementation IOMA Initiative Operating Maintenance and Administration IT&T Information Technology and Telecommunications ITDSP Information Technology Delivery Standard Practices ITIL Information Technology Infrastructure Library

K

KIDC Kamloops Internet Data Centre



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L

LGS Large General Service

M

MAPP Management and Accounting Policies and Procedures MDG Master Data Governance MGMT Management

O

OCIO Office of the Chief Information Officer OMA Operating Maintenance and Administration

P

PCER Project Completion and Evaluation Report PMO Project Management Office PPM Project and Portfolio Management PSW Plan Schedule Work

R

RRA Revenue Requirements Application

S

SAP SAP AG (Germany) SCA Supply Chain Applications SCS Supply Chain Solutions SCM Supply Chain Management SD&M Schedule, Dispatch & Mobility



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SHE Safety, Health and Environment SMI Smart Metering Infrastructure

T

T&D Transmission & Distribution TBD To be deteremined TIBCO Tibco Software Inc.

W

WIP Work in progress

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REQUESTOR NAME: BCOAPO INFORMATION REQUEST ROUND NO: 1 TO: BRITISH COLUMBIA HYDRO & POWER

AUTHORITY DATE: July 28, 2016 PROJECT NO: 3698878 APPLICATION NAME: INQUIRY OF EXPENDITURES RELATED

TO THE ADOPTION OF THE SAP PLATFORM

______________________________________________________________________ 1.0 Reference: Exhibit B-3, Attachment 1, page 7 of 9

Preamble: The Attachment states: “A technology strategy white paper was presented to the Board at the February 2007 meeting…”.

1.1 Please provide a copy of the technology strategy white paper provide to

the Board in February 2007.

2.0 Reference: Exhibit B-3, Attachment 1, page 7

Preamble: The Attachment states: “One major IT application challenge which we face is the future of our PeopleSoft applications. Following its acquisition by Oracle, it is clear that the PeopleSoft applications will require to be replaced around F12/F13. The options would include the new Oracle replacement, or deployment of the financial modules of SAP that is currently used by BC Hydro to deliver Customer Care functionality. SAP has a strong presence in the utilities market today. The decision as to the preferred application and implementation timing is under study and has yet to be made”

2.1 The referenced text suggests that SAP was considered a strong

“alternative” as early as May 2007. Please confirm that this was the case.

3.0 Reference: Exhibit B-3, Attachment 2, page 7 Exhibit B-3, Attachment 3, page 4

Preamble: Attachment 3 from the May 12 Executive Team meeting indicates that SAP was the preferred approach.

Page 3 of Attachment 6 from the May 22, 2008 ARMC indicates that BC Hydro was considering deploying a SAP environment.

3.1 Please confirm that the recommendations from the May 12, 2008 Executive Team meeting (per Attachment 6, pages 5-6) were shared with the ARMC on May 22, 2008

4.0 Reference: Exhibit B-3, page 4 (lines 10-12) & footnote #5 Exhibit B-3, Attachment 6, page 3

4.1 Please clarify what is meant by “non-optimal ERP solutions” (per page 4).

C1-3

markhuds


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4.2 Please explain why SAP for customer care is considered non-optimal (per footnote #5) when in Attachment 6 BC Hydro states “We currently use SAP successfully in the customer side”.

5.0 Reference: Exhibit B-3, pages 8-9 5.1 Since the May 2008 adoption of the high level strategy that SAP would be

the ERP solution, have there been any instances where SAP did not meet the anticipated business needs and an alternative solution was chosen? If yes, please outline the projects concerned, the alternative solution chosen, the reason why, and the overall project cost.

6.0 Reference: Exhibit B-3, pages 16-20, Tables 2 & 3

6.1 With respect to Table 2, please clarify what the Initiative Operating costs for each project represent. For example are they: i) the operating (i.e. non-capitalized) costs associated with implementing the project, ii) the annual operating costs once in-service, or iii) the cumulative in-service operating costs for the F2009 – F2016 period?

6.2 With respect to Table 2, please clarify the distinction between “closed” and “in-service”.

6.3 With respect to Table 3, what do the reported Initiative Operating costs represent?

7.0 Reference: Exhibit B-3, page 37 Exhibit B-3, Attachment 15 Exhibit B-3, Attachments #28, #35 and #40

7.1 Please provide a general description of the different “phases of activity” in the life of a SAP-related project (e.g. Definition, Identification and Implementation – per Attachment 15) and the approvals required to proceed to each stage.

7.2 At what stage/phase in a project’s development is it considered sufficiently certain to proceed that it is included in the capital expenditure forecast underpinning an RRA (i.e., included in Appendix I of the Application)?

7.2.1 Is there a specific approval that triggers such inclusion and, if so, what is it?

8.0 Reference: Exhibit B-3, pages 16-20, Tables 2 & 3 Exhibit B-3, Attachments #28, #35 and #40

8.1 For each of the projects in Table 2 over $2 M (total cost), please indicate the date the project was approved (per question 7) such that it was “eligible” for inclusion in the RRA and, where applicable, the date the project was either closed or declared in-service.

8.2 For each of the projects in Table 3 over $2 M (total cost), please indicate the date the project was approved (per question 7) and, where applicable, the date the project was either cancelled or written-off.

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8.3 Please provide a schedule that indicates the applicable project numbers (per Tables 2 and 3) to the individual projects set out in Attachments #28, #35 and #40.

8.4 If there are projects noted in Tables 2 and 3 with costs of $2 M or more that are not set out in Attachments #28, #35 and/or #40, please identify and explain why.


9.1 Were each of the projects listed in Tables 2 and 3 managed separately or was there some degree of co-ordination required between some/any of the projects?

9.2 If there were projects that were either managed as a group and/or for which co-ordination was required please, for each instance: • Identify the individual projects concerned and the overall

budget/planned expenditures, • Describe why it was required that they be managed/coordinated

together. • Explain why the set of projects was not considered to be a single

project for purposes of project management and approval.

10.0 Reference: Exhibit B-3, pages 21-22, Tables 5 & 6 Exhibit B-3, Attachments #27, #34 and #39

10.1 Please explain the difference (in terms of when the values are established) between the Planned Operating/Capital expenditures (per Tables 5 & 6) versus the comparable expenditures that would be included in the RRA for the relevant year.

10.2 Please provide as schedule that sets out the IT capital and operating expenditure forecasts included in the RRAs for F2009-F2014 (per Attachments #27, #34 and #39) and contrasts them with the comparable total (i.e. not just SAP projects) planned IT capital and operating expenditures for F2009-F2014 per the annual management plan for OCIO. (Note: It is assumed that BC Hydro is unable to identify the SAP-related project spending in the F2009-F2014 RRAs and compare them with the values in Tables 5 and 6)).

11.0 Reference: Exhibit B-3, pages 16-20, Table 2 Exhibit B-3, Appendix B

11.1 Please confirm whether Appendix B includes all of the in-service and closed projects from Table 2. If not, please provide the authorized vs. actual spending for the omitted projects.

12.0 Reference: Exhibit B-3, pages 21-22, Tables 5 & 6 12.1 With respect to Table 5, please explain: i) the material actual

overspending versus planned in F2011 and ii) the material actual underspending in F2014 versus planned.

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12.2 With respect to Table 6, apart from F2015, there is a consistent pattern of underspending versus planned. Please explain why.

13.0 Reference: Exhibit B-3, pages 16-20, Tables 2 & 3 Exhibit B-3, pages 44-50, Table 9

13.1 Please confirm whether Table 9 includes all of the in-service, closed, deferred and written-off projects from Tables 2 and 3 If not, please provide a revised version of Table 9 that includes these projects, noting the ones previously omitted.

14.0 Reference: Exhibit B-3, pages 16 & 67, Tables #2 and #11

14.1 Please provide a schedule that, for each of the projects reported as Work-in-Progress in Table 2, combines the expenditures set out in Tables 2 and 11 so as to show total anticipated spending over the entire life of the project.

British Columbia Old Age Pensioners' Organization Information Request No. 1.1.1 Dated: July 28, 2016 British Columbia Hydro & Power Authority Response issued September 30, 2016

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British Columbia Hydro & Power Authority BC Hydro Inquiry of Expenditures related to the Adoption of the SAP Platform

Exhibit: B-7

1.0 Reference: Exhibit B-3, Attachment 1, page 7 of 9

The Attachment states: “A technology strategy white paper was presented to the Board at the February 2007 meeting…”.

1.1.1 Please provide a copy of the technology strategy white paper provide to the Board in February 2007.

RESPONSE:

Please refer to the attachment to this response.

STRATEGIC TECHNOLOGY WHITE PAPER

PURPOSE

The purpose of this document is to engage the board in an initial discussion on future investments that will improve organizational performance through advanced technology. Technology will have significant impact on all our business strategies. For the purpose of this paper, we will focus on the areas that address improvements to our safety, reliability and help with the issue of skill shortages. As we develop our technology strategy, we will bring forward both an overall plan and specific actions for discussion and, where needed, approval.

1. INTRODUCTION

BC Hydro, like all electric utilities, leverages heavily on engineering and technology. Our system was designed in an environment when high technology was less prevalent than skilled workers and when customers could tolerate periodic lapses in reliability and power quality. Technology to monitor and c,ontrol the system is more prevalent and increasingly economical. These factors create the need to shift our thinking in how we will integrate technology more strategically into the design and operation of our system.

Utilities have generally been late adopters of new technology and very conservative in its application. We need to break that pattern, because we will only achieve our long term goals if we become early adopters of technology.

We must also do so in a way that integrates technology into all aspects of our business rather than being driven by piece meal analysis. Generation, Transmission and Distribution systems are interconnected, and technology investments that are not integrated, may lose their effect.

2. FUTURE STATE DRIVERS

Achieving our 5 key priorities will require technological advances. The challenges we face today include:

2.1. Energy Deficits and Secure Supplies - We are planning now to close the gap between energy supply and demand. Closing that gap will require massive investments in Generation, Transmission, Distribution and Demand Side management by all players in the system. These investments must incorporate the next generation of technology and not continue to mimic the architecture of the old system.

Submitted by: Engineering, Aboriginal Relations and Generation 14 February 2007 Meeting of the Board of Directors

1

BCOAPO IR 1.1.1 Attachment 1

Inquiry of Expenditures related to the adoption of the SAP Platform

Page 1 of 6

2.2. Customer and Stakeholder Expectations - As people become more reliant on technology, their service expectations will increase for timely and relevant information. They will seek cleaner, more reliable power from an increasingly diverse supply. The technologies that are available today to enhance our relationship with customers are likely underutilized.

2.3. Human Resources - We have an ageing workforce and it is becoming increasingly difficult to attract new resources. Technology solutions can shift the fundamentals of work and organizational design to improve the safety and effectiveness of our employees.

2.4. Safety - Safety is a top priority for BC Hydro. The fundamental method to improve safety is to reduce or eliminate the interaction of people (workers/public) with the hazards created by the electrical system. A technology strategy for BC Hydro will need to incorporate more deliberate goals for public and worker safety.

3. CURRENT TECHNOLOGY INITIATIVES

Changing and adapting to new technology requires long lead times. The organization is in varying stages of development and implementation of the following initiatives;

Smart Grid A Smart Grid incorporates elements of conventional and leading-edge power engineering, sensing and monitoring technology, information technology, and communications to provide better grid performance and to support a wide array of services to consumers.

We anticipate increased customer requests for two-way interconnections to facilitate their desire for more distributed generation and advanced metering. A Smart Grid can include the deployment of a Distributed Management System (OMS) with greatly enhanced monitoring and control capabilities. When an outage occurs, the automatic metering system instantly detects the extent of the outage and begins a process to isolate groups of customers affected, and attempts to restore service from other sources. In a matter of minutes the outage is minimized and isolated to a small area.

Advanced Metering Infrastructure AMI provides a foundation for fundamental changes to electricity delivery and usage. More specifically in the short-term AMI can enable operational efficiencies; enhance restoration response and customer services; increase revenue protection; provide a foundation for conservation; increase internal and public safety; and support the reliability and optimization of the distribution system.

In the longer term AMI can support the implementation of innovative rates, provide building blocks for Smart Grid BC, offer more dynamic and relevant information to customers, support grid stabilization, and provide an infrastructure that others in the Province may be able to utilize.


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Spatial Asset Management (SAM) SAM is a module of the Graphical Information System (GIS) system that facilitates tracking of condition and performance on an asset-by-asset basis. At present BC Hydro has the system installed in approximately 150 field vehicles, and another 50 mobile laptops are available for flexible deployment in other vehicles. This allows asset information to be captured in the field and stored in a common database, accessible to all crews. This application alone greatly increases the efficiency of maintenance crews. Crews working in a particular area can open the system up and view other maintenance items in the area, thereby reducing travel time.

Communications, Monitoring and Control Networks A comprehensive· communication network is fundamental to the optimization of an inclusive energy delivery system. Trends in pervasive two-way communication networks will make the monitoring, measurement and centralized control of distributed assets cost effective. For example, a two-way network to the customer provides both a data collection and a communication capability for price signals.

Ubiquitous communication networks support the concepts of presence and location, which can change workforce organization and the effectiveness of the mobile worker.

Generation Monitoring & Control and Advanced Work Management Systems Monitoring technologies and software packages can be installed on equipment to monitor many, preset equipment health conditions on an ongoing basis. The airline industry and many other utilities have installed this equipment which enables them to detect deviation from normal machine conditions in advance of equipment failure.

Work management systems are available today that can integrate reliability data with cost information to optimize maintenance and capital decisions and work plans. These systems can also be set up to link to inventory, time entry, safety information and operating practices through the use of handhelds to streamline and improve operational efficiencies. In the future, trust in more advanced monitoring could reduce the number of interactions with equipment potentially reducing costs and ensuring safety.

3. EMERGING TECHNOLOGIES AND BEST PRACTICES

BC Hydro will be researching and assessing emerging technology and best practices in other global utilities, these include:

Robotics Remote control robotics provides separation from a hazardous situation and by being connected to the network for central monitoring could lead to safety improvements. For example, workers could remotely access the electrical system with them being positioned safely away from the hazard.

Advanced Materials Carbon nanotubes have potential to create highly conductive (more than 10 times greater than copper), ultra-strong wires and cables with low sag and high current-carrying capacity that may


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eliminate the need for transmission system expansion. Nano-technology also has potential in the manufacture of photovoltaic panels.

Energy Storage and Distributed Generation BC Hydro's ability to store energy is an important aspect of system reliability and low-cost. With cost-effective technical advancements in energy storage, it would be possible to store energy at every transition point in the generation/transmission/distribution chain and significantly increase reliability.

Demand Side Management (DSM) Technologies DSM initiatives and technologies will impact electricity use conservation and efficiency, better resource utilization from existing resources, renewable technologies for generation and grid/voltage optimization. DSM in technology innovation and market transformation activities are focussed on accelerating conservation and efficiency to reduce future load growth. Crosscutting technology such as efficient lighting, geoexchange technology, solar energy, management of electronics and plug load through wireless controls and metering, and biomass technology and water conservation technologies, are a·mong a long list of technologies that can be applied in BC.

These technologies as well as advances in efficiencies in motors and pumps and changes in industrial process technologies and lean manufacturing will further contribute to energy efficiency and reduced load growth. Integration of technologies will capture synergies and derive higher energy savings.

4. IMPACTS ON OTHER STRATEGIES

People Strategic technology implementation will have major impacts on BC Hydro's long-term HR strategies. Attraction and retention strategies will need to continue to evolve from a short-term focus on recruitment to a longer-term perspective of creating and managing a more diverse talent pool of internal and external candidates. Due to the complexity and more frequent need to update systems and equipment, training will need to become a larger and more frequent part of normal business activities. The approach to compensation will need to change to provide the right mix of "value propositions" and incentives to the new knowledge workers.

Appendix 1 gives an example of what our future workforce could look like.

Customers Outage frequency and outage duration will be greatly improved with the adaptation of a Smart Grid program; specifically the OMS and AMI components should improve customers' reliability experience. Improved power quality will provide customers with a higher level of confidence in the safety and security of their digital technology. Improved outage notification will help relationships with large industrial customers who need to know accurate estimates of outages to enable management of staff levels during outages and with residential customers. Monitoring our customers changing needs and requests for different services, and using technology to respond, should also provide higher levels of satisfaction.


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Reliability More advanced monitoring of equipment has the impact of increasing availability of the units and giving proactive signals on problems before they occur. AMI provides near real time, system wide voltage and load information that can be exploited for a variety of reliability improvements.

Safety Strategic technology will reduce the risk to public or worker safety from current levels. Worker safety will be reduced as technologies emerge to conduct line work remotely using robotics technology. With the advancement of "place and presence" technology the corporation will be able to monitor the location of staff during the dangerous periods of storm restoration, or "working alone" conditions.

Public safety risk will reduce because of improved surveillance and monitoring of the electrical facilities. Better online information and analysis of systems and equipment should help to improve safety by improving workers' knowledge about the work and by reducing the amount of exposure to risks. Emergency response can be improved through better communications and system information.

The ability to more effectively identify fault locations should reduce safety incidents to the public and to BC Hydro employees patrolling lines. Energy Diversion or tampering detection will enhance the safety of BC Hydro workers because of the ability to diagnose potential issues remotely instead of technicians having to physically test for these issues at the premises.


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Appendix 1

This is an example envisioning what might be the "Future Look" of Work at BC Hydro in 10-20 years. A scenario from the Field:

Akira takes the 5-minute ride in the Skytrain from her home and smiles as she reflects on having received the PLC Safety Leadership Award from her peers at last night's annual awards dinner. She gets off at her stop at the substation where she signs onto the tablet computer and reviews the day's orders. She and her apprentice trades trainee and helper driver Anthony go over the list and head off to the first task of the day. Their time, location and availability/work status is captured and reported automatically to payroll by the GPS device in their truck and the RFIO chips in their badges.

While en route to Customer #1, they receive a real-time request for another work order in the same neighbourhood which is transmitted to them from the Customer Care Centre in Williams Lake. Akira accepts the order to assist Customer #2 using the voice-response technology in the truck and they continue on their way. As her work order is transmitted, the Inventory Management System identifies that she and Anthony will require a part that is not currently on her vehicle, so a delivery order is sent out from the maintenance yard to meet them at the next job site. Overnight, BC Hydro's inventory management service providers in Bangalore, India will notify the parts manufacturer to increase BC Hydro's order for that component based on an analysis of first quarter usage.

Arriving onsite at Customer #1 's business, Akira electronically completes the tailboard, which requires a fingerprint scan for each crew member to confirm attendance and PSSP/training status. The job involves extending a 3-phase line, installing a transformer, running a service, and installing a smart meter, which is completed by Akira and Anthony in their air conditioned vehicle with an insulated operators' pod, using a joystick to control insulated robotic manipulator arms.

Upon completing the tasks, (which are electronically logged when the meter is installed and active), the job is electronically "voiced" off as complete, the DAD database is automatically updated to provide real-time system status information to the PIC, and Customer#1 is notified by the team in Williams Lake that service has been reinstated. Just as they are about to leave the first job, they receive a call to provide some information about an outage for an intervenor request that the corporate Finance group requires by end of day. Akira provides a verbal summary that is transcribed and transmitted by voice recognition technology to the Corporate Finance team in Burnaby.

With Customer #1 waving goodbye and the Finance request off their plates, Akira and Anthony indicate that they are taking a break for a cappuccino. Their RFIO chips note them as "present" in the neighbourhood but not available for work for the next 30 minutes. Updated email and voicemail notifications derived from the RFIO and GPS data capture are automatically sent to Customer#2 that they will be arriving to tackle the next job in 35 minutes.

Submitted by: CORPORATE HUMAN RESOURCES February 2007 Meeting of the BOARD OF DIRECTORS

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Page 1 of 1


Exhibit: B-7


The Attachment states: “One major IT application challenge which we face is the future of our PeopleSoft applications. Following its acquisition by Oracle, it is clear that the PeopleSoft applications will require to be replaced around F12/F13. The options would include the new Oracle replacement, or deployment of the financial modules of SAP that is currently used by BC Hydro to deliver Customer Care functionality. SAP has a strong presence in the utilities market today. The decision as to the preferred application and implementation timing is under study and has yet to be made”

1.2.1 The referenced text suggests that SAP was considered a strong “alternative” as early as May 2007. Please confirm that this was the case.

RESPONSE:

Confirmed. BC Hydro knew in 2007 that it would eventually need to upgrade or replace its PeopleSoft financial system, and that the SAP Financials module was a potential solution. Initially, the SAP Financials solution was not recommended because its expected cost and expected time to implement were less favourable than the PeopleSoft upgrade option. Subsequently, more detailed investigation determined that the SAP Financials solution could be delivered at lower cost and in a shorter timeframe than initially assumed. Please refer to BC Hydro’s response to BCUC IR 1.5.2 for additional information on the change in 2008 in favour of SAP Financials.


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Exhibit: B-7


Exhibit B-3, Attachment 3, page 4

Attachment 3 from the May 12 Executive Team meeting indicates that SAP was the preferred approach.

Page 3 of Attachment 6 from the May 22, 2008 ARMC indicates that BC Hydro was considering deploying a SAP environment

1.3.1 Please confirm that the recommendations from the May 12, 2008 Executive Team meeting (per Attachment 6, pages 5-6) were shared with the ARMC on May 22, 2008

RESPONSE:

BC Hydro does not have a record of whether the SAP Strategy agreed to at the May 12, 2008 Executive Team meeting was shared with the ARMC on May 22, 2008. The minutes of the ARMC meeting do not indicate whether there was any discussion of SAP or a strategy to make SAP the default solution for IT&T initiatives. Please refer to the Consolidated Information Filing, page 11, line 10 to page 12, line 4 and the associated footnotes and attachments.


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Exhibit: B-7

4.0 Reference: Exhibit B-3, page 4 (lines 10-12) & footnote #5


1.4.1 Please clarify what is meant by “non-optimal ERP solutions” (per page 4).

RESPONSE:

“Non-optimal ERP solutions” refers to the situation where BC Hydro’s ERP systems were no longer fully meeting BC Hydro’s business requirements. Please refer to sections 2.1.1 and 2.1.2 of the Consolidated Information Filing, which outline the challenges BC Hydro faced at the time with its ERP solutions. There were challenges with both the individual systems (e.g., technical obsolescence and functional gaps) as well as the overall ERP landscape (e.g., poor integration and overall complexity of the environment).


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Exhibit: B-7

4.0 Reference: Exhibit B-3, page 4 (lines 10-12) & footnote #5


1.4.2 Please explain why SAP for customer care is considered non-optimal (per footnote #5) when in Attachment 6 BC Hydro states “We currently use SAP successfully in the customer side”.

RESPONSE:

As summarized in BC Hydro’s response to BCOAPO IR 1.4.1, there were challenges with both the individual systems as well as the overall ERP landscape. BC Hydro considered it’s SAP system to be technical healthy with appropriate functionality for the Customer Care business functions.

However, since the SAP system was part of the overall ERP landscape, it was also subject to some of BC Hydro’s general ERP-related challenges, such as poor business integration (e.g., customer driven work such as electrical connections were managed in Ventyx PassPort, and hence isolated from the SAP customer system which managed customer accounts, customer meters and customer calls).


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Exhibit: B-7

5.0 Reference: Exhibit B-3, pages 8-9

1.5.1 Since the May 2008 adoption of the high level strategy that SAP would be the ERP solution, have there been any instances where SAP did not meet the anticipated business needs and an alternative solution was chosen?

If yes, please outline the projects concerned, the alternative solution chosen, the reason why, and the overall project cost.

RESPONSE:

Please refer to BC Hydro’s response to BCUC IR 1.4.2, which addresses the scenario where SAP ERP functionality was considered inadequate, and was therefore supplemented via a “bolt on” solution to achieve a better overall fit to business requirements.

There are also several scenarios where SAP was not an obvious “default” solution (i.e., requirements outside of what would normally be considered core ERP functionality), but where SAP was nevertheless considered as an alternative. For projects that would not normally be considered ERP-related, BC Hydro does not track instances where SAP has been considered; however, the following are examples of projects where SAP alternatives received formal consideration and a non-SAP solution was recommended:

1. The Fleet and Garage Management project considered using SAP plant maintenance functionality as a viable alternative to meet its business requirements. The review recommended that a ‘commercial-off-the-shelf’ software solution should be procured due to its lower cost and better fit to requirements. This project is currently in implementation phase with a forecast total cost of $8.3 million;

2. The HP Service Center is no longer supported by the vendor and three projects are in Implementation phase with the objective of replacing this legacy system. The three projects are Microsoft XRM Enterprise Platform (forecast cost of $0.5 million), Aboriginal Relations MS XRM (forecast cost of $2.7 million), and Service Desk MS XRM (forecast cost of $3.0 million). SAP was considered an alternative, however it was determined that an SAP-based solution would require significant customization to meet business requirements. The Microsoft Dynamics XRM platform was chosen instead; and

3. The Construction Contract Management tool project was initiated in 2014 to provide contract scheduling and forecasting capabilities, particularly for complex engineering construction projects. SAP was analyzed as an option, however, a commercial-off-the-shelf solution was chosen instead because of better fit to the requirements of complex contracts inherent with large construction projects. The total cost of the CCM project was $3.8 million.


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Exhibit: B-7


1.6.1 With respect to Table 2, please clarify what the Initiative Operating costs for each project represent. For example are they: i) the operating (i.e. non-capitalized) costs associated with implementing the project, ii) the annual operating costs once in-service, or iii) the cumulative in-service operating costs for the F2009 – F2016 period?

RESPONSE:

The Initiative Operating costs for each project represent the operating costs associated with implementing a project that are ineligible for capitalization under the International Financial Reporting Standards. For example, costs that are incurred during the Identification phase of a project are typically expensed. Other project related activities that are typically classified as Initiative Operating are: change management, training documentation, training and data conversion.


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Exhibit: B-7


1.6.2 With respect to Table 2, please clarify the distinction between “closed” and “in-service”.

RESPONSE:

Please refer to BC Hydro’s response to the BCUC IR 1.6.1.


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Exhibit: B-7


1.6.3 With respect to Table 3, what do the reported Initiative Operating costs represent?

RESPONSE:

Please refer to BC Hydro’s response to BCOAPO IR 1.6.1.


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Exhibit: B-7

7.0 Reference: Exhibit B-3, page 37

Exhibit B-3, Attachment 15 Exhibit B-3, Attachments #28, #35 and #40

1.7.1 Please provide a general description of the different “phases of activity” in the life of a SAP-related project (e.g. Definition, Identification and Implementation – per Attachment 15) and the approvals required to proceed to each stage.

RESPONSE:

A high-level description of the different phases of activity in the life-cycle of an IT project is provided below.

Project Initiation – identification of a problem or opportunity but the required response is not yet determined.

Project Identification Phase – review of conceptual alternatives, evaluation of feasibility, recommendation of an alternative, and production of a project plan, estimates and business case for the Definition phase. This phase ends with a ‘go/no go’ decision to proceed to Definition Phase with a selected and approved preferred alternative.

Project Definition Phase – a detailed investigation of the preferred alternative, preparation of a high level design, a project plan, estimates and a business case for the Implementation Phase. This phase ends with a go/no go decision to proceed to Implementation Phase. The Definition Phase is sometimes labelled the Blueprint Phase for SAP-related projects (aligned with the Accelerated SAP – ASAP – project delivery framework that is aligned with ITDSP).

Project Implementation Phase – undertakes a detailed design, building, testing, user acceptance testing, and commissioning into service, including deployment of the solution and stabilization. This phase ends with project acceptance by the Project Initiator evidenced by a Project Completion and Evaluation Report.

The Project Identification, Definition, and Implementation phases are preceded by an approved business case and Expenditure Authorization Request. Also, consistent with the IT Project Delivery Framework described in section 4.3.2 of the Consolidated Information Filing, decision points occur at various stages of the project which determine if the project will proceed to the following stage.


Page 2 of 2


Exhibit: B-7

For further details, please refer to the Consolidated Information Filing, Attachment 19, pages 10 and 11.


Page 1 of 1


Exhibit: B-7



1.7.2 At what stage/phase in a project’s development is it considered sufficiently certain to proceed that it is included in the capital expenditure forecast underpinning an RRA (i.e., included in Appendix I of the Application)?

RESPONSE:

The annual planning process drives the allocation of funding and determination of projects that would be included in an RRA. The detailed planning process involves a top-down and bottom-up approach and is described in detail in Chapter 6 of an RRA. Please refer also to BC Hydro’s response to BCUC IR 1.15.13.

The Technology group develops the capital investment forecast over a test period covered by the RRA by selecting projects in the following order of priority:

1) Mandatory investments required to meet safety, legal, regulatory or tariff compliance;

2) Investments which are committed or substantially committed as of the forecast date; and

3) The remaining proposed projects are prioritized based on various categories including: benefits, strategic alignment, operational risk, foundational support, costs and payback.

The phase or stage in the project life-cycle is not a specific criterion for inclusion of a project expenditure forecast in an RRA. In other words, an RRA may include projects at any point stage in the development cycle (e.g., a proposed future project, or in the Identification, Definition or Implementation stage of the project life-cycle).

British Columbia Old Age Pensioners' Organization Information Request No. 1.7.2.1 Dated: July 28, 2016 British Columbia Hydro & Power Authority Response issued September 30, 2016

Page 1 of 1


Exhibit: B-7



1.7.2.1 Is there a specific approval that triggers such inclusion and, if so, what is it?

RESPONSE:

The Technology leadership team and/or BC Hydro’s Executive Team approve the inclusion of a project in the portfolio plan.

The Executive Team and the Board review the 10 Year Capital Forecast to ensure overall alignment with the business objectives, priorities and key targets of the company. Technology then undertakes the portfolio planning process with this guidance, in consideration of the particular issues, risks and opportunities within the business area. BC Hydro’s RRA includes forecast IT&T capital expenditures for a test period based on the capital investment portfolio plan presented and approved by the Technology leadership team, and the Executive team in their oversight of IT&T expenditures and initiatives.


Page 1 of 3


Exhibit: B-7


Exhibit B-3, Attachments #28, #35 and #40

1.8.1 For each of the projects in Table 2 over $2 M (total cost), please indicate the date the project was approved (per question 7) such that it was “eligible” for inclusion in the RRA and, where applicable, the date the project was either closed or declared in-service.

RESPONSE:

The information requested in BCOAPO IRs 1.8.1 and 1.8.3 is provided in the table below.

Appendix I reports forecasted Capital Expenditures for planned and in-progress projects based on a threshold of $2 million. Therefore, the response to this IR includes the date the project was first included in the RRA as it may apply, and the approval date for the project as noted on the original EAR.

Please also note that projects #16 and #64 were identified after the respective RRA was established and completed before the next RRA, and therefore the RRA Filing date is shown as N/A.


Page 2 of 3


Exhibit: B-7

Project

(and Table 2 Consolidated Information Filing reference #)

Total ($000)

RRA or Annual Report Filing

Reference

Original EAR Approval Date

Project Status

Close or In-Service Date

1. SAP Financials License (SAP Enterprise Licenses) 5,801.0 F11 RRA December 2008 Closed August 2013

2. SAP Common Infrastructure (SAP Enterprise Program Common Infrastructure) 4,391.0 F11 RRA October 2009 Closed January 2011

3. SAP Mobile & Handheld Device Management 2,869.0 BC Hydro’s F2014 Annual Report to the BCUC

April 2012 Closed August 2014

16. SAP Investigative Case Management 2,632.0 N/A March 2013 Closed January 2015

26. Enterprise Billing Infrastructure (formerly: Customer Billing) 6,265.0 F17-F19 RRA September 2015 In

Progress N/A

28. Enterprise Financials Upgrade (Financial Systems Replacement Project) 18,887.0 F09/F10 RRA August 2008 Closed February 2011

42. EMPower Project (formerly HR Systems Replacement) 18,622.0 F11 RRA July 2009 Closed March 2012

43. Learning Management System Replacement 2,511.0 BC Hydro’s F2014 Annual Report to the BCUC

October 2012 Closed April 2014

55. Project and Portfolio Management (PPM) 25,966.0 F11 RRA September 2008 Closed November 2012

61. Supply Chain Management 8,729.0 F12-F14 ARRA July 2011 Deferred N/A


Page 3 of 3


Exhibit: B-7

Project

(and Table 2 Consolidated Information Filing reference #)

Total ($000)

RRA or Annual Report Filing

Reference


Project Status

Close or In-Service Date

62. Supply Chain Solutions - SAP 7,661.0 BC Hydro’s F2014 Annual Report to the BCUC

January 2014 Closed January 2016

63. Supply Chain Applications 4,048.0 F17-F19 RRA November 2014 In-Progress N/A

64. Supply Chain Solutions - SAP Meters 2,169.0 N/A March 2014 Closed November 2015

68. Plan and Schedule Work (PSW) Management 10,526.0 F11 RRA March 2011 Closed April 2013

69. Distribution Work Scheduling 12,313.0 BC Hydro’s F2014 Annual Report to the BCUC

March 2014 In-Service June 2015

70. Work Management Technical Readiness 5,694.0 BC Hydro’s F2014 Annual Report to the BCUC

November 2012 Closed September 2013

71. Schedule Dispatch Mobility Foundational Technology 3,351.0

BC Hydro’s F2014 Annual Report to the BCUC

February 2013 Deferred N/A

TOTAL 142,435


Page 1 of 1


Exhibit: B-7



1.8.2 For each of the projects in Table 3 over $2 M (total cost), please indicate the date the project was approved (per question 7) and, where applicable, the date the project was either cancelled or written-off.

RESPONSE:

Please refer to the table below. The approval dates are consistent with BC Hydro’s response to BCOAPO IR 1.8.1.

Project Project Number

Total ($000)

RRA or Annual

Report Filing Reference


Project Status

Write-off Date

72. Asset Management Foundational Technology

YT-00165 3,720 F12-F14 ARRA February 2013 Cancelled March 2015

73. Work Management Foundational Technology

YT-00317 2,223


February 2013 Cancelled March 2014

74. Customer Connections Foundation Technology

YT-00319 1,371


February 2013 Cancelled March 2014

75. Schedule Dispatch Mobility

YT-00318 1,235


February 2013 Partial write-off March 2015

76. Supply Chain Management YT-00171 2,052 F12-F14

ARRA July 2011 Partial write-off March 2016

TOTAL 10,601 Note: Asset Management was identified on the F12-F14 ARRA Appendix I and on Appendix J (page 156) with forecasted spend in fiscal 2013. A business case was not yet completed at the time of filing, and was not expected to be completed until a later date.


Page 1 of 1


Exhibit: B-7



1.8.3 Please provide a schedule that indicates the applicable project numbers (per Tables 2 and 3) to the individual projects set out in Attachments #28, #35 and #40.

RESPONSE:

Please refer to BC Hydro’s response to BCOAPO IR 1.8.1.


Page 1 of 1


Exhibit: B-7



1.8.4 If there are projects noted in Tables 2 and 3 with costs of $2 M or more that are not set out in Attachments #28, #35 and/or #40, please identify and explain why.

RESPONSE:

There are two projects not reported in the respective Appendix I in Attachments 28, 35 and 40 of the Consolidated Information Filing: SAP Investigative Case Management and Supply Chain Solutions – SAP Meters (project #16 and #64, respectively). These projects were identified after the F2012-F2014 RRA Plan was established.


Page 1 of 1


Exhibit: B-7


1.9.1 Were each of the projects listed in Tables 2 and 3 managed separately or was there some degree of co-ordination required between some/any of the projects?

RESPONSE:

BC Hydro distinguishes between: 1) projects for which there was some degree of co-ordination and 2) Transformation Initiative technology projects that were coordinated and managed together as a program:

1) Many projects have some co-ordination with other projects. All of these projects maintained separate project teams, project management, and steering committees due to the distinct subject matter of the respective projects. Each of these co-ordinated projects had distinct and non-overlapping objectives, business stakeholders and scope. There was alignment as required to coordinate testing activities and common milestones. For example,

• In 2009 and 2010, the Enterprise Financials Upgrade project and the Project and Portfolio Management project ran concurrently. These projects shared a go-live date of April 2010 and implemented their respective technical changes into the production SAP environment as part of a co-ordinated go-live event. Meetings were held between the projects to coordinate this common go-live to ensure code and configuration introduced by one project would not interfere with code and configuration introduced by the other project.

• In 2014, the Distribution Work Scheduling project shared a technical go-live with the SAP Enhancement Pack 7 Upgrade project. As with the previous example, the two separate project teams met to coordinate the common go-live, but otherwise were run as separate projects.

2) The SAP projects that were part of the Transformation Initiative – Work Management Foundational Technology, Asset Management Foundational Technology, Customer Connections, Schedule Dispatch & Mobility, and Supply Chain Management – were run as separate projects within a program. Co-ordination was required as there were process handoffs, shared resources, and touch-points between the envisioned business functions that would be delivered by the respective projects. For a definition of a program please see Section 1.3 (“Project Programs”) of the Project Management Guidelines for Technology Projects at Attachment 18 of the Consolidated Information Filing.


Page 1 of 1


Exhibit: B-7


1.9.2 If there were projects that were either managed as a group and/or for which co-ordination was required please, for each instance:

• Identify the individual projects concerned and the overall budget/planned expenditures,

• Describe why it was required that they be managed/coordinated together.

• Explain why the set of projects was not considered to be a single project for purposes of project management and approval.

RESPONSE:

Please refer to BC Hydro’s response to BCOAPO IR 1.9.1. Given that response, BC Hydro would be unable to provide overall budget/planned expenditures where co-ordination occurred between individual projects without making arbitrary assumptions as to the required extent of coordination. For that reason, a meaningful response to the first bullet above cannot be provided.


Page 1 of 1


Exhibit: B-7



1.10.1 Please explain the difference (in terms of when the values are established) between the Planned Operating/Capital expenditures (per Tables 5 & 6) versus the comparable expenditures that would be included in the RRA for the relevant year.

RESPONSE:

The RRA plan is prepared for a future test period prior to filing the RRA. The management plan is prepared annually, and considers changes to the factors and assumptions that form the basis for preparing the respective plans.

BC Hydro prepares the RRA with planned operating and capital expenditures for the test year(s) covered by the application at a point in time, before the actual filing of the application in the manner described in Chapters 5 and 6 of an RRA. The RRA plan is the outcome of a review of external and internal factors (e.g., company-wide priorities, cost pressures, and project information such as scope, schedule and cost estimates), as well as key assumptions.

BC Hydro also prepares a management plan annually. In preparing a management plan, BC Hydro considers the applicable RRA plan, as well as the external and internal factors described above, which may have changed subsequent to the RRA plan. The management plan reflects adjustments made as a result of the changed circumstances between the time the RRA plan is prepared versus when the management plan is prepared.


Page 1 of 3


Exhibit: B-7



1.10.2 Please provide as schedule that sets out the IT capital and operating expenditure forecasts included in the RRAs for F2009-F2014 (per Attachments #27, #34 and #39) and contrasts them with the comparable total (i.e. not just SAP projects) planned IT capital and operating expenditures for F2009-F2014 per the annual management plan for OCIO. (Note: It is assumed that BC Hydro is unable to identify the SAP- related project spending in the F2009-F2014 RRAs and compare them with the values in Tables 5 and 6)).

RESPONSE:

BC Hydro is able to identify the SAP-related projects in Attachments 27, 34 and 39. The table below compares the IT capital expenditures for the SAP-related projects identified in the respective Appendix I’s with the comparable figures in the management plan.

Please note that the RRA Plan for initiative operating expenditures is not available at detailed project level.


Page 2 of 3


Exhibit: B-7

IT&T Capital Expenditures $’s in million

F2009/F2010 RRA

F2011 RRA F2012-F2014 RRA

IT Management Plan

Project Name F09 Plan

F10 Plan

F11 Plan

F12 Plan

F13 Plan

F14 Plan

F09 Plan

F10 Plan

F11 Plan

F12 Plan

F13 Plan

F14 Plan

Plan & Schedule Work (Plan & Schedule Work Management Project)

8.0 5.3 15.8 10.3

7.1 5.3 16.9

Project & Portfolio Management (PPM)

7.0 8.1 0.0 0.0

8.0 7.0 8.1

EMPower (Human Resource Information System (HRIS) Replacement Initiative)

4.6 7.6 - -

0.6 8.0 7.6

SAP Common Infrastructure

4.2 0.5

SAP Financials License

F10 Infrastructure Foundation

Enterprise Financials Upgrade 4.3 1.1 1.5 0.0 0.0 0.0 4.3 12.0 2.0

Safety Health and Environment Information Mgmt System 0.6 0.7

0.6 0.7 0.0

Customer Relationship Management (CRM)

0.0 0.0 6.0

Supply Chain

6.6 7.8 0.0

6.6 11.4 7.1

Talent Management Integration

0.0 0.0 3.0

Asset Management

0.0 1.0 2.0

5.2 Budget Processing

0.0 0.0 1.5

Total 4.9 1.8 21.1 27.6 24.6 22.8 4.9 25.8 24.6 27.6 28.3 12.3


Page 3 of 3


Exhibit: B-7

There is limited value in showing a comparison between the management plan and the RRA project cost estimate for reasons that include:

• The RRA cost estimate is a ‘point in time’ estimate and is generally prepared before the management plan is finalized;

• The annual management plan provides an opportunity for BC Hydro to refine the project budget based on new information or changed circumstances, and will generally vary from the project level forecast in the RRA; and

• The project budget will be refined for the annual management plan based on new information or changed circumstances, and generally will vary from the project level forecast in the RRA.

Please also refer to BC Hydro’s responses to BCOAPO IR’s 1.7.2 and 1.7.2.1.


Page 1 of 1


Exhibit: B-7

11.0 Reference: Exhibit B-3, pages 16-20, Table 2

Exhibit B-3, Appendix B

1.11.1 Please confirm whether Appendix B includes all of the in-service and closed projects from Table 2. If not, please provide the authorized vs. actual spending for the omitted projects.

RESPONSE:

Appendix B provides variance explanations between actual and authorized amounts for the completed projects listed in Table 2. The projects with a status of ‘In-Service’ as at March 2016 are shown in the table below. There may still be trailing costs associated with in-service projects.

Project Actual ($ 000)

First Full Funding (FFF)

Implementation Amount ($ 000)

Variance: FFF

Authorized vs. Actual

($ 000)

Final Authorized

Amount ($ 000)

Variance: Final

Authorized Amount vs.

Actual ($ 000)

13. Mobile Application Infrastructure 446.0 453.1 7.1 453.1 7.1

15. F16 SAP Upgrade 508.0 608.4 100.4 608.4 100.4

21. Meter Testing Consolidation 1,440.0 1,832.8 392.8 1,832.8 392.8

36. SAP Finance Enhancements F15 22.0 48.8 26.8 48.8 26.8

46. Human Capital Management Enhancements F15

442.0 485.6 43.6 485.6 43.6

48. Qualification and Learning Management System (QLMS) Enhancements Work Program - F15/F16

193.0 203.8 10.8 203.8 10.8

54. Payroll Audit & Compliance Tool 308.0 302.0 (6.0) 302.0 (6.0)

69. Distribution Work Scheduling 12,313.0 9518.0 (2,795) 12,350.0 37.0

TOTAL 15,672.0 13,452.5 (2,219.5) 16,284.5 612.5


Page 1 of 1


Exhibit: B-7


1.12.1 With respect to Table 5, please explain: i) the material actual overspending versus planned in F2011 and ii) the material actual underspending in F2014 versus planned.

RESPONSE:

(i) The higher actual expenditures compared to plan in fiscal 2011 result from higher costs for change management, data conversion and training activities related to implementation of the following projects: Project & Portfolio Management, Financials Systems Replacement (also referred to as Enterprise Financials Upgrade) and EMPower.

(ii) The lower actual expenditures compared to plan in fiscal 2014 is predominantly due to cancelled and deferred Transformation Initiative Technology projects i.e., Supply Chain Management, Schedule Dispatch Mobility, Asset Management Foundational Technology, Work Management Foundational Technology, and Customer Connections Foundational Technology.


Page 1 of 1


Exhibit: B-7


1.12.2 With respect to Table 6, apart from F2015, there is a consistent pattern of underspending versus planned. Please explain why.

RESPONSE:

There is not a consistent reason for the underspending across all years.

With respect to Table 6, the lower expenditures compared to plan in F2009 and F2010 are not material.

The lower expenditures in the F2011-F2015 period were predominantly driven by the deferred and cancelled Transformation Initiative projects that were forecasted, but did not proceed. In addition, the Plan and Schedule work project was reduced in scope, as described in section 3.4.3 of the Consolidated Information Filing. The F2016 underspend is primarily attributed to the Supply Chain Applications (SCA) project which was delayed in F2016. BC Hydro intends to file an application in respect of the SCA project following the conclusion of the SAP Inquiry.

As part of normal process, projects must be reprioritized based on unknown or unexpected events. The basis for the capital expenditures forecast for a project, which is based on a ‘point in time’, can change quite significantly as the project progresses through its life-cycle. Adjustments to a forecast may result from the changed circumstances, and the priority and/or feasibility of the project in the context of value, risk and costs.


Page 1 of 1


Exhibit: B-7


Exhibit B-3, pages 44-50, Table 9

1.13.1 Please confirm whether Table 9 includes all of the in-service, closed, deferred and written-off projects from Tables 2 and 3 If not, please provide a revised version of Table 9 that includes these projects, noting the ones previously omitted.

RESPONSE:

Confirmed.

Please note that the number of projects reported in Tables 2 and 3 total 76 while the number of projects in Table 9 total 74. The reason for this is that both the Schedule Dispatch Mobility project and the Supply Chain Management project are reported in Table 2 in respect of their Deferred status and also reported in Table 3 in respect of partial write-offs.


Page 1 of 3


Exhibit: B-7

14.0 Reference: Exhibit B-3, pages 16 & 67, Tables #2 and #11

1.14.1 Please provide a schedule that, for each of the projects reported as Work-in-Progress in Table 2, combines the expenditures set out in Tables 2 and 11 so as to show total anticipated spending over the entire life of the project.

RESPONSE:

Please refer to the table below.


Page 2 of 3


Exhibit: B-7

Project Initiative Expenditures Fiscal 2009 to Fiscal 2026

Expenditures as at F2016

($000)

10 Year Forecast F2017 – F2026

($000)

Project Category Capital Initiative Operating

Capital Initiative Operating

Total ($000)

Project Status

11. SAP Security Access Retrofit Platform - 384.0 570 954.0 In Progress

25. SAP CCS Enhancements Work Program F16 Customer 179.0 - 179.0 In

Progress

26. Enterprise Billing Infrastructure (formerly: Customer Billing) Customer 5,245.0 1,020.0 10,971.0 805 18,041 In

Progress

32. Financial Reporting Enhancements F15/F16 Financial 255.0 - 255.0 In

Progress

39. SAP Finance Enhancements F16 Work Program Financial 331.0 - 64.0 395.0 In

Progress

40. Analysis for Office Financial 37.0 - 9.0 21 67.0 In Progress

52. HR Enhancements F16 Human Resources 419.0 - 419.0 In Progress

53. SAP Environmental Health & Safety Management Upgrade - F16 Human Resources 360.0 16.0 180.0 556.0 In

Progress


Page 3 of 3


Exhibit: B-7

Expenditures

as at F2016 ($000)

10 Year Forecast F2017 – F2026

($000)

Project Category Capital Initiative Operating


Total ($000)

Project Status

60. SAP PPM Enhancements Work Program F16

Project & Portfolio Management 434.0 - 72.0 506.0 In

Progress

63. Supply Chain Applications Supply Chain 2,697.0 1,351.0 61,087.0 6,184.0 71,319.0 (Note 1)

In Progress

65. SAP Master Data Governance (MDG) Enhancements Work Program F16 Supply Chain 418.0 45.0 463.0 In

Progress

66. Ariba eCommerce Expansion F16 Supply Chain 467.0 - 393.0 41.0 901.0 In Progress

67. Distribution Work Scheduling (DWS) Enhancement Work Program

Work and Asset Management 998.0 75.0 782.0 42.0 1,897.0 In

Progress

TOTAL 11,840 2,507 73,558 7,093 94,998

Note 1: $7.3 million will be transferred from Supply Chain Management to the SCA project when the SCA project is approved to proceed. This amount is not included in this total.

D Barry Kirkham, Qc+ James D Burns+ jeffrey B Lightfoot• Christopher P Weafer+ Michael P Vaughan Heather E Maconachie Michael F Robson+ Zachary J Ansley+ George J Roper Patrick j O'Neill

Carl J Pines, Associate Cow1sel+

Robin C lvlacfarlane+ Duncan J Manson+ Daniel W Burnett, QC: + Ronald G Paton+ Gregory J Tucker, QC + Terence W Yu+ James H McBeath+ Edith A Ryan+ Daniel H Coles Jordan A Michaux

Rose-Mary L Basham, QC, Associate Counsel+ Hon WalterS Owen, OC, QC, LLD (1981) john I Bird, QC (2005)

August 4, 2016

VIA ELECTRONIC MAIL

Douglas R Johnson+ Alan A Frydenlund, QC + • Harvey S Delaney+ Paul J Brown+ Karen S Thompson+ Harley J Harris+ Paul A Brackstone+ * james W Zaitsoff+ Jocelyn M Le Dressay

British Columbia Utilities Commission Sixth Floor, 900 Howe Street Vancouver, BC V6Z2N3

Attention: Ms. Laurel Ross,

josephine M Nadel+ Allison R Kuchta+ James L Carpick+ Patrick J Haberl+ Gary M Yaffe+ Jonathan L Williams+ Scott H Stephens+ Pamela E Sheppard Katharina R Spotzl

+ Law Corporation * Also of the Yukon Bar

OVVEN•BIRD

Li\W CURPUKJ\Tl()N

PO Box 49130 Three Bentall Centre 2900-595 Burrard Street Vancouver, BC Canada V7X 1J5

Telephone 604 688-0401 Fax 604 688-2827 Website www.owenbird.com

DirectLine: 604691-7557

Direct Fax: 604 632-4482

E-mail: [email protected]

Our File: 23841/0144

Acting Commission Secretary and Director

Dear Sirs/Mesdames:

Re: British Columbia Hydro and Power Authority ("BC Hydro") Inquiry of Expenditures related to the adoption of the SAP Platform~ Project No. 3698878

We are counsel for the Commercial Energy Consumers Association of British Columbia ("CEC"). Attached please find the CEC's first set of Information Requests with respect to the above-noted matter.

Should you have any questions regarding the foregoing, please do not hesitate to contact the writer.

Yours truly,

!W)N BIRD L\ W

~herP.We CPW/jlb cc: CEC cc: BC Hydro cc: Registered Interveners

(00560548; I)

ORPORATION

8 INTERLAW MEMBER 01' INTERLAW, AN INTERNATIONAL ASSOCIATION

\8f 01' INDEPENDENT LAW fiRMS IN MAJOR WORLll CENTRES

C2-3

cnsmith

SAP Exependitures Inquiry

REQUESTOR NAME: Commercial Energy Consumers Association of British Columbia (CEC)

IRROUNDNO: #1 TO:

DATE: British Columbia Hydro and Power Authority (BC Hydro)

August 4, 2016 PROJECT NO APPLICATION NAME:

3698878 Inquiry of Expenditures related to the adoption of the SAP Platform

1. Reference: Exhibit B-3, Pages 1 and 2

22 The final scope items, as determined by the Commission are:

2:5

24

25

2

3

4

5

6

7

8

9

10

II

12

1.

2.

3.

4.

5.

What are the total capital and operating expenditures incurred by BC Hydro as at

the end of F2016 on the SAP platform, SAP modules and other supporting capital

enhancements to support the platform adoption?

What are BC Hydro's approval and oversight controls and processes related to

the authorization and governance of information technology capital expenditures

and projects? Were these controls and processes appropriately designed and

operating effectively with respect to management's review and oversight of

SAP-related expenditures?

Have the goals outlined in BC Hydro's Information Technology and

Telecommunication (IT&T) Five- Year Plan related to SAP initiatives been

achieved?

What is BC Hydro's planned capital spending on the adoption of the SAP platform

and independent SAP projects on a go-forward basis?

Were all SAP-related disclosures to the Commission appropriate, reasonable and

in accordance with the Utilities Commission Act?

1.1. Are there any issues or is there any information that BC Hydro has encountered in assembling the consolidated information filing that it found did not fit within the Commission scope questions and yet was relevant to ascertaining BC Hydro's costeffectiveness with regard to adoption of the SAP platform or the appropriateness of BC Hydro's actions with respect to its process for the adoption of the SAP platform.

{00564748;1}

2. Reference: Exhibit B-3, Page 4

D As a result of that approach, by 2008 BC Hydro had over 600 applications and over

10 200 databases supporting its business groups.4 In addition to the hundreds of

11 applications and databases BC Hydro was operating, BC Hydro had also developed

12 four non-optimal ERP solutions. 5 ERP is software that allows an organization to use a

11 system of integrated applications to manage the business. 6

(Gartner information referenced in Note 6)

Enterprise resource planning (ERP) is defined as the ability to deliver an integrated suite of business applications. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes, such as those found in finance, HR, distribution, manufacturing, service and the supply chain.

ERP applications automate and suppmi a range of administrative and operational business processes across multiple industries, including line of business, customer-facing, administrative and the asset management aspects of an enterprise. However, ERP deployments tend to come at a significant price, and the business benefits are difficult to justify and understand.

2.1. Has BC Hydro also found that its ERP deployments have come at a significant price and been difficult to justify and understand? Please explain.


s It was against this backdrop that BC Hydro began development of its IT&T strategy

9 with a view to integrating the IT & T landscape in an effort to better support business

10 needs and to reduce overall systern complexity and costs. 12 The analysis BC Hydro

11 performed with respect to consolidation of its various ERP systems into a single

12 systen1 was based on improving cross-functionality and integration of databases. 13

(ARMC Presentation Referenced in Note 13, Page 4 of 6)

Financial ltnplications (Business Case Not Required)

Finally, we surnmarize the financial aspects of tile strategy, including capital and operating.

(ARMC Presentation Referenced in Note 13, Page 6 of 6)

{00564748;1}

Agreement on IT&T Architectures

1. Adopt the tecl1nology architectures as proposed. For the recommendation \.Yith respect to the single ERP environment. the following recommendation was agreed to:

Each major initiative will complete the business process design and business functional requirements prior to software design. SAP will be used as a default solution. If the SAP environment does not meet the business needs, a bolt on solution will be considered. The priorities will be established by tile IT&T Leadership Group but foundational projects will be considered first.

3 .1. Please confirm that the decision to adopt the single ERP platform was made specifically with a determination that a business case was not required.

3 .2. Please confirm that the senior management oversight team was left with the responsibility to assess the value to the organization of the single ERP platform solution.

3.3. Please confirm that the management team from the business units was left with the responsibility to ensure that the solution enabled and suppmied the business.

3.4. Please confirm that Attachment 9 represents the entire business case discussion for the initial stages of the SAP implementation as the ERP platform and that there is no other detailed business case.


5 The strategy to use SAP as the default solution means that BC Hydro evaluates

G whether the platform can be leveraged whenever there is a need to adjust or extend

7 ERP-associated business functionality. Business requirements in large enterprises are

a not static and a key objective for improving BC Hydro's ERP environment was to

o ensure that IT&T systen1s could evolve and adapt in support of emerging business

10 needs and organizational priorities. BC Hydro's SAP Strategy is not a project or

11 program with a defined beginning and end. Neither the adoption of SAP as the default

12 ERP, nor the other strategic intents in the IT&T Plan finalized in 2009, were financial

13 approval decisions, nor were they approvals to necessarily use SAP for any specific

14 project or purpose. Financial approval decisions, as well as specific IT & T architectural

15 recornmendations, were and are always made within the context of specific project

16 proposals and associated funding requests (all as more fully described in section .:1.

17 below).

4.1. Please confirm that the Common Infrastructure Business Case July, 2009 provided in Attachment 5 represents one of the key "business case" decisions with regard to adopting the SAP platform as the ERP for BC Hydro.

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4.2. Please confirm that Appendix D-2 of this report is the extent of the benefit assessment done and that there was no attempt to establish and or estimate quantitatively the benefits of the decision.

4.3. Has BC Hydro assembled the individual project decisions and any quantitative assessment of benefits related to those decisions, which subsequently comprised the evolution of the adoption of the SAP platform, because it had been adopted as the default ERP?

4.3 .1. If so can BC Hydro provide a summary table of those quantified benefits and relate them to the costs?


7

8

Function

Customer Care

Financials

Human Resources

Project Management

{00564748;1}

Table 1 Seven Major SAP Functional Areas and SAP Modules

SAP Description f'.'lodules

IS-U-CCS, IS-U-CCS was implemented at BC Hydro in 2003 lo provide billing, credit CR&B and collections. account management and meter management for

BC Hydro's 1.7 million residenlial and commercial cuslomers.

Opportunities for further expansion included enhanced customer relationship management (CRM), industrial account billing, customer analytics to drive conservation goals, and smart metering related extensions to manage the automated meter-to-c.%h process.

This product set is also known as CR&B.

SAP SAP ERP has extensive financral accounting (FI) and controlling (CO) Financials capabilities, which integrate with a variety of closely related modules

mcluding accounts receivable, sundry billing, accounts payable, travel and expenses, etc.

BC Hydro's PeopleSoft Financials system was ageing and required replacement or reimplementation, including business process simplification, enhancement of controls and complrance with requirements lnternatronal Financial Reporting Standards (I FRS). and SAP provided comprehensive coverage for those requirements.

SAP HCM SAP ERP has extensive Human Capital Management (HCM) features and is another foundational element. II rncludes functron~!lity such as payroll. time capture, recruitment talent management, etc.

Some of these functions were previously delivered via PeopleSof! and various point solutions.

SAP Project SAP Project Systems (PS), together with supporting modules provides Systems extens1ve project and portfolio management capabilities, plus close

integration to other SAP solutions such as Financials, HCM, EAM and Supply Cham, and integration to 3-u party scheduling systems such as Primavera P6.

For large and complex projects such as utrlity asset construction or upgrades, BC Hydro had traditionally relied on limited scope custom IT solutions (e.g., Info-PM) For less complex proJects, a variety of solutions are used including Microsoft.

Status

Implemented

(continuing Investment expected)

Implemented

(continuing mvestment expected)

Implemented

(contmumg investment expected)

Implemented

(continuing investment expected)

Function SAP Description Status Modules

Supply Chain SAP SCM SAP Supply Chain Management (SCM) includes a variety of functions Partially such as materials management, procurement, c:ontracls, and external Implemented supplier relations, and the functionaltly is closely integrated to work management, project management and financials processes, which are of particular importance for BC Hydro's utility operations

BC Hydro currently uses Ventyx PassPort for most of its Supply Chain funct10ns

Work SAP EAM SAP has extensive industry-specific functionality across the overall area Par!tally Mam1gement of work and asset management, also known as SAP Enterpnse Asset Implemented

Management (EAM). ThiS IS a complex area and is fundamental to core ut11ity related operations.

Work management' is primarily focused on scheduling and executing core utility related work (i.e., maintenance on genemtion, transmission, substalions. distributions assets, enhancement or changes to assets, customer-driven work such as extensions or connections, restoration work, or olher work c-ategones such as vegetation management).

Work management scope areas are currently supported at BC Hydro by systems including SAP, Ventyx PassPort. GE Smallworld, and numerous other packages and custom soluttons.

Asset SAP EAM As indtcated above, SAP has extensive tndustry-specific functionality Part1ally Management within tis overall EAM solutton Implemented

'Asset management' is primarily concerned with tracking and managtng the asset base tncluding generation, transmission, substations, distribution and meters (including planning functions, equipment attnbutes, maintenance schedules. maintenance requirements, etc)

Asset management scope meas are currently supported at BC Hydro by systems mcluding Ventyx PassPort, GE Smallworld, and numerous other packages and custom solutions

5 .1. Please provide the date at which the referenced status in the fourth column was determined.

5.2. For each of all of the 7 major SAP platform implementations was there a cost benefit analysis developed and if so, can those be provided?


20 Given the enterprise nature of SAP, a very large number of projects involve SAP in

21 varying degrees; some involve core functions of SAP vvhile others connect to SAP in a

22 minimal manner. In addition, BC Hydro does not typically categorize IT project

23 expenditures internally as SAP-related or non-SAP related. For the purpose of this

24 proceeding, we consider ''SAP-related" to include projects that invest in the SAP

2s platfortTl and core modules, and projects in which functionality resides primarily in SAP

2.6 core capabilities. Projects that are not considered "SAP-related" are those in which the

primary function does not reside in SAP, but which may integrate with SAP or have no

2 connection to SAP. To establish which projects are considered SAP-related, BC Hydro

3 reviewed all IT&T projects and made an assessment of the degree to which each

4 project involved SAP as so described.

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6.1. Please discuss and reconcile 'the strategy of having the SAP platform as the default ERP and having a project by project assessment of whether the project can use the SAP platform justified in the project business case' with the fact that there is no identification of which projects are SAP related or which are 'bolt on'.

6.2. In effect, will it be less than possible to evaluate the SAP platform adoption decision or has BC Hydro's categorization referred to above enabled BC Hydro to assemble a quantitative evaluation of the SAP platform adoption decision?

7. Reference: Exhibit B-3, Page 21, Appendix A

7 Table 4 8

SAP-related Projeds (Tab!& 2)

SAP-related Projects: Write-offs (T8ble 3)

Sl!btotal

SMI SAP-related

Total

Total SAP-related Project Initiative Expenditures, F2009-F2016


($000) (SOOO)

144,044 24,097

9,663 938

153,707 25,035

18,300 -172,007 25,035

Total

($000)

168,141

10,601

178,742

18,300

197,042

12 3.2 SAP-related Project Overview F2009-F2016

13 Please refer to Appendix A for an overview of each project listed in Table_l, using a

14 template similar to the Appendix J format in BC Hydro RRAs. Each template provides

15 a description of each project reported in Table 2 above and includes a summary of the

110 key outcomes as well as an update of cost information as provided by BC Hydro in its

17 ApriiiR Responses.

7 .1. Please confirm that BC Hydro had a quantitative business case prepared for its SMI project and is regularly reporting on the achievement of benefits related to the business case.

7.2. Please identify for the Table 2 projects specifically, which ones have had a quantitative business case prepared in advance of the project approval and which ones have not.

7.3. Please identify for the Table 2 projects specifically, which ones have had a quantitative tracking of benefits achieved after the project completion and implementation and which ones have not.

7.4. For each project listed in Appendix A to the extent that there was a quantitative business case specifying the benefits to be achieved or that there was a quantitative accounting of benefits achieved please provide the business case benefits expected and the benefits achieved for the project.

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12 An IT&T Governance committee was established in F2009 to focus on ensuring IT&T

13 investrnents are prioritized, achieve business value, simplify processes, enable

14 reliability and safety goals, and are achievable with minimal risk to the organization.

1s This group included senior managers from the operating groups and corporate groups,

16 and \vas chaired by the CIO. It was active until January 2011.

8.1. Please describe how this committee ensured that IT&T investments achieved business value.

8.2. Were the functions of this IT&T Governance Committee been taken over by the Technology Governance Committee and have they been taken over by the Executive Team, now responsible for IT governance and oversight?

8.3. Please describe how the current governance practices ensure that the IT&T investments achieve business value.


1s Financial approval is governed by the CPS Financial Approval Procedure (refer to

16 Attachment 12), which docL1ments the authority assigned to BC Hydro employees to

17 approve control documents (e.g., an Expenditure Authorization Request (EAR)). The

1s CPS Financial Approval Procedure states that capital projects are to be reviewed

19 periodically by the project initiator to ensure that the original business case remains

20 valid; the scope, and schedule and cost objectives are current; and the basis for

21 capitalization remains valid. If there are significant changes, an updated business case

22 is to be prepared and a revised EAR submitted for approval. If the revised EAR is not

23 approved, the original authorization may be v;ithdrawn. An EAR that has been active

24 for more than one year and where project activity has not begun will require

2s re-approval to ensure continued funding.

9.1. Please advise as to whether or not a project initiator conducting a periodic review of a project conducts, when ensuring that the original business case remains valid, any quantitative analysis of the benefits suppmiing the business case.

9.2. Please advise as to whether or not a project initiator conducting a periodic review of a project reports on the review, through to the Technology Governance Committee and now the Executive Team or any predecessor committees or subordinate committees.

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10. Reference: Exhibit B-3, Pages 34 and 35, Attachment 14

2 BC Hydro's MAPP 4.1.1 B.1 Business Case Requirements outline the requirements for

3 each business case (refer to Attachment 14 ). A business case is required for any

4 project (or initiative) greater than $1 million requiring investment, expenditure or

s commitment that has significant impact on business operations, creates material risk,

G and/or where there are credible alternatives to a recommended course of action. Each

7 specific business group can determine the level of documentation required for a

a business case for projects or initiatives less than $1 million. The level of business case

9 analysis and documentation should be commensurate v.;ith the level of expenditure

10 and risk of the initiative. In IT&T, each project requires that a business case and EAR

11 be prepared. Hov;ever, for projects less than $1 million, the level of information

12 required is generally less than for projects over $'1 million.

13 The business case is developed and approved, and revised as necessary, over the

14 lifecycle of a project; strategy & planning, identification, definition, and implementation.

1s Once the project goes to operation, a project completion and evaluation report may be

16 required (refer to section 4.2.3 below).

(Page 34)

The PCER provides the project nature, analysis of all significant scope, schedule and

2 cost variances frorn the authorizations at the end of the Definition Phase, stakeholder

and First Nations consultation and communications, project risks and how they were

4 mitigated/ remain unresolved, impact of the completed project on business risks and

£, the benefits realized, lessons learned, conclusions and recommendations. The PCER

6 is completed by the Project Manager and is signed off by the Project Initiator, Project

7 Sponsor, Review Team (outside of the project team) and the Benefits Recipients.

(Page 35)

10.1. Was there a comparable business case requirements policy in place before Business Case Requirements policy in Attachment 14, effective date 2012?

1 0.2. Could BC Hydro please provide the benefits summary for all of the projects in Appendix A, where such summaries exist?

10.3. Could BC Hydro please provide a summary for all of the projects in Appendix A of the Post Completion Evaluation Report assessment of the benefits achieved, where such summaries exist?

10.4. For the Business Case Requirements Policy in Appendix 14, does BC Hydro think it may be appropriate to have a risk assessment, as discussed in Section 5 of the policy, with regard to the achievability of the project benefits?

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11. Reference: Exhibit B-3, Page 38, Attachment 19

22 The framework for IT&T project delivery including the Gate Reviews is set out in

23 BC Hydro's ITDSP and Tailoring Guidelines (60.1 03) (refer to Attachment 19), which

24 have been in use at BC Hydro since June 2004 when the IT & T work was outsourced.

2s The practices have evolved over the years. The last major rework of the ITDSP

26 framework was completed in March 2013 to align with the standard BC Hydro Project

21 Management Procedure and PPM lifecycle.

11.1. Please describe the different types of Business Cases prepared for each Gate Review specified in the ITDSP and Tailoring Guidelines in Attachment 19.

11.2. Please identify at which Gate the project's main Business Case is provided to meet the MAPP4.1.1B.1 guideline.


21 BC Hydro finalized its IT&T Plan in 2009, and BC Hydro's IT&T capital projects and

22 expenditures began to ramp up in the later part of F2009 and F201 0 in accordance

n v;ith this plan. The ITDSP framework was updated in 2009 to, among other things, add

24 Gate Reviews, but this version of ITDSP was complex. During this period there was

2s only one person (a Quality Management!QA Specialist) working in the Technology

2c. PMO on implementing project delivety standards and overseeing projects. For

n example, the role of the Project Initiator was not consistently applied. Each project was

28 expected to comply with the ITDSP and standards; however, clue to limited resources

in the Technology PMO there was limited oversight of compliance. For example, the

2 Enterprise Financials Upgrade project fully followed ITDSP, while the EMPower project

3 that began during this period did not follow ITDSP.

12.1. Were there any consequences in place, during this period, for projects and their management if the standards were not followed?

12.2. What was the rate of compliance for projects during this period, if BC Hydro has sufficient records to be able to identify this compliance level?

{00564748;1}


t 1 During this period, some project teams used other methodologies with only high-level

12 or no mapping to BC Hydro's ITDSP. Several projects were not in full compliance 'Nith

13 ITDSP, and as noted above the Technology PMO had limited resources to provide

t4 direction and oversee compliance. There vvere numerous minor and a few major

15 occurrences of non-cornpliance with governance and oversight standards and policies;

16 however, in most cases successful project outcomes vvere delivered.

13.1. Could BC Hydro please determine the rate of compliance for this period? 13 .2. While the PMO had limited resources, were there nevertheless defined consequence

which would apply for anyone not in compliance if and when the enforcement was followed.


9 In 2013, BC Hydro formalized a distinction between IT & T projects, •.vork programs and

10 capital acquisitions. This allowed BC Hydro to focus on applying the appropriate

11 governance structures to projects and work programs with varying degrees of risk and

12 complexity. In accordance 1Hith the Project Management Guidelines for Technology

13 Projects (Attachrnent 18), work programs follow existing sustainment processes

14 because they are generally lovver risk and therefore the full application of ITDSP is not

15 required as for projects. Work programs do not follow the same life-cycle as projects,

16 but the delivery governance still requires the standard reporting, change notices and

11 completion reports. The financial governance of expenditures for work programs is the

1s same as for projects.

14.1. What has been the level of compliance with the ITDSP for this period? 14.2. Are there consequences in the current period 2013 to 2016 for non-compliance and if so,

what are they? 14.3. Are the Project Management Guidelines for Technology Projects treated as a standard or

are they just guidelines for voluntary utilization?

{00564748;1}


21 JiJble 9 below provides for each of BC Hydro's SAP-related projects a summary of

22 comments and any issues identified in relation to compliance with financial policies and

n controls, and project delivery standards (i.e., ITDSP). The projects in Table 9 are

24 ordered chronologically by their stari date. The evolution of IT&T project governance

2s and oversight to the current state, as discussed in the section above, is reflected in the

table; that is, there has been demonstrated considerable improvernent in standards

2 and policy performance over time.

15 .1. Is this just a judgement or does BC Hydro keep track of non-compliance incidences? 15.2. How does BC Hydro monitor policy compliance?


s One of the goals of the IT&T Plan is to simplify the application environment by

9 reducing the number of integrated applications, using SAP as the core technology

10 standard. The simplification referred to in this goal assutT1es that implementing

11 business capabilities and processes in fewer or one integrated system will (a) allow

12 disparate systems to be decomrnissioned, resulting in reduced operating costs, and (b)

enable BC Hydro to implement improved business processes due to the integrated

2 nature of ERP soft'vvare.

16.1. Has BC Hydro conducted an analysis to determine if the operating costs have been reduced as a consequence of SAP related project implementations and if so, could that evaluation be provided?

16.2. Has BC Hydro measured the improved business processes in regard to SAP related project implementation and if so, could that evaluation be provided?


10 There is general business satisfaction with the SAP systems in place, demonstrated

11 through the effectiveness of support to business activities, the high reliability and

12 scalability of the systems and the stability of SAP for critical business transactions.

13 For example, BC Hydro has never missed a CListomer billing cycle, payroll cycle or

14 financial reporting cycle. For further discussion, please refer to section 5.2.

17 .1. Has BC Hydro measured the effectiveness of support to business activities in regard to SAP related project implementation and if so, could that evaluation be provided?

{00564748;1}

17.2. How has the effectiveness of support to business activities been demonstrated? 17.3. Did BC Hydro, previously to adopting the SAP platform, ever miss a billing cycle,

payroll cycle or financial reporting cycle and if so, how many and what were the consequences of missing these cycles?


23 For exarnple, the implernentation of project rnanagement functionality in SAP, via the

24 PPM Project, allowed SAP to become the single source of truth for project structures

20. and costs for BC Hydro. Prior to this implementation, high level project information

20 vvas stored in PeopleSoft and detailed project costs 'Nere maintained in different

21 in-house systems, causing effort to reconcile between systems on a monthly basis.

18.1. Has BC Hydro measured or estimated the effort for reconciling between systems prior to the SAP related project implementations and after the SAP project implementations to demonstrate a cost reduction?


1::. It was not intended, hovvever, that the implementation of SAP initiatives, in and of

16 themselves, would account for a specific operational cost savings. As noted on

11 pages 4 to 5 of the IT&T Plan and as set out in BC Hydro's response to F2011 RRA

18 BCUC IR 1.275.3 (refer to Attachment 25), $4 million of the $9.3 million reduction in

19 IT & T operating costs were related to reduced software and application maintenance

20 costs.

19 .1. Please confirm that the SAP initiatives have not lead to specific operational cost savings.

RESPONSE:

The iten,s con1pr·ising the $9.3 million referred to in the question are contained within the list of cost reductions on page 30 of Appendix N and include the following:

$ n~ iII i o ___ n __ ---1

Reduction in telecon, air time costs and volume 0.80

Avoidance of software n,aintenance costs 2.00 ---------------------------~----------------------~-~--------------------f----------------------·---·--

Reduction in printer n,aintenance costs 0.48

Avoidance of future spend on PCs 1.50

Reduction in spend on servers 1.60

Reduction In spend on storage 1.00

Avoidance of spend on application n,aintenance 2.00

Total 9.38

The benefits associated with tile above impact tile entire or·ganization but are primar·iJy par't of tile OCIO budget.

{00564748;1}

19.2. Of the $4 million related to reduce software and application maintenance costs, how much was related to SAP related projects?

19.3. What time period was this evaluation made for? 19.4. Was this assessment complied from specific project business case evaluations or some

other source, please identify the source? 19.5. Has BC Hydro produced an updated assessment to the 2016 current timeframe? 19.6. Does BC Hydro have a chronology for these cost reductions over the SAP

implementation time frame?


1a The implementation of SAP solutions across the major functional areas has

19 delivered the following positive outcomes:

20.1. Does BC Hydro have a financial analysis of these positive outcomes to determine the cost-effectiveness of the SAP project implementation over time?


6

7 8

60.0

400

20.0

Figure 4 Forecast of SAP-related Capital Expenditures by Functional Area, F2017 -F2026

Forecast SAP-Related CAP EX by SAP Function I ;\sat March 31. 2016)

44rvt

20M

11M SM 81v1 9M

2017 2018 2019 2020 2021 2012 2023 2024 2025 2026

F:nancial

·· PPfvl

HCM

'vVM/AM

Supp!•,' Chain

Customer

w P!atform

21.1. Please confirm that these expenditures will match the numbers provided in Table 11. 21.2. Is it correct to say that there is $191 million of estimated additional capital expenditures

to be made to implement the SAP related projects BC Hydro has planned for so far. 21.3. Is it correct to say that BC Hydro will have an estimated additional $19 million of

operating expenditures for the SAP related projects BC Hydro has planned so far. 21.4. Please provide the complete list of the legacy ERP systems and other software being

displaced and decommissioned as a result of the SAP implementation past and planned and provide their related ongoing annual license fees.

{00564748;1}

21.5. Please provide the SAP on-going license fees for all of the project components which have been implemented or are planned to be implemented.

21.6. Has BC Hydro done a quantitative evaluation ofthe SAP implementation to date and for the planned implementation and if so could that be provided?


19 The follovving table provides a summary of the Utilities Commission Act provisions,

20 BC Hydro commitrnents and Commission requirements in effect year by year that

21 related to BC Hydro's disclosure of capital projects and expenditures, including

22 SAP-related, over the period F2009-F2016.

22.1. Please confirm that the BC Hydro evidence filed in Table 12 is evidence that BC Hydro has met all of the Commission and Utility Commission Act obligations for filing of information over the periods of time defined in the Table 12 evidence and if not, please identify any exceptions separately.

22.2. Please identify when BC Hydro may have been obligated by the Commission or UCA to identify projects that are linked such that they may appropriately be seen as a larger project initiative and identify whether or not BC Hydro has met obligations to make filings with the Commission in compliance with such a project definition.

{00564748;1}

Commercial Energy Consumers Association of British Columbia Information Request No. 1.1.1 Dated: August 4, 2016 British Columbia Hydro & Power Authority Response issued September 30, 2016

Page 1 of 1


Exhibit: B-7

1.0 Reference: Exhibit B-3, Pages 1 and 2

1.1.1 Are there any issues or is there any information that BC Hydro has encountered in assembling the consolidated information filing that it found did not fit within the Commission scope questions and yet was relevant to ascertaining BC Hydro's cost-effectiveness with regard to adoption of the SAP platform or the appropriateness of BC Hydro's actions with respect to its process for the adoption of the SAP platform.

RESPONSE:

The Commission’s scope questions for this Inquiry of BC Hydro’s expenditures related to the adoption of the SAP platform are broad, and thus information relevant to BC Hydro’s adoption of the SAP platform does fit within the scope questions. BC Hydro has provided extensive information in this proceeding and does not believe there are any other issues to disclose related to its adoption of the SAP platform.


Page 1 of 1


Exhibit: B-7

2.0 Reference: Exhibit B-3, Page 4

1.2.1 Has BC Hydro also found that its ERP deployments have come at a significant price and been difficult to justify and understand? Please explain.

RESPONSE:

BC Hydro agrees that ERP deployments can be costly to implement, but having a comprehensive ERP environment installed and functioning well is fundamental to the business operations for all large enterprises, and that is why BC Hydro has strived to improve its overall ERP situation. As indicated in section 2.2 of the Consolidated Information Filing, BC Hydro has adopted SAP as its ERP technology standard and each SAP-related project is individually considered so that scope and value are appropriately understood and justified.

As the Gartner reference goes on to explain (as per the link provided in footnote 6 of the Consolidated Information Filing, page 4), the benefits justifications for ERP implementations are challenging, but can accrue from four main areas: “1) IT cost savings, 2) business process efficiency, 3) as a business process platform for process standardization and 4) as a catalyst for business innovation.”


Page 1 of 1


Exhibit: B-7


1.3.1 Please confirm that the decision to adopt the single ERP platform was made specifically with a determination that a business case was not required.

RESPONSE:

Confirmed. A business case was not required for the decision to adopt SAP as the default technology for ERP applications because it was not a financial approval decision and it did not approve a solution for any project initiative. An approved business case and EAR are required for each project. The approval of the SAP Strategy is in the nature of approval as described in BC Hydro’s response to BCUC IR 1.2.7.


Page 1 of 1


Exhibit: B-7


1.3.2 Please confirm that the senior management oversight team was left with the responsibility to assess the value to the organization of the single ERP platform solution.

RESPONSE:

BC Hydro’s Executive Team considered the options of continuing with the historical “best of breed” approach and moving toward a single ERP platform, and in May 2008 agreed that BC Hydro should move incrementally toward a single ERP system with SAP as the default. This approval of the strategy did not constitute approval of the implementation of a solution (SAP or otherwise) for any project initiative. Please refer to Attachment 48 of the Consolidated Information Filing.


Page 1 of 1


Exhibit: B-7


1.3.3 Please confirm that the management team from the business units was left with the responsibility to ensure that the solution enabled and supported the business.

RESPONSE:

Confirmed. The SAP Strategy does not change the roles and responsibilities of the Project Sponsor, Project Initiator and Steering Committee for any IT&T project.


Page 1 of 1


Exhibit: B-7


1.3.4 Please confirm that Attachment 9 represents the entire business case discussion for the initial stages of the SAP implementation as the ERP platform and that there is no other detailed business case.

RESPONSE:

Not confirmed.

The business case provided as Attachment 9 to the Consolidated Information Filing is in respect of the Financial Systems Replacement Project (FSRP), which was the first SAP-related project following the adoption of the SAP Strategy in May 2008. Attachment 9 is not a business case for the initial stages of SAP implementation beyond the FSRP.


Page 1 of 1


Exhibit: B-7


1.4.1 Please confirm that the Common Infrastructure Business Case July, 2009 provided in Attachment 5 represents one of the key "business case" decisions with regard to adopting the SAP platform as the ERP for BC Hydro.

RESPONSE:

Confirmed. The approval of this business case for investment in “common infrastructure” indicated that BC Hydro management had confidence that additional SAP-related projects would proceed over time.


Page 1 of 1


Exhibit: B-7


1.4.2 Please confirm that Appendix D-2 of this report is the extent of the benefit assessment done and that there was no attempt to establish and or estimate quantitatively the benefits of the decision.

RESPONSE:

Confirmed. No attempt was made to estimate quantitatively the benefits of the SAP technical components (SAP Portal, SAP ESS/MSS, etc.) that were within the scope of the SAP Common Infrastructure business case.

For further clarity, BC Hydro notes that the purpose of Appendix D-2 of the SAP Common Infrastructure Business Case was to outline the benefits of the SAP technical components specifically identified, not the full suite of the SAP Platform and associated modules.

As per BC Hydro’s practice, financial approval decisions are made within the context of specific projects, so each business case (including the one for SAP Common Infrastructure) needed to provide sufficient justification for financial expenditure approval, and Appendix D-2 was included as part of this justification.


Page 1 of 1


Exhibit: B-7


1.4.3 Has BC Hydro assembled the individual project decisions and any quantitative assessment of benefits related to those decisions, which subsequently comprised the evolution of the adoption of the SAP platform, because it had been adopted as the default ERP?

RESPONSE:

No. BC Hydro has not assembled the full record of SAP-related project decisions and resulting quantitative impacts for BC Hydro. Rather, it is BC Hydro’s practice to consider value on a project by project basis.

Please refer to BC Hydro’s responses to BCUC IRs 1.13.1 and 1.27.5, which summarize the information that has been tracked. Please also refer to Appendix A of the Consolidated Information Filing for an overview of all SAP-related projects.

Commercial Energy Consumers Association of British Columbia Information Request No. 1.4.3.1 Dated: August 4, 2016 British Columbia Hydro & Power Authority Response issued September 30, 2016

Page 1 of 1


Exhibit: B-7


1.4.3 Has BC Hydro assembled the individual project decisions and any quantitative assessment of benefits related to those decisions, which subsequently comprised the evolution of the adoption of the SAP platform, because it had been adopted as the default ERP?

1.4.3.1 If so can BC Hydro provide a summary table of those quantified benefits and relate them to the costs?

RESPONSE:

Please refer to BC Hydro’s response to CEC IR 1.4.3.


Page 1 of 2


Exhibit: B-7


1.5.1 Please provide the date at which the referenced status in the fourth column was determined.


Page 2 of 2


Exhibit: B-7

RESPONSE:

The referenced status in the table above is accurate as of the date of the Consolidated Information Filing.

Note that multiple projects have been implemented for most of the SAP modules listed in the table. The dates for the primary implementation projects are indicated for those modules that are considered ‘Implemented’:

Customer Care F2004 Financials F2011 Human Resources F2012 Project Management F2011 Supply Chain F2015 (partial) Work Management F2012 (partial) Asset Management F2012 (partial)

Please refer to also Figure 2 on page 55 of the Consolidated Information Filing for a visual summary of the recent implementations.


Page 1 of 2


Exhibit: B-7


1.5.2 For each of all of the 7 major SAP platform implementations was there a cost benefit analysis developed and if so, can those be provided?


Page 2 of 2


Exhibit: B-7

RESPONSE:

BC Hydro did not develop cost and benefit models at the level of the seven SAP modules.

Instead, each project is justified based on its own individual merits with the associated costs and benefits considered as part of the business case approval process. In addition, there is often more than one project associated with each module, and each project is individually justified.


Page 1 of 1


Exhibit: B-7


1.6.1 Please discuss and reconcile 'the strategy of having the SAP platform as the default ERP and having a project by project assessment of whether the project can use the SAP platform justified in the project business case' with the fact that there is no identification of which projects are SAP related or which are 'bolt on'.

RESPONSE:

BC Hydro has a good understanding of which projects could likely leverage its existing SAP ERP platform (i.e., based on documented business objectives). Table 1 of the Consolidated Information Filing provides a high level overview of the main capabilities across seven core modules.

During the Identification (IDN) phase of each project, a detailed set of business requirements is established. For ERP-related projects, these requirements are tested against SAP capabilities to see if there is appropriate fit. If SAP provides appropriate fit, then the project is implemented in SAP. If SAP functionality is considered inadequate, then a non-SAP solution (i.e., “bolt-on”) will be considered to supplement or replace SAP (please also refer to BC Hydro’s response to BCUC 1.4.2 for additional context on “bolt-on” projects).

The decision on which technical solution, or combination of solutions will be used, is formalized in the Architecture Vision (AV) document, which is an ITDSP deliverable completed within the IDN phase.

Note that BC Hydro does not expect all of its IT&T projects to default to its SAP ERP technology standard, only those with business requirements that are ERP-related. Similar logic applies to other application domains. For example, for ECM (Enterprise Content Management)-related projects, BC Hydro defaults to its ECM technology standard, which is IBM Filenet, unless business requirements justify a different technology.


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Exhibit: B-7


1.6.2 In effect, will it be less than possible to evaluate the SAP platform adoption decision or has BC Hydro's categorization referred to above enabled BC Hydro to assemble a quantitative evaluation of the SAP platform adoption decision?

RESPONSE:

As indicated in BC Hydro’s response to CEC IR 1.4.3, BC Hydro has not attempted to assemble a full quantitative assessment across all SAP-related projects.

This would be a very complex exercise, with two dimensions being particularly difficult to estimate: 1) quantification of all IT&T and business-related benefits across all of the SAP-related projects, and 2) quantification of the costs and benefits of the alternative IT&T strategy (i.e., continuation of the “Best of Breed” ERP strategy beyond F2009).


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Exhibit: B-7

7.0 Reference: Exhibit B-3, Page 21, Appendix A

1.7.1 Please confirm that BC Hydro had a quantitative business case prepared for its SMI project and is regularly reporting on the achievement of benefits related to the business case.

RESPONSE:

Confirmed. The SMI program had a quantitative business case prepared and the realization of benefits has been reported annually in the SMI Program Quarterly Update Reports to the Commission for Q1 in F2013, F2014, F2015 and F2016.


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Exhibit: B-7


1.7.2 Please identify for the Table 2 projects specifically, which ones have had a quantitative business case prepared in advance of the project approval and which ones have not.

RESPONSE:



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Exhibit: B-7


1.7.3 Please identify for the Table 2 projects specifically, which ones have had a quantitative tracking of benefits achieved after the project completion and implementation and which ones have not.

RESPONSE:

As indicated in BC Hydro’s response to BCUC IR 1.27.5, BC Hydro does not have quantitative benefits tracking in place by project.

In response to recent internal audit recommendations the Technology group will be planning and implementing a benefit realization process by March 31, 2018 (refer to Attachment 23 of the Consolidated Information Filing).


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Exhibit: B-7


1.7.4 For each project listed in Appendix A to the extent that there was a quantitative business case specifying the benefits to be achieved or that there was a quantitative accounting of benefits achieved please provide the business case benefits expected and the benefits achieved for the project.

RESPONSE:



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Exhibit: B-7


1.8.1 Please describe how this committee ensured that IT&T investments achieved business value.

RESPONSE:

The IT&T Governance Committee ensured that IT&T investments achieved business value through review and discussion of IT capital plans, and discussion of status updates provided by CIO on larger IT&T initiatives. IT&T Governance members were Executive members, senior business representatives and the CIO, ensuring adequate business coverage.

Please also refer to BC Hydro’s response to BCUC IR 1.15.6.


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Exhibit: B-7


1.8.2 Were the functions of this IT&T Governance Committee been taken over by the Technology Governance Committee and have they been taken over by the Executive Team, now responsible for IT governance and oversight?

RESPONSE:

Yes, the functions of IT&T Governance Committee were taken over by Technology Governance Committee and now by the Executive Team. As set out in BC Hydro’s response to BCUC IR 1.15.6, the terms of references of each governance and oversight body have evolved over time.


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Exhibit: B-7


1.8.3 Please describe how the current governance practices ensure that the IT&T investments achieve business value.

RESPONSE:

There are multiple control points to ensure that IT&T investments achieve business value.

Annual IT capital plans are developed by the Technology group working together with business groups on a portfolio basis to select and prioritize the initiatives with the highest business value in the plan.

Annual IT capital plans are reviewed by the Technology Leadership Team and Finance. Once a plan is finalized, it is reviewed and approved by the Executive Team (previously this was done by Tech Governance).

The Technology group developed and applied a new prioritization model in late F2015 and early F2016 to ensure IT initiatives planned in the IT capital plans aligned and supported the new BC Hydro corporate priorities. Only priority initiatives are included in the plan.

On a monthly basis, the Technology Leadership team meets to release projects (i.e., to start work on project initiation). The investment justification is reviewed at that time. As specific initiatives proceed through the project lifecycle phases, business cases (or statement of objectives for Identification) are developed describing project justification and value. At the end of each lifecycle phase, the Project Sponsor needs to confirm that there is continued business justification to proceed with the project.

During execution of a project, the Project Initiator and Steering Committee (if in place), review project changes for impacts to benefits and to ensure that the project continues to be justified.


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Exhibit: B-7


1.9.1 Please advise as to whether or not a project initiator conducting a periodic review of a project conducts, when ensuring that the original business case remains valid, any quantitative analysis of the benefits supporting the business case.

RESPONSE:

The Project Initiator is accountable to monitor overall project progress through regular status meetings; to review and decide upon change requests that materially affect the project budget and schedule; to advocate, enable and verify project outcomes and benefits realization as project solutions are introduced and then operationalized by BC Hydro’s business groups, and to ensure that organization and process changes introduced by the project are anchored into the operating business groups.

BC Hydro does not have a policy or procedure in place that defines how the periodic reviews of the project are to be conducted by the Project Initiator. On a case by case basis, quantitative analysis of the benefits supporting the business case may be conducted. The direct benefits identified as a result of this analysis would be documented in the project business case, or the Project Initiator would report to the Project Sponsor or the Project Steering Committee if concerns are identified regarding the business case validity.


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Exhibit: B-7


1.9.2 Please advise as to whether or not a project initiator conducting a periodic review of a project reports on the review, through to the Technology Governance Committee and now the Executive Team or any predecessor committees or subordinate committees.

RESPONSE:

The status of projects is reviewed with the Project Initiator in regular status meetings with the Project Manager. The Project Initiator chairs Steering Committee meetings and reports on project status as appropriate. The Project Initiator does not report on project status directly to other committees. On a case by case basis, projects may be reviewed at the Executive level (e.g., formerly by the Technology Governance Committee, currently by the Executive Team) or at the Board Level. If such reviews occur, the project status, key risks and issues would be reviewed.

Please refer to BC Hydro’s response to BCUC IR 1.21.2 for additional details on project status reporting to the Executive level.


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Exhibit: B-7

10.0 Reference: Exhibit B-3, Pages 34 and 35, Attachment 14

1.10.1 Was there a comparable business case requirements policy in place before Business Case Requirements policy in Attachment 14, effective date 2012?

RESPONSE:

Yes.


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Exhibit: B-7


1.10.2 Could BC Hydro please provide the benefits summary for all of the projects in Appendix A, where such summaries exist?

RESPONSE:

The following table provides a reference to the page number of benefits summaries, or equivalent, provided in the business cases and project completion reports attached to DIX IR 1.16.0, where such summaries exist.

BC Hydro notes that three projects have a definition phase business case rather than implementation phase business cases and therefore benefits are not fully defined.

The note “No PCER” in the fourth column of the table indicates that either a PCER was required but not completed, or it was not possible to locate a PCER that may have been completed. Where a PCER was not required this is also noted.

All IT&T projects have an NPV calculation in the EAR document. For the purposes of providing a response to CEC IR 1.7.2, BC Hydro has identified in column 2 of


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Exhibit: B-7

the table below projects that have quantitative business cases where direct benefits have been included in the net present value (NPV) calculation and where the resulting NPV is positive over the evaluation period.

Project Quantitative Business Case (CEC IR 1.7.2)

Benefits Summary from Business Case (CEC IR 1.10.2)

Benefits Summary from PCER

(CEC IR 1.10.3)

1. SAP Financials License (SAP Enterprise Licenses)

No No benefits summary Not applicable -- no PCER, not required, capital purchase

2. SAP Common Infrastructure (SAP Enterprise Program Common Infrastructure)

No See page 17, section 6.1 of DIX IR 1.16 Attachment 5

No PCER – not required at the time

3. SAP Mobile & Handheld Device Management

No See page 43, section 5 of DIX IR 1.16 Attachment 7

See page 13, section 5 of DIX IR 1.16 Attachment 8

4. F10 SAP Infrastructure

No No benefits summary No PCER – not required at the time

5. SAP NetWeaver Technical Enhancements

No See page 25, “Major Benefits”, in DIX IR 1.16 Attachment 11

See page 11,section 5 of DIX IR 1.16 Attachment 13

6. SAP Enhancements Pack 7 Upgrade



7. SAP Enhancements Pack 6 Upgrade



8. Data Masking for SAP and Portal

No See page 28, “Alternative 4”, in DIX IR 1.16 Attachment 18


9. SAP Solution Manager Implementation




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Exhibit: B-7




(CEC IR 1.10.3)

10. SAP Licensing F14 No No benefits summary Not applicable -- no PCER, not required, capital purchase

11. SAP Security Access Retrofit

No See page 14, section 5, of DIX IR 1.16 Attachment 25

Not applicable --no PCER yet, project not complete

12. SAP Environment Upgrade

No See page 25, section 5.2.1, DIX IR 1.16 Attachment 26


13. Mobile Application Infrastructure



14. Worksoft Test Automation

Yes See page 20, section 5, of DIX IR 1.16 Attachment 29


15. F16 SAP Upgrade No See page 20, section 6, of DIX IR 1.16 Attachment 32

See page 9 of DIX IR 1.16 Attachment 33

16. SAP Investigative Case Management


See page 11, section 5, of DIX IR 1.16 Attachment 37

17. SAP Collections Module

No See page 32, “Benefits”, DIX IR 1.16 Attachment 38


18. SAP Customer Care System (CCS) Enhancements F15



19. Net Metering SAP Billing Rate


No PCER


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Exhibit: B-7




(CEC IR 1.10.3)

20. SAP Customer Care System (CCS) Address Management


21. Meter Testing Consolidation



22. Large General Service (LGS) Rate Structure Change


23. Credit Collections Enhancements F14



24. Residential Inclining Block (RIB) IT Implementation


25. SAP Customer Care System (CCS) Enhancements Work Program F16



26. Enterprise Billing Infrastructure (formerly: Customer Billing)

No, project in Definition phase

• Improved capability for content management on the bill

• Reduced cost of paper for bill and bill related content

• Reduced cost of postage for bill delivery

• Reduction of RAMSA costs for Customer Service

• Technology risk reduction

• Improved customer satisfaction



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Exhibit: B-7




(CEC IR 1.10.3)

27. SAP Governance, Risk and Control (GRC) 10.0 Implementation

No See page 17, “Purpose”, in section 2 of DIX IR 1.16 Attachment 54


28. Enterprise Financials Upgrade (Financial Systems Replacement Project)

No See page 41, Appendix F, of DIX IR 1.16 Attachment 58

No PCER

29. SAP Financial Reporting Enhancements F13

No See page 26, “Benefits Realization”, of DIX IR 1.16 Attachment 63


30. SAP Financials - Reporting Enhancements F11/F12


31. PowerTech Lab Financial System Migration

No • Improved employee productivity and improved data accuracy for decision making at Powertech Labs.

• Cost avoidance associated with an alternative ERP solution.

• Successful migration from obsolete, unsupported software.

• Eliminated risk associated with reliance on unsupported software.

32. Financial Reporting Enhancements F15/F16



33. SAP Journal Voucher Upload Tool

No See page 23, “Benefits Realization”, of DIX IR 1.16 Attachment 71

No PCER

34. SAP Expense Workflow Enhancements




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Exhibit: B-7




(CEC IR 1.10.3)

35. SAP FSR Changes to Distribution Outage Data Warehouse


36. SAP Finance Enhancements F15


No benefits summary in PCER

37. Harmonized Sales Tax (HST)


38. Provincial Sales Tax (PST) Reinstatement


No PCER

39. SAP Finance Enhancements F16 Work Program



40. Analysis for Office No See page 18, section 5, of DIX IR 1.16 Attachment 83


41. PeopleSoft Decommissioning



42. EMPower Project (formerly HR Systems Replacement)

Yes See page 33, section 6.5, of DIX IR 1.16 Attachment 90

No PCER

43. Learning Management System Replacement



44. SAP Incident Management System




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Exhibit: B-7




(CEC IR 1.10.3)

45. SAP Incident Management System (Environment)


See page 11, “Impacts & Benefits…”, in DIX IR 1.16 Attachment 100




47. SAP Human Capital Management (HCM) System F13 Enhancements

No See page 23, “Benefits Realization”, in DIX IR 1.16 Attachment 103


48. Qualification and Learning Management System (QLMS) Enhancements Work Program - F15/F16



49. Common Payroll Holdback

No See page 26, “Benefits Realization”, in DIX IR 1.16 Attachment 108

No PCER


No See page 14, section 3.1.1, “Major Benefits”, of DIX IR 1.16 Attachment 109


51. eRecruitment Enhancements Work Program F15



52. HR Enhancements F16



53. SAP Environmental Health & Safety Management Upgrade - F16

No See page 16 of DIX IR 1.16 Attachment 118



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Exhibit: B-7




(CEC IR 1.10.3)

54. Payroll Audit & Compliance Tool



55. Project and Portfolio Management (PPM)

No See page 21, section 6.5, of DIX IR 1.16 Attachment 124

See page 22, section 1.8, of DIX IR 1.16 Attachment 126

56. Project & Portfolio Management (PPM) Enhancements F13



57. Project & Portfolio Management (PPM) Enhancements F14



58. SAP Project & Portfolio Management (PPM) Enhancements F15



59. Project & Portfolio Management (PPM) System Security Enhancements



60. SAP Project & Portfolio Management (PPM) Enhancements Work Program F16



61. Supply Chain Management


No benefits summary, project in Definition phase

No benefit summary in PCER, project in Definition phase

62. Supply Chain Solutions - SAP


See pages 15 and 16, sections 5.1 and 5.2, of DIX IR 1.16 Attachment 146


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Exhibit: B-7




(CEC IR 1.10.3)

63. Supply Chain Applications


• Provide an effective supply chain management tool, enabling better decision making and lowering risk in the supply chain

• Improve the efficiency of resources

• Improve the efficiency of supply chain processes

• Improve the quality of supplier delivery

• Advance the goals of the platform strategy

• Provide capability for streamlined audit and controls

• Provide financial benefits to the organization and the rate payer


64. Supply Chain Solutions - SAP Meters


See pages 15 and 16, sections 5.1 and 5.2, of DIX IR 1.16 Attachment 146

65. SAP Master Data Governance (MDG) Enhancements Work Program F16



66. Ariba eCommerce Expansion F16

Yes See page 25, section 6 of DIX IR 1.16 Attachment 156



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Exhibit: B-7




(CEC IR 1.10.3)

67. DWS Enhancement Work Program



68. Plan and Schedule Work (PSW) Management


See page 20, sections 5.1 and 5.2 of DIX IR 1.16 Attachment 162

69. Distribution Work Scheduling

Yes See page 26, section 6 of DIX IR 1.16 Attachment 163

See page 16 of DIX IR 1.16 Attachment 166

70. Work Management Technical Readiness

No See page 33, “Transformation benefits…”, in DIX IR 1.16 Attachment 167

No benefits summary in PCER

71. Schedule Dispatch Mobility Foundational Technology


See page 23, bullets in section 2, of DIX IR 1.16 Attachment 169; note: project in Definition phase



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Exhibit: B-7


1.10.3 Could BC Hydro please provide a summary for all of the projects in Appendix A of the Post Completion Evaluation Report assessment of the benefits achieved, where such summaries exist?

RESPONSE:



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Exhibit: B-7


1.10.4 For the Business Case Requirements Policy in Appendix 14, does BC Hydro think it may be appropriate to have a risk assessment, as discussed in Section 5 of the policy, with regard to the achievability of the project benefits?

RESPONSE:

Yes, BC Hydro agrees a risk assessment with regard to the achievability of project benefits is appropriate, and the Business Case Requirements policy in Attachment 14 requires this. In addition, the IT business case template and guidance require the author of the business case to assess risk associated with:

1) Ability to realize the business benefit;

2) Ability of the technology to deliver the expected functionality required to achieve the benefit;

3) Ability to deliver the project at the cost, schedule and quality required; and

4) Readiness of both the business and technology organization to embark on the project.


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Exhibit: B-7

11.0 Reference: Exhibit B-3, Page 38, Attachment 19

1.11.1 Please describe the different types of Business Cases prepared for each Gate Review specified in the ITDSP and Tailoring Guidelines in Attachment 19.

RESPONSE:

An Identification Phase Statement of Objectives is prepared for Gate 1 Identification Approval. The Statement of Objectives describes the business need, and the scope, cost and schedule required to assess the business need, to investigate alternative solutions that can address it, and to identify a recommended feasible alternative to be taken forward to the Definition Phase.

A Definition Phase Business Case is prepared for Gate 2 Preliminary Approval. This business case describes the alternatives investigated in the Identification phase, the rational for the recommended alternative and the scope, cost and schedule required to complete the design of the recommended alternative and to complete a detailed implementation plan for the recommended alternative.

An Implementation Phase Business Case is prepared for Gate 3 Full Funding Approval. This business case describes the design work undertaken during the Definition phase and the proposed detailed implementation plan. The Implementation business case includes the detailed scope of work, estimates and schedule to implement the recommended and designed solution.


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Exhibit: B-7


1.11.2 Please identify at which Gate the project's main Business Case is provided to meet the MAPP4.1.1B.1 guideline.

RESPONSE:

The Implementation Phase Business Case prepared for Gate 3 Full Funding Approval meets the MAPP4.1.1B.1 guideline. Please refer also to BC Hydro’s response to CEC IR 1.11.1.


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Exhibit: B-7


1.12.1 Were there any consequences in place, during this period, for projects and their management if the standards were not followed?

RESPONSE:

During the F2009-F2010 period corrective actions were issued to projects that did not follow standards and these corrective actions were tracked to their completion. There was limited enforcement of corrective actions during this period.


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Exhibit: B-7


1.12.2 What was the rate of compliance for projects during this period, if BC Hydro has sufficient records to be able to identify this compliance level?

RESPONSE:

Please refer to BC Hydro’s response to BCUC IR 1.23.1.1.


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Exhibit: B-7


1.13.1 Could BC Hydro please determine the rate of compliance for this period?

RESPONSE:



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Exhibit: B-7


1.13.2 While the PMO had limited resources, were there nevertheless defined consequence which would apply for anyone not in compliance if and when the enforcement was followed.

RESPONSE:

During the F2011-F2012 period there were limited PMO resources available to provide direction and to ensure compliance. Internal organizational changes and headcount pressures exacerbated these challenges.

The Compliance Management Policy at Attachment 1 to BC Hydro’s response to BCUC IR 1.15.5 was applicable during this period and continues to apply. This policy defines general consequences for non-compliance with Information Management standards, as follows:

The OCIO and business group BIS [Business Information Systems] Managers must ensure that unresolved noncompliance issues are addressed. The methods of addressing non-compliances include but are not limited to:

Informing the offending user(s) or group(s) of the noncompliance; Granting an exemption for the noncompliance, as appropriate; Issuing IT QA Action Request(s) to request a standard change or

corrective action (See IT QA Action Tracker Request Procedure – 6B.100 [7]), as appropriate;

Instituting awareness campaigns or education programs to improve user knowledge of policies, procedures and standards;

Escalating issues to senior management; Allocating costs associated with the noncompliance to the offending

business group; Discontinuing information technology asset access privileges to the

offending user(s) or group(s).

Although there were defined consequences for noncompliance as listed above, the completion of corrective actions were not enforced.


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Exhibit: B-7


1.14.1 What has been the level of compliance with the ITDSP for this period?

RESPONSE:



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Exhibit: B-7


1.14.2 Are there consequences in the current period 2013 to 2016 for non-compliance and if so, what are they?

RESPONSE:

Non-compliance with the ITDSP standards may be identified at different times during the project delivery:

• At a gate review: Consequences will depend on assessment of the risk associated with the non-compliant item, and may be a gate fail or a conditional pass. Corrective action will be identified and verified completed as appropriate (before proceeding or while the project proceeds);

• Within an approved phase, during project delivery regular oversight by the Technology PMO: Consequences will depend on assessment of the risk associated with the non-compliant item. Corrective action required is identified and verified completed. Depending on the risk assessment, the project may be put on hold until the item is addressed or the project may continue execution while the non-compliance item is addressed;

• During the annual quality review conducted by the Technology PMO on active projects: Consequences will depend on assessment of the risk associated with the non-compliant item. Corrective action required is identified and verified completed. Depending on the risk assessment, the project may be put on hold until item is addressed or the project may continue execution while the non-compliance item is addressed; and

• In addition to addressing the project specific non-compliant items, additional training of all or some Project Managers may be identified and delivered, the standards and guidelines documentation may be updated to provide more clarity if needed. The Project Manager may be reassigned if the resource does not have the necessary skills and expertise to successfully deliver the project.

Since the release of the revised ITDSP framework in 2013, the framework has progressively gained prominence and acceptance in the organization. At this time, all IT projects initiated by the Technology group follow the ITDSP framework. From time to time, IT projects may be initiated by other business units. These projects are also expected to follow the ITDSP framework, but because they are not ‘visible’ to the Technology PMO the identification and enforcement of non-compliance may not be applied.


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Exhibit: B-7


1.14.3 Are the Project Management Guidelines for Technology Projects treated as a standard or are they just guidelines for voluntary utilization?

RESPONSE:

The Project Management Guidelines for Technology Projects are to be used by resources involved in delivering technology projects. The document provides guidelines on how to setup and manage technology projects at BC Hydro, observing the BC Hydro standard project lifecycle and the Information Technology Delivery Standard Practices (ITDSP). The ITDSP framework is the standard, the standard is tailored to the needs of each project, and the Project Management Guidelines provide further clarity on how to apply the standard to each project. Not all sections of the Project Management Guidelines apply to each project, however the sections that apply are not for voluntary utilization, they are expected to be followed.


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Exhibit: B-7


1.15.1 Is this just a judgment or does BC Hydro keep track of non-compliance incidences?

RESPONSE:

BC Hydro produced Table 9 for the purpose of the Consolidated Information Filing to support the review of the scope items of the SAP Inquiry. Table 9 is based on a review and analysis of the financial and project governance records of the SAP-related projects. BC Hydro does not keep a central list of project non-compliance incidences.


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Exhibit: B-7


1.15.2 How does BC Hydro monitor policy compliance?

RESPONSE:

Compliance with financial policies and standards is monitored by the Finance group through review of approval documents (including EARs and monthly financial reports).

Compliance with project governance policies and standards is monitored by the Technology PMO through the review of a project’s Business Case and Statement of Objectives, monthly project status reports, project deliverables, gate reviews, participation on Steering Committees and execution of annual quality assurance review plans.

From time to time Audit Services tests compliance with BC Hydro policies through periodic internal audits as per internal audit plan.


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Exhibit: B-7


1.16.1 Has BC Hydro conducted an analysis to determine if the operating costs have been reduced as a consequence of SAP related project implementations and if so, could that evaluation be provided?

RESPONSE:

BC Hydro has tracked the impact of SAP on IT&T operating costs. Please refer to BC Hydro’s responses to BCUC IR 1.13.1 and BCUC IR 1.13.2.

BC Hydro has not tracked the impact of SAP on business area operating costs since a quantitative benefits tracking process is not currently in place. Please refer to BC Hydro’s response to BCUC IR 1.27.5.


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Exhibit: B-7


1.16.2 Has BC Hydro measured the improved business processes in regard to SAP related project implementation and if so, could that evaluation be provided?

RESPONSE:

A formal quantitative measurement of business process improvement has not been done.

BC Hydro does track project outcomes via the PCER (Project Completion and Evaluation Report) so it is confident that SAP-related projects have implemented the business requirements as specified, which contain a variety of business process enhancements and automation requirements.

Please refer to BC Hydro’s response to BCUC IR 1.27.5.


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Exhibit: B-7


1.17.1 Has BC Hydro measured the effectiveness of support to business activities in regard to SAP related project implementation and if so, could that evaluation be provided?

RESPONSE:

A formal quantitative measurement of support to business activities has not been done. BC Hydro does track project outcomes via the PCER so it is confident that SAP-related projects have implemented the business requirements as specified. Please refer to BC Hydro’s response to CEC IR 1.17.2.


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Exhibit: B-7


1.17.2 How has the effectiveness of support to business activities been demonstrated?

RESPONSE:

The SAP systems provide effective business support in a variety of ways, including:

1. Projects have implemented the functionality as required by the business groups (via project implementation requirements tracking and delivery), and BC Hydro is able to evolve and extend the SAP systems when needed to adapt to new or changing business requirements.

2. The SAP systems host many of BC Hydro’s most critical and highest volume business functions, and these operate reliably every day as needed to effectively conduct utility business. (e.g., commercial and residential customer billing and revenue collection, meter management, call centre records, financial transactions, vendor payment transactions, payroll transactions, time entry transactions, project management functions, all environment and safety incidents, etc.).


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1.17.3 Did BC Hydro, previously to adopting the SAP platform, ever miss a billing cycle, payroll cycle or financial reporting cycle and if so, how many and what were the consequences of missing these cycles?

RESPONSE:

BC Hydro is not aware of any significant “misses” (i.e., major operational disruptions due to a technology malfunction) prior to adoption of the SAP platform.


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Exhibit: B-7


1.18.1 Has BC Hydro measured or estimated the effort for reconciling between systems prior to the SAP related project implementations and after the SAP project implementations to demonstrate a cost reduction?

RESPONSE:

No, BC Hydro has not attempted to specifically estimate or measure the effort for reconciling between systems prior to and after the SAP-related project implementations to demonstrate a cost reduction.


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Exhibit: B-7


1.19.1 Please confirm that the SAP initiatives have not lead to specific operational cost savings.

RESPONSE:

SAP initiatives have resulted in cost savings; however, in most cases BC Hydro cannot quantify the direct cost savings relating to specific projects and programs. Financial budgets are adjusted when the savings can be quantified and when they are not offset by cost pressures. For example, assumed operational savings of $2.1 million and $8.4 million relating the SAP initiatives EMPower and Plan & Schedule Work, respectively, were reflected in the F2012-F2014 ARRA.

In addition, as described in BC Hydro’s response to BCUC IR 1.27.5, most SAP initiatives are undertaken with a view to enhance capability, and to simplify and standardize the IT environment. Thus, operational savings may be in the form of indirect benefits such as: avoidance of future costs and risk, productivity savings, and improved operational capability. Please also refer to BC Hydro’s response to CEC IR 1.10.2 for additional projects where quantitative benefits have been identified.


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Exhibit: B-7

BC Hydro notes that the cost reductions identified in the IT&T Five-Year Plan – Year 2, as noted in the preamble, were reflected in the fiscal 2010 budget, and only partially relate to SAP projects. However, as noted on page 30 of the IT&T Five-Year Plan – Year 2, IT&T costs increased overall in fiscal 2010, primarily due to increases in headcount.


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Exhibit: B-7


1.19.2 Of the $4 million related to reduce software and application maintenance costs, how much was related to SAP related projects?

RESPONSE:

Of the $4 million in cost avoidance related to software and application maintenance costs, $0.9 million is directly attributable to SAP through the implementation of the Financial Systems Replacement project, specifically the termination of the PeopleSoft Financials software maintenance contract. The remaining $3.1 million is not attributable to SAP.


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Exhibit: B-7


1.19.3 What time period was this evaluation made for?

RESPONSE:

This evaluation was made for the F2010 period.


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Exhibit: B-7


1.19.4 Was this assessment complied from specific project business case evaluations or some other source, please identify the source?

RESPONSE:

The assessment was compiled by the internal IT management team based on expected changes and cost avoidance opportunities at the time. It is unclear what specific sources were used, but it appears that analysis was conducted in areas such as software maintenance and application maintenance to determine future cost avoidance opportunities, and it is likely that there was also an awareness of opportunities indicated within project business cases as well as other operating cost opportunities.


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Exhibit: B-7


1.19.5 Has BC Hydro produced an updated assessment to the 2016 current timeframe?

RESPONSE:

BC Hydro has not produced an updated assessment to the 2016 timeframe of the type of information filed in BC Hydro’s response to BCUC IR 1.275.3 in the F2011 RRA.

In terms of SAP-related costs specifically, BC Hydro has tracked SAP-related and overall ERP-related software and application maintenance costs between F2009 and F2016. Please refer to BC Hydro’s responses to BCUC IRs 1.13.1 and 1.13.2. These costs represent the actual expenditures incurred. However, as indicated in CEC IR 1.6.2, BC Hydro has not attempted to quantify the software and application maintenance costs that would have been incurred through continuation of the alternative IT&T strategy (i.e., continuation of the “Best of Breed” ERP strategy beyond F2009).


Page 1 of 1


Exhibit: B-7


1.19.6 Does BC Hydro have a chronology for these cost reductions over the SAP implementation time frame?

RESPONSE:

No. Please refer to BC Hydro’s response to CEC IR 1.19.5.


Page 1 of 1


Exhibit: B-7


1.20.1 Does BC Hydro have a financial analysis of these positive outcomes to determine the cost-effectiveness of the SAP project implementation over time?

RESPONSE:

Please refer to BC Hydro’s response to MoveUP IR 1.1.2 and BCUC IR 1.27.5.


Page 1 of 1


Exhibit: B-7


1.21.1 Please confirm that these expenditures will match the numbers provided in Table 11.

RESPONSE:

Confirmed.


Page 1 of 1


Exhibit: B-7


1.21.2 Is it correct to say that there is $191 million of estimated additional capital expenditures to be made to implement the SAP related projects BC Hydro has planned for so far.

RESPONSE:

Table 11 and the related Figures 3 and 4 of Exhibit B-3 report forecast capital expenditures for both planned and in-progress SAP-related projects, as at March 31, 2016.

Thus, it is correct to say that at March 31, 2016, planned and in progress SAP-related capital expenditures in the fiscal years 2017 to 2026 were estimated to be $191 million.


Page 1 of 1


Exhibit: B-7


1.21.3 Is it correct to say that BC Hydro will have an estimated additional $19 million of operating expenditures for the SAP related projects BC Hydro has planned so far.

RESPONSE:

BC Hydro confirms that at March 31, 2016, forecast SAP-related capital expenditures of $191 million in the fiscal years 2017 to 2026 will require an estimated $19.3 million in operating expenditures over this period related to overall implementation.

IT capital projects, including SAP-related projects, typically require operating funding for activities with costs that cannot be capitalized; this funding is needed for activities such as early stage planning, project identification, analysis of alternatives, requirements analysis, change management, training, and data migration.

These planned operating expenditures typically account for 5 to 10 per cent of total Technology operating expenditures in any period.


Page 1 of 1


Exhibit: B-7


1.21.4 Please provide the complete list of the legacy ERP systems and other software being displaced and decommissioned as a result of the SAP implementation past and planned and provide their related ongoing annual license fees.

RESPONSE:

There were many systems that were displaced and/or decommissioned as a result of the SAP implementations, most notably other ERP systems as well as other minor packaged products and custom built systems.

Please refer to BC Hydro’s response to CEC IR 1.21.5 for total ERP-related licensing fees (both SAP-related and other ERP-related).

BC Hydro notes that the major displaced and decommissioned systems include:

• PeopleSoft Financials • PeopleSoft HR • PeopleSoft EPM • TQTS/iLearn • PassPort Indus Service Suite (ISS)- Work Order scheduling component • Safety Incident DataMart • BCTC Oracle eBusiness Suite • BCTC HR Ceridian Payroll and HR Services • Info-PM • External Applicant Tracking System Workstream


Page 1 of 2


Exhibit: B-7


1.21.5 Please provide the SAP on-going license fees for all of the project components which have been implemented or are planned to be implemented.

RESPONSE:

The table below provides the SAP-related and other ERP-related software licence maintenance costs, including the forecast for F2017. BC Hydro does not have specific forecasts for SAP license maintenance fees beyond F2017 for future projects.

($000s) SAP Related Non-SAP ERP Related

Total ERP licensing

F2009 Actual 1,987.1

(estimated based on F2010)

3,102.9 5,090.0

F2010 Actual 1,987.1 2,297.9 4,285.0

F2011 Actual 2,396.9 1,953.5 4,350.4

F2012 Actual 2,673.6 1,675.4 4,349.1

F2013 Actual 2,822.8 1,833.6 4,656.4

F2014 Actual 3,255.3 1,654.1 4,909.4

F2015 Actual 3,721.8 1,289.8 5,011.6

F2016 Actual 4,136.0 1,297.5 5,433.5

F2017 Forecast 4,077.4 1,279.1 5,356.5


Page 2 of 2


Exhibit: B-7

Note that the table above excludes SAP license maintenance costs related to SMI functionality, which costs approximately $530,000 per year. In addition, note that the data for SAP-related F2009 license maintenance actuals was not readily available, so BC Hydro based this number on F2010 and validated that there were no material changes as per the software licensing agreements.


Page 1 of 1


Exhibit: B-7


1.21.6 Has BC Hydro done a quantitative evaluation of the SAP implementation to date and for the planned implementation and if so could that be provided?

RESPONSE:

Please refer to BC Hydro’s response to CEC IRs 1.4.3 and 1.6.2.


Page 1 of 1


Exhibit: B-7


1.22.1 Please confirm that the BC Hydro evidence filed in Table 12 is evidence that BC Hydro has met all of the Commission and Utility Commission Act obligations for filing of information over the periods of time defined in the Table 12 evidence and if not, please identify any exceptions separately.

RESPONSE:

Confirmed.


Page 1 of 1


Exhibit: B-7


1.22.2 Please identify when BC Hydro may have been obligated by the Commission or UCA to identify projects that are linked such that they may appropriately be seen as a larger project initiative and identify whether or not BC Hydro has met obligations to make filings with the Commission in compliance with such a project definition.

RESPONSE:

Neither the Commission nor the UCA obligates BC Hydro to identify projects that are linked nor to make filings in compliance with such a project definition. BC Hydro’s Capital Project Filing Guidelines include capital project expenditure threshold levels that will trigger an application by BC Hydro for approval of project costs, and as noted in these Guidelines (refer to page 5 of Attachment 37 to Exhibit B-3):

Rather than focus on the definition and distinction between projects and programs, BC Hydro will use individual BC Hydro Board approvals as the trigger for capital project filings, irrespective of the characterization of the capital expenditure. When the initial BC Hydro Board approval to proceed with implementation phase funding is sought for any capital expenditure above the threshold, the capital project filing requirement would be triggered.

COPE 378

INFORMATION REQUEST NO. 1

British Columbia Hydro and Power Authority

Inquiry of Expenditures related to the adoption of the SAP Platform British Columbia Utilities

Commission Action on Complaint

1.0 Section 2.1 Context for BC Hydro’s SAP Strategy Development, Exhibit B-3, pages 3 and 4

C6-3

markhuds


1.1 Did BC Hydro engage in a survey prior to deciding to engage in this program to centralize its IT&T to determine the effect on other similar entities to determine: a) What centralization model might best serve BC Hydro’s needs; and b) What centralization model, if any, could potentially reduce the corporation’s global IT&T

costs? 1.2 COPE understands from the Compliance filing that BC Hydro did not expect that the adoption of the SAP platform would reduce the Corporation’s overall IT-related costs. Did BC Hydro expect that the adoption of the SAP platform would be revenue neutral or that it would cost more than its previous Best of Breed approach?

1.3 Did BC Hydro examine in any detail other utility’s or similar corporation’s approaches to IT&T centralization and made any inquiries about the potential pitfalls?

1.3.1 If so, please provide the information gathered.

1.3.2 If not, please explain why BC Hydro did not make this kind of inquiry.

2.0 2.1.2 Toward a Single ERP System (2008-2009), Exhibit B-3, pages 6-7

2.1 Did BC Hydro determine what others in the industry had done to deal with the aftermath of the “Best of Breed” approach?

2.1.1 If yes, please provide identify those industry players examined and how they dealt with this challenge.

2.1.1 If not, please explain why BC Hydro declined to examine how others in the industry had dealt with the challenges associated with this transition.

2.2 Did BC Hydro identify what industry players had successfully dealt with the aftermath of the “Best of Breed” approach?

2.2.1 Please provide for the record information BC Hydro gathered regarding how those entities successfully dealt with those issues.

2.2.2 If not, please explain why BC Hydro failed to secure this information.

2.3 Exhibit B-3, pages 7-8

On what basis did BC Hydro form the expectation that the single ERP system would require less effort to maintain?

2.3.1 Has the SAP platform required less effort to maintain thus far than the Best of Breed systems did?

2.3.2 Have the SAP platform systems incurred less yearly cost to maintain thus far than the Best of Breed systems did?

2.3.2 Has the comparative uniformity of the single ERP system translated into a reduction in the overall costs to support the same business functions?

3.0 2.2 SAP as the Default ERP Solution (2008-2009), Exhibit B-3, page 10

3.1 “There have been many successful deployments.” What specifically does BC Hydro mean by “successful deployment”?

3.2 Did BC Hydro look at those deployments that didn’t qualify in its eyes as successful to identify factors that contributed to their failures?

4.0 Table 1, Exhibit B-3

4.1 What ‘customer analytics to drive conservation goals’ did BC Hydro specifically identify as being available or potentially available for future expansion?

4.2 What specific programs or initiatives does BC Hydro see those “customer analytics to drive conservation goals” would be used for?

5.0 4.2 Financial Oversight, Exhibit B-3, page 31

5.1 Please describe in more detail what BC Hydro means by “significant changes” (i.e. significant enough to trigger a revised EAR)?

5.2 What, if any, additional examination was undertaken to deal with projects that were referred back for multiple revised EAR’s for additional funding?

5.3 This entire section talks about various parties approving authorities. Were any of the various parties given approving authority at whatever level given an understanding of the global costs of the SAP transition projects and/or the cost of the status quo for their particular aspect of the project?

6.0 4.2.1 Business Case Requirements, Exhibit B-3, p34

“BC Hydro’s MAPP 4.1.1B.1 Business Case Requirements outline the requirements for

each business case (refer to Attachment 14). A business case is required for any

project (or initiative) greater than $1 million requiring investment, expenditure or

commitment that has significant impact on business operations, creates material risk,

and/or where there are credible alternatives to a recommended course of action.”

6.1 How does BC Hydro determine what has a significant impact on business operations? Who within BC Hydro engages in this analysis?

6.2 How does BC Hydro determine what creates a material risk? Who within BC Hydro engages in this analysis?

6.3 How does BC Hydro determine whether there is a credible alternative to a recommended course of action? Who within BC Hydro engages in this analysis?

7.0 4.5.1 Project Delivery Governance F2009-F2010

7.1 Did BC Hydro have a staffing strategy in place during this time period to monitor whether they required additional people to oversee projects, particularly to ensure they were ITDSP and project delivery standards complaint?

8.0 4.5.2 Project Delivery Governance F2011-F2013, Exhibit B-3

8.1 Given that BC Hydro has specifically cited the difficulty external Project Managers had in working within ITDSP deliverables and processes, has the utility since increased its internal team of Project Managers?

8.2 BC Hydro has again cited the fact that the Technology PMO had limited resources during this time period to provide direction and oversight. Please confirm whether the resource levels cited available to the Tech PMO during F2011-F2013 were the same as during F2009-F2010.

8.3 Please describe all actions taken and failsafes BC Hydro now has in place to ensure that no section will be again under-resourced like the Technology PMO was between F2009 and F2013.

Movement of United Professionals Information Request No. 1.1.1 Dated: July 28, 2016 British Columbia Hydro & Power Authority Response issued September 30, 2016

Page 1 of 1


Exhibit: B-7

1.0 Reference: Section 2.1 Context for BC Hydro’s SAP Strategy Development,

Exhibit B-3, pages 3 and 4

1.1.1 Did BC Hydro engage in a survey prior to deciding to engage in this program to centralize its IT&T to determine the effect on other similar entities to determine:

a) What centralization model might best serve BC Hydro’s needs; and b) What centralization model, if any, could potentially reduce the

corporation’s global IT&T costs?

RESPONSE:

BC Hydro has not found records of a survey being conducted to provide information on potential IT&T centralization models.


Page 1 of 2


Exhibit: B-7

1.0 Reference: Section 2.1 Context for BC Hydro’s SAP Strategy

Development, Exhibit B-3, pages 3 and 4

1.1.2 COPE understands from the Compliance filing that BC Hydro did not expect that the adoption of the SAP platform would reduce the Corporation’s overall IT-related costs. Did BC Hydro expect that the adoption of the SAP platform would be revenue neutral or that it would cost more than its previous Best of Breed approach?

RESPONSE:

As indicated in section 5.1.4 of the Consolidated Information Filing, BC Hydro did not expect that “the implementation of SAP initiatives, in and of themselves,


Page 2 of 2


Exhibit: B-7

would account for a specific operational cost savings”. However, the SAP strategy was part of an overall strategy to contain operating costs, and BC Hydro did expect that the adoption of the SAP platform would cost less relative to the cost of remediating, enhancing and sustaining multiple separate ERP platforms. As discussed in section 2.1 of the Consolidated Information Filing, BC Hydro’s multi-ERP environment in 2008 was complex and difficult to maintain, and accordingly BC Hydro expected that the ongoing future costs of building and supporting required business capabilities in a “best of breed” ERP environment would be higher than in a single ERP environment.

BC Hydro believes that its SAP strategy has been successful in terms of managing ERP-related operating costs. Please refer to BC Hydro’s response to BCUC IRs 1.13.1 and 1.13.2.


Page 1 of 1


Exhibit: B-7



1.1.3 Did BC Hydro examine in any detail other utility’s or similar corporation’s approaches to IT&T centralization and made any inquiries about the potential pitfalls?

RESPONSE:

BC Hydro has not found specific records from this period that would indicate a detailed review of other utility’s or similar corporation’s approaches to IT&T centralization. However, it is reasonable to assume that management at the time (i.e., 2007 to 2009) was aware of practices at other utilities, was in contact with peer companies via industry groups, and had knowledge of leading practices as would normally be gained via IT&T research and advisory services.

Please also refer to BC Hydro’s response to MoveUP IR 1.1.1.

Movement of United Professionals Information Request No. 1.1.3.1 Dated: July 28, 2016 British Columbia Hydro & Power Authority Response issued September 30, 2016

Page 1 of 1


Exhibit: B-7




1.1.3.1 If so, please provide the information gathered.

RESPONSE:

Please refer to BC Hydro’s response to MoveUP IR 1.1.3.


Page 1 of 1


Exhibit: B-7




1.1.3.2 If not, please explain why BC Hydro did not make this kind of inquiry.

RESPONSE:



Page 1 of 1


Exhibit: B-7

2.0 Reference: 2.1.2 Toward a Single ERP System (2008-2009), Exhibit B-3,

pages 6-7

1.2.1 Did BC Hydro determine what others in the industry had done to deal with the aftermath of the “Best of Breed” approach?

RESPONSE:

Yes.

In formulating its IT&T strategy, including the move to a single ERP platform, BC Hydro looked at a variety of factors and these are summarized in section 2 of the Consolidated Information Filing. BC Hydro did look at what others in the industry were doing in regards to ERP strategy (i.e., “Best of Breed” versus single ERP), and it was BC Hydro’s understanding that standardization on a single ERP platform was a leading practice for most utilities, and indeed among large corporations generally. SAP is used for ERP functions by most regulated utilities in Canada, including FortisBC, TransAlta, SaskPower, Manitoba Hydro, Hydro One, Hydro Quebec and NB Power.


Page 1 of 1


Exhibit: B-7


pages 6-7


1.2.1.1 If yes, please provide identify those industry players examined and how they dealt with this challenge.

RESPONSE:



Page 1 of 1


Exhibit: B-7


pages 6-7


1.2.1.2 If not, please explain why BC Hydro declined to examine how others in the industry had dealt with the challenges associated with this transition.

RESPONSE:

Please refer to BC Hydro response to MoveUP IR 1.2.1.


Page 1 of 1


Exhibit: B-7


pages 6-7

1.2.2 Did BC Hydro identify what industry players had successfully dealt with the aftermath of the “Best of Breed” approach?

RESPONSE:

There is no indication that BC Hydro specifically identified and/or categorized “industry players” as successful or not successful in regards to their ERP strategies and/or associated implementations. However, it is reasonable to assume that IT&T management at the time (e.g., between 2007 to 2009) were generally aware of major ERP related implementations at other utilities, were in contact with peers via industry groups or conferences, and had knowledge of leading practices and risks pertaining to ERP implementations as typically gained from experience, dialogue, ERP related literature, IT advisory services and technology vendors.


Page 1 of 1


Exhibit: B-7


pages 6-7


1.2.2.1 Please provide for the record information BC Hydro gathered regarding how those entities successfully dealt with those issues.

RESPONSE:



Page 1 of 1


Exhibit: B-7


pages 6-7


1.2.2.2 If not, please explain why BC Hydro failed to secure this information.

RESPONSE:

BC Hydro did not need to specifically identify and categorize “industry players” as successful or not successful in regards to their ERP strategies and/or associated implementations. Please refer to BC Hydro’s response to MoveUP IR 1.2.2.


Page 1 of 1


Exhibit: B-7


pages 6-7

1.2.3 Exhibit B-3, pages 7-8


RESPONSE:

BC Hydro formed the expectation that a single ERP system would require less effort to maintain compared to multiple overlapping ERP platforms due to the technical and business complexities experienced with multiple ERPs as outlined in section 2.1 of the Consolidated Information Filing.

In addition, BC Hydro notes that there are many examples, both within technology as well as other business areas, where benefits accrue from technical standardization, and BC Hydro anticipated that ERP standardization would also provide associated benefits. For example, most companies have a common standard for laptops, servers, mobile devices, desktop applications, application development tools, other application types, etc. Beyond technology, companies also commonly standardize many aspects of their business operations to gain operational, maintenance and cost benefits (e.g., airlines that standardize on aircraft models, transportation companies that standardize on vehicle models, and consulting organizations standardize on service methodologies).


Page 1 of 1


Exhibit: B-7


pages 6-7



1.2.3.1 Has the SAP platform required less effort to maintain thus far than the Best of Breed systems did?

RESPONSE: Please refer to BC Hydro’s responses to BCUC IR 1.13.1 and BCUC IR 1.13.2.


Page 1 of 1


Exhibit: B-7


pages 6-7



1.2.3.2 Have the SAP platform systems incurred less yearly cost to maintain thus far than the Best of Breed systems did?

RESPONSE:

Please refer to BC Hydro’s responses to BCUC IR 1.13.1 and BCUC IR 1.13.2.


Page 1 of 1


Exhibit: B-7


pages 6-7



1.2.3.3 Has the comparative uniformity of the single ERP system translated into a reduction in the overall costs to support the same business functions?

RESPONSE:

Please refer to BC Hydro’s responses to BCUC IR 1.13.1 and BCUC IR 1.13.2.


Page 1 of 1


Exhibit: B-7

3.0 Reference: 2.2 SAP as the Default ERP Solution (2008-2009), Exhibit B-3,

page 10

1.3.1 “There have been many successful deployments.” What specifically does BC Hydro mean by “successful deployment”?

RESPONSE:

BC Hydro considers that there have been many successful deployments of SAP at other companies, given the market presence and continued growth of SAP ERP software within the utilities industry and beyond.


Page 1 of 1


Exhibit: B-7

3.0 Reference: 2.2 SAP as the Default ERP Solution (2008-2009), Exhibit B-3,

page 10

1.3.2 Did BC Hydro look at those deployments that didn’t qualify in its eyes as successful to identify factors that contributed to their failures?

RESPONSE:



Page 1 of 1


Exhibit: B-7

4.0 Reference: Table 1, Exhibit B-3

1.4.1 What ‘customer analytics to drive conservation goals’ did BC Hydro specifically identify as being available or potentially available for future expansion?

RESPONSE:

The reference to “customer analytics to drive conservation goals” was intended as a general statement to indicate that it was important for BC Hydro to have a good understanding of its customers and their energy needs so that effective electricity conservation programs could be developed. BC Hydro uses SAP as its core customer information system, so SAP customer data is used as one of the inputs to inform and structure BC Hydro’s demand side management (DSM) programs.

As ‘customer analytics to drive conservation goals’ was intended as a general statement around SAP capabilities in regards to customer data and analytics, BC Hydro has not formally linked specific SAP CR&B capabilities to specific DSM programs or initiatives.


Page 1 of 1


Exhibit: B-7

4.0 Reference: Table 1, Exhibit B-3

1.4.2 What specific programs or initiatives does BC Hydro see those “customer analytics to drive conservation goals” would be used for?

RESPONSE:



Page 1 of 1


Exhibit: B-7

5.0 Reference: 4.2 Financial Oversight, Exhibit B-3, page 31

1.5.1 Please describe in more detail what BC Hydro means by “significant changes” (i.e. significant enough to trigger a revised EAR)?

RESPONSE:

Please refer to BC Hydro’s response to BCUC IR 1.17.7.


Page 1 of 1


Exhibit: B-7


1.5.2 What, if any, additional examination was undertaken to deal with projects that were referred back for multiple revised EAR’s for additional funding?

RESPONSE:

Please refer to BC Hydro’s response to BCUC IRs 1.17.6 and 1.17.7.


Page 1 of 1


Exhibit: B-7


1.5.3 This entire section talks about various parties approving authorities. Were any of the various parties given approving authority at whatever level given an understanding of the global costs of the SAP transition projects and/or the cost of the status quo for their particular aspect of the project?

RESPONSE:

The decision to adopt SAP as the default technology standard for ERP applications was a strategic decision, not a financial approval decision, and it did not approve any project initiative. For those reasons, there is no business case or overall cost estimate for the strategy.

Each individual project is supported by a business case and EAR and managed to an authorized cost. Please refer to BC Hydro’s response to BCUC IR 1.4.5 for an explanation of how the SAP technology standard applies to project identification.


Page 1 of 1


Exhibit: B-7

6.0 Reference: 4.2.1 Business Case Requirements, Exhibit B-3, p34

“BC Hydro’s MAPP 4.1.1B.1 Business Case Requirements outline the requirements for each business case (refer to Attachment 14). A business case is required for any project (or initiative) greater than $1 million requiring investment, expenditure or commitment that has significant impact on business operations, creates material risk, and/or where there are credible alternatives to a recommended course of action.”

1.6.1 How does BC Hydro determine what has a significant impact on business operations? Who within BC Hydro engages in this analysis?

RESPONSE:

The threshold criteria identified in MAPP 4.1.1B.1 as quoted in the question, including whether the project has a significant impact on business operations, do not apply to IT projects.

As described in section 4.2.1 of the Consolidated Information Filing, all IT projects and work programs require a business case regardless of dollar value, business impact, risk or the existence of credible alternatives. The reason for requiring a business case in all circumstances is driven by the difficulty in accurately assessing the impacts, risks and alternatives related to IT projects.


Page 1 of 1


Exhibit: B-7



1.6.2 How does BC Hydro determine what creates a material risk? Who within BC Hydro engages in this analysis?

RESPONSE:



Page 1 of 1


Exhibit: B-7



1.6.3 How does BC Hydro determine whether there is a credible alternative to a recommended course of action? Who within BC Hydro engages in this analysis?

RESPONSE:



Page 1 of 1


Exhibit: B-7

7.0 Reference: 4.5.1 Project Delivery Governance F2009-F2010

1.7.1 Did BC Hydro have a staffing strategy in place during this time period to monitor whether they required additional people to oversee projects, particularly to ensure they were ITDSP and project delivery standards complaint?

RESPONSE:

There was no formal staffing strategy in place during F2009-F2010 to ensure ITDSP and project delivery standards compliance.


Page 1 of 1


Exhibit: B-7

8.0 Reference: 4.5.2 Project Delivery Governance F2011-F2013, Exhibit B-3

1.8.1 Given that BC Hydro has specifically cited the difficulty external Project Managers had in working within ITDSP deliverables and processes, has the utility since increased its internal team of Project Managers?

RESPONSE:

Since 2011, BC Hydro has added four internal project manager staff under the PMO, both in delivery and controls/advisory roles. BC Hydro is continuing to increase the internal team of IT project managers via new position postings. Formal onboarding and ongoing support to external project managers is also being provided. As a result, external project managers are now more familiar with the ITDSP framework.

BC Hydro has a program underway to increase its internal IT project management workforce to reduce its reliance on external resources.


Page 1 of 1


Exhibit: B-7


1.8.2 BC Hydro has again cited the fact that the Technology PMO had limited resources during this time period to provide direction and oversight. Please confirm whether the resource levels cited available to the Tech PMO during F2011-F2013 were the same as during F2009-F2010.

RESPONSE:

The resource levels within the Technology PMO were increased from one employee in F2010 to four employees by the end of F2013.


Page 1 of 1


Exhibit: B-7


1.8.3 Please describe all actions taken and failsafes BC Hydro now has in place to ensure that no section will be again under-resourced like the Technology PMO was between F2009 and F2013.

RESPONSE:

There is no failsafe that can ensure that a department will never be under-resourced. However, as noted in BC Hydro’s response to MoveUP IR 1.8.2, BC Hydro has increased its staffing level in the Technology PMO and is continuing to do so at this time.

A recent re-organization established a Delivery and Contracts group, containing project delivery and project controls, as one of four pillars of the Technology organization. This more prominent positioning of Delivery and Contracts will help ensure staffing levels are maintained. As part of the BC Hydro Workforce Plan, noted in Appendix F of BC Hydro’s Fiscal 2017-Fiscal 2019 Revenue Requirements Application, BC Hydro will look for opportunities to increase and strengthen the project delivery and project controls internal staff compliment.

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