Question

London Hydro (LH), the electricity provider of London, Ontario, and surrounding areas, is wrapping up a lengthy and costly system upgrade that was sparked by government regulations. Ontario prides itself on using the latest technologies to conserve electricity. In 1998 it passed two regulations that paved the way for smart-metering: the Electricity Act, 1998 and the Ontario Energy Board Act, 1998. Smart-metering uses computerized electric meters on homes and small businesses that can record electricity use on an hourly basis. So, rather than totalling up kilowatt-hours on a monthly basis as traditional meters do, smart meters provide a record of electricity use every hour. Smart meters are able to report usage directly to utility companies over phone lines or the Internet. The benefit of smart meters, in addition to saving the electric company the cost of sending an employee to read meters, is setting time-of-use pricing. Time-of-use pricing charges customers more for electricity during peak hours (11 a.m.– 5 p.m.), less during mid-peak hours (7 a.m.–11 a.m. and 5 p.m.–10 p.m.), and even less during off-peak hours (10 p.m.– 7 a.m.). Time-of-use pricing should encourage consumers to consume less during peak hours, adding up to big savings for Ontario, its citizens, and the environment. Ontario’s smart metering initiatives have power companies across the province scrambling to meet specifications and deadlines. Software and hardware must be purchased and installed to prepare for the arrival of a tidal wave of customer consumption data. London Hydro started to prepare early in hopes of getting a jump on the competition. Rather than adding a new system to accommodate smart metering, London Hydro decided it was time to upgrade all of its systems. London Hydro’s old custom-built system could barely keep up with current usage. The company decided to shop around for a new system that could not only accommodate smart metering but could tie that data in with core business systems. Mridula Sharma, London Hydro’s Director of Information Services, stated that LH was in need of “a more integratable solution that was scalable and flexible.” The company needed to “prepare for future growth as well as enhance business process workflow,” Sharma said. Sharma and her team set to work outlining the details of the new system based on government mandates and internal needs. With a systems analysis report in hand, Sharma began searching for a company that could design and implement the system. Soon, she narrowed the field to three candidates: SPL Solutions (Oracle), another customer-built solution, and SAP for utilities. Sharma chose SAP primarily because the system was designed for use by a utility company and required little customization. London Hydro selected another outside firm, Wipro Technologies, to implement the system because Wipro had extensive experience implementing utility software. The resulting system provides powerful management of smart metering data flowing from the government’s central smart metering data repository. The task of assigning time-of-use prices based on customer consumption is fully automated and will cause London Hydro no additional overhead. BN103 - Platform Technologies - Final Assessment Trimester 2, 2020 Page 6 of 10 [Source: Chapter 12, R. M. Stair and G. W. Reynolds, Principles of Information Systems: A Managerial Approach, 9th ed. Cengage, 2010.] a) Why did London Hydro initiate its smart-metering system development? [5 Marks] b) What benefits did London Hydro enjoy by purchasing an off-the-shelf system and outsourcing the implementation? [5 Marks]

Answer 1

a) London Hydro initiated its smart system metering system development as it is located at a location i.e. Ontario that prides itself on using the latest technologies for electricity conservation. The other major reasons for starting their own smart metering system development plan include the benefits that can be obtained by the the optimal usage of smart meters, which are:

1. Smart-metering uses computerized electric meters on homes and small businesses that can record electricity use on an hourly basis which would help them; Using smart meters they will not have to calculate the monthly revenue all at once as it is already being done hourly.

2.Smart meters are able to report usage directly to utility companies over phone lines or the Internet which makes collection of data easier and asks for less manual attention.

3.Smart meters bring in a concept of time-of-use pricing which eventually manipulate customers/users to use less amount of electricity during peak hours in order to save electricity as well as money.

4.Altogether usage of smart meters not only happens to be beneficial for the people in financial or other terms but also to the environment due to a good amount of electricity being saved.

5.All the reasons mentioned above can be stated as to why London Hydro came up with a plan of smart meters.

b) Purchasing an off-the-shelf system and outsourcing the implementation has a lot to do with various different benefits as well as areas where profit can be generated.Benefits that the organization must have enjoyed are :

1. London Hydro didn't have to go through the process of developing such a system for smart meters all the way from scratch as they decided to purchase is as is from SAP.

2. They chose Wipro technologies to implement the system because Wipro had extensive experience implementing utility software.

3. Outsourcing and purchasing not only helped the organization to cut on costs but also could easily get things done by experienced professionals in their respective domains without having to employ them permanently.

4. The resulting system provided powerful management of smart metering data flowing from the government’s central smart metering data repository.

5. Also, the task of assigning time-of-use prices became fully automatic and didn't cost London Hydro any additional overheads.

Therefore, the above reasons state what all benefits did the organization enjoy by outsourcing the implementation and purchasing their own off-the-shelf system.