BC Hydro has carved a major update of its information technology systems into small portions, allowing it to elude scrutiny by the independent utilities watchdog. But smaller projects did not prove to be more manageable – an updated accounting for a string of projects shows cost overruns have plagued the Crown corporation's IT ambitions.
Two months after the NDP energy critic Adrian Dix asked for financial details on the Crown corporation's IT upgrades, Hydro has provided answers on four of the projects that are part of the systems overhaul. None was reviewed in advance by the B.C. Utilities Commission because each project was forecast to be completed for less than $20-million. All four ended up over budget.
"The implementation of these schemes have been a disaster," Mr. Dix said Tuesday. "They want the big solution, the one ring to rule all. Then it costs far more than they think and it doesn't achieve what they want it to achieve."
Last month, the minister responsible for BC Hydro, Bill Bennett, apologized to ratepayers for wasted money associated with the Crown corporation's transition to SAP software. SAP is a software company that specializes in corporate applications that allow companies to manage business functions such as accounting, human resources and other "backshop" databases.
But Hydro has still not answered questions about the total cost of the program or when the work will be complete. "BC Hydro has adopted an incremental approach to rolling out SAP," Greg Reimer, executive vice president of Hydro, said in a June 12 letter to Mr. Dix.
Mr. Reimer did provide details about two parts of the SAP software program and both are overbudget.
The financial systems project was going to be upgraded for $7.2-million in 2009, but new accounting requirements led to the decision to switch to SAP instead, at a cost of $16.1-million.
The project management program also grew in scope when Hydro regained responsibility for its transmission lines. A $15-million IT upgrade was abandoned and the SAP platform was introduced instead at a cost of $21-million.
"They said they would move to SAP … and as a matter of practice they divided the contracts into increments under $20-million because they have contempt for the BCUC," Mr. Dix said. "That's fundamentally dishonest."
BC Hydro rejected the option of going to SAP software in 2008, warning it would take too many resources and provide too little savings. But it later decided to implement the software across seven departments.
BC Hydro's IT plans are reported to the utilities commission but only projects that are expected to be more than $20-million are submitted in advance for independent scrutiny of needs, benefits and costs.
Another project was launched as a minor upgrade of the Hydro website with a $2-million budget. It was completed at a cost of $17.5-million after Hydro decided that the off-the-shelf software would not meet its requirements.
Simi Heer, a spokeswoman for Hydro, said Tuesday the overall budget for IT has been kept in check by cutting or delaying other plans to make up for the cost overruns. "Technology changes constantly," she noted. "Some priorities get shifted."
She said the website upgrade is one example of an emerging priority. "It's absolutely necessary, customer service lives on online now. We have more than one million customers using it already."
Ms. Heer added that the shift to the SAP platform emerged as the better choice because the corporation's existing software was proving to be difficult to maintain and upgrade.
"SAP it is a large project, we are a large company with 1.9 million customers and 5,000 employees: It's a big technology system we need to run a big company."