Texas Utilities – Europe
Company: NTLCustomer: Texas Utilities – EuropeSubmitted by: Nelson BostockDate: August 2002Texas Utilities – Europe (TXU) is the UK’s largest supplier of electricity and gas to domestic customers. It is also one of the country’s main energy retailers and traders.
Deregulation of the market in the 1990s brought many benefits to customers, including a much wider choice of suppliers, coupled with the ability to buy all their services from one company.However, this freedom is not enjoyed by the suppliers themselves, says Stuart Ryalls, Vice President of Technical Services at TXU: “We are strictly monitored and controlled by Ofgem, the industry regulator. In 2000 we were given a reset of £100 million, which meant we had to look very seriously at ways to cut costs without affecting customer service – and we had to do it very quickly. This involved a major restructuring programme, which in turn affected our network requirements.”TXU had a long-standing relationship with NTL Business, but went out to tender to ensure it found the most cost-effective and innovative solution.
This proved to be the NTL Business facilities management service.NTL Business now has complete responsibility for all the components on the network and, should a fault occur, the source can be tracked quickly and easily. Previously calls had to be made to numerous suppliers who invariably argued about responsibility for the problem, losing valuable time before it could be fixed. TXU can now focus on its core business, leaving NTL Business to handle all aspects of network management, including future redesign.
An energetic market
Through the TXU Energi brand, TXU in the UK supplies gas and electricity to around 5.5 million customers, mostly in the old Eastern Electricity and NORWEB regions of East Anglia and the North West.
It also supplies London through a joint venture with London Electricity called 24 Seven, has seven power stations and is a major player in portfolio management within the utilities industry.The company’s headquarters are in London, but the IT department is in Ipswich and currently supports between 2,500 and 3,000 employees at 15 locations, running 450 applications on 280 servers.Stuart Ryalls says: “We have a very high dependency on our network to maintain our profitability. Apart from the implications to obvious areas such as customer billing, there is an even more critical aspect for today’s utilities suppliers. Under the new energy trading arrangements we have to report on our anticipated supply and demand on a half hourly basis – and we face severe financial implications if we get it wrong.
” Although there is a ‘window’ for returns, TXU rely on NTL Business to ensure the network is responsive and available at all times to fulfil this vital requirement.
TXU’s current advertising strapline is ‘Extraordinary service’ and it expects the same from its suppliers. So when NTL Business was selected to help TXU through a period of major cost cutting and restructuring following a reset of £100 million imposed by Ofgem, it knew it would be expected to achieve remarkable results in a very short time.TXU went out to tender to three companies with the main challenge of saving £1 million on IT costs, plus a long list of other equally important requirements for its network. NTL Business was already the existing supplier of voice and data circuits, but this was not a major factor in its selection.Although TXU was trying to cut costs, price was not the main criteria for its decision as Stuart Ryalls explains: “We had to balance cost versus risk, and although the NTL Business solution was not the cheapest it was the one we believed would ultimately achieve all our short and long term objectives in the most cost- effective way.
An added bonus was that NTL Business has a strong technical presence in East Anglia where our IT operations are based.”Under the facilities management agreement that TXU now has with NTL Business, it is responsible not only for the NTL Business components but also for all the customer- purchased equipment installed. In fact, it has total control of the network.
Facilities management is not the same as a managed service because, as much of the hardware has been purchased by the customer, NTL Business cannot guarantee exact availability. However, NTL Business was well placed to provide the necessary support because it can monitor both the circuits and the active equipment through its Network Monitoring Centre.
The main benefit to TXU is that NTL Business can now pinpoint the fault quickly and liaise directly with the appropriate supplier.The agreed service level is a four-hour response and a four-hour fix. But Stuart Ryalls really doesn’t want to have to test this. He just wants the network to be available at all times.
Keeping pace with change
Network separation was one of the first tasks for NTL Business as Stuart Ryalls explains: “As part of our cost-cutting exercises, we also underwent a major restructuring programme. This involved selling our metering division and making 24 Seven an independent company.
We also outsourced our call centre. These changes had a major impact on our network requirements, as we needed to separate sections to cater for the new businesses. We still support our call centre, but 24 Seven is now a completely separate enterprise, and metering will be gone by the end of 2001.”I think that at first the NTL Business team was surprised at the speed of change within TXU and by how quickly we expected them to react to our demands. But they adapted quickly and have responded well to the many and varied challenges we have thrown at them.
“For example, in the middle of the network separation work TXU also decided to completely rebuild its computer centre. As a result, NTL Business was responsible for ensuring that the move to a temporary hosting system was completed quickly and without any serious downtime. According to Stuart Ryalls NTL Business performed this mammoth task, involving the installation of masses of cabling and a high bandwidth link, exceptionally well.
NTL Business inherited a range of problems, including the complexity of the existing network, which had originally been designed and built by Eastern Electricity in the 1980s. It used a fibre optic ring to link sites, overlaid with separate facilities for voice and data networks.
By 2000 it was proving expensive and unable to cope with rapidly changing demands.At the same time, its efficiency and availability were becoming more and more critical to the day-to-day operations of TXU, so it was obvious that the whole network would have to upgraded to handle today’s IP requirements. Some upgrades have already been incorporated as part of the restructuring and network separation programme, but the major work is still to come.However, Stuart Ryalls is not concerned: “I don’t have to worry about how or when any more. From my point of view NTL Business is now my network management operations team. That team obviously works closely with my staff, but what it does to build the network we need for the future is NTL Business’s problem – not mine!”
Su pply and demand
The marketing requirements of a dynamic organisation such as TXU are constantly changing, as are its need for network support.
Stuart Ryalls expands: “The utilities industry has changed dramatically over the past few years and our rate of change is dynamic. We constantly buy and sell companies, power stations – in fact whatever we need to keep pace with changing market forces. As a result we need an equally dynamic partner like NTL Business who can respond as quickly as we do.”The next phase of the agreement will include more major network upgrades and the introduction of per port billing to provide the flexibility and scalability TXU requires to keep pace with today’s rapidly changing requirements. If it buys a company one day and needs to support an extra 300 users, these will be easily added – if it sells another portion of the business the next day, the same principle will apply in reverse.
NTL Business has also helped TXU achieve savings in another totally different area.
TXU receives many millions of calls a year to its non-geographic numbers such as 0800 and 0845, and Stuart Ryalls was alarmed at how much these were costing. So as part of its cost-cutting exercise TXU went out to six suppliers with a statement of requirements for these services.Stuart Ryalls continues: “The fact that we selected NTL Business to provide this service had nothing to do with our existing relationship. NTL Business won this contract purely on merit because although it came in at a very good price, again it was not the cheapest solution. It represented the best overall cost of ownership and we decided it was definitely the ‘best buy’.
As a result, we have also achieved substantial savings in this area.”
Definitely the right supplier
Stuart Ryalls is confident that NTL Business was the right company to resolve the issues facing TXU. He sums up by saying: “The network has already changed dramatically but I’m no longer involved in the details. My only requirement is that when people come to work they have access to a telephone and a computer that work full time. If NTL Business decides that combining voice and data on an IP network is going to ensure this that’s fine by me, but I don’t want to get involved in the details – I just want assured network availability.
We don’t want to be network experts – we sell gas and electricity – and NTL Business is certainly helping us to do this more profitably and cost-effectively.”