To accommodate unpredictable delivery demands, Hydro Ottawa wanted to migrate key workloads to a cloud platform. However, the industry’s capital-intensive operating model presented a challenge.
Structuring a first-of-its-kind agreement that classifies cloud infrastructure as a capital investment, IBM will host Hydro Ottawa’s billing, customer care and ERP workloads in an IBM Cloud environment.
~USD 900,00 in cost savingsresulting from the migration of critical workloads to an IBM Cloud hosting environment
Transforms IT organizationby shifting focus from operational tasks to higher-value strategic projects and initiatives
Delivers seamless serviceby underpinning its customer care and billing platform with IBM Cloud technology
Business challenge story
Moving to cloud in a capital-intensive industryTo provide both regulated energy supply and unregulated energy generation services, Hydro Ottawa needs IT infrastructure supporting two disparate lines of business (LOBs). “Our regulated business involves large, fixed investments, but we also have what are essentially startup demands for our unregulated business,” says Chief Information and Technology Officer Mark Fernandes. “I’m hesitant to make IT infrastructure investments for that part of the business based on forecasts and then end up underutilizing those assets.”
By migrating to a cloud platform, Hydro Ottawa could easily scale its hosting environment as needed and avoid overinvesting in infrastructure for its less predictable business demands. But the standard operating model in the utilities industry presented a unique challenge in making the transition to a cloud hosting environment.
“Our industry is capital-intensive—we make huge investments for everything from the poles you see on the streets to transformers,” explains Fernandes. “For the capital we invest, we get a rate of return against it. It becomes very challenging for utilities to go to pure cloud models, which are OPEX [operating expense]-oriented, because we don’t get a return on OPEX.”
Structuring a first-of-its-kind agreement
Evaluating leading cloud providers, including Amazon Web Services (AWS) and Microsoft, Hydro Ottawa chose an IBM Cloud hosting solution. Fernandes says: “IBM was unique in being flexible enough to say, ‘We get your OPEX story, and here’s how we’re going to meet that requirement.’ IBM understood what we needed to do in terms of capitalizing assets, and that was really the tipping point for us in choosing IBM Cloud.”
IBM Cloud Services and IBM Global Financing teams structured a first-of-its-kind agreement designed to help Hydro Ottawa classify cloud infrastructure as a capital investment within International Financial Reporting Standards (IFRS) guidelines. As part of the 3-year contract, IBM will migrate the utility’s business-critical customer care and billing (CC&B) system to IBM Cloud bare metal server infrastructure and manage the environment.
Shifting to a strategic IT focus
Moving Hydro Ottawa’s CC&B platform from a traditional hosting infrastructure to an IBM Cloud environment provides approximately USD 900,000 in savings, which the utility invested in an additional five-year IBM Cloud hosting contract for its ERP system. “If we hadn’t gone the IBM Cloud route, we’d be going through the process of acquiring hardware and maintaining it in house,” says Fernandes. “This worked out for us in a far more cost-effective way.”
In addition to offering cost benefits, the shift to a cloud hosting model is transforming Hydro Ottawa’s IT organization. “My infrastructure team is taking on more of a business analyst role in terms of trying to understand and deliver what the business needs,” says Fernandes. “Because these folks are spending less time on operational tasks, I can advance other strategic projects and lean less heavily on outside resources.”
Finally, teaming with IBM gives Hydro Ottawa peace of mind and confidence in its ability to seamlessly deliver services to its customer base. “In the utilities industry, billing is a critical item,” says Fernandes. “If you get it wrong, customer dissatisfaction levels rise pretty quickly. IBM has been with us down the line, since the initial implementation of our billing system, and that’s certainly a confidence booster.”
About Hydro Ottawa
In 2000, five municipal electric utilities merged to create Hydro Ottawa, establishing a unified distribution company to serve the population of the newly amalgamated City of Ottawa in Ontario, Canada. As Ontario’s third-largest municipally owned electric utility, the organization delivers electricity to more than 324,000 business and residential customers spanning a service area of over 1,000 square kilometers.
- IBM Cloud Bare Metal Servers
- IBM Cloud Platform