ICT BUSINESS SERVICE STRATEGIES OVERVIEW

Transcription

1 ICT BUSINESS SERVICE STRATEGIES OVERVIEW STRATEGY & ARCHITECTURE, INFORMATION SERVICES & TECHNOLOGY Transpower New Zealand Limited ICT Plan 1.3 Transpower New Zealand Limited All rights reserved. i

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3 ICT Business Services Strategies Overview Document History Version Date Author Comment September 2012 D M Williams S&A version to determine scope October 2012 D M Williams Initial Draft October 2012 D M Williams Incorporates material agreed with GM IST on 12 October and very limited changes to the portfolio strategies November 2012 D M Williams Follows Project Team review 2 November July 2013 D Pearce Updates following budget reviews and CEO Challenge July 2013 SJ Heard Addition of Opex data and explanation August 2013 D Pearce Updates after feedback from G Bickers and J Tocher September 2013 D Pearce Updated with RCP2 team provided graphs D Pearce Updates post Deloitte Review D Pearce Final Deloitte Review Updates D Pearce Final Updates to graphs and tables C O P Y R I G H T 2013 T R A N S P O W E R N E W Z E A L A N D L I M I T E D. A L L R I G H T S R E S E R V E D This document is protected by copyright vested in Transpower New Zealand Limited ( Transpower ). No part of the document may be reproduced or transmitted in any form by any means including, without limitation, electronic, photocopying, recording or otherwise, without the prior written permission of Transpower. No information embodied in the documents which is not already in the public domain shall be communicated in any manner whatsoever to any third party without the prior written consent of Transpower. Any breach of the above obligations may be restrained by legal proceedings seeking remedies including injunctions, damages and costs. Transpower New Zealand Limited All rights reserved.

4 ICT Business Services Strategies Overview Table of Contents 1 Introduction Purpose ICT Framework ICT Business Services Overview of RCP2 forecast Capability Business Capability Technical Requirements Group Capability Information Services Strategy Forecasting Approach Overview Capital Expenditure Operating Expenditure Benchmarking Deliverability Related Documents Constraints Business Services Transmission Systems Systems Corporate Systems ICT Shared Services Network Services Telecommunications Services Security Services A Reference Documents B Outsourced Services C Risk Register Extract D Business requirements E ICT requirements Transpower New Zealand Limited All rights reserved.

5 ICT Business Services Strategies Overview F Glossary Transpower New Zealand Limited All rights reserved.

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7 ICT Business Services Strategies Overview 1 Introduction 1.1 Purpose This overview describes the ICT Business Service Strategies and expenditure for our ICT business service categories. It covers the RCP2 Period (2015/16 to 2019/20). 1.2 ICT Framework Figure 1 shows the ICT framework and the position of the Business Services Strategies within the suite of documents. The Information Services Strategic Plan (ISSP) details our high-level ICT strategies. The Business Service Strategies (BSS) apply the high-level ICT strategies to our business service categories. The ISSP and BSS ensure we deliver solutions cost effectively and consistently and that expenditure addresses business and stakeholder needs. The ICT Portfolio Plans describe the capital expenditure (Capex) plans for the RCP2 period, taking into account the strategies, business requirements and the necessary ICT technical requirements. External Drivers Organisational Strategy (Transmission Tomorrow, SCI, Vision, etc) Informs Informs External Technology Drivers Information Systems Strategic Plan (ISSP, Enterprise Architecture) Informs Business Capability Strategies (Grid, System Operator, Corporate) External Business Drivers Drives Business Service Strategies (Transmission Systems, Systems, Market Systems, Corporate Systems, Shared Services, Network Services, Telecommunications Services, Security Services) Directs Drives ICT Portfolio Plans (25) Implements Programmes & Projects Figure 1: The ICT Framework 1 1 Of the 25 Portfolio Plans shown in the diagram, three of them pertain to System Operator Services, and do not therefore form part of the RCP2 proposal. Transpower New Zealand Limited All rights reserved. Page 1 of 55

8 ICT Business Services Strategies Overview 1.3 ICT Business Services We group our ICT business services into the seven areas shown in Table 1. There is also a Market Systems category which does not form part of RCP2 submission, and is omitted from this overview. Business Service Category Transmission Systems Systems Corporate Systems ICT Shared Services Network Services Telecommunications Services Description Support the core transmission services through the provision of real-time and time-series Grid information systems and the management of the substation information (for example using SCADA and Historian software). Support the forecasting and planning of Grid asset maintenance and our management system (including Maximo, IONS and ESRI software). Support our corporate operations and obligations by providing human resource, finance, risk, audit and compliance and project management information and systems (including the MyT, FMIS and AMDB applications). Support the ICT services and infrastructure, which in turn support the operations of our information systems (such as Authentication services, Storage Area Networks and hardware virtualisation tools like VMWARE). Support communication and collaboration services over Transpower and public networks (such as voice, video). Support telecommunications links between Transpower sites, and between Transpower and public networks (for example, our fibre network TransGO). Security Services Ensure the availability and integrity of our information systems by applying the correct security classifications and controls to minimise risk (such as firewalls, and host or network intrusion systems). Table 1: Description of Business Service Categories 1.4 Overview of RCP2 forecast In contrast to those used for power engineering, the tools and practices for developing and implementing ICT solutions change frequently. Some of the changes relate to delivering greater capability, while others relate to the complexities of an environment where increasingly large numbers of devices and processes depend on digital technologies and communication. For example, maintaining security for ICT tools that support Grid operations was formerly achieved by their physical isolation. Now system elements increasingly communicate over digital networks. Transpower New Zealand Limited All rights reserved. Page 2 of 55

9 ICT Business Services Strategies Overview ICT Capital Expenditure Figure 2 shows our total forecast ICT capital expenditure (Capex) for RCP2. Table 2 provides an overview of the ICT-related Capex by business service and year. ICT Capex - RCP2 Forecast vs Historic $80M $70M $60M $50M $40M $30M $20M $10M 0 RCP1 RCP2 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Historic RCP1 Forecast RCP2 Forecast Figure 2: Total ICT Capex (RCP1 and RCP2) Category 2015/ / / / /20 Total Transmission Systems Systems Corporate Systems ICT Shared Services Network Services Telecommunications Services Security Services Total Table 2: Summary of RCP2 ICT Capex by Business Service ($m) While the overall trend for ICT Capex over RCP2 is downward, the annual expenditure in each category is volatile. This reflects the lumpy nature of projectbased Capex. Transpower New Zealand Limited All rights reserved. Page 3 of 55

10 ICT Business Services Strategies Overview ICT Operating Expenditure Figure 3 presents the total historic and forecast ICT Operating Expenditure (Opex). Table 3 provides an overview of the ICT-related Opex by business service and year. ICT Opex - RCP2 Forecast vs Historic $60M $50M RCP1 RCP2 $40M $30M $20M Historic RCP1 Forecast RCP2 Forecast $10M 0 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Figure 3: ICT Opex (RCP1 and RCP2) Category 2015/ / / / /20 Total Transmission Systems Systems Corporate Systems ICT Shared Services Network Services Telecommunications Services Security Services Total Table 3: Summary of ICT Opex by Business Service ($m) ICT Opex increased during RCP1. This reflects the increased costs involved in supporting more complex ICT assets as they are put into production. Transpower New Zealand Limited All rights reserved. Page 4 of 55

11 ICT Business Services Strategies Overview 2 Capability 2.1 Business Capability Our business capability requirements are set out in the Grid and Corporate Business Capability Strategy. These capability requirements have been used as inputs in developing the ISSP, BSS and Portfolio Plans. All capital projects detailed in the Portfolio Plans are linked to stated business requirements. The full list of business capability requirements is contained in Appendix D. There are five common themes across the capability requirements that have implications for the business service strategies. 1. Information management: The need to easily access current, accurate data and information stored across a number of data sources and to have the tools to analyse, report on and present that information to enhance decision making. 2. Maintenance of fit-for-purpose systems: The need to carry out lifecycle maintenance and upgrades to systems to ensure that they remain effective and supportable to meet the needs of the business. 3. Increased focus on resilience of critical systems: The supporting architectures and subsequent investments must target the appropriate level of reliability and resilience. 4. Segregation of ICT systems that support critical business functions: Systems that support the operation of the Grid need to have the levels of reliability and resilience that match the criticality of the assets they are controlling or monitoring. 5. Visibility of the real-time Grid : The real-time view of the Grid is incomplete; the operators need timely, accurate and prioritised information to support decision making. 2.2 Technical Requirements To meet the business requirements, enabling ICT technical requirements (ICT requirements) have been defined. These set out the technologies and associated policies and protocols required to deliver the business requirements. The full list of ICT requirements is contained in Appendix E. 2.3 Group Capability The Information Services and Technology Division must continue to evolve to better understand and meet the business requirements. Core operating practices are robust, but we are changing our organisational structure to: manage the separation of business and mission-critical systems, especially to adopt a reliability engineering approach to the mission-critical systems increase the connection between the Information Services and Technology Service Groups and the business functions within other divisions increase the coupling between enterprise architecture (high-level, longerterm) and solution architecture (near-term solution creation and delivery) to increase the cost effectiveness and alignment of delivered solutions Transpower New Zealand Limited All rights reserved. Page 5 of 55

12 ICT Business Services Strategies Overview better focus the development and application of skill sets and people capabilities to deliver the ICT strategies. Transpower New Zealand Limited All rights reserved. Page 6 of 55

13 ICT Business Services Strategies Overview 3 Information Services Strategy The Information Services Strategic Plan (ISSP) sets out our ICT Strategy through to It describes our key business drivers, links them to 11 global ICT strategies and explains the implications of each of the ICT strategies. The 11 ICT strategies are listed below. 1-1 We will invest in ICT solutions to support better asset and supply chain management. 2-1 We will progressively integrate ICT and engineering operational management practices. 2-2 ICT will be used to support the real-time management of the Grid through the effective use of automation and control technologies. 2-3 ICT system engineering practices will be enhanced to maximise the productivity of the Grid within high standards of reliability and resilience. 3-1 The performance of critical systems (functionality, reliability, resilience, adaptability and cost) will be improved by segregating those systems from others so they can be managed to appropriate standards in specific purpose environments. 3-2 Advanced monitoring services will be more widely applied to monitor ICT critical systems and to automate the management of responses to failure states and fault conditions. 3-3 The technology footprint will be constrained to the minimum size necessary. 3-4 ICT will have flexible and responsive practices and processes that deliver value to the business. 4-1 All information will be easily and securely accessible and available to staff and third parties as required, along with systems to enable timely, quality decision making. 5-1 To manage down the total cost of ownership, we need to focus on the simplification of business functions and practices, and the standardisation of ICT solutions to the maximum extent practical. 5-2 ICT governance and core enterprise architecture controls will be further developed to support better-informed ICT decision making. Transpower New Zealand Limited All rights reserved. Page 7 of 55

14 ICT Business Services Strategies Overview 4 Forecasting Approach 4.1 Overview Chapter 4 explains our forecasting approaches for Capex and Opex. There are some common aspects to both approaches, such as: all estimates were compiled by the ICT team within Transpower using subject matter experts, consultants and industry analysts as required no contingency amounts are included in the estimates we have not used probabilistic analysis (such as Monte Carlo simulation) to deal with uncertainty. The forecasting approach is the same as that used to develop RCP1 forecasts. 4.2 Capital Expenditure We developed cost forecasts by first considering the cost of historic investments, original implementation costs and current market pricing for hardware, software and design services. We then used scoping workshops and industry analysis to refine the cost estimates. These involved consulting with internal subject matter experts, consultants, and industry analysts. We used this blended approach because we cannot predict with certainty what technologies we will be commissioning in 3 5 years time or the exact techniques that we will use to deliver them. We will refine these estimates through stages 1 and 2 of the Service Delivery Lifecycle (SDLC, which is used to plan, deliver, manage and maintain ICT services and solutions) until as close as possible to starting the work. Doing so allows us to consider emerging, cost-effective technologies and to adopt them if they are demonstrably mature. 4.3 Operating Expenditure Our Opex forecast covers costs such as software licensing, third party support and maintenance, leases and outsourced services. The RCP2 forecast is higher that the RCP1 costs, but less volatile. During RCP1 we commissioned a number of major capital programmes, including new telecommunications assets and a new asset management system. These programmes have delivered new capability that is more expensive to support. Also during RCP1 we standardised and simplified the way we deliver common ICT services using formal IT service management techniques. Under this approach, ICT Opex, for constant levels of services delivered, is more predictable and stable than under a more reactive model. This is reflected in our RCP2 forecasts. The baseline for our RCP2 forecast is 2012/13 Opex. We then extrapolated historic cost trends from this base for each business service category, taking into account anticipated changes to our operating environments, existing service agreements, Transpower New Zealand Limited All rights reserved. Page 8 of 55

15 ICT Business Services Strategies Overview planned ICT Capex, new service requirements and emerging tools and practices from the wider ICT industry. Consistent with our policy or where otherwise appropriate, we have carried out cost-benefit analyses as part of the procurement process for existing contracts that give rise to Opex in RCP2. We will continue to undertake cost-benefit analysis as part of the business case and procurement policy for any re-negotiated or new contracts. For all Opex forecasts we have assumed that we implement the programmes described in our Portfolio Plans and that there are no relevant regulatory obligations that have a material effect on the programmes. We have made some business service-specific assumptions which, where relevant, are detailed in chapter Benchmarking We commissioned independent consultants to review and benchmark our Capex and Opex programmes against New Zealand Government sector organisations (Independent Review of RCP2 ICT Expenditure for Transpower, R Lewis and M Butler, October 2013). The consultants concluded that, taking into account the nature and scope of our business functions, the Capex and Opex forecasts are reasonable compared with other government sector organisations. 4.5 Deliverability Our RCP2 forecasts were challenged by our ICT group to test the aggregate resource required. The review concluded that our overall resource requirements are similar to the final years of RCP1. We are confident that the planned levels of ICT Capex and Opex can be delivered during RCP2. We have established a risk register aligned with our corporate risk register that we use to monitor and address ICT delivery risks. An extract of the ICT risks in the Corporate Risk Register is provided in Appendix C. We have also reviewed how well we have delivered ICT expenditure plans during RCP1. The Annual Regulatory Report 2 shows the variance between the RCP1 Allowance and the latest RCP1 actual and forecast costs Related Documents Appendix A provides a list of reference documents, documents on which these programmes are based, and other related documents. The programmes and projects set out for each business service adhere to all relevant policies and planning standards. There are no identified departures from policies and standards, or from recommendations in any consultants reports, in the programmes described. 2 3 Annual Regulatory Report for the 12 months to 30 June 2013 October 2013, Appendices 8 and 9. Relative to the RCP1 forecast the 2012/13 actual ICT asset management was $0.4m underspent and security services operating expenditure portfolios were $0.9m underspent. The asset management variance was due to phased delivery of the System reducing costs in the early years of the project while the security variance is due to fewer security devices being deployed than originally forecast Transpower New Zealand Limited All rights reserved. Page 9 of 55

16 ICT Business Services Strategies Overview 4.7 Constraints As part of compiling this overview, we have identified three constraints that may affect delivery of the planned programmes during RCP2: cost, resourcing, and organisational readiness and maturity. Cost: all costs in this overview are based on estimation work by each business service owner and/or IST. They are based on information available at the time we compiled this overview. Resourcing: many projects will require specific engineering and ICT skill sets and organisation experience. This places constraints on how many of these investments can be executed at the same time. We will monitor and manage any constraints in line with our programme management methodology. We have conducted a resource planning and levelling exercise to ensure that we achieve this plan to the greatest extent possible. Organisational readiness and maturity: some investments will require certain levels of organisation capability and maturity. IST, in conjunction with the business, has developed a programme of continuous maturity improvement. Transpower New Zealand Limited All rights reserved. Page 10 of 55

17 ICT Business Services Strategies Overview 5 Business Services The three objectives for each of the seven ICT business services are to: 1. deliver, maintain and support the ICT components required to support the business functions 2. optimise the Total Cost of Ownership (TCO) of ICT systems 3. meet requirements for reliability and availability appropriate to the business criticality of the business functions supported by the systems. The sections in Chapter 5 describe the business requirements and strategies for each business service and explain how our RCP2 Capex and Opex programmes will meet these requirements and support these strategies. 5.1 Transmission Systems These systems support our core transmission services through the provision of realtime and time-series Grid information systems, the management of the substation information and ongoing transmission Grid planning activities Key Business Requirements The Grid and Corporate Capability Strategy sets out the business capability requirements. The key requirements for Transmission Systems are: maintenance of fit-for-purpose systems through appropriate upgrades, refreshes and replacement of systems in line with lifecycle policies (typically based on 4 7 year lifecycles) facilitating access to data and information held in diverse systems providing required analysis and reporting tools providing presentation layers for easy access to reports and analysis for those requiring the outputs of the analysis and key stakeholders providing systems that can cope with increasing speed and volume of data ensuring the reliability and resilience of critical systems in the Transmission Systems business service category. Transpower New Zealand Limited All rights reserved. Page 11 of 55

18 ICT Business Services Strategies Overview Business Service Strategies Five Business Service Strategies for Transmission Systems drive our Capex and Opex plans. Table 4 lists the strategies and associated rationale. BSS 1.1 Strategy SCADA will adopt lifecycle maintenance and management more closely aligned with vendor roadmaps. Rationale Avoid early adoption of latest release and technologies to avoid the costs and risks inherent in an early adopter strategy. Improve supportability by ensuring that the in-service solution and components are certified and support the current SCADA version. Improve TCO by avoiding large upgrade costs due to major version skipping, and ensuring that there are easy upgrade paths from the in-service version to the next version. Outcomes Effective lifecycle management. Efficient capital investment. BSS 1.2 Strategy Carry out lifecycle refreshes and maintenance of Transmission Systems using a risk minimisation approach to lifecycle planning. Rationale Ensure systems remain supportable and do not suffer from degraded reliability through being run beyond useful life. The critical nature of Transmission Systems means that we will take a conservative approach to lifecycle management, and assets will not be utilised beyond their recommended service lives. Outcomes Effective lifecycle management. Reduced risk of unplanned/unexpected outages and reduce recovery times from unplanned outages. BSS 1.3 Strategy Use real-time data in situational awareness and decision-making systems, such as Distance to Fault. Rationale Avoid unplanned outages caused by insufficient information available to operators. Respond to outages more quickly and effectively through availability of more accurate and complete information, and automating responses to fault conditions and events where it is safe to do so. Outcomes Enhanced capability. Reduced risk, for example by reducing the time required to recover from unplanned Grid outages. BSS 1.4 Strategy Transpower New Zealand Limited All rights reserved. Page 12 of 55

19 ICT Business Services Strategies Overview Transmission Systems projects will support the implementation of capabilities such as Dynamic Rating to enhance the utilisation of assets. Rationale Enable better utilisation and optimisation of the Grid through, for example, Dynamic Ratings. Outcomes Enhanced capability. BSS 1.5 Strategy Develop data federation, analysis, reporting and presentation tools across core systems. Rationale There is a need to enhance the availability and comprehensiveness of project information and reporting. There is a need to enhance the information and reporting available for asset management and system operation. Outcomes Enhanced capability Capital Expenditure Table 4: Transmission Systems Business Service Strategies Transmission Systems covers the following capital expenditure portfolios: 1. IT SCADA and Real Time Systems (RTS) 2. IT Time Series 3. IT Meter Data 4. IT Transmission Systems Plan. Figure 4 summarises the historic and forecast Capex for Transmission Systems. Table 5 shows the forecast Capex split by portfolio. The relevant Portfolio Plans provide more detail on the individual projects that make up the forecasts. ICT Capex - Transmission Systems - RCP2 Forecast vs Historic $16M $14M $12M $10M $8M $6M $4M $2M 0 RCP1 RCP2 Historic RCP1 Forecast RCP2 Forecast: SCADA/RTS Other 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Figure 4: Transmission Systems Capex by year Portfolio 2015/ / / / /20 Total IT SCADA/RTS Transpower New Zealand Limited All rights reserved. Page 13 of 55

20 ICT Business Services Strategies Overview IT Meter Data IT Time Series IT Transmission Systems Plan Total Table 5: Transmission Systems Capex (real 12/13 $m) The largest Transmission Systems initiative for RCP2 is to bring our SCADA and Real- Time Systems up to date. The timing of this investment is driven by our strategy of updating third-party software at the same time as vendors do to avoid having immature solutions or being unable to access support. There is also a $2.5m investment over the first two years for the refresh of the PI Historian time series system. Other investments focus on enhancing existing tools, making them easier to access and to analyse information held across diverse systems. Across the portfolios, our emphasis is on maintaining existing capability rather than introducing new capability. For Transmission Systems, 60% of Capex investment is directed at maintaining capability Operating Expenditure Figure 5 summarises the historic and forecast Opex for Transmission Systems. Table 6 shows the RCP2 forecasts split into the software licensing (such as SCADA), thirdparty support and maintenance, and outsourced services. ICT Opex - Transmission Systems - RCP2 Forecast vs Historic $6M $5M RCP1 RCP2 $4M $3M $2M Historic RCP1 Forecast RCP2 Forecast $1M 0 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Figure 5: Transmission Systems Opex by year 2015/ / / / /20 Total IST Leases Third-Party Support and Maintenance Transpower New Zealand Limited All rights reserved. Page 14 of 55

21 ICT Business Services Strategies Overview IST Outsourced Services IST Licenses Total Table 6: Transmission Systems Opex (real 12/13 $m) The critical nature of many systems within Transmission Systems, and the consequent requirements for very high levels of availability, resilience and complexity and 24-hour support result in higher operational costs compared to Enterprise systems used in business functions such as finance and HR. There is an increase of $950,000 in software licensing costs for Transmission Systems from halfway through 2015/2016 to fund a new medium-term load forecasting service. Towards the end of RCP2 we will procure a SCADA upgrade to replace the current system (see the document Portfolio Plan IT SCADA/RTS ). The procurement of hardware, software and support services will follow our standard procurement policy to ensure a fit-for-purpose service at the lowest economic cost. In addition to the forecasting approach and assumptions detailed in our Opex forecasting approach (see section 4.3), we made the following five assumptions for our Transmission Systems Opex forecast. The future costs associated with the upgraded SCADA system are in line with current industry trends. Due to the business criticality of Transmission Systems, we will continue inhouse provision of the services. There are no significant changes to existing support or licensing arrangements. None of the proposed capital projects will result in additional types of operational expenditure. All ICT designs and solutions meet the business requirements for availability, reliability, resilience and redundancy. 5.2 Systems Investments and Opex in this area support the forecasting and planning maintenance and management activities for the Grid assets. These activities include asset management, works planning, outage management and predictive Grid asset maintenance Key Business Requirements The Grid and Corporate Capability Strategy sets out the business capability requirements. The key requirements for Systems are: maintenance of fit-for-purpose systems through appropriate upgrades, refreshes and replacement of systems in line with appropriate lifecycle policies facilitating access to data and information held in diverse systems Transpower New Zealand Limited All rights reserved. Page 15 of 55

22 ICT Business Services Strategies Overview providing required analysis and reporting tools providing presentation layers that provide easy access to reports and analysis for those requiring the outputs of the analysis and key stakeholders providing ICT solutions that support initiatives to improve asset management, Grid management and field force operations processes Business Service Strategies Seven Business Service Strategies drive our Capex and Opex plans for Systems. Table 7 lists the strategies and associated rationale. BSS 2.1 Strategy Support the ongoing implementation and enhancement of the Maximo--based Information System. Rationale Ensure that Maximo, our Information System, remains supported and continues to meet the requirements of the business. Outcomes Effective lifecycle management. Efficient and optimised asset management practices. BSS 2.2 Strategy Develop ICT solutions to support enhanced workforce and job management capabilities. Rationale Improve the utilisation and efficiency of the field workforce by better scheduling of work and optimising the use of available resources. Outcomes Enhanced capability. Improved efficiency and optimisation of the use of resources. BSS 2.3 Strategy Update and enhance spatial systems to meet the needs and requirements of the business. Rationale Improved capability in spatial systems will improve the effectiveness of planning, design and operational activities through an enhanced capability to monitor and visualise our assets and operational systems. Outcomes Enhanced capability. Efficient capital investment. Reduced risk. BSS 2.4 Strategy Provision of flexible reporting and analysis tools to rationalise and limit the proliferation of reporting and analysis tools and manual analysis and reporting in spreadsheets. Rationale Provision of common fit-for-purpose reporting and analysis tools will reduce the acquisition of multiple, costly reporting and analysis tools in different parts of the business. Provision of effective reporting and analysis tools will automate the reporting and Transpower New Zealand Limited All rights reserved. Page 16 of 55

23 ICT Business Services Strategies Overview analysis process, and reduce the reliance on spreadsheets and the amount of manual labour required producing and maintaining reports. Outcomes Enhanced capability. Efficient capital investment. BSS 2.5 Strategy Development of a new, integrated Outage System. Rationale Reduction in unplanned disruptions to the Grid by providing a system that allows better planning and management of outages by providing a unified process and system across Grid operations, telecommunications networks, and other key components. Outcomes Enhanced capability. Reduced risk. BSS 2.6 Strategy Develop data federation, analysis, reporting and presentation tools across core systems. Rationale There is a need to enhance the availability and comprehensiveness of project information and reporting. There is a need to enhance the information and reporting available for asset management and system operation. Outcomes Enhanced capability. BSS 2.7 Strategy Development of ICT solutions to support the easy access to information for Transpower staff and contractors in the field, and the ability to enter information directly into systems from the field. Rationale Improved access to information by field staff will ensure that they have the right information available to complete their assigned tasks. Improved ability to enter information from the field will reduce manual data transfer and re-keying, and ensure timelier, comprehensive capture of data. Outcomes Enhanced capability Capital Expenditure Table 7: Strategy Systems covers the following capital expenditure portfolios: 1. IT 2. IT Outage 3. IT Spatial and Drawings. Figure 6 summarises the historic and forecast Capex for Systems. Table 8 shows the forecast Capex split by portfolio. The relevant Portfolio Plans provide more detail on the individual projects that make up the forecasts. Transpower New Zealand Limited All rights reserved. Page 17 of 55

24 ICT Business Services Strategies Overview ICT Capex - - RCP2 Forecast vs Historic $18M $16M $14M $12M $10M $8M $6M $4M $2M 0 RCP1 RCP2 Historic RCP1 Forecast RCP2 Forecast: Mgmt Other 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Figure 6: Systems Capex by year 2015/ / / / /20 Total IST IT Outage IT Spatial and Drawing Total Table 8: Systems Capex (real 12/13 $m) The total IT investment in Systems for RCP2 is $23.6m, of which the largest component is in the IT portfolio. The investment in IT includes enhancements to job and workforce planning (2016/17 and 2017/18) and a lifecycle upgrade to the Information System (AMIS) (2017/18). In RCP2 the emphasis is generally on maintaining existing capability rather than introducing new capability. However, in the Systems category there is a business need to continue enhancing and leveraging the investment made in Maximo, including introducing enhanced capabilities for workforce and job planning, scheduling and management. For this reason, over 70% of Systems Capex is allocated to building new capability Operating Expenditure Figure 7 summarises the historic and forecast Opex for Systems. Table 9 shows the RCP2 forecasts split into software licensing and third-party support and maintenance costs. Transpower New Zealand Limited All rights reserved. Page 18 of 55

25 ICT Business Services Strategies Overview ICT Opex - - RCP2 Forecast vs Historic $2.0M RCP1 RCP2 $1.5M $1.0M $0.5M Historic RCP1 Forecast RCP2 Forecast 0 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Figure 7: Systems Opex by year 2015/ / / / /20 Total Third Party Support and Maintenance IST Licenses Total Table 9: Systems Opex (real 12/13 $m) The Systems Opex programme has one material outsource contract, with Certus for support of the Maximo AMIS. This contract was established following the Transpower Procurement process and policies. Details are provided in Appendix B. Systems within Systems are generally classed as Enterprise rather than Critical. However, due to their core function, the volumes of data they deal with, and the integration with other systems, they are not suitable for outsourced hosting. 5.3 Corporate Systems Corporate Systems support corporate operations by providing human resource, finance, risk, audit and compliance, and project management information and systems Key Business Requirements The Grid and Corporate Capability Strategy sets out the business capability requirements. The key requirements for Corporate Systems are: maintenance of fit-for-purpose systems through appropriate upgrades, refreshes and replacement of systems in line with appropriate lifecycle policies facilitating access to data and information held in diverse systems providing required analysis and reporting tools Transpower New Zealand Limited All rights reserved. Page 19 of 55

26 ICT Business Services Strategies Overview providing presentation layers that provide easy access to reports and analysis for those requiring the outputs of the analysis and key stakeholders the ability to use Cloud solutions Business Service Strategies Four Business Service Strategies drive our Capex and Opex for Corporate Systems. Table 10 lists the strategies and associated rationale. BSS 3.1 Strategy Upgrade and replace (as necessary) corporate, finance and supply chain systems. Rationale Ensure that the corporate and finance systems remain supported and continue to meet the requirements of the business. Outcomes Effective lifecycle management. BSS 3.2 Strategy Develop ICT solutions to support better safety management. Rationale Need to keep safe any of our staff and contractors, and people on our sites or doing work for us. ICT systems will support the collection, analysis, and action tracking of information related to safety. ICT systems will support safety initiatives, such as providing an SOS button on mobile devices to enable people to easily summon help or alert us of safety incidents. Outcomes Reduced risk to staff, contractors and service providers. BSS 3.3 Strategy Develop data federation tools, analysis and reporting tools across our systems and simplify and automate the reporting of data from multiple systems/data sources. Rationale Currently a lot of reporting and data analysis is difficult because data and information is held in a number of unintegrated data repositories and systems. A lot of reporting and analysis is manually intensive and uses spreadsheets or similar tools. Implementing data federation, automating analysis and reporting, and developing simplified presentation of reporting will reduce the resource required, improve the speed and accuracy of analysis and reporting, and give new insights through the synthesis of data that was not previously possible. Outcomes Enhanced capability. Improve efficiency of reporting, and reduce resources needed for data compilation, analysis and presentation. Transpower New Zealand Limited All rights reserved. Page 20 of 55

27 ICT Business Services Strategies Overview BSS 3.4 Strategy Implement ICT solutions to support enhanced treasury and finance, contract management and stakeholder/environmental management capabilities. Rationale Developing ICT solutions will support improved capability and performance in treasury management, contract management and stakeholder/environmental management. Outcomes Enhanced capabilities. Table 10: Corporate Systems Business Service Strategy Capex Investments Capital Expenditure Corporate Systems covers the following seven capital expenditure portfolios: 1. IT Safety 2. IT Corporate Information and Document 3. IT Portfolio Planning 4. IT Stakeholder 5. IT Finance 6. IT Human Resources 7. IT Risk and Audit. Figure 8 summarises the historic and forecast Capex for Corporate Systems. Table 10 shows the forecast Capex split by portfolio. The relevant Portfolio Plans provide more detail on the individual projects that make up the forecasts. ICT Capex - Corporate Systems - RCP2 Forecast vs Historic $10M $9M $8M $7M $6M $5M $4M $3M $2M $1M 0 RCP1 RCP2 Historic RCP1 Forecast RCP2 Forecast: Finance Other 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Figure 8: Corporate Systems Capex by year 2015/ / / / /20 Total IT Safety IT Corporate Information and Document IT Portfolio Planning IT Stakeholder Transpower New Zealand Limited All rights reserved. Page 21 of 55

28 ICT Business Services Strategies Overview IT Finance IT Human Resources IT Risk & Audit Total Table 11: Corporate Systems Capex (real 12/13 $m) The total IT investment in Corporate Systems for RCP2 is $31.6m. The most significant investments are the refresh of the Financial Information System in 2015/2016, and the replacement of the Transmission Pricing Methodology (TPM) in Other investments include: investments to enhance our capabilities to manage records and information a more integrated stakeholder management system to improve interactions with stakeholders and customers improvements to risk, project and financial management tools a safety management system to replace and/or enhance existing systems. In RCP2 the emphasis is generally on maintaining existing capability rather than introducing new capability. For Corporate Systems over 80% of RCP2 Capex is allocated to maintaining existing capability Operating Expenditure Figure 9 summarises the historic and forecast Opex for Corporate Services. Table 12 shows the RCP2 forecasts split into the software licensing, third-party support and maintenance and outsourced services. ICT Opex - Corporate Services - RCP2 Forecast vs Historic $5M $4M RCP1 RCP2 $3M $2M $1M Historic RCP1 Forecast RCP2 Forecast 0 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Figure 9: Corporate Systems Opex by year Transpower New Zealand Limited All rights reserved. Page 22 of 55

29 ICT Business Services Strategies Overview 2015/ / / / /20 Total Third Party Support and Maintenance IST Outsourced Services IST Licenses Total Table 12: Corporate Systems Opex (real 12/13 $m) The expenditure reflects expected enhancements required to Corporate Systems services over the remainder period of RCP1. All Corporate Systems are classed as Enterprise systems, which in most cases are suitable for consideration for outsourced hosting. The opportunity to replace internally provided Corporate Systems with those from third-party service providers, whether outsourced hosting or sourced over the Internet from Cloud providers, will be considered during RCP2. Our forecast reflects our current (in-sourced) approach, but we will continue to explore these alternatives to determine if the costs and levels of service offered align with our needs. 5.4 ICT Shared Services The ICT Shared Services provide a platform for the operation of our information systems. This includes the core ICT infrastructure and supporting technologies Key Business Requirements The four key business requirements for ICT Shared Services are: developing mobility solutions to meet the needs of the business to view and input data and information from and into a number of systems while in the field implementing segregated environments for Critical and Enterprise systems developing infrastructure and systems to facilitate data federation, analysis, reporting and presentation across all Transpower data sources and systems continuing to develop IT Service tools and processes, including integrating those processes with the business s operational processes where appropriate Business Service Strategies Five Business Service Strategies drive our Capex and Opex for ICT Shared Services Systems. Table 13 lists the strategies and associated rationale. BSS 4.1 Strategy Upgrade and refresh core ICT-enabling infrastructure components and management tools. Transpower New Zealand Limited All rights reserved. Page 23 of 55

30 ICT Business Services Strategies Overview Rationale Ensure that ICT infrastructure remains reliable, supportable and fit-for-purpose so that business functions are not impaired by the failure or degradation of ICT infrastructure. Avoid costs and risks of running out of support, obsolete ICT infrastructure. Align with our infrastructure lifecycle refresh policies. Outcomes Efficient lifecycle management. Reduced risk of unplanned equipment outages and failures. BSS 4.2 Strategy Delivery of ICT platforms to support workforce mobility. Rationale Ensure that ICT infrastructure continues to meets the needs of the business to access our systems and data from outside the office and in the field. Outcomes Efficient lifecycle management. BSS 4.3 Strategy Establish segregated data centre environments for Critical and Enterprise systems. Rationale Provide data centre environments that provide suitable levels of reliability and resilience for critical systems. Remove the risks of non-critical system failure impairing critical system performance if co-hosted in the same data centre. Improve the efficiency of change and release management procedures for Enterprise systems. Outcomes Reduced risk (for critical systems). Increased flexibility for change of Enterprise systems. BSS 4.4 Strategy Development of service management processes and systems, including service design and service operations, to incorporate the required flexibility and responsiveness. Rationale Meeting business requirements for the availability and reliability of ICT systems requires maintaining our systems and processes that: manage the introduction of changes to the ICT environment effectively identify issues and failures early to allow proactive rather than reactive management of events and incidents ensure a thorough, analytic based approach to incident and problem resolution. Outcomes Efficient lifecycle management. Contained costs. Reduced risk. BSS 4.5 Strategy Implementation of core technologies and toolsets required to enable data federation, data analysis and reporting, and information delivery. Transpower New Zealand Limited All rights reserved. Page 24 of 55

31 ICT Business Services Strategies Overview Rationale Currently a lot of reporting and data analysis is difficult because data and information in held in a number of unintegrated data repositories and systems. A lot of reporting and analysis is manually intensive and uses spreadsheets or similar tools. Implementing data federation, automating analysis and reporting, and developing simplified presentation of reporting will reduce the resource required, improve the speed and accuracy of analysis and reporting, and give new insights through the synthesis of data that was not previously possible. Outcomes Enhanced reporting capabilities. Effective lifecycle management. Contained costs. Table 13: ICT Shared Services Business Service Strategies Capital Expenditure ICT Shared Services covers the following four Capex portfolios: 1. IT Workforce Mobility 2. IT Enabling Infrastructure 3. IT Service 4. IT Data Centres. Figure 10 summarises the historic and forecast Capex for ICT Shared Systems. Table 14 shows the forecast Capex split by portfolio. The relevant Portfolio Plans provide more detail on the individual projects that make up the forecasts. ICT Capex - ICT Shared Services - RCP2 Forecast vs Historic $18M $16M $14M $12M $10M $8M $6M $4M $2M 0 RCP1 RCP2 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Historic RCP1 Forecast RCP2 Forecast: Data Centre Enabling Infrastructure Service Mgmt Workforce Mobility Figure 10: ICT Shared Services Capex by year Transpower New Zealand Limited All rights reserved. Page 25 of 55

32 ICT Business Services Strategies Overview 2015/ / / / /20 Total IT Data Centre IT Enabling Infrastructure IT Service IT Workforce Mobility Total Table 14: ICT Shared Services Capex (real 12/13 $m) The total IT investment in ICT Shared Services for RCP2 is $49.1m. Key investments in this area include: refreshing the core infrastructure (servers, network, and so on) and management tools establishing a new data centre to provide a fit-for-purpose environment for our critical systems standardising and rationalising the server footprint establishing segregated environments for Critical and Enterprise systems introducing mobility-enabling infrastructure. Most of the expenditure (over 85%) is allocated to maintaining existing capability. Our preferred approach to the data centre replacement is one where we own the equipment in one data centre, but use a second hosted data centre to achieve the required resilience and segregation. This is different to the approach for replacing the data centre taken in RCP1. This preferred approach has resulted in an increase in Opex for RCP2 of about $3.6m each year. Subsection provides details of the procurement process for our data centre programme Operating Expenditure Figure 11 summarises the historic and forecast Opex for ICT Shared Services. Table 15 shows the RCP2 forecasts split into leases, software licensing, third-party support, and maintenance and outsourced services. ICT Opex - ICT Shared Services - RCP2 Forecast vs Historic $12M $10M RCP1 RCP2 $8M $6M $4M Historic RCP1 Forecast RCP2 Forecast $2M 0 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Figure 11: ICT Shared Services Opex by year Transpower New Zealand Limited All rights reserved. Page 26 of 55