Trustpower looks for alternative to $18m IT system

Trustpower is looking at alternatives for an $18 million customer information system it has spent almost $10 million on already.

In its third quarter operating results to December 31 posted today, the NZX-listed (TPW) company said it engaged Oracle in late 2008 to replace the existing system, to improve efficiency.

Trustpower, with $9.5 million committed including capitalised internal time, has now decided to pause the project while it looks for ways to trim down the cost and to consider alternatives.

Spokesman Graeme Purches said the system was a lot cheaper than some of its competitors’. “It’s a massive piece of work.”

The system includes billing, customer services and data.

While Trustpower says it is still working with Oracle, it will look at other companies to find the best option. But Oracle has indicated it will take some time to create and longer than expected, he said.

In a statement today, Trustpower said part of the cost would be impaired once a full review of the options was complete.

In November last year, state-owned electricity company Meridian Energy said it would put a $20 million IT system, also developed by Oracle, on ice.

Meridian told NBR the project, which included a system development and billing system replacement, was put on hold because of a counter offer from Gentrack and a managerial resignation.

Electricity sales up slightly
Trustpower’s total sales were up slightly for the period to 3,169 GWh and its customer numbers as of December 31 were up 6,000 on the same time last year.

However, at 226,000, customers were 3,000 below the second quarter number.

Total generation was down 6% to 1,620 GWh compared to the prior period, after lower hydro production in the North Island during the first half of the financial year.

Its main hydro storage catchments were at or above average levels for this time of year after good inflows during the third quarter and early January 2010.

Trustpower shares were unchanged this afternoon at $7.32.

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2 Comments & Questions

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What is it with IT programmes in NZ? how can a piece of software with some hardware cost 18 million, hell I could by a second hand 747-400 airliner for that, time the weak management goons finally learnt how not to be seduced by the IT snake oil salesmen, what is wrong with the current system? they only have a handful of customers in world terms. Perhaps the current one won't make a cup of tea and lacks the fun on-line games of the new one.

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More often than not is not weak management getting sucked in by what the vendor says it can deliver - it is the organisations difficulty to define its own requirements on which the vendor is to work from. The vendor says it can deliver X without the customer defining what X is sufficiently clearly. No wonder we regularly have project blow-outs!

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