Going to Pieces With B2B

In an attempt to encourage competition and efficiency in the consumer energy market, the Canadian regulators mandated the breaking apart of the energy delivery value chain into its constituent parts. "Deregulation required that we unbundle services," says Wayne Andrews, manager/customer support at Union Gas. Unbundling services, for example, would allow a large industrial customer to buy gas storage separate from the distribution service. It would also allow new consumer-focused middlemen, called remarketers, to step between Union Gas and its customers and sell them various combinations of services from competing providers. In theory at least, different services — metering, billing, distribution — could be delivered by different providers.

Needless to say, this kind of unbundling puts enormous demands on Union Gas's core systems. Short of manually reentering every new order and change, the company needed a way to let its large industrial customers and the new remarketers enter orders and changes and review account information quickly and easily without introducing errors or delays. In the ideal situation, a remarketer's sales system, for example, would talk directly to Union Gas's order entry system.

In 1999, early-on in the planning for deregulation, Andrews and his in-house IS group agreed that this level of B2B integration would likely require a set of Web-based applications if they wanted something that would be flexible enough to work with many different integration partners. However, at that time "our IS group did not have Web skills internally," Andrews notes. Rather than hire people with the appropriate skills, Union Gas decided to look for outside B2B integration help.

Cambridge, MA–based Sapient Corp., an eight-year-old IT consulting firm in 1999, had recently completed a similar kind of project for Atlanta Gas & Light (AG&L) in Atlanta. Through the gas industry grapevine, Union Gas learned of the AG&L experience and paid a visit to Atlanta. "We saw Sapient's work, and we liked their fixed-price, fixed-term approach that shared the risk," says Andrews. He invited Sapient to Toronto to make a presentation.
Sapient's shared risk, incremental approach made it easy for Union Gas to get started. "For a small amount of money we engaged them in a one-week scoping session. We had very little to lose," Andrews recalls. The Sapient team worked an intense week of 11-hour days to help Union Gas define the back-end configuration changes and the front-end reports required by the coming deregulation. "We were impressed with their work," says Andrews. The company decided to give Sapient the design work for the first phase of the project, which itself was dubbed Unionline.
This first part addressed the needs of the large customers. "Union Gas wanted to enable the industrial customers to see into their relationship with the company on-line," says Mike Reid, director, Sapient Canada, Inc., Toronto, an office the company opened as it built up its relationship with Union Gas. Sapient has since attracted a number of large Canadian clients to the Toronto office. The first phase consisted essentially of on-line, Web-based reports customers could access with a browser. A second phase delivered major enhancements, Reid adds.
The work to this point certainly was a big improvement, but it hardly qualified as real B2B integration. It was mainly reporting. The heavy B2B integration work came in the third phase of Unionline. This phase would give the remarketers system-to-system access to Union Gas's back-end systems. "These remarketers are out there making thousands of deals to sign up individual customers with the utility. They need to have a way so that Union Gas knows that this particular meter is a customer of a certain remarketer," explains Reid. This could be done by hand, but it would be slow, error-prone, and costly.

The Union Gas systems consisted of a variety of client/server application packages and custom-built, in-house client/server applications. They ran on the Unix platform with an Oracle database. "We got a break because we did not have to do a major rewrite of the back-end systems. The client/server architecture was sufficient," says Andrews.
Rather than try to forge system-to-system integration with each remarketer, each with a different level of IT capability and sophistication, Sapient chose to create a flexible framework and use XML, a core Web services standard, as the key integration technology. The framework incorporates the most common functions and takes advantage of Microsoft's BizTalk XML server. In addition, Sapient built a Java framework for remarketers with non-Microsoft systems. Sapient also published an XML format for use with Unionline. "By publishing the XML format, we don't have to know the other guy's systems. We just exchange XML based on the published format," Reid explains.
Sapient leveraged its global distributed coding capabilities to deliver the actual code. It passed large chunks of the code to a 17-person team in India, which enabled it to produce the code at lower cost. Twelve people working out of Sapient's Toronto office handled project management and design and analysis.

In July 2002, the latest version of Unionline went live. "The system validates the eligibility of every customer and then processes the changes with no human intervention," Reid reports. Response from the large remarketers has been very positive, he adds, noting that they keep coming up with new things they want to be able to do. Industrial marketers use the system to automatically process their nominations, which are daily change instructions about how to handle their various, unbundled services.
By early Fall 2002, the system had been used to exchange about 90 Gb of data and conduct 2.6 million individual transactions, including 52,000 transfer requests, reports Reid. The system has experienced 99.8% uptime reliability.

The price to date: $15.7 million (Canadian). For Union Gas, the project was never intended to deliver a financial return on investment. Rather, it is part of the cost of deregulation, and the regulators have agreed to allow the company to recoup its investment through increased fees. "It may lower our operating costs through less human involvement, but we didn't do this for the cost savings," says Andrew.
Although the project continues, both Union Gas and Sapient have seen enough to draw some lessons from the effort to date. For example, "we should have looked at the business process side sooner," says Andrews. Parallel to the technical B2B integration project, the company was preparing workers for the changes deregulation would cause to the business process. This effort should have started when the technical work began on each phase rather than as it was ending.

On the technical side, Sapient was surprised to discover "how many moving parts were involved," says Reid. The moving parts were other technology suppliers and vendors who contributed to the effort, with Sapient acting as overall project manager.
Although the situation was ripe for tension between Sapient and Union Gas's IS group, the relationship remained remarkably trouble-free. "They liked the way we worked, and we had complementary skills. They knew the legacy systems and we knew the Web," says Reid. Adds Andrews: "Early on, the IS group might have felt threatened, but now they are sucking up Sapient's knowledge. There is a lot of skills transfer going on."
Still, Union Gas is not ready to send Sapient home. Future enhancements are in the works. "Customers already as asking us for on-line contracting," says Andrews.

For Sapient, B2B integration is turning into a popular specialty. Enbridge, another large Canadian and U.S. energy distribution company, has lined up Sapient for a similar project after hearing about Unionline. B2B integration, it turns out, makes for good business all around.