Ertan Hydropower Development Company (EHDC) operates in China's extremely challenging and rapidly growing electricity market. Given the enormous scope of its projects, Ertan has had no choice but to operate at the edge of human technological know-how.
Slashing IT costs
Ertan was founded in 1988 in order to build one of the largest hydropower plants in the world. Completed in 1998, this plant construction project involved more than 700 technicians from 47 countries as well as a sizable local workforce.
Rapidly growing demand for electricity
With consumer spending growing at a rate of more than eight per cent a year since the 1990s, electricity was at a premium. The power outages that frequently hit the country by 2002 ultimately ushered in major reforms and the end of the State Power Corporation. Since then, investments in power production have grown by more than 15 per cent a year. Over the next thirty years China is expected to invest more than one trillion US$ in power production, part of which will be channeled into hydropower plants.
Large-scale expansion to meet growing demand In 2003, Ertan obtained the rights to develop the full hydropower potential of the entire 1571 kilometer-long Yalong River. Considered an ideal hydropower location thanks to its natural drop of more than 14,000 feet over 900 miles, the Yalong River has potential hydropower capacity in excess of 28 GW. This translates into 151 TWh of potential annual power production. During the next few years Ertan will build another 20 dams along the Yalong River, including JingPing, at 305 meters high the world's tallest and largest dam.
Four dams are already under development, with an additional one to two projects scheduled for construction each year. Reaching more than 23,000 MW by 2020, total capacity will exceed the entire electricity production of the Netherlands, for example, and satisfy five per cent of China's needs. Ertan's projects will succeed in providing China's Sichuan province with one fourth of all the electricity it requires.
Market liberalization forces Ertan to develop commercial strategy At the same time, the Chinese electricity market has been evolving. Throughout the liberalization and privatization of this part of the economy, Ertan will find itself competing with 50 to 100 other suppliers in a market that spans four provinces in the southwest of China. In addition, the liberalization of the market in 2006 - which means no more state control or limits on the number of large clients has forced the company to develop a business strategy and become an active trader.
Maximizing efficiency in the face of tougher competition As a consequence of increased competition, the company needed to boost its efficiency and prepare for future growth. The company was therefore restructured in 2002 and 2003 as it cut staff at Ertan headquarters down from 300 to under 90, not including 145 employees at the Ertan power plant. These cuts would not have been possible without the maximization of information processing resources and automated control facilities.
During its sudden takeoff, Ertan certainly had its work cut out for it. Not only was it growing by leaps and bounds, but is also needed to become leaner and meaner. The goal: to boost efficiency to deal with all the new rivals looming on the horizon of an open market - and to update its "ancient" IT.
When Ertan obtained the rights to develop the full hydropower potential of the entire Yalong River in 2003, the company realized it would need to scale up in order to build all 20 of the new hydropower plants. At the time, however, its IT infrastructure was seriously inadequate and incapable of meeting their information requirements.
Inadequate IT infrastructure with scattered data and isolated systems Data was scattered across individual systems throughout the organization and could often only be accessed from a single location or system. Interoperability between systems was extremely limited because applications could not exchange data or logic, central data management was lacking and workflows had never been automated. Moreover, similar data was entered many times into different systems while users were confronted with separate user interfaces for each application. As a result, Ertan's IT infrastructure was unable to provide adequate support for information analysis, decision-making or knowledge management. An additional issue of growing concern was the poor level of system security, even though security had already been prioritized.
New IT strategy that offers strong support for management To remedy the poor levels of integration and interoperability, Ertan devised a new IT strategy based on state-of-the-art technology that enabled the seamless integration of applications, collaboration on data from multiple locations, standardized working methods, automated workflow and maximum security.
The key element of Ertan's new IT strategy was an enterprise information portal designed to provide access to a wide variety of applications for areas such as accounting, project and asset management, office automation and collaboration. One goal was to give individual sign-on facilities and current users one single look and feel for all applications. Finally, the platform needed to enable electronic signatures and facilitate the development of a number of new applications for HR, fleet management and real-time dam operation monitoring.
Request for Proposal results in survival of the fittest vendor Based on these criteria, Ertan sent a Request for Proposal (RFP) to eight software vendors with a presence in China. This included the Chengdu Holley Information Company, which has been a Cordys partner since 2003. Responses to the RFP had to be anonymous, which meant that they were not allowed to contain the vendor's company name or make any direct or indirect reference to it.
The committee eventually selected the Cordys/Holley proposal because it offered the best product concept (Cordys) in combination with local presence for delivery (Holley). The Cordys/Holley consortium won the bid on account of its general suitability, understanding of the industry, MIS capabilities and use of open standards.
The solution selected for the Ertan infrastructure consisted of an enterprise information portal composed of a range of Cordys products. The highly transparent portal provides access from any location to any of the company's applications, including systems for production control, accounting systems, office automation and applications such as video conferencing.
Ertan's enterprise portal is composed of the following Cordys products:
•Business Process Management: facilitates the controlled modeling, execution, monitoring and management of business processes;
•Business Activity Monitoring: real-time view of business operation performance;
•Enterprise Service Bus: used for the transparent integration of the entire IT infrastructure by weaving individual application logic into web services;
•Composite Application Framework: uses a Service Oriented Architecture approach to make IT functionality available as web services;
•Web Workplace and WS-Appserver: backbone for the web-based functionality of Ertan's enterprise portal.
Complete suite of office automation and business applications The entire solution was implemented over a period of two-and-a half years. The first phase involved the configuration and installation of the technical infrastructure. During this phase, the enterprise portal was made available internally and externally for access to a complete suite of office automation applications.
Additional applications were made available during the second phase. This included Webex's web-conferencing facilities as well as major business applications that supported production, accounting and asset management, including IFS' Equipment Asset Management system. The last phase consisted of implementing a data warehouse and various decision support systems.
Seamless integration of production control systems The benefits of the Cordys solution were clearly revealed when Ertan's production control systems were integrated into the enterprise portal. The portal offered access to the company's production systems for computer control, dam security, water level monitoring, facility management and energy accounting.
Whereas in the past Ertan used separate accounting systems for its head office and power plant, UFSOFT's Enterprise Accounting system offered a single administration environment for all departments and sites. Because the integration of UFSOFT required full disclosure of its XML/Webservice API, Cordys entered into a strategic partnership with UFSOFT, China's largest software company with a 60% market share in accounting software.
Thanks to its seamless integration, the Cordys-based portal offers access to each of Ertan's systems from a single point of access and a uniform user-interface to guarantee transparency, ease-of-use, short learning curves and a high level of efficiency. In addition, the web-conferencing facilities have enabled collaboration between different plants at Ertan, not to mention with other parties.
The implementation of the Cordys-based enterprise information portal has helped Ertan to boost the performance, efficiency and effectiveness of its people and processes while slashing IT costs. Increased availability and accuracy of information has helped to improve strategic and operational decision-making, which benefits overall productivity.
Information available at any location dramatically speeds up processes and provides better control An immediately visible benefit of the portal is the major improvement in availability of information throughout the organization. Instead of being available inside certain systems and/or from certain locations only, information can now be accessed anytime and anywhere. This speeds up the execution of a large number of processes.
Information anywhere: significant reduction on travel In the past, decision-making was frequently delayed by Ertan management's traveling back and forth to the construction sites. Nowadays, Ertan managers can access all the information they need with laptops or smart phones and hold meetings through web-conferencing. Plus, contracts can be signed electronically, which means these things don't have to wait until the managers are back at Ertan's head office in Chengdu. In addition to cutting traveling costs, the improved facilities for information sharing and web-conferencing have reduced the risk of travel, which is still a serious safety threat for Ertan's employees.
Improved capacity management through real-time monitoring Another example of the broad and on-time availability of data involves monitoring water levels. The new portal allows Yalong River water levels to be monitored from Ertan's Chengdu head office, which has led to better control over actual power production and improved capacity management.
Increased accuracy, transparency and usability reduce errors and improve quality Aside from the improved availability of data and information, the whole system has become much more accurate. In addition, the intuitive, web-based user interface reduces or even eliminates the need to train employees in the use of particular applications.
Shared master data: information is accurate Whereas key data was often duplicated across systems, master data is now shared across applications to eliminate data ambiguity. Plus, the increased availability and accuracy of information has resulted in more information being recorded electronically. This has reduced the prior degree of human error at Ertan when a lot of this information was still shared "the old-fashioned verbal way".
Event management: Manage by exception
Extensive management information on processes enables Ertan to manage by exception. Management reports are generated automatically and in real-time by dashboards that issue warnings when particular exceptions occur. This ranges from reports on water levels and energy production volumes through to key financial data composed of various underlying systems.
Slashing IT costs
Overall productivity at Ertan has benefited greatly from the implementation of the Cordys-based portal. As a result, Ertan has recorded a very concrete 40 per cent decrease in IT investments and maintenance costs. Besides lower hardware and software expenses, Ertan needs substantially fewer man-days per project. Compared to the other proposals, Cordys has made it possible for Ertan to save at least 30 per cent on hardware and nearly 50 per cent on licensing fees. At the same time, the cost of IT platform maintenance has been cut by 40 per cent.
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