When Compliance Cuts Costs

Hydro-Quebec taps datamart to enforce purchasing contracts, save millions

Montreal  December 18, 2001  Hydro-Quebec had a problem.

The $11.4 billion utility, which serves more than 3.5 million subscribers and has more than 31,400 megawatts of installed capacity, had implemented an SAP R/3 enterprise resource planning (ERP) system, but a year later, in mid-2000, the company was still unable to get the business data it needed from its systems to ensure compliance with its purchasing contracts.

Compliance was crucial, since the company's purchasing department negotiated discounts of 20 percent on the $1.5 billion in goods and services that Hydro-Quebec buys each year, according to Leo Paul Jemus, information services chief for the utility's purchasing services.

The company opted to implement a datamart that could give its managers visibility into the utility's spend, and in mid-2000 Montreal-based technology provider Sand Technology set up the datamart in less than two months using its Nucleus Active Mart solution. The datamart allows end users to query the utility's back-end systems on their own, rather than having to rely on programmers to create custom queries for the SAP database.

The new solution, accessed through a Web browser, allows users to see the status of their purchases from order to delivery, but more importantly it allows the company's purchasing department to track compliance with existing contracts.

"With Nucleus, we can now show 2,000 managers exactly how much they are buying, how much their employees are buying, and from whom," Jemus says.

Jemus estimates that in 2000, although the datamart was only implemented for the second half of the year, purchases that did not involve the purchasing department dropped by 25 percent compared to 1999 (from 12 percent to 9 percent). "On a purchasing budget of approximately $1.5 billion, this represents potential savings exceeding $4 million," Jemus explained.

In the first five months of 2001, Jemus says, the proportion of purchases that did not involve the purchasing department dropped to 8.5 percent.

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