The digitisation of Maynilad
The Philippines is not a country that suffers from a lack of water. The capital Manila enjoys an average monthly rainfall of around eight inches, and its 22 million population does not generally go thirsty. However like every large city that has grown through rapid urbanization, it has struggled to modernise its infrastructure at the pace required. Managing the supply of clean water and the downstream activities of runoff and sewerage management were inadequate prior to 1997 when the water service was privatised. The government-owned Metropolitan Waterworks and Sewerage System served the metropolitan area, however, a significant proportion of sewage ended up in storm drains or open canals. It was neither an efficient nor a healthy situation.
In 1997, the government awarded contracts to two companies, splitting Metro Manila into west and east zones. The West Zone went to Maynilad Water Services, Inc. (Maynilad), a consortium that subsequently ran into financial difficulties and returned the concession to the government. In 2007, water services were again placed in private hands—under the DMCI-MPIC Water Consortium. New management subsequently implemented the necessary intervention and poured the needed investments that made possible Maynilad’s dramatic turnaround from financially crippled utility to consumer-focused organization.
Today, Maynilad is under the ownership of three principal shareholders: Metro Pacific Investments Corporation which holds majority shares at 53 percent; DMCI Holdings, Inc., a local infrastructure company, with 25 percent; and Marubeni of Japan with 20 percent. Maynilad is responsible for the water and wastewater services in the western part of the Greater Manila area, serving a population of more than nine million in 17 cities and municipalities. Maynilad's concession contract has been extended to 2037.
Clearing the way for improvement
The new management invested heavily, and it needed to. Leaking pipes were a big concern. In 2007, 67 percent of the water that left the treatment plants was classed as 'non revenue', in other words most of it was lost though leaks, though much was illegally diverted. Replacing the large pipes made a big difference in a reasonably short time, but detecting leaks and illegal extraction was just one aspect of running a complex and geographically extensive utility that cried out for the application of new technology.
In March 2011, Dr Francisco Castillo, who had been overseeing the IT system from his position as Managing Consultant at the Spanish IT consulting firm Indra Systems, was appointed as CIO and Senior VP of Maynilad, with a seat in the management committee to reflect the key role IT was to play in setting the strategy that would take the company right up to the cutting edge of global best practice. In-house IT was never going to be the answer – his strategy was to outsource all of the operational and maintenance systems. “It meant redrawing the organisational map” he says. “I now have a very small and strategic IT team of nine, six of them as Project Managers engaged in managing contracted-out projects.”
His first priority was to fix the networks, servers and storage, so he set in motion a series of projects to create a robust infrastructure out of something that was, frankly, a mess. “It meant revamping our network in terms of cabling, putting in fibre connections to connect all of our remote offices and changing every one of our switches. Then we standardised and virtualised all our servers, becoming the first organisation in the Philippines to do so.”
At the same time it was necessary to re-engineer all the applications. SAP had been set up as a tool to automating manual processes rather than as an ERP platform that would support all the business critical systems. SAP was re-implemented with additional modules, and the customer relations platform revamped to the latest iteration of MS Dynamics software. “The CRM system used to reliably crash every four hours,” he observes wryly, “and the solution the former IT team had reached was to programme it to reboot every three hours!” The product itself was not at fault – it just hadn't been implemented properly.
Revamping the core IT was a major task, and it delivered great results in increased efficiency throughout the organisation. There was however another side to the coin. There is a huge amount of information available from the sensors, equipment and plants belonging to a sprawling water utility, much of it 'locked in' and hard to access. These monitor water flows, pressure, chemicals, pollution, acidity and many other things besides. Most companies run their IT and OT (operational technology) functions as separate departments, so it was a radical step in 2014 when OT was placed under Castillo. It established Maynilad as a leader in the much talked about field of IT/OT convergence. Now he has another OT team of 15 people, larger because these functions have not been outsourced. “By uniting the two, data can be taken straight from the plant into the IT system and you can see online how production is doing, what issues you have with your equipment, and how you need to schedule maintenance.”
To facilitate this, he has implemented the FIELD MOUS (Field Monitoring User System). It's a set of software modules designed for plant-wide monitoring and analysis. It also comprises a system data archive that handles the collection, storage, and retrieval of data and also acts as a data repository for all applications. Ultimately it allows management to understand where the business stands operationally at any given moment in time. FieldMOUS is Maynilad's IoT platform, enabling sensor data to be viewed, virtually in real time, at the new central control room which was commissioned only in August this year.
The major manifestation of the IT/OT landscape has seen the number of applications running within the business from 16 in 2011 to around 60 today, and from 35 physical servers to more than 350 virtual servers, says Castillo. Over the same period the number of reportable incidents has reduced dramatically, in fact by 70 percent within the first nine months. “It is hard to argue with myself if it is all under me! We are reaping the benefit because we can get the data straight from the sensors and feed it into our different IT systems. There are many ongoing projects to maximise the benefits of that convergence. Over 50 facilities have been automated, with more than 900 instruments regularly calibrated and maintained,” he says.
Better for business, better for users
At any point in time Maynilad has some 60 IT projects ongoing, and a similar number of OT projects. “Over the last five years we have moved fast. I could say we have improved from Jurassic to even beyond the state of the art in some areas!” Post-convergence (though that process is still ongoing) among the priorities now being refined are IT/OT security and the physical security of the facilities and remote equipment. One important focus is the improvement of customer service and customer experience. The key thing has been to provide a reliable water supply. Back in 2007 only 46 percent of customers were receiving a 24-hour water service, now it is close to 100 percent: then the number of connections was around 700,000, now it's over 1.3 million. Nevertheless a lot more can be done. The first phase, now complete, was to make billing available online, via SMS or by e-mail, and the next target will be to have an automated advisory service that will give advance notice of interruptions in service, maintenance issues and the like.
The people in the West Zone concession don't need a long memory to appreciate the difference, and now the management of Maynilad can make informed decisions knowing precisely the true state of the business thanks to the business information dashboards they can access. It's important to remember, he says, that in a highly regulated industry, where water prices are set by the government, the only real business improvement deliverables are internal ones, mainly in operational efficiency. Automation is an ongoing process says Francisco Castillo, but many plants have been fully automated and over the next two years all of them will be managed directly from the central control room. “We have dramatically improved on all of the key performance indicators that the regulator expects of us, and we are now on a par with any 21st century utility,” he concludes. “Non-revenue water is now down to 30 percent and that is improving monthly.” In September, Castillo was declared ASEAN CIO of the year, an annual recognition given to an individual who has displayed exceptional leadership and contributed significantly to his company’s growth and influence. Under his leadership, Maynilad was able to obtain an ISO20,000:1 certification for its information technology service management system, and also received the SAP Customer Centre of Expertise certification for its efficient business processes. Capturing all these lessons learned, this year he wrote a book entitled “Managing Information Technology” (Springer, Germany) which in effect is a compendium of best practices in the industry and how to apply these.