Provincial Power

CorporationPresented by:Siddeek AliLeslie DyckTim Friesen

Chris ReichertJayson

SchimnowskiJimmy Tran

Presentation Outline

Company Background

Crown corporations, traditionally government-owned, provide services to Canadians in a non-competitive marketplace

Provincial Power Corporation (PPC) has held virtual monopoly since 1910 as electricity provider

Revenues of $1.2B serving 350,000 customers

Organizational goals: Remain the prime supplier of electricity in the province Remain easy to do business with (ensuring customer loyalty) Be customer-focused and cost effective Run a billing system that is Y2K compliant

The Organizational Problem

PPC needs to address the imminent deregulation Unbundling of utilities value-added chain Increased government regulation Competition from new entrants, alliances, M&As Increased need for diversification and strategic planning

The Traditional Model

Crown corporation is involved in all aspects of the supply chain

Generation

Transmission

Distribution

The Incoming New Model

1998 brings the serious possibility of deregulation

Utility companies were analyzing their business processes to see where they would fit into the new deregulated marketplace

Generation

Transmission

Distribution

Customer Service & Billing

Energy

Information Aspect of Problem

Poor customer service & billing process Meter-focused rather than customer-focused Inability to handle all types of power contracts

Lacks integration of various business processes No integration between functional areas Isolated solutions for: installation, connection, repair, monitoring, maintenance, & other site services Isolated solutions for energy consulting and contract management

Information Aspect of Problem

Must evaluate core competencies If business units can’t communicate, can management effectively get a handle on core competencies? What effects might this have on PPC’s ability to adjust to deregulation & competition?

Inefficiency No coordination between back office & front office functions No communication mechanisms between, for example, finance and power logistics

YES

IT/IS Impacts

Current CIS runs poor or dead-end software Rarely allows incorporation of new communication technologies Even if incorporation is possible, it is extremely expensive

Current customer information system (CIS) is based on an outdated mainframe

12 isolated legacy systems Expensive and risky to maintain

1. Do Nothing

Continue to use 12 non-integrated legacy systems

Upgrade legacy systems to ensure Y2K compliancy

2. SAP IS-U/CCS

Enterprise-wide software planning application, Enterprise Resource Planning (ERP)

Company based in Germany with thousands of customers around the world

Many capabilities

Legacy System - Pros

Familiarity Employees are knowledgeable in using the legacy system

Less costly in the short term No need to pay for the high costs of replacing entire system

No employee retraining burden For example, time, money, and company moral

Less risky Avoids the uncertainty associated with installing an entirely new system

Legacy System - Cons

Mainframe based Costly to maintain in the long term

Does not allow communication between departments

In-field representatives cannot communicate with billing

Not adaptable to changing business environment – deregulated utilities industry

poor or dead-end software engineering

SAP IS-U/CCS - Pros Integrates and facilitates communication between all PPC departments

Logistics, Financials, Customer Service, & Etc.

Adaptable to PPC’s organizational structure Eliminates need for multiple legacy systems

Has business process-oriented user interface Allows end-users to multitask

Offers software solutions for all activities performed in PPC

Front officeo Universal billing system to handle all types of contracts

Back officeo Open architecture to communicate with 3rd party systems

SAP IS-U/CCS - Cons Very costly to implement

$25M to $27M

Long implementation time Over 15 months

Poor support Program still under development and would not be shipped until late 1998

Allows PPC to fulfill organizational goals: Remain the prime supplier of electricity in the province

Wide range of capabilities prepares PPC for unknown future

Remain easy to do business with (ensuring customer loyalty)

Improves on PPC’s current business practices Be customer-focused and cost effective

Customer orientation allows PPC to provide better and more efficient customer service

Run a billing system that is Y2K compliant System designed for the new millennium

Solution

Implement SAP IS/CCS

Customer Focus ’99 Project

Implement SAP IS-U/CCS under guidance of PricewaterhouseCoopers LLP

Project managed by Richard Lawton Certified SAP Consultant

Richard Lawton – Project Manager

Setting up the project

Managing the schedule

Managing the finances

Managing the benefits

Managing the risks, opportunities, issues

Making important recommendations

Lawton’s Recommendation

Continue project as scheduled

Delay project

Postpone indefinitely

Issues to Consider

Time pressures Project must be completed two weeks before August 23rd.

If missed, project will be halted for three weeks at burn rate of $150,000/week.

Y2K Budget constraints

$27.3 M budget and PPC’s objective was to spend less If project delayed, project will go over budget

Technical problems PPC will be SAP IS-U/CCS’ first customer

Difficulties and delays expected

Issues to Consider

Staff motivation concerns Stress and anxiety levels of the project team members were extremely high as they approached the deadline

Training time constraints Longer than expected SAP IS-U/CCS implementation time meant that staff training time would be shortened

Project Outcome

Lawton recommended that the project proceed as scheduled

Implement by August 23rd

SAP IS-U/CCS went live on August 9th

First batch of customer bills printed on August 12th

$1.5M under budget Functioned as designed

Implementation resulted in some issues 1% of the customer account information was not converted correctly, about 3,500 accounts Strive for perfected resulted in high emotions Less training than preferred

MB Hydro IT/IS

Six IT departments, numerous ERP systems: SAP – finance, HR, materials planning, work orders Banner – customer care incl. bill generation, Mybill, service orders, computer-aided dispatch to service GIS applications by ESRI and GE Smallworld

Hydro integrated the ERP systems: they found no out-of-the-box solution that fit their model they communicate, they’re accessible across functional areas E.g. HR and meter functions link with Finance

Future continued improvement of customer interface wireless meters, which could enable time-of-use rates, remote connect/disconnect, improved energy management service

Messages for Modern Leader

Vendor management Be aware of additional mandatory software systems

Dedicated team Steering committee, project management team

Unfreeze, move, and refreeze Organizational behaviour change model

Training Allocate adequate time, money, and trainers

QUESTION TIME