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Current customer information system (CIS) is based on an outdated mainframe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