Provincial Power Corp (PPC)

1. Provincial Power Corp (PPC)

2. Outline • Describe the Organizations • Define the Problem • Define information aspect of the problem • How IT impacts the problem • Define alternatives • Pros/Cons of Alternatives • Select your solution and analyze advantages • Go or No Go Decision • Pros/Cons Alternatives • Define Messages for Modern Leader

3. 1. Describe the Organizations Provincial Power Corp (PPC) • Virtual Monopoly since incorporation in 1910. • Sold significant amount of power to the states and neighbouring provinces • 1997 – Revenues of $1.2 billion and served 350,000 customers. • 1998, the provincial government started discussing de-regulation • 12 different information systems, outdated and not-integrated. Meter based rather than customer based. Not Y2K compliant. • Poor history of IT customer service capabilities. • 1998 – PPC and PwC agree to work on SAP implementation (called Customer Foucs ’99) • 233 users highly impacted, 73 users medium impacted, and 517 low impact

4. 1. Describe the Organizations PriceWaterhourseCooper (PwC) • In 1998, Price Waterhouse and Coopers Lybrand merged • 150,000 people working in 150 countries • Six lines of service and 22 industry-specialized practices • Management consulting is one of their lines of business • Technology solutions • ERP (SAP, Peoplesoft, Oracle), IT integration, Internet Advisory, and Solutions thru technology. • PwC Energy and Mining is one of the strongest specializations them. Greatest strength was evaluation the external environment and helping organizations anticipate and respond to those changes.

5. 1. Describe the Organizations SAP • SAP is an enterprise-wide software application company (ERP). The company was founded in 1972 by three (five) ex-IBM employees and was based in Waldof, Germany. • 8,000 (86,000) customers in 84 (120) countries • R/2 launches at the end of the decade • Sold 1.2 million shares on the Frankfurt and Stuttgart stock exchanges in 1998. • 1990’s launch R/3 (SAP most popular product) had 12,000 instalations in 84 countries, by 1999. R stands for real time processing • Benfits/Innovation: • Client-Server concept • Uniform appearance of graphical interface (GUI) • Relational Databases • Runs on any type of computer

6. 1. Describe the Organizations SAP • 1996 installed 1,089 new R/3 customers. At the end of 1996 the installed 9,000. • 1997 celebrate 25 years and more than 50% of company’s revenue is generated outside of Germany. • End of the 1990’s company launches mySap.com • Links ERP and e-commerce using Web technology • Invest 17-25% of revenues in R&D • With service-oriented architecture and the underlying integration and application platform SAP NetWeaver, SAP is providing our customers with solutions for end-to-end business processes. With SAP NetWeaver, your company can integrate people, information, and processes within the company and beyond. • To further demonstrate our commitment for ongoing innovation, growth, and market leadership, SAP acquired Business Objects in 2008. Together, SAP and Business Objects, an SAP company, offers the industry's most comprehensive portfolio of business performance and optimization solutions for companies of all sizes. • 51,500 employees (website)

7. 1. Describe the Organizations

8. 2. Organizational Problem – May 1998 • Deregulation Increased competition along the value chain Leaner operations to reduce costs Improved customer service Generation Transmission Distribution Retail

9. 2. Organizational Problem – May 1998 • Existing systems focus on “meters”, not customers Industry trend towards “Smart Meters” • Y2K compliance

10. 3. Information aspect of problem • Several unconnected legacy systems contributes to poor communication, reduces ability to provide excellent customer service • Unconnected Implications • Poor Customer Service implications • Increasing costs of supporting legacy systems from an IT perspective

11. 4. How IT impacts the problem • Several unconnected legacy systems contributes to poor communication, reduces ability to provide excellent customer service • Unconnected Implications: • Each system has different databases, for example G.Swanson could be Glen Swansun. • Conflicting data in each database. • Stale information, does not update immediately. Syncing is very difficult to accomplish in a timely and cost effective manner. • Poor Customer Service implications • Frustrated customers because the organization has multiple points of contacts • Call backs and lengths of call are longer which result in higher customer service costs (staff and systems) • Increasing costs of supporting legacy systems from an IT perspective • Maintain knowledge base for increasingly obselete systems. • Risk that legacy systems will not be suported in the future.

12. 5. Define alternatives • Status Quo – continue to maintain and troubleshoot current legacy systems • Implement SAP enterprise solution.

13. Pro Less expensive (in the short term) Familiarity of staff with existing system Change management is not an issue Con Existing systems are not connected Costs of maintaining legacy systems will rise Knowledge of legacy systems may become scarce Vendor support may no longer be available 6. PRO/CON of status quo

14. Con SAP Weaknesses Poor support Long implementation time IS-U/CCS was incomplete, development was slow Cost = $27 million PPC weaknesses Poor track record (mitigated by hiring PwC) 6. PRO/CON of an ERP (SAP) Pro • Familiarity (PPC is using SAP) • IS-U/CCS meets their needs • Open architecture allows for connection with legacy systems • Negotiating leverage

15. 7. Select your solution and analyze advantages • PPC, PwC and SAP agree to work together • Project Name: Customer Focus ’99 • 1st ever implementation of SAP IS-U/CCS • Code is still be written!!!! How is it going? Any Guesses? Past History?

16. 8. Go, or No Go • July 11, 1999 - Decision facing PPC/PwC is whether or not to continue the project as planned • Product development at SAP was slow • An alternative to scrapping the project: Can the scope/timeline be modified?

17. 9. Proceed Pro • Project so far had met critical path timelines • Key milestones had been identified, ie. Both PwC and PPC knew what success “looked like” Con • IS-U/CCS was still not finished, development was slow • Major issues to be addressed: • time pressure • budget constraints • technical problems • staff motivation concerns • Escalation of commitment

18. 9. Abandon Con • Still have same issues as before • Will still need to do something • Crown corporation will be viewed as having wasted taxpayer dollars Pro No more project spending Existing systems are still functional Project included upgrades to existing system to ensure they were Y2K compatible

19. 9. The decision ? 1999-2000 Annual Report: “The successful installation of a state-of-the-art customer information and billing system was a significant achievement. The new SAP Customer Care and Service System provides monthly billing for over 300,000 customers and integrates customer information with information contained in NB Power’s other SAP systems.”

20. 10. Leadership messages • Clear vision of what success looks like. • Clear definition of project objectives. • Senior management commitment, sponsor. • Communicating reasons for change, not SAP due to changing environment. • Identify the lessons learned (PPC B, Ex 1, Memo by Lawton) • What worked, what didn’t • Don’t be afraid to hire a consultant

21. May 2009 SAP Canada’s website does not list NB Power as a success story