Provincial Power Corporation

1. Provincial Power Corporation Presented by: Siddeek Ali Leslie Dyck Tim Friesen Chris Reichert Jayson Schimnowski Jimmy Tran

2. Presentation Outline

4. 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

5. 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

6. The Traditional Model Crown corporation is involved in all aspects of the supply chain Transmission Distribution Generation

7. 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 Energy Customer Service & Billing Generation Transmission Distribution

9. 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

10. Information Aspect of Problem • Inefficiency • No coordination between back office & front office functions • No communication mechanisms between, for example, finance and power logistics • 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?

11. YES

13. IT/IS Impacts • Current customer information system (CIS) is based on an outdated mainframe • 12 isolated legacy systems • Expensive and risky to maintain • Current CIS runs poor or dead-end software • Rarely allows incorporation of new communication technologies • Even if incorporation is possible, it is extremely expensive

15. 1. Do Nothing • Continue to use 12 non-integrated legacy systems • Upgrade legacy systems to ensure Y2K compliancy

16. 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

18. Legacy System - Pros • Less costly in the short term • No need to pay for the high costs of replacing entire system • Familiarity • Employees are knowledgeable in using the legacy system • No employee retraining burden • For example, time, money, and company moral • Less risky • Avoids the uncertainty associated with installing an entirely new system

19. Legacy System - Cons • Not adaptable to changing business environment – deregulated utilities industry • poor or dead-end software engineering • Mainframe based • Costly to maintain in the long term • Does not allow communication between departments • In-field representatives cannot communicate with billing

20. 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 office • Universal billing system to handle all types of contracts • Back office • Open architecture to communicate with 3rd party systems

21. 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

23. Solution • Implement SAP IS/CCS • 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

24. Customer Focus ’99 Project • Implement SAP IS-U/CCS under guidance of PricewaterhouseCoopers LLP • Project managed by Richard Lawton • Certified SAP Consultant

25. 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

26. Lawton’s Recommendation • Continue project as scheduled • Delay project • Postpone indefinitely

27. 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

28. 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

29. 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

30. 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

32. 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

33. QUESTION TIME