Business Case Analysis

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CIS Business Case Analysis and Fit Analysis

Large Eastern Electric Utility Company

Quintel was responsible for managing the entire project.  Our standard templates and CIS and utility benchmarks were used to accelerate this process.  Because we have implemented CIS systems numerous times we were able to be very precise in defining the benefits and costs of the implementation.  The specific deliverables are listed below:

  • Completed Business Case templates for each workshop (call center, billing back office, field, meter shop, AMI benefits, regulatory requirements, etc.) These templates represent the “expected” SAP gaps, costs, benefits, business processes and flows, etc.  The workshops with the business “owners” were used to validate the assumptions used for the business case analysis.
  • Proposed Business Scenario Scope for CIS Implementation
  • Legacy Systems being replaced and/or interfaced to supplemental technology requirements
    1. Existing legacy systems
      i.    To be eliminated
      ii.    To be modified
    2. Existing Interfaces
      i.    To be eliminated
      ii.    To be rewritten
  • List of Major Gaps & Closure approach
  • List of Organizational Impact Expected—the organizational impacts will depend on the current organizational structure, union agreements and current business processes
  • Business Objectives, Expected Benefits and Metrics
  • List of Major Integration / Policy Issues that will be dealt with in the implementation or result thereof
  • List of Major Data Sources for Conversion and approach for data conversion
  • Identified Best Practices that could be used in the implementation
  • Project Planning Deliverables for the Implementation and Costs
  1. Overall project CIS implementation plan
  2. Template Roadmap and Rollout Roadmap
  3. Initial estimate of work– detailed cost schedule (internal and external resources, facilities, software, training costs, etc.) Transition to operations/stabilization (post go live requirements for business and technical) Infrastructure requirements, a) Production environment, b) Development environment, c)Test environment and d) Disaster recovery
  • Financial Business Case including:
  1. Implementation Costs and Ongoing costs as described above
  2. Identified and quantified benefits for each business unit or process area
  3. Business case scenarios including financial analysis
  4. Potential rate cases items—capital vs. expenses, depreciation
  5. AMI and Deregulation costs and benefits
  • Reporting Strategy
  • Training and Change Management Approach (roles, overtime, temporary hires for the Call Center, security, SOX and SOD rules, gap analysis, change management)

The result was a business case and a Fit Analysis Report that describes areas where some workarounds or special adaptation effort may be required to meet the Company’s business needs. The written business cases and plan was delivered to the Company for review and approval.  The financial business case outlined the targeted savings and the timeline to achieve the savings.  The baseline included: as-is costs, the targeted savings, opportunities for achieving managerial and staffing efficiencies, implementation costs (including program management office costs, other consulting subcontractor costs, hardware and software costs, the Company’s FTEs required to implement the program and performance metrics for the implementation period).  The savings were broken down into labor, materials and other categories and presented on an annual basis (monthly for the first two years).  Similarly, the costs were reported in the categories mentioned above. Investments were divided into capital and operating expenses.  The labor and regulatory implications were also factored into the recommended plan.

Fit Gap Analysis of ERP and CIS Packages, Software Selection and Business Case

Large Global  Utility

Assisted a large, global utility with the evaluation of their current processes for ERP, work management, GIS, Outage Management and CIS business processes.  Working with the client team potential integration issues were identified and potential resolutions to these issues were identified.   A gap analysis, workshops, and a business case were developed along with an approach for the implementation, with the objective of validating key business processes for the utility’s  global organization and to map ERP/CIS utility solutions to the global business requirements.

The purpose of this document is to understand what a specific Enterprise Resource Planning or ERP solution does and to use the fit analysis as influence for the global to-be and the global design (blueprint).

Some of the objectives of this analysis included:

  • Where possible, confirm ERP solutions/modules for use in national grid’s implementation
  • Identify areas where more detailed review is appropriate during the Blueprint Phase
  • Create a “strawman” ERP approach for blueprinting and subsequent implementation
  • Document the high level gaps that would have to be accommodated during project level enhancement (e.g., standard enhancement concept, third party solutions, etc.).
  • Document key value areas of an ERP implementation

One of the key goals of the fit analysis initiative is to use the information in this report and the momentum generated during our forums to rally business interest in an ERP implementation. Such an implementation cannot be just an Information Systems (IS) project and it must become part of the overall transformation effort.

ERP and CIS Package Software Selection and Business Case

Large Global Utility

Quintel performed merger integration responsibilities for the six merging gas and electric utilities. Performed benchmarking and performance improvement activites to develop new organization, new and common business processes and performance metrics.  In addition, Quintel created a business case for a new ERP and CIS business platform and conducted the system selection for the client.  Several packages where considered including: Oracle, SAP, PeopleSoft, Cayenta, and CISPlus.

  • Established a Utility Shared Service Organization that centralized Human Resources, Finance, IT and Accounting, Materials Management and Fleet – based on industry best practices and Quintel benchmarking,
  • Completed four waves of strategic sourcing and associated benchmarking activites yielding $90 million (15%) in annual savings on materials and services spend.  In addition, Quintel implemented strategic sourcing processes and metrics or ongoing performance improvement and savings. Quintel utilized its benchmarking database of industry spend levels and average cost reductions to realize savings.
  • Designed and implemented an overall IT architecture for the entire organization.  This included the consolidation of the six operating company data centers into a single data center.  This included the development of RFPs for vendors and service providers and the selection of vendors/contractors for implementation.

Business Case and Performance Improvement Analysis

California Electric and Water Utility

Quintel provided efficiency advisory services to include performance improvement and performance measurement consulting services.  In completing this assignment, Quintel interviewed staff in Power generation, transmission, distribution and engineering; Water operations, engineering and construction; customer service, finance and general services areas.  We utilized several unique approaches to capture the information required to study these areas in more detail:

  1. i.      Completed activity survey
    1. Distributed to all employees (e-mail or test sessions)
    2. Documented employee responses
    3. ii.      Completed a functional audit of processes
      1. Focus groups with multiple user groups
    4. iii.      Captured and analyzed the client’s data and created data as needed :
      1. Reviewed performance metrics, processes, procedures and policies
      2. Data estimated based on employee interview
      3. Data extrapolated based on available information
      4. Prior client experiences and benchmarks incorporated in the generation of workable data for analysis
    5. iv.      Conducted best practices and peer group benchmarking analysis

Quintel then crafted into recommendations with the associated business cases.  The total efficiency savings opportunities identified were in the areas of SAP usage, Fleet Management, Water Order Fulfillment, Billing, Customer Service projects and organization design.  These areas amounted to a savings potential of approximately $30 million, or 15% of the current IID operating and capital budget.  The area with the greatest potential for savings ($7 million) was the more efficient use of SAP. In addition to these “hard” savings areas, the area of governance (performance measures, policies and procedures, etc.) was identified as a key area that needed to be addressed in order to achieve the savings.

Finally, detailed implementation plans were developed with critical paths identified in order to assist the client in planning its implementation.

ERP and CIS Software Selection and Business Case

Large New York Electric and Gas Utility

Quintel was the sole consulting company providing complete management consulting services and information technology services to develop new business processes to improve corporate performance and implement all ERP modules through Quintel benchmarks and associated best practices. Services included the establishment of performance measures and management reports to measure performance associated with the ERP modules. Quintel utilized its benchmarking database for metrics and best practice processes during this engagement to monitor performance, such as call center performance (average handling time, call waiting time, etc.).  Through Quintel efforts, this project yielded ROIs in excess of 25%.

Assessment of SAP-Enabled Processes for an Integrated Petroleum Company

One of the Major Integrated Petroleum Companies

Management at this large oil company began to recognize the criticality of maintaining the appropriate level of commonality among key business processes that are either supported by the recently established shared services unit, or are enabled by the SAP implementation currently underway. Further study led to the conclusion that management and streamlining of important cross-functional business processes was in fact a more general challenge. However, there was no organizational apparatus in place to provide this cross-functional perspective, nor to balance the benefits of commonality with the need for local business unit responsiveness.

Our consultants were engaged to help develop a process management approach that would be beneficial and acceptable to this traditionally hierarchical, decentralized organization. We worked closely with a team of client personnel to tailor an approach that would fit into their culture. First, we investigated a series of internal initiatives that had been formulated to deal with various cross-functional and cross business unit issues – from energy conservation to sharing best practices – and documented what worked and what didn’t, and what barriers were encountered. We then surveyed several leading companies that had formalized a process management approach to learn about their organization roles and responsibilities, procedures, performance measures and transition.

Next, we crafted an approach to process management that would fit the client organization, and recommended a series of pilot projects to begin the transition. Organizational roles and responsibilities were defined for process sponsors, process sponsor’s council, process and sub-process owners, and process councils. A first cut business process model was developed in order to help clarify what the process boundaries were. Recommendations were also developed for how this new organizational dimension would influence technology investments such as SAP.

Best Practice Assessment for Information Technology and SAP System

Major Electric and Gas Utility

As the energy industry continues to evolve, IT organizations within electric utility companies have come under increased pressure to achieve better performance. At the same time, outsourcing of IT activities has become common, threatening the future survival of many support activities (such as IT) in the industry.

The client asked our consultants to review the IT organization, compare it to “best practices” outside the utility industry, and prepare a gap analysis. The assignment included both a technical as well as strategic review of the IT area, SAP implementation and Y2K projects.

The assessment included 65 best practice attributes that were separated into five high level categories: Management Activities, Service Development Activities, Service Delivery Activities, Architecture Activities, and Significant Projects. Each of these categories was further divided into sub-categories.

Using our Best Practice database of IT practices, a three-stage model was used for each best practice attribute: Level 1 – Transactional, Level 2 – Free Standing/Functional, and Level 3 – Enabling/World Class. An internal assessment was then completed to establish the client’s “As-Is” practice and “To-Be” practice for each attribute. The assessment was based on more than 40 interviews with internal stakeholders as well as a review of nearly 100 internal documents.

The gap analysis included a summary of nearly 60 gaps. For each gap, supporting evidence was presented to ensure that all of the gaps were based on consistent interpretation and analysis of the information provided to our consultants.

The client used the analysis as the basis for the IT organization’s strategic plan. It was important for the IT leadership team to review the gap analysis and determine which gaps are critical for their future success and which are not, since it would not be justified to be “best practice” across each individual attribute. For each gap, then, the client determined an appropriate action plan ranging from “do nothing” to a detailed project plan to minimize the gap.

Utility e-Business Strategy and Internet Infrastructure Analysis

Northwestern Municipality

The client is a large Northwestern city with two large utilities: an electric utility and a water and wastewater utility.

The City had won a number of rewards for having some of the best web pages and web content in industry. However, the City desired to make its e-Business offerings more robust and interactive. All divisions, including the two utilities, desired to use the internet to facilitate business transactions with customers, suppliers and stakeholders. In an effort to become more interactive, each division was pursuing its own initiatives. As a result there was no clear vision of user needs, redundant architecture was in place (software and hardware) and there was no quality control from a web development process or a content management process.

In addition, there was a traditional “utility or government” mentality that permeated the organization. Many executives did not know what e-Business was and why they should be concerned. The utility executives also felt that they had captive customers and would not need to provide additional services or change the way they were doing business.

Our consulting team worked jointly with the utilities and the City’s IT department. The project team interviewed various city and utility executives, web managers and IT professionals to understand the current process and e-Business strategy. In addition, the we conducted research into the trends of e-Business in government and utility industry as well as best practices into web architecture. Together the team and City teamed identified recommendations to align the City and utility e-Business strategy and to improve the development and management of web content.

The project team identified various opportunities to improve the City’s web architecture and to develop a comprehensive e-business strategy that is aligned with the City’s and the Utilities business and technology strategies. The leadership team accepted all recommendations.

Assessing Performance of Customer Billing System

Multi-Utility Company

Our client had difficulty billing its business customers for new services, installations of new equipment, and other miscellaneous charges. The bills were as much as one year in arrears. This backlog represented many millions of dollars in receivables. Because several different organizations within the company were directly involved, the problem was very complex. The client asked our consultants to conduct a quick review of its billing functions and operations, and recommend process improvements.

The core team—consisting of experts in data processing, telephone operations, and accounting—joined with the client’s senior management to carry out a two-week review. As part of the examination, the team studied all manual and data processing procedures to determine the root causes of the problem. At the conclusion of the two-week period, we identified a number of substantial recommendations for change.

In the short-term, we recommended that the client bill its customers, separately, in fixed amounts for any new service. Thus, charges for telephone use could be billed routinely while the fixed service costs were being calculated. In a period of several months, the billing backlog disappeared, and the daily cash flow from Accounts Receivable increased as much as $2 million per day. The client adopted our long-range recommendations and made major changes to the firm’s entire billing system and its data processing procedures. The immediate result was a significant improvement in the company’s cash position and an improvement in customer relationships.

Assessing the Usefulness and Cost-Benefits of Replacing Existing Systems

Large Utility Company (Generation and Distribution)

The client company used home-developed IT systems to support its business processes. Its largest customer requested that our client use SAP in one business area, for enhanced collaboration purposes. Our assignment was to assess the usefulness and cost-benefits of a general replacement of existing systems with SAP.

Our consultants investigated the key business processes to identify current IT systems shortcomings. The project team interviewed similar engineering firms regarding their application strategy and experience with enterprise systems.

Developed a cost-benefit analysis of three options:

  1. Introduce SAP.
  2. Enhance existing systems.
  3. “Do nothing.”

The analysis showed that using SAP as future application platform was the best medium-term solution. Our client followed the recommendations and started a first prototype development to ensure user acceptance and reduce implementation risks.