A Discussion Of The Application Planning

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Retain, Upgrade, Or Replace Your CIS

• A Discussion Of The Application Planning
  Decision Making Process.

Phoenix, Arizona
May 19, 2005 945 am to
1045 am
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An Approach to the Application Planning Process
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Planning Project Approach

• The following diagram provides a high-level view
  of TMG Consultings Application Planning approach.

Project Management Administration
Industry Analysis (How does this compare to
industry best practices, costs, etc?)
GAP Analysis (What is the difference
between current and target?)
Alternative Analysis (What are viable ways to
achieve target?)
Business Analysis (Cost, Benefits, Risk,
Timeframe?)
Design Blueprint A Blueprint for Success
Customer Education Path
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Application Plan Project Activities Schedule
1. Project Management
Ongoing Project Administration
2. Gather Information
5. Formulate Target
6. GAP Analysis
7. Alternative Assessment
8. Business Analysis
3. Current Assessment
4. Requirements Analysis
9. Blueprint For Success
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Project Work Activity 1

• 1.0 PROJECT MANAGEMENT
• 1.1 Project Management
• Complete contractual documents.
• Establish project web site.
• Arrange for project participants.
• Finalize organization and reporting.
• Finalize project calendar and timeline.
• Develop detailed work program.
• Confirm invoicing and reporting.
• Confirm other project management requirements.
• 1.2 Project Administration
• Administer the website.
• Administer the work program.
• Provide team direction and manage project
  resources.
• 1.3 Project Kickoff
• Prepare kickoff materials.
• Schedule kickoff meeting
• Conduct kickoff to introduce and formally launch
  the project.

TMG CUSTOMER EXAMPLEAn example of project
activities spanning project weeks and total work
hours.
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Project Work Activity 2

• 2.0 GATHER INFORMATION
• 2.1 Conduct Interviews
• Identify individuals to interview.
• Schedule and conduct interviews.
• Document interview results.
• 2.2 Conduct Surveys
• Distribute survey for comment.
• Update survey as required.
• Announce survey and activate.
• Compile survey results.
• 2.3 Gather Materials
• Provide Client with a list of material to be
  provided.
• Client to gather and provide material.
• 2.4 Conduct Walkthroughs
• Conduct facility and operational walkthroughs as
  required.
• 2.5 Review Current System
• Conduct a workshop to review the current
  system(s) under evaluation.

TMG CUSTOMER EXAMPLEThe following is an excerpt
from a survey of over 300 user participants.
19) Your overall satisfaction level with CIS?
B
C
D
A
F
N/A
The average response...
25
37
18
7
7
6
Not Applicable 26 responses or 6
Excellent 32 responses or 7
Failing 32 responses or 7
Above Average 121 responses or 25
Unsatisfactory 87 responses or 18
Average 176 responses or 37

• Observation
• The majority of participants (69) indicate the
  current CIS is satisfactory to outstanding. Only
  31 believe CIS is unsatisfactory, failing or
  have no comment.

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Project Work Activity 3

• 3.0 CURRENT ASSESSMENT
• 3.1 Business Analysis
• Strategy, structure, offerings, configuration,
  process, data, staff and systems.
• 3.2 Customer Analysis
• Customer interaction, service, reading, billing,
  payment, collection and revenue.
• 3.3 Application Analysis
• Product technology, data design, functionality,
  usability, and scalability.
• 3.4 Technology Analysis
• Including the database, operating system,
  server, network, desktop, and cooperative
  environment.
• 3.5 Financial Analysis
• Business costs, IT costs, vendor costs, and
  contract commitments.
• 3.6 Delivery, Operation, Support Analysis
• Services associated with delivering, operating,
  and supporting the system.
• 3.7 Risk Analysis
• Identifies areas of exposure and level of risk.

TMG CUSTOMER EXAMPLEThe following business
analysis is an excerpt from a recent CIS
assessment

• Additional staffing required throughout the
  organization.
• High turnover in new hires (night shift in
  particular).
• Dependence on key staff increases risk.
• Workload and system problems contribute to low
  morale and loss of confidence in system.

• Systems being implemented with little
  consideration to CIS integration, e.g. the Outage
  Management System should use CIS for customer
  information and not replicate.

• Growth strategy increasing current base from
  250,000 to 500,000 is difficult to support.
• Core business of delivering power and billing is
  not being supported.

B7. Staff
B8. System
B1. Strategy

• Data integrity issues exist.
• Lack essential information to manage the
  business.
• Reports provide conflicting data or no data.

B2. Structure
B6. Data
Overall

• No issues identified.

• Provides essential offerings for wires company
  and energy company.
• Difficult to implement new programs such as EBPP.
• Difficult to operate extended capabilities for
  wires and energy company.

B3. Offerings
B4. Configuration
B5. Process

• No issues identified. Rates and rules of service
  understood and configured.

• Business process redesign work occurred however
  it was not embraced by staff.
• Staff not working to standard practices.
• Processes continue to evolve without effort to
  document and retrain staff.

A
B
C
D
F
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Project Work Activity 4

• 4.0 FUNCTIONAL REQUIREMENTS
• 4.1 Define Functions Features
• TMG Consulting will gather available
  documentation on business requirements.
• TMG Consulting will incorporate these
  requirements into its 2,500 item CIS baseline
  requirements checklist.
• This checklist reflects industry best practices
  and the work completed over the past 12 years
  across numerous utilities.
• TMG Consulting will conduct a half-day
  introduction to the CIS baseline function and
  feature checklist. Based on this introduction
  the team will identify key users participants and
  develop the review schedule. The baseline will
  be published for pre-review.
• Conduct work sessions across a minimum of 5 days
  to review, modify and weight the CIS baseline
  function and feature checklist.
• Publish the checklist for final review and
  consideration by the user community.
• Use the checklist to evaluate the current CIS
  System(s).

TMG CUSTOMER EXAMPLE
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Project Work Activity 5

• 5.0 FORMULATE STRATEGY
• 5.1 Senior Management Workshop Vision
  Strategy
• Conduct a work session to identify business
  vision and strategy regarding waves of
  innovation and risk, customer centric position,
  core and extended customer service, customer
  perception of value, customer value package,
  customer marketing strategy, market drivers, and
  business system drivers.
• 5.2 Target Business Workshop Direction
  Objectives
• Conduct work session to identify target business
  objectives (e.g. retain full service walk-in
  locations), business activity outsourcing, scope
  of products, services, and programs, external and
  internal contact or touch points, and business
  life-cycle considerations.
• 5.3 Target Technology Workshop - Direction
  Objectives
• Conduct work session to identify target
  computing environment, application environment,
  and related development, support, operating and
  maintenance environments.
• 5.4 Target Integration Workshop - Application
  Interfaces
• Conduct a work session to identify customer
  application architecture, interfaces, and
  integration points.

TMG CUSTOMER EXAMPLE

• Customer Billing
• Complex Billing
• Unbundled Billing
• Third Party Billing

• Customer Growth
• Use technology to optimize Staff
• Support an aggressive acquisition strategy

7. Customer Billing
1. Customer Growth
The Customer

• Customer Offerings
• Branding
• Competitive launch period of 4 to 6
  months
• Offer retail products services
• Offer utility services
• Offer city services
• Offer communication services
• Offer home entertainment services
• Must bill to have a new product or service

• Customer Marketing Sales
• Focus on Potential Customers
• Focus on Existing Customers

2. Customer Marketing
6. Customer Offerings
CISToolsTM
3. Customer Care
5. Customer Choice

• Customer Interaction
• Numerous paths to interact
• A single point of contact
• Ultimate customer self-service
• Customer Relationship
• Know your customer when they call
• Customer Service
• Provide exceptional levels of customer service
• Customer Life-Cycle Mgmt
• Provide comprehensive services from registration
  through termination

4. Customer Revenue

• Customer Choice
• Customer acquisition
• Customer enrollment
• Forecasting scheduling
• Risk management
• Commodity management
• Data collection
• Data communication

• Customer Revenue Stream
• Older technology ultimately impacts revenue
  stream
• Older technology ultimately impacts vision and
  recognition of revenue

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Project Work Activity 6

• 6.0 GAP ANALYSIS
• 6.1 Identify GAPS
• Review and understand the current environment.
• Develop and document the target environment.
• Identify GAPS between the current as is and
  target or to be environments.
• Identify critical GAPS or minimums to be
  addressed.

TMG CUSTOMER EXAMPLEThe identification of items
considered to be in scope based upon identified
GAPS.
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Project Work Activity 7

• 7.0 ALTERNATIVE ANALYSIS
• 7.1 Develop Alternative Solutions
• Identify potential CIS scenarios.
• At a minimum each scenario will include a brief
  description, positive and negative points,
  resource requirements, installation costs,
  ongoing costs, development timeframe, and project
  risk.
• 7.2 Evaluate Alternative Solutions
• Refine evaluation criteria and assign weight
  based upon criticality.
• Perform a comparative analysis of each scenario
  based upon the defined evaluation criteria and
  associated weights.
• Document results of the alternative analysis.
• Present the ranking of alternatives and agree on
  the scenario to be further refined and supported.

TMG CUSTOMER EXAMPLEA description and diagram of
an alternative to retain the billing system.
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Project Work Activity 8

• 8.0 BUSINESS ANALYSIS
• 8.1 Develop Costs
• Refine installation and ongoing costs.
• Develop a disbursement schedule.
• Identify cost allocation.
• Identify incremental cost per customer.
• 8.2 Develop Benefits
• Develop tangible cost savings.
• Develop tangible cost reductions.
• Develop tangible revenue enhancement.
• Develop intangible benefits.
• 8.3 Complete Cost/Benefit Analysis
• Formulate the cost / benefit and identify return
  on investment.

TMG CUSTOMER EXAMPLE
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Project Work Activity 9

• 9.0 BLUEPRINT FOR SUCCESS
• 9.1 Prepare Draft Blueprint
• Compile project material and develop report
  draft.
• Issue report draft for review and comment.
• Review and incorporate changes into draft report.
• Conduct iterative review process.
• 9.2 Conduct Presentations
• Prepare presentation materials.
• Conduct formal and informal presentations as
  required.
• 9.3 Deliver Final Blueprint
• Update the report draft to reflect needs or
  changes identified during the various
  presentations.
• Deliver the final report and close the project.

TMG CUSTOMER EXAMPLE
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Understand Assess the Current Environment
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Application Decision Model

• TMG Consulting utilizes the following decision
  model to determine optimum application direction.

DECISION QUADRANTS
Q1. Maintain CIS
Q2. Enhance CIS
Q4. Replace CIS
Q3. Migrate CIS
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Application Decision Model Categories

• The TMG Consulting decision model requires
  assessment of the following two areas
• 1. Business PerspectiveHow does the existing
  customer system address current and planned
  business needs?
• 2. Technical PerspectiveHow is the existing
  technical foundation, environment, tools, and
  application design viewed?

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Application Decision Model Grading Scale

• Within each category, evaluation criteria is
  defined and a grade assigned indicating project
  position and outlook for successful completion or
  impact.
• Grading is subjective based upon material
  provided, interviews conducted, and industry
  experience. All grades begin at a C and are
  incremented or decremented based upon the
  assessment. In the event insufficient
  information was available, the grade defaults to
  a C. Variations in the grade definition are
  detailed within each of the evaluation categories.

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Business Assessment Average Grade

• How does the existing customer system address
  current and planned business needs?

CIS
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Technology Assessment - Average Grade

• How is the existing technical foundation,
  environment, tools, and application design viewed?

CIS
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Application Decision Model Results
APPLICATION DECISION MODEL
Technical Fit
A A A- B B B- C C C- D D D- F

• Q1. Maintain CCIS
• 1. Status Quo

• Q2. Enhance CCIS
• 2. Major Upgrades
• 3. Re-front Scrapper
• 4. Common Front-end
• 5. New User Interface
• 6. Data Warehouse

• Q4. Replace CCIS
• 9. Custom Development
• 10. Managed CIS (COTS)
• 11. Hosted CIS
• 12. Outsourced CIS
• 13. ASP CIS

• Q3. Migrate CCIS
• 7. Re-host
• 8. Re-engineer

A A A- B B B- C C
C- D D D- F
Business Fit
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Review Industry Divers
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A Strategic Customer Focus
The customer is the center of the world.
Employees surround the customer to establish and
manage the relationship.
Strategy

• Strategy identifies what the organization is
  trying to accomplish in terms of the customer and
  generating customer value

Employee

• Systems are the manual and automated processes
  which affect the customer and their perception of
  value.

• Structure deals with organizational
  considerations which affect the customer and
  their perception of value.

Employee
The Customer
Employee
Employee
Employee
Employee
Systems
Structure

• Customer Centered Organizations
• Think Like Customer (TLC)
• View Customer as Primary Asset
• Focus on Customer Satisfaction
• Focus on Long-Term Relationships

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Core Extended Customer Service
How would you rate in providing exceptional
levels of service to customers? (may want to
segment by customer type)
Customer Grade Outstanding A Exceeds
B Satisfactory C Unsatisfactory
D Failing F
Focus on Caring Customer Service
Acknowledge - Appreciate - Affirm - Assure
Focus on Core Customer Service
Utility
Provide Basic Products, Programs, Services
Discount Your Customers
Impatient - Rude - Sarcastic - Ignore - Blame
Others
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CIS Market Drivers

• Customer Billing
• Complex Billing
• Unbundled Billing
• Convergence or Third Party Billing

• Customer Growth
• Use technology to optimize Staff
• Support an aggressive acquisition strategy

7.Customer Billing
1.Customer Growth
The Customer

• Customer Offerings
• Branding
• Competitive launch period of 4-6 months
• Offer retail products services
• Offer utility services
• Offer city services
• Offer communication services
• Offer home entertainment services
• Must bill to have a new product or service

• Customer Marketing Sales
• Focus on Potential Customers
• Focus on Existing Customers

2.Customer Marketing
6.Customer Offerings
CISToolsTM
3.Customer Care
5.Customer Choice

• Customer Interaction
• Numerous paths to interact
• A single point of contact
• Ultimate customer self-service
• Customer Relationship
• Know your customer when they call
• Customer Service
• Provide exceptional levels of customer service
• Customer Life-Cycle Mgmt
• Provide comprehensive services from registration
  through termination

4.Customer Revenue

• Customer Choice
• Customer acquisition
• Customer enrollment
• Forecasting scheduling
• Risk management
• Commodity management
• Data collection
• Data communication

• Customer Revenue
• Older technology ultimately impacts revenue
  stream
• Older technology ultimately impacts vision and
  recognition of revenue

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CIS Market Drivers
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CIS Market Drivers
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Functional Fit Requirements Definition
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Scope of Functions
The following diagram represents the major
functional categories.
Customer Choice
Customer Service/Care
Customer Management
Account Management
Credit Collection Management
Portfolio Management
Rates Management
Financial Management
Service Address Management
Billing Management
Service Point
Service Order Management
Inventory Management
Usage Management
System Mechanics
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Checklist Example
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Requirements Weighting
Number of Items
assign weights to each category.
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Critical
The most critical features which are the primary
drivers for this replacement effort.
0
10
Mandatory
Features which are mandatory, the system must
provide for within the base automation.
0
5
Required But Flexible
These features are required now however, the
utility is flexible in how the system implements
the feature (automation / manual workaround).
0
3
Future Need
These features will be required at some time in
the future and can be provided as a future
product release.
0
1
Nice To Have
These features are nice to have but are not a
required component of the new system.
0
Total
0
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Vendor Checklist Response
The vendor will respond to each item with
5
Current Base
The function is provided in the base product. No
modification is required
4
Planned Base
The function will be provided in the next planned
release of the product. No modification is
required.
3
Roll Into Base
The function will be developed and placed into
the base product during installation activities
at no cost.
2
Other Base
The function can be obtained from another
customers enhancements or a joint effort with
another customer.
1
Enhancement
This requires a customer specific enhancement to
be developed. Following implementation the
customer enhancement may or may not be rolled
into the next planned product release.
scores will be developed to assess functional
fit.
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Review Schedule
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Scope of Functions Account Management
Account Management An account is created to
reflect the establishment of a financial
agreement for the provision of a product or
service. The account is the primary path for
accessing and viewing customer account related
information. An account can be defined as a
single account, a master account, or a temporary
account. It reflects available and installed
service offerings, product offerings, equipment
offerings, and program offerings. It supports a
wide array of account views into account
transactions, consumption, payments, billings,
adjustments and account specific notes.
Return
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Scope of Functions Billing Management
Billing Management Support of cycle driven, date
driven and event driven billing schedules. The
process will input time based and volume based
consumption and will provide for consumption
validation and estimation algorithms. The
process will identify appropriate contract
clauses and utilize associated rate schedules and
pricing plans. The billing process will provide
for flexible billing periods and accommodate
proration. In addition to batch billing the
system will provide for on-line account billing
for what-if analysis and adjusted billing.
Return
35
Define Document Alternatives
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Alternatives

• TMG Consulting uses the following industry model
  as the basis for defining possible alternative
  scenarios. The following model presents four
  quadrants representing general software scenarios
  to consider regarding CIS options in support of a
  CIS replacement initiative. Client example
  provided below.

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Alternative Scenarios

• A series of alternative scenarios are identified
  including status quo which is the baseline.
  Client example provided below.

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Alternative Scenarios

• A profile is developed for each scenario. Client
  example provided below.

Installation - Development
Deploy
Storm
Target Hosted
Current
CIS
Customer/1 CSS
Utility 1 x
Utility 1 x
Utility 2 x
Utility 2 x
2. Convert
Utility 3 x
Utility 3 x
Utility 4 x
Utility 4 x
1. Upgrade
Utility 5 x
Utility 5 x
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Assess Alternatives Identify the Optimum
Solution
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Analysis of Alternatives

• Assessment criteria is used to evaluate each
  alternative scenario. The following are possible
  evaluation criteria.

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Assessment Criteria

• Assessment criteria is developed for each
  assessment category in order to score the
  alternative scenarios. Client example provided
  below.

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Assessments

• The solutions are evaluated using the assessment
  categories and evaluation criteria. Client
  example provided below.

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Assessment Summary

• The assessment is summarized and total award
  points identified. Client example provided below.

The following table summarizes the grade or fit,
weight, award points and total award for each of
the alternatives across the 10 evaluation
categories. The translation into this table from
the previous pages is as follows A 2, B 1, C
0, D -1, and F -2.
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Summary Recap

• A recap of the scenarios and their assessment is
  provided. Client example provided below.

CONSOLIDATE CSS
A
B
D
A
B
A
B
B
B
B
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Recommended Course of Action

• The following matrix presents the alternative
  solutions ranked by positive to negative return.
  Client example provided below.

• To Be Considered

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Develop a Business Case for the Optimum Solution
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Benefits
Client example provided below.

• A detailed assessment of benefits did not occur
  as part of this process, however, TMG Consulting
  offers the following rapid cost benefit analysis
  for consideration.

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Benefits
Client example provided below.

• Cost Reduction The possibility of reducing the
  current IT operational chargeback from 2.34 to
  1.50 for a savings of 0.84 per customer/month
• Cost Avoidance TMG Consulting conservatively
  assumed a 10 increase in user efficiency would
  occur as the result of improvements brought about
  by a new core CIS with extended capabilities
  geared to a retail company. All 225 positions
  were used to calculate this efficiency. From an
  IT perspective, TMG Consulting used current
  support services fees and said conservatively
  there would be no efficiencies or avoided costs.
• Revenue Enhancement Within the open retail
  environment the utility must compete for new
  customers and retain existing ones. A simple and
  conservative method to assign value to the
  customer was to take the year 2001 revenues
  estimated at 500 million and divide by the
  563,000 customers to assign an average revenue
  figure of 888.10 to each customer. Assumed 5
  of the customers at any point in time were at
  risk for leaving for another retailer or the
  value of obtaining another customer in the open
  market represented additional revenue of 888.10,
  and that a 5 increase in number of customers
  through switches was anticipated. Additional
  product revenue of 50 million annually is
  anticipated. The ability for the utility to
  improve the time to market for a new product or
  service by 90 days is worth the time value of
  money.
• Estimated Costs The one time capital cost of 18
  million and the ongoing annual cost of 10
  million is placed into the worksheet.
• Summary of Costs and Benefits The following
  table summarizes the core CIS costs and benefits
  for a 5 year operating period.

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Investment Measurements

• TMG Consultings rapid cost/benefit analysis
  utilizes the following 4 investment measures.
  Client example provided below.

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Investment Measures
Client example provided below.

• As a result of this rapid cost/benefit analysis
  TMG Consulting suggests the utility will receive
  sufficient return on its investment to justify
  pursuing this initiative. The worksheet has been
  provided for modification by the utility to
  perform additional analysis.

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Thank you for your attention. TMG
Consultingwww.tmgconsulting.com 9210 Honeycomb
Dr. Austin, Texas 78737 Greg Galluzzi
gregg_at_tmgconsulting.comp. 512.288.2655 f.
512.288.2622