Case Study Austin's Energy's Billing System Can't Light Up

INTRODUCTION

Austin Energy is the nation’s eighth largest publicly-owned electric utility and a department of the City of Austin. The mission is to deliver clean, affordable, reliable energy and excellent customer service. Our utility provides electricity to more than 420,000 customers and a population of almost one million in the City of Austin, several neighboring cities, unincorporated areas of Travis County, and a portion of Williamson County. 

The company operations are funded entirely through energy sales and services, and Austin Energy supports other City of Austin services with an annual transfer into the general fund of more than $100 million. The utility operates within the ERCOT market. The mission is to deliver clean, affordable, reliable energy and excellent customer service.

Austin Energy is recognized for achieving some of the highest performance standards in the industry. These standards include aggressive renewable and reliability goals and demonstrated efforts to promote new clean energy technologies and a sustainable environment. The City of Austin’s goals for use of renewable energy are some of the most aggressive in the United States. Austin Energy ranks first among Texas utilities for green power sales. Austin Energy also offers some of the most comprehensive energy efficiency programs in America. Austin Energy has long recognized the environmental and energy benefits of electric vehicles. The company leading the effort to study the impact of electric vehicles on the electric system while promoting increased market share in the automotive industry.

SWOT ANALYSIS

STRENGTH

• Rates are affordable, competitive, and stable
• Company commitment to clean energy resources. Austin Energy has a diverse generation portfolio of nearly 3,000 megawatts. This diverse mix of generation fueled by wind, solar, biomass, natural gas, nuclear, and coal helps Austin Energy control costs and power plant emissions.
• Affordable. Austin Energy has an established goal to maintain rates in the lower 50 percent among comparable Texas utilities.
• Reliable. Austin Energy provides exceptional electric system reliability and significant expertise in serving power-sensitive industries such as high-tech manufacturing.
•   Excellent Customer Service. Austin Energy’s Electric Service Delivery, Power Supply and Market Operations, and Customer Care groups are ISO 9001:2008 certified by the International Organization for Standardization.

WEAKNESS

• Instability issues. Persistent system error from billing department
• Customer services employee. Employee response one to one assistant for account accessing and correcting error.
• Customer. Unable to access system online portal, system causes a lot of problem, not friendly and hard time for customer.
• IBM failure. Billing software system failure

OPPORTUNITY

• Austin Energy customers can influence policy makers
• Policies reflect community values and priorities
•  Annual dividends go to the community
• Austin Energy supports the local economy
• Local control, Austin Energy is able to make business decisions that are important to customers — such as investing dollars in electric system reliability and allocating millions of dollars to help low-income residents pay their utility bills.
• Local control also helps Austin Energy to prioritize energy efficiency programs and to support our clean power strategy for reduced emissions and sustainable power supplies.
• Local ownership also allows for collaboration with clean tech companies that are developing advanced energy management systems and growing green jobs.

THREAT

• Modernization billing project delays. Austin and IBM project late completion, delay schedule, software bugs
• Software bugs. Error of thousand of bills, 65000 never received bills, 35000 in accurate bills, overcharging

QUESTION 1 :  Is Austin Business Project is a failure?

Yes, the Austin Business Project is failure because :

Modernization billing project delays

•                     Austin and IBM project late completion, delay schedule, software bugs

•                     Complexity new billing system with 73 different interface

Software bugs

•                     Error of thousand of bills

•                     65000 never received bills

•                     35000 in accurate bills, overcharging

Instability issues

•                     Seriously impact business and customer

•                     Persistent system error from billing department

•                     Revenue loses

Customer services employee

•                     Employee response one to one assistant for account accessing and correcting error.

•                     Called them selves as alpha tester

Customer

•                     Unable to access system online portal

•                     System causes a lot of problem, not friendly and hard time for customer.

IBM failure

•                     Billing software system failure

QUESTION 2 : Describe the business impact of the faltering Austin Energy project.

Operation

• Mostly affected is billing department.
• Difficulties of issuing bills because of billing software failure.
• Common error of customer not received bills, customer receive in accurate bills, account automatically cancelled.
• Incurred more cots in utilities and operation. Since business function is interconnected, one function failure give impact of another function such as production.
• Business service is inaccurate, it give impact in revenue and profit even though they don’t have pressure of competitor.

Customer service

•  The department mostly affected.
• Employee work in high level of stress.
• Extra effort need to solve customer problem. They still need to serve customer better even though customer angry to show their disappointment towards the company.
• Employee also treated in the same way as usual, do not receive any appreciation from the company.
• Give impact of public relationship disaster.

Sales and marketing

• Company also faced difficulties in determining the actual sales since the system leads more error.
• Sales and profit decreasing.
• Company might face law suit for this issues. If it is happening, more cost to handle legal costs. It is bad for company since give negative impact in their legacy.
• Company also incurred more cost in advertising to give explanation to the public about what happen.

Finance and accounting

• Inaccurate financial report since the actual value of revenue and profit inaccurate recorded.
• Give impact of financial planning and investment.
• The project is delayed, suppose fully operational in early 2011 but it still not fully operational and incurred more cost.

Management

• Wrong decision making of having IBM to develop the software as the bad experience IBM performance in inventory management.
• The service give by IBM is bad and disappointment.
• Need to train all employees with new technology.

Customer

• Mostly affected. 
•  System also not user friendly, Austin portal also always have problem, customer cant access account information.
• Company also doesn’t think of their preference such as ability to choose time of the month that customer prefers to pay bills.

QUESTION 3 : To what degree was IBM responsible for the problem  countered by the Austin Energy billing project?

•  IBM not really responsive to the problems.
• It made Austin Energy appealed so many times to IBM officials ranging from the managers of billing system project up to IBM CEO.
• IBM responsible in find the roof of problem, make system correction, test the latest system version and implement the system.

Was Austin Energy at fault for the problem?

Yes, Austin Energy is at fault for the problem. It is because:

• Austin Energy as a user had to be committed to the system.
• Probably, Austin Energy did not plan very properly in the project to develop the billing system.
• They must have clear and proper project management objective which should deal with five major variables: scope, time, cost, quality and risk.
• The agreement should clearly define the roles and responsibilities of both party.

QUESTION 4 : What were the specific organizational or technical factors as well as management factors involve in this project failure?

Organizational

• Employee could not be committed enough and described as if they are alpha tester when they encountered bugs and issues that never have made it to a live version.
• Unable to meet customer satisfaction.
• No realignment internally and externally.
• Caused vastly on costs that exceed budgets.
• Fail to meet customer expectation.
• Lost trust draws customer away.

Technical

•                     No specific infrastructure.

•                     Unreliable system caused money loss.

•                     Did not work closely with third party vendors like oracle.

•                     Customers unable to access the system’s online portal.

Management

•                     No strategy which cause time slippage.

•                     No business solutions.

•                     Interrelated with manpower.

•                     Repeating mistakes and delays.

•                     Improper project management objective.

QUESTION 5 : Describe the steps Austin Energy and IBM should have taken to better manage this project.

Austin Energy and IBM need to develop an information system plan which indicates :

1.         The direction of system development

•                     Overview of plant contents

•                     Current and future business organization

•                     Key biz process

•                     Management strategy

2.         The rationale

•                     Current situation and current business organization

•                     Changing environment

•                     Major goals of the biz plan

•                     Firm’s strategic plan

3.         The current systems / situation

•                     Major system supporting biz function and process

•                     Current infrastructure capabilities

•                     Difficulties meeting business requirement

•                     Anticipated future demand

4.         New developments to consider

•                     New system project

•                     New infrastructure capabilities required

5.         The management strategy

•                     Acquisition plan

•                     Milestone and timing

•                     Organizational realignment

•                     Management control

6.         The implementation plan

•                     Anticipated difficulties in implementation

•                     Progress report

7.         Budget requirement

•                     Requirement

•                     Potential saving

•                     Financing

•                     Acquisition cycle

CONCLUSION

Good project management is essential for ensuring that billing system are delivered on time, on budget and provide business benefit. Risk assessment are required in order to prevent any chances of failure encountered without deep consideration and deliberations. Strategies are vital to be implemented since it is useful for managing project risk and system implementation.