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INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083

AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

Case Study

Prepared by:Ismail Bin Mahedin (P13D122P)Samat Haron Bin Joll (P13D123P) Hjh Sulzarina Bt Hj. Mohamed (P13D119P) Dayang Suhana Bt Awang Bujang (P13D152P)

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• Questions:-• Question 1. Is the Austin Energy project a failure? Explain your

answer.• Question 2. Describe the business impact of the faltering Austin

Energy project.• Question 3. To what degree was IBM responsible for the problems

countered by the Austin Energy billing project. Was Austin Energy at fault for the problems? Explain your answer.

• Question 4. What were the specific organizational or technical factors as well as management factors involved in this project failure?

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

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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BackgroundAustin’s Energy is the 9th largest public power utility in the United State providing low cost reliable power to the capital city of Texas and metro area. Annual revenues over $1.3 billion servicing 400,000 premises representing around 43,000 businesses and 1 million consumers.Austin Energy generation portfolio include nuclear, coal, gas, wind, solar, and biomass. Austin Energy’s recognition are as follows:i. An industry leader in conservation and renewable energy offering the most comprehensive residential and commercial energy efficiency programs in the nation.

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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Continueii. Leader in distributed generation by operating the first fuel in Texas tied directly to the electric grid and the largest module combined heat and power plant in the nation, and leader in using the best solutions for information technology and telecommunications to deliver the first smart grid in the US by early Summer of 2009.Issues:i.AE legacy billing system:-a. did not integrate with smart meters and other newer technologiesb. system lacked newer customer assistance optionsModernize the billing system and bring the information systems up to date with newer energy conservation method.Contracted with IBM in 2009 for five years ; $55m( $38m for building and installing + $17m for operating the system for 5yrs after completion)

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Question 1: Is the Austin Energy project a failure? Explain your answer.

Yes, the project can be considered a failure for these reasons;Supposed to go live in early 2011 but it is still not fully operational.Software bugs have led to errors in bills which results over 65,000 customers never received a bill and another 35,000 received inaccurate bill.The company wall ill-prepared to handle the outpouring of customer dissatisfaction with the new system and their customer service was in danger of being over run.Due to the persistent system errors and lack of ability to bill for utilities properly, the City of Austin was losing revenue.Besides these there are also costs exceeded budgets, unexpected time slippages,technical performance that was less than expected,failure to obtain anticipated benefits and poor user interface

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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Question 2: Describe the business impact of the faltering Austin Energy Project.

Software bugs have led to errors in thousand of customer billings. Over 65,000 customers have not received bills entirely, and another 35,000 have received inaccurate bills. One customer was billed $300,000 instead of $3,000. The company was ill-prepared to deal with the outpouring of customer dissatisfaction and the customer service department was in danger of being overrun.

“Persistent system errors prevented the company from billing apartment residents for water, balancing its books, and filing audit reports. Without the ability to bill for utilities properly, the City of Austin was losing revenue,: said Austin Energy manager, Larry Weiss.

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• Question 3: To what degree was IBM responsible for the problems countered by the Austin Energy billing project? Was Austin Energy at fault for the problems? Explain your answer.

• IBM was repeating mistakes during the system implementation. Two separate errors cost the

project 37 hours of delay and one of the errors was the same type the same team made earlier. The team seemingly used ad-hoc methods for managing the project. The company replaced the lead manager twice.

• At this point, instead of blaming IBM alone, Austin Energy also at fault. They engaged with the utilities that did not include strong enough penalties for vendor non-performance, including the question of system availability in the contract. The utility did not make provisions for back-up systems in case something went wrong with the new system implementation, instead choosing to believe everything would work smoothly.

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INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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• Question 4: What were the specific organizational or technical factors as well as management factors involved in this project failure?

• IBM’s lead manager on the project was replaced twice. Problems with the system were not delegated to the right person. IBM and Austin Energy executives failed early on to identify gaps outside the project’s scope and recommend solutions. IBM responses to the myriad of implementation problems were too incremental.

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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• However, in the organizational perspective, poor communications happen. This will led to business impact that caused by known defects. Both IBM and Austin Energy failed to insists or implement best practice processes to ensure repeatable successes.

• Austin Energy did not manage its customer service department very well to ensure that all customer complaints were handled in a timely and proper manner. It did not plan for back-up measure in case something bad happen.

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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• However, in the organizational perspective, poor communications happen. This will led to business impact that caused by known defects. Both IBM and Austin Energy failed to insists or implement best practice processes to ensure repeatable successes. Austin Energy did not manage its customer service department very well to ensure that all customer complaints were handled in a timely and proper manner. It did not plan for back-up measure in case something bad happen. Employees were not properly trained and integrated well into the system implementation.

• In the technical side, IBM failed to work closely with third party vendors like Oracle to ensure all parts of the new system would interface with each other correctly and easily. The new billing system is complex, with 73 different interfaces.

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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

• Both companies should have dealt better with five major variables associated with any major project:

• Scope : Define what work is or is not included in a project• Time : Assess the amount of time required to successfully

complete the project, including all activities and tasks.

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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• Cost : Determine the time to complete a project multiplied by the cost of human resources required to complete the project.

• Quality : Determine how well the end result of a project satisfied the objectives specified by management.

• Risk : determine potential problems that threaten the project’s success. Determine if the potential problems prevent a project from achieving its objectives by increasing time and cost, lowering the quality of project outputs, or preventing the project from being completed altogether.

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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• Steps that should be taken to have better management in future;

• SELECTING PROJECT– Choose the suitable Information System that will be

use suitable with the organization– Choose correct Information System to link the

business plan because it will mirror organizational changes

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ESTABLISHING THE BUSINESS VALUE OF INFORMATION SYSTEMSi. Engage with cost and benefits of the Information System projectsii. To calculate company performance iii. Important in decision-making process and enhance employee performance

INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

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MANAGING PROJECT RISKi. Describing three dimensions of project risk: size,

structure, and experience with technologyii. Monitor the effectiveness of communications to

make sure the project will run smoothlyiii. Effective control risk factor: using PERT and Gantt

Charts

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THANK YOU