July 2007 WSSC IT Enterprise Technology Roadmap Enterprise Application Systems Implementation

July 2007

WSSC ITEnterprise Technology

RoadmapEnterprise Application Systems

Implementation

2

WSSC IT TEAM

July ’07 – IT Team

Agenda

What is Enterprise Asset Management? What is Enterprise Resource Planning? Where is WSSC Today? What benchmarking has been performed? Compelling Reasons for pursuing an

ERP/EAM Implementation? What is the Business Case? What are the Requirements for Success? Why should WSSC Implement? Questions, Comments and Feedback

What is Enterprise Asset Management? What is Enterprise Resource Planning? Where is WSSC Today? What benchmarking has been performed? Compelling Reasons for pursuing an

ERP/EAM Implementation? What is the Business Case? What are the Requirements for Success? Why should WSSC Implement? Questions, Comments and Feedback

3

WSSC IT TEAM


What is Enterprise Asset Management (EAM)?

Enterprise Asset Management is an asset intensive industry approach, (for example, Utilities) used to– Optimizing the business process for asset management to yield

savings and increasing the life cycle of assets.

– Improve the entire asset life cycle, taking care of all the relevant phases starting

from planning the right investments, specifications and design to asset constructions, operations and maintenance procedures finally moving towards the disposal and decommissioning of

assets.

An Enterprise Asset Management solution – can be particularly helpful for asset intensive sectors such as

Water and Waste Water Utilities Organizations where asset management is critical to business operations – Gartner Group (G00129221 - Utilities should consolidate Business Functions)

Other industries that may benefit from the EAM solution include transportation, government, and public sectors.

Enterprise Asset Management is an asset intensive industry approach, (for example, Utilities) used to– Optimizing the business process for asset management to yield

savings and increasing the life cycle of assets.

– Improve the entire asset life cycle, taking care of all the relevant phases starting

from planning the right investments, specifications and design to asset constructions, operations and maintenance procedures finally moving towards the disposal and decommissioning of

assets.

An Enterprise Asset Management solution – can be particularly helpful for asset intensive sectors such as

Water and Waste Water Utilities Organizations where asset management is critical to business operations – Gartner Group (G00129221 - Utilities should consolidate Business Functions)

Other industries that may benefit from the EAM solution include transportation, government, and public sectors.

4

WSSC IT TEAM


What is Enterprise Resource Planning (ERP)?

Enterprise Resource Planning is a process by which an organization manages and integrates the important parts of its business.

Term ERP– Originally implied systems designed to plan the utilization of enterprise-wide

resources. – As adoption has become popular and common place, its now frequently used in

the context of large software applications developed to help companies implement ERP in their organization.

An ERP management information system integrates important areas such as planning, purchasing, inventory, sales, customer services, finance, human resources and asset maintenance/management etc.

We can think of ERP as the glue that binds the different computer systems for a large organization.

– Typically each department would have their own system optimized for that division's particular tasks but with ERP, each department still has their own system, but they can communicate and share information easier with the rest of the company.

ERP integrate all data and processes of an organization into a unified system with multiple components of computer software and hardware to achieve the integration.

A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules.

Enterprise Resource Planning is a process by which an organization manages and integrates the important parts of its business.

Term ERP– Originally implied systems designed to plan the utilization of enterprise-wide

resources. – As adoption has become popular and common place, its now frequently used in

the context of large software applications developed to help companies implement ERP in their organization.

An ERP management information system integrates important areas such as planning, purchasing, inventory, sales, customer services, finance, human resources and asset maintenance/management etc.

We can think of ERP as the glue that binds the different computer systems for a large organization.

– Typically each department would have their own system optimized for that division's particular tasks but with ERP, each department still has their own system, but they can communicate and share information easier with the rest of the company.

ERP integrate all data and processes of an organization into a unified system with multiple components of computer software and hardware to achieve the integration.

A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules.

5

WSSC IT TEAM


Where is WSSC Today?

WSSC CORE ENTERPRISE – CURRENT STATE HIGH LEVEL – BUSINESS VIEW

Financial Information System(FIS)

Permit Processing Information System(PPIS) Maintenance Management

Information System(MMIS)

Sewer Model System(SMS)

Customer Services Information System(CSIS)

Compass Work Order Management System

(COMPASS)MAPS System

GISGeo-Spatial View

Assessment Information

System(AIS)

Fleet Maintenance and Management System

(MEIS)

MovableAsset

InformationSystem (MAIS)

Re

mit

Pe

rmits

C

olle

ctio

n

Val

idat

es

Cus

tom

er

Info

rmat

ion

(M

eter

)

Get Sewer AssetsInformation

Extracts P

art Num

ber

and Cost Info

rmation

Per

form

acc

ount

va

lidat

ion

in G

L

Sends service PO & Inventory Record

Sends financial information on Rate Payer Water/Sewer Collection

(Account Receivables)

Validates Account No. from GLSends inventory Information to GL

Man

ually

ent

er

Fue

l Exp

ense

and

T

rip R

enta

l thr

ough

AD

I

Update Asset Changes

Sen

d D

epr

eci

atio

nIn

form

atio

n

LEGEND Work Order Management Asset Management Inventory Control Procurement

WSSC CORE ENTERPRISE – CURRENT STATE HIGH LEVEL – BUSINESS VIEW


Permit Processing Information System(PPIS) Maintenance Management

Information System(MMIS)



Compass Work Order Management System

(COMPASS)MAPS System

GISGeo-Spatial View

Assessment Information

System(AIS)


(MEIS)

MovableAsset

InformationSystem (MAIS)

Re

mit

Pe

rmits

C

olle

ctio

n

Val

idat

es

Cus

tom

er

Info

rmat

ion

(M

eter

)

Get Sewer AssetsInformation

Extracts P

art Num

ber

and Cost Info

rmation

Per

form

acc

ount

va

lidat

ion

in G

L

Sends service PO & Inventory Record

Sends financial information on Rate Payer Water/Sewer Collection

(Account Receivables)

Validates Account No. from GLSends inventory Information to GL

Man

ually

ent

er

Fue

l Exp

ense

and

T

rip R

enta

l thr

ough

AD

I

Update Asset Changes

Sen

d D

epr

eci

atio

nIn

form

atio

n

LEGEND Work Order Management Asset Management Inventory Control Procurement

Where we are right now:

Challenges we currently face and the reasons why:

•Legacy Technologies, some are 20+ years old

•Best of Breed, Stove Piped and Redundant Systems with Multiple Data Source

•Lack of vendor supported or high support cost put Commission at risk

•Fragmented Architecture

•Complex and hard to maintain Interfaces between Systems

•Not easily replaceable / Not Plug and Play

•IT solutions were built in silos.

•Systems do not talk to each other (No interoperability)

•Systems Data Lack Cleansing and/or Archival

•Systems cannot support changes and improvements to business processes

6

WSSC IT TEAM


Where are we today (cont)?

Best of Breed Solution – Where we are right now– Pros

Rich functionality specific to water and wastewater industry needs (if COTS)

These products may have evolved and stayed one step ahead of integrated ERP/EAM vendors offerings

– Cons Lack of Integration with existing systems Does not place the burden and responsibility on the

Software Vendor to ensure that functionality and architecture required for integration with other systems is compatible and up to date

Contractual obligation for upgrades and technical architecture performance of interfaces

Complex interfaces required for functional interoperability between system must be maintained in house (we are not a software company)

Best of Breed Solution – Where we are right now– Pros

Rich functionality specific to water and wastewater industry needs (if COTS)

These products may have evolved and stayed one step ahead of integrated ERP/EAM vendors offerings

– Cons Lack of Integration with existing systems Does not place the burden and responsibility on the

Software Vendor to ensure that functionality and architecture required for integration with other systems is compatible and up to date

Contractual obligation for upgrades and technical architecture performance of interfaces

Complex interfaces required for functional interoperability between system must be maintained in house (we are not a software company)

7

WSSC IT TEAM


WSSC CORE ENTERPRISE – FUTURE STATE HIGH LEVEL - BUSINESS VIEW


Permit Processing Information System(PPIS)

Maintenance Management Information System(MMIS)




(MEIS)

MAPS System(MAPS)

GISGeo-Spatial View

Assessment Information System(AIS)

HRMS

·C

ust

om

er R

elat

ion

ship

&

Info

rmat

ion

M

anag

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t

·A

sset

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agem

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·W

ork

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Pro

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on

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l

·F

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cial

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t·

Hu

man

R

eso

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es

Man

agem

ent

Work Order Management System

(COMPASS)

SEAMLESSLY AUTOMATED AND INTEGRATED SYSTEMS

Customer Relationship Management System

(CRM)

Enterprise Asset Management System (EAM)

Enterprise Resource Planning System(ERP)

Hosted Solutions

GIS

Geo

-Sp

atia

l Vie

w

Dec

isio

n S

up

po

rt &

Bu

sin

ess

Inte

llig

ence

IT Infrastructure

IT Infrastructure IT Infrastructure IT Infrastructure IT Infrastructure

·D

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ases

·T

elco

/ N

etw

ork

·S

yste

ms

·W

eb·

Rep

ort

ing

WSSC CORE ENTERPRISE – FUTURE STATE HIGH LEVEL - BUSINESS VIEW


Permit Processing Information System(PPIS)

Maintenance Management Information System(MMIS)




(MEIS)

MAPS System(MAPS)

GISGeo-Spatial View

Assessment Information System(AIS)

HRMS

·C

ust

om

er R

elat

ion

ship

&

Info

rmat

ion

M

anag

emen

t

·A

sset

Man

agem

ent

·W

ork

Ord

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anag

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Pro

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on

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l

·F

inan

cial

M

anag

emen

t·

Hu

man

R

eso

urc

es

Man

agem

ent

Work Order Management System

(COMPASS)

SEAMLESSLY AUTOMATED AND INTEGRATED SYSTEMS

Customer Relationship Management System

(CRM)

Enterprise Asset Management System (EAM)

Enterprise Resource Planning System(ERP)

Hosted Solutions

GIS

Geo

-Sp

atia

l Vie

w

Dec

isio

n S

up

po

rt &

Bu

sin

ess

Inte

llig

ence

IT Infrastructure

IT Infrastructure IT Infrastructure IT Infrastructure IT Infrastructure

·D

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ases

·T

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ork

·S

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·W

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Rep

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ing

Where is WSSC Today (cont)?

Where we want to be:

Benefits:

• Integrated Solution, with Single Common Data Source

•Unified vendor support

•Loosely coupled and interoperable Architecture

•Simple and easily maintain Interfaces between Systems

•Plug and Play

•Easy Support and Upgrade

•Modular Application Architecture

•Unified System of Records and Data Model

•Easy accommodation for changes and improvements to business processes

8

WSSC IT TEAM


Where are we today (cont)?

Integrated ERP/EAM Solution – Where we want to be – Pros

ERP/EAM Modules are combined by Vendor out of the box at the function and data layers providing seamless integration

More spending with one vendor provides leverage for negotiating capability

Reduces expenditure for complex interface development We do not have to deal with multiple software technology

architecture, integration issues and multiple software upgrades

– Cons Systems functionality may be generic, supporting multiple

industries and requiring customization to provide required functionality from out the box offering

All eggs are in one basket Exit strategy is more difficult

Integrated ERP/EAM Solution – Where we want to be – Pros

ERP/EAM Modules are combined by Vendor out of the box at the function and data layers providing seamless integration

More spending with one vendor provides leverage for negotiating capability

Reduces expenditure for complex interface development We do not have to deal with multiple software technology

architecture, integration issues and multiple software upgrades

– Cons Systems functionality may be generic, supporting multiple

industries and requiring customization to provide required functionality from out the box offering

All eggs are in one basket Exit strategy is more difficult

9

WSSC IT TEAM


What benchmarking has been performed?

Industry Research – Gartner Group– Worked with Water/Waste Water Industry Analyst– Worked with ERP/EAM Industry Analyst

CIO water / wastewater utility summit

Best of Breed vs. Integrated System– We analyzed whether WSSC IT should be in the business

of integrating multiple best of breed solutions. – Our efforts should not be spent in the business of

software integration. Neither should it be our niche area.– The need for the best of breed functionalities outweighs

the architectural challenges of integration and upgrades.– We can live with the best practices and standards of a

generic offerings of a leading integrated ERP vendor

Industry Research – Gartner Group– Worked with Water/Waste Water Industry Analyst– Worked with ERP/EAM Industry Analyst

CIO water / wastewater utility summit

Best of Breed vs. Integrated System– We analyzed whether WSSC IT should be in the business

of integrating multiple best of breed solutions. – Our efforts should not be spent in the business of

software integration. Neither should it be our niche area.– The need for the best of breed functionalities outweighs

the architectural challenges of integration and upgrades.– We can live with the best practices and standards of a

generic offerings of a leading integrated ERP vendor

10

WSSC IT TEAM



Notion to evaluate Oracle– WSSC already established Oracle as its database

standard.– We have been using Oracle’s E-Business Suite Financials

for our accounting and payroll requirements for the past 10 years.

– We standardized Oracle Spatial for GIS needs.– Oracle’s flagship E-Business suite is one of the top

integrated business applications in the market today.– Oracle is a viable global software vendor that can survive

tough economic pressures.– Oracle offers integrated Enterprise Asset Management

module in its flagship product (E- Business Suite) – Strong product offerings in this space. Oracle just

acquired SPL WorldGroup software – a leading utility application provider. (2 Time selection from past effort)

– Transitioned from a best of breed component assembler to an integrated suite provider.

Notion to evaluate Oracle– WSSC already established Oracle as its database

standard.– We have been using Oracle’s E-Business Suite Financials

for our accounting and payroll requirements for the past 10 years.

– We standardized Oracle Spatial for GIS needs.– Oracle’s flagship E-Business suite is one of the top

integrated business applications in the market today.– Oracle is a viable global software vendor that can survive

tough economic pressures.– Oracle offers integrated Enterprise Asset Management

module in its flagship product (E- Business Suite) – Strong product offerings in this space. Oracle just

acquired SPL WorldGroup software – a leading utility application provider. (2 Time selection from past effort)

– Transitioned from a best of breed component assembler to an integrated suite provider.

11

WSSC IT TEAM



Case Studies - Water/Waste Water Utilities – East Bay Municipal Utilities District, CA– Metropolitan St. Louis Sewer District, MO– Metropolitan Water Reclamation District of

Greater Chicago, IL– Dekalb County, Dept. of Wastershed

Management, GA– Detroit Water and Sewer Department, MI– San Antonio Water System, TX– Metropolitan Sewer District of Greater

Cincinnati, OH

Case Studies - Water/Waste Water Utilities – East Bay Municipal Utilities District, CA– Metropolitan St. Louis Sewer District, MO– Metropolitan Water Reclamation District of

Greater Chicago, IL– Dekalb County, Dept. of Wastershed

Management, GA– Detroit Water and Sewer Department, MI– San Antonio Water System, TX– Metropolitan Sewer District of Greater

Cincinnati, OH

12

WSSC IT TEAM


What Benchmarking has been performed?

San Antionio Water System, TX

– Financial Loss Estimate $5M

– Failed Implementation– Lack of Executive Management

Commitment– Lack of Change Management

process and lots of Customizations

– Effort led as an IT Project– Little investment in Training– Lack of Project Management

Principles

San Antionio Water System, TX

– Financial Loss Estimate $5M

– Failed Implementation– Lack of Executive Management

Commitment– Lack of Change Management

process and lots of Customizations

– Effort led as an IT Project– Little investment in Training– Lack of Project Management

Principles

Dekalb County, GA

– Total Cost Estimate $20M

– Successful Implementation– Strong Executive Management

Commit to Implementation– Robust Change Management

process with little or no Customizations

– Effort led through the formation of Core Business Team with business analysts across business unit

– Huge Investment in Training (about 50% of Budget)

– Deployed strong project management principles / methods

Dekalb County, GA

– Total Cost Estimate $20M

– Successful Implementation– Strong Executive Management

Commit to Implementation– Robust Change Management

process with little or no Customizations

– Effort led through the formation of Core Business Team with business analysts across business unit

– Huge Investment in Training (about 50% of Budget)

– Deployed strong project management principles / methods

Case Studies - Successful vs. Unsuccessful Experience waste and Waste Water Utilities ERP/EAM Implementation

13

WSSC IT TEAM



5 Business Brainstorming Workshops– All critical business area participated– Approach to address aging critical business systems and

applications discussed– Oracle SPL Product Workshops Conducted

Product Review by representatives for all business areas i.e. Assets, Work Order, Acquisition, Finance, HR, Logistics, SLMBE.

Day in the life workflows from evaluated– Site Visit to Dekalb County, GA by Production,

Engineering & Construction, Customer Care, Logistics and IT Teams

Discussed lessons learned during and post Oracle SPL implementation.

Shared experience including things to watch out for in an ERP/EAM Implementation.

Well represented by all key WSSC teams.

5 Business Brainstorming Workshops– All critical business area participated– Approach to address aging critical business systems and

applications discussed– Oracle SPL Product Workshops Conducted

Product Review by representatives for all business areas i.e. Assets, Work Order, Acquisition, Finance, HR, Logistics, SLMBE.

Day in the life workflows from evaluated– Site Visit to Dekalb County, GA by Production,

Engineering & Construction, Customer Care, Logistics and IT Teams

Discussed lessons learned during and post Oracle SPL implementation.

Shared experience including things to watch out for in an ERP/EAM Implementation.

Well represented by all key WSSC teams.

14

WSSC IT TEAM


What benchmarking has been performed? (Cont)

Favor Integrated OVER Best of Breed

ERP/EAM?

Strategic Planning

Enterprise Technology Roadmap

START

Evaluate Oracle?

NO

YES

NO

Establish Multi-Year Executive Commitment to Commission Enterprise Technology

Roadmap

END

Benchmarking Refine ImplementationDetails

Cost Estimate(Per Year for 5 Years)

Establish Business Familiarity

Enterprise RoadmapApproved?

YES

NO

YES YES

Favor Integrated OVER Best of Breed

ERP/EAM?

Strategic Planning

Enterprise Technology Roadmap

START

Evaluate Oracle?

NO

YES

NO

Establish Multi-Year Executive Commitment to Commission Enterprise Technology

Roadmap

END

Benchmarking Refine ImplementationDetails

Cost Estimate(Per Year for 5 Years)

Establish Business Familiarity

Enterprise RoadmapApproved?

YES

NO

YES YESBUSINESS FAMILIARITY

·Cursory look·- Current AS-IS business Processes·- Review materials available from business areas

·Gap Analysis·- Identify the gaps in current AS-IS business processes·- Identify opportunities for improvement in future TO-BE business processes

·Oracle Product Workshop·- Understand business processes offerings in Oracle Product and Modules·- Determine aberrations and remediation plan

·Oracle Proposed Path·- Review of the Oracle Phases and validation of high level sequencing of modules implementation

REFINED IMPLEMENTATION PLAN

·Phase 0 Tasks HW & SW Architecture (Upgrade to 11.5.10)PMP, PQP, Core Business Team, Technical Readiness

·Phase 1 TasksRetire COMPASS, MMIS, MEIS*, TAMSO, Implement Oracle Inventory, Bill of Materials, Work in Process, Fixed Assets, Ent. Asset Mgmt, HRMS Benefits and Time & Labor

·Phase 2 TasksRetire MAPS, CSIS*Implement Account Payable, iPurchasing, iSupplier, Order Mgmt, Account Receivable andService

·Phase 3 TasksImplement Ent. Plan. & Budget, Project Accounting and Fleet Management

COST

·Software Cost·- By Impl. Phase·- By Year

·Hardware Cost·- By Impl. Phase·- By Year

·Professional Services Cost·- By Impl. Phase·- By Year

·Training Cost·- By Impl. Phase·- By Year

·Internal Cost

BENCHMARKING

• List of Companies with references• Plan Site Visit• CIO Forum for Water & Wastewater Industry

15

WSSC IT TEAM


Compelling Reasons to pursue an ERP/EAM Implementation?

High Maintenance Requirements for Heterogeneous Systems and Multiple Platforms

Integrating disparate solutions and managing all the system interfaces becoming a growing challenge

Increased risk of business disruption from legacy and stove piped application technology

Inflexible technology limiting the adoption and introduction industry best practices and standards to our business processes

Constantly rising effort associated with the operations of aging application and hosting environment.

High Maintenance Requirements for Heterogeneous Systems and Multiple Platforms

Integrating disparate solutions and managing all the system interfaces becoming a growing challenge

Increased risk of business disruption from legacy and stove piped application technology

Inflexible technology limiting the adoption and introduction industry best practices and standards to our business processes

Constantly rising effort associated with the operations of aging application and hosting environment.

16

WSSC IT TEAM


What is the business case?

Assumptions– Project costs includes items such as

Software, servers, client upgrades, network upgrades, support and maintenance contracts, professional services, IT training, application customization and development, implementation labor and on-going support and administration.

– NPV calculations doesn't completely reflect the operating efficiency benefits.

For example the process improvements that can improve productivity, re-deploy labor resources, avoid purchases or eliminate expenses.

– Project risk costs were not factored in the NPV calculations. This includes everything from schedule and budget overruns,

functionality shortcomings, slow adoption and resources risks that may affect planned costs and benefits.

– Intangible benefits are strategic and important but non-quantifiable in monetary terms such as brand advantage or business agility with ERP implementation.

Assumptions– Project costs includes items such as

Software, servers, client upgrades, network upgrades, support and maintenance contracts, professional services, IT training, application customization and development, implementation labor and on-going support and administration.

– NPV calculations doesn't completely reflect the operating efficiency benefits.

For example the process improvements that can improve productivity, re-deploy labor resources, avoid purchases or eliminate expenses.

– Project risk costs were not factored in the NPV calculations. This includes everything from schedule and budget overruns,

functionality shortcomings, slow adoption and resources risks that may affect planned costs and benefits.

– Intangible benefits are strategic and important but non-quantifiable in monetary terms such as brand advantage or business agility with ERP implementation.

17

WSSC IT TEAM


What is the business case (cont)?

Timeline– 5 Years vs. 7 Years Implementation Effort

Net Present Value (NPV)– Out of the two scenarios, the 5 year ERP implementation is

our recommended approach– Although the 5 year implementation has a negative NPV when

compared with 7 year ERP implementation with a higher NPV, the 5 year ERP implementation will

Reduce risks on implementation due to extended implementation time

Improve implementation delivery by reduced user training to usage timeframe

Reduce risks of extended dependency and integration of aging systems

Return on Investment (ROI)– Notwithstanding higher NPV, we recommend 5 year plan

to get it done.

Timeline– 5 Years vs. 7 Years Implementation Effort

Net Present Value (NPV)– Out of the two scenarios, the 5 year ERP implementation is

our recommended approach– Although the 5 year implementation has a negative NPV when

compared with 7 year ERP implementation with a higher NPV, the 5 year ERP implementation will

Reduce risks on implementation due to extended implementation time

Improve implementation delivery by reduced user training to usage timeframe

Reduce risks of extended dependency and integration of aging systems

Return on Investment (ROI)– Notwithstanding higher NPV, we recommend 5 year plan

to get it done.

18

WSSC IT TEAM


What is the Business Case (cont)?

ERP IMPLMENTATION - 5 YR and 7 YR SCENARIOS - BUDGET FORECAST

Description FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17

5 YR ERP IMPLEMENTATION - BUDGET FORECAST

5 Yr Without ERP Implementation Annual Budget $25,902,201 $26,938,289 $28,015,821 $29,136,453 $30,301,912 $31,513,988 $32,774,548 $34,085,529

5 Yr ERP Implementation Annual Budget $25,902,201 $32,357,329 $33,007,271 $33,629,619 $33,382,213 $27,201,088 $27,526,734 $27,885,406

Annual Budget Savings With 5yr ERP Implementation $0 -$5,419,040 -$4,991,450 -$4,493,165 -$3,080,301 $4,312,900 $5,247,814 $6,200,124

5yr ERP Imp - % annual budget savings 0% -20% -18% -15% -10% 14% 16% 18%

7 YR ERP IMPLEMENTATION - BUDGET FORECAST

7 Yr Without ERP Implementation Annual Budget $25,902,201 $26,938,289 $28,015,821 $29,136,453 $30,301,912 $31,513,988 $32,774,548 $34,085,529 $35,448,951 $36,866,909

7 Yr ERP Implementation Annual Budget $25,902,201 $29,486,268 $30,192,033 $30,870,205 $31,577,738 $31,871,628 $31,686,512 $27,885,406 $28,778,425 $29,707,164

Annual Budget Savings With 7yr ERP Implementation $0 -$2,547,978 -$2,176,213 -$1,733,752 -$1,275,826 -$357,640 $1,088,036 $6,200,124 $6,670,526 $7,159,745

7yr ERP Imp - % annual budget savings 0% -9% -8% -6% -4% -1% 3% 18% 19% 19%

NOTE - We have assumed a 4% annual inflation rate for the IT budget line item.

3 YR NPV CalculationsDescription Annual Discount RateInitial Cost of InvestmentReturn from 1st yearReturn from 2nd yearReturn from 3rd year NPV5 yr ERP 5% -$17,983,957 $4,312,900 $5,247,814 $6,200,124 -$3,581,5357 yr ERP 5% -$7,003,373 $6,200,124 $6,670,526 $7,159,745 $10,606,406

Post ERP Implementation Period


ERP vs. Non-ERP - Budget Comparison

-25%-20%-15%-10%

-5%0%5%

10%15%20%25%

1 2 3 4 5 6 7 8 9 10

No. of years

% B

ud

get

Sav

ing

s

5yr ERP Imp - % annualbudget savings7yr ERP Imp - % annualbudget savings

ERP vs. Non-ERP - Budget Comparison

-25%-20%-15%-10%

-5%0%5%

10%15%20%25%

1 2 3 4 5 6 7 8 9 10

No. of years

% B

ud

get

Sav

ing

s

5yr ERP Imp - % annualbudget savings7yr ERP Imp - % annualbudget savings

19

WSSC IT TEAM



Increased budget commitment Shorter implementation duration Negative NPV

Increased budget commitment Shorter implementation duration Negative NPV

5 YR ERP IMPLMENTATION - BUDGET FORECAST

Description Estimated base FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15

Business Projects

ERP $6,933,044 $1,614,009 $8,613,185 $8,557,361 $8,445,713 $7,434,951 $1,559,935 $1,559,935 $1,559,935

Others $1,188,933 $1,544,663 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,000,000 $1,000,000 $1,000,000

Back Office Projects $5,155,601 $5,778,006 $5,000,000 $5,000,000 $5,000,000 $5,000,000 $4,000,000 $3,500,000 $3,000,000

Total Projects (Business + Back office) $8,936,678 $8,936,678 $14,713,185 $14,657,361 $14,545,713 $13,534,951 $6,559,935 $6,059,935 $5,559,935

IT Operations (Salary, Maint etc) $16,965,523 $16,965,523 $17,644,144 $18,349,910 $19,083,906 $19,847,262 $20,641,153 $21,466,799 $22,325,471

Total IT Budget (Including Capital Budget) $25,902,201 $25,902,201 $32,357,329 $33,007,271 $33,629,619 $33,382,213 $27,201,088 $27,526,734 $27,885,406

ERP Phased Implementation Estimated base FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15

Phase 0 $1,614,009 $1,614,009

Phase 1 $14,355,309

Phase 1 a $8,613,185

Phase 1 b $5,742,124

Phase 2 $14,076,188

Phase 2 a $2,815,238

Phase 2 b $8,445,713

Phase 2 c $2,815,238

Phase 3 $4,619,713 $4,619,713

TOTAL ERP COST $34,665,219

Ongoing Maintanence $693,304 $693,304 $693,304 $693,304

Ongoing Training $519,978 $519,978 $519,978 $519,978

ERP Enhancements $346,652 $346,652 $346,652 $346,652


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WSSC IT TEAM


Fiscal Year 2012


5 Year Phased ERP Implementation– Phase 0 (11.5.10 Technical Upgrade, Phase Planning, Requirements Definition etc) – Phase 1 (Compass replacement, TAMS/O Replacement, WAM, OTL, INV, eAM )– Phase 2 (MAPS & CSIS replacement, CCB & BI Extract, iSupplier, iProcurement, PUR)– Phase 3 (Projects, EBP Modules Implementation)

5 Year Phased ERP Implementation– Phase 0 (11.5.10 Technical Upgrade, Phase Planning, Requirements Definition etc) – Phase 1 (Compass replacement, TAMS/O Replacement, WAM, OTL, INV, eAM )– Phase 2 (MAPS & CSIS replacement, CCB & BI Extract, iSupplier, iProcurement, PUR)– Phase 3 (Projects, EBP Modules Implementation)

Fiscal Year 2008 Fiscal Year 2009 Fiscal Year 2010 Fiscal Year 2011

Phase 0 Implementation

Phase 1

Implementation

Phase 2

Implementation


Phase 1a Phase 1b

Phase 2a Phase 2b Phase 2c

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WSSC IT TEAM



Moderate budget increase Longer implementation duration Positive NPV

Moderate budget increase Longer implementation duration Positive NPV

7 YR ERP IMPLMENTATION - BUDGET FORECAST

Description Estimated base FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17

Business Projects

ERP $4,952,174 $1,614,009 $5,742,124 $5,742,124 $5,686,299 $5,630,475 $5,630,475 $4,619,713 $1,559,935 $1,559,935 $1,559,935

Others $1,163,523 $1,544,663 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,000,000 $1,000,000 $1,000,000

Back Office Projects $4,968,287 $5,778,006 $5,000,000 $5,000,000 $5,000,000 $5,000,000 $4,500,000 $4,500,000 $3,000,000 $3,000,000 $3,000,000

Total Projects (Business + Back office) $8,936,678 $8,936,678 $11,842,124 $11,842,124 $11,786,299 $11,730,475 $11,230,475 $10,219,713 $5,559,935 $5,559,935 $5,559,935

IT Operations (Salary, Maint etc) $16,965,523 $16,965,523 $17,644,144 $18,349,910 $19,083,906 $19,847,262 $20,641,153 $21,466,799 $22,325,471 $23,218,490 $24,147,229

Total IT Budget (Including Capital Budget) $25,902,201 $25,902,201 $29,486,268 $30,192,033 $30,870,205 $31,577,738 $31,871,628 $31,686,512 $27,885,406 $28,778,425 $29,707,164

ERP Phased Implementation Estimated base FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17

Phase 0 $1,614,009 $1,614,009

Phase 1 $14,355,309

Phase 1 a $5,742,124

Phase 1 b $5,742,124

Phase 1 c $2,871,062

Phase 2 $14,076,188

Phase 2 a $2,815,238

Phase 2 b $5,630,475

Phase 2 c $5,630,475

Phase 3 $4,619,713 $4,619,713

TOTAL ERP COST $34,665,219

Ongoing Maintanence $693,304 $693,304 $693,304 $693,304

Ongoing Training $519,978 $519,978 $519,978 $519,978

ERP Enhancements $346,652 $346,652 $346,652 $346,652


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WSSC IT TEAM


Fiscal Year 2014

Fiscal Year 2013

Fiscal Year 2012


7 Year Phased ERP Implementation– Phase 0 (11.5.10 Technical Upgrade, Phase Planning, Requirements Definition etc) – Phase 1 (Compass replacement, TAMS/O Replacement, WAM, OTL, INV, eAM )

Phase 1 broken into 3 sub phases to accommodate budget cycle– Phase 2 (MAPS & CSIS replacement, CCB & BI Extract, iSupplier, iProcurement, PUR)

Phase 2 broken into 3 sub phases to accommodate budget cycle– Phase 3 (Projects, EBP Modules Implementation)

7 Year Phased ERP Implementation– Phase 0 (11.5.10 Technical Upgrade, Phase Planning, Requirements Definition etc) – Phase 1 (Compass replacement, TAMS/O Replacement, WAM, OTL, INV, eAM )

Phase 1 broken into 3 sub phases to accommodate budget cycle– Phase 2 (MAPS & CSIS replacement, CCB & BI Extract, iSupplier, iProcurement, PUR)

Phase 2 broken into 3 sub phases to accommodate budget cycle– Phase 3 (Projects, EBP Modules Implementation)

Fiscal Year 2008

Fiscal Year 2009

Fiscal Year 2010

Fiscal Year 2011


Phase 1

Implementation

Phase 2

Implementation




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WSSC IT TEAM


What are the Requirements for Success?

Dedicated Business Analyst from Customer Care, Production, E&C, Logistic, HR, Finance teams committed to implementation

– ERP/EAM is a business project, not an IT exercise– Enterprise that do not understand this are likely to experience ERP

project failure Must be Lead by Executive Steering Board (ESB)

– ESB buy in and sponsorship– Proper executive involvement and governance

Avoid Modifications and Customization– Adjust business processes to standards industry best practices– Openness to vendor and industry recommendations– Strong support from all business teams to adoption new business

processes Strong Project Management and Change Management

– Effective training plan and education activities– User Community preparation– Change readiness assessment– Core Business Team formation– Formal Project Management Methods

Dedicated Business Analyst from Customer Care, Production, E&C, Logistic, HR, Finance teams committed to implementation

– ERP/EAM is a business project, not an IT exercise– Enterprise that do not understand this are likely to experience ERP

project failure Must be Lead by Executive Steering Board (ESB)

– ESB buy in and sponsorship– Proper executive involvement and governance

Avoid Modifications and Customization– Adjust business processes to standards industry best practices– Openness to vendor and industry recommendations– Strong support from all business teams to adoption new business

processes Strong Project Management and Change Management

– Effective training plan and education activities– User Community preparation– Change readiness assessment– Core Business Team formation– Formal Project Management Methods

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WSSC IT TEAM


What are the Requirements for Success? (cont)

Budget Increase– Multi-year implementation will require a significant

increase on IT Budgets over the implementation period

Strong Change Management– ERP implementations are inherently risky; however, some

of these risks can be minimized by defining implementation strategies appropriate for the organization’s unique circumstances

Commission-wide involvement– Paying close attention to the people aspects of an

ERP/EAM project is as important as the technical aspects to the project’ success.

– Expect challenges be prepared to exercise endurance – ERP is more than a project, it’s a lifestyle

Budget Increase– Multi-year implementation will require a significant

increase on IT Budgets over the implementation period

Strong Change Management– ERP implementations are inherently risky; however, some

of these risks can be minimized by defining implementation strategies appropriate for the organization’s unique circumstances

Commission-wide involvement– Paying close attention to the people aspects of an

ERP/EAM project is as important as the technical aspects to the project’ success.

– Expect challenges be prepared to exercise endurance – ERP is more than a project, it’s a lifestyle

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WSSC IT TEAM


Why should WSSC Implement an EAM/ERP?

An EAM/ERP implementation – will significantly impact the Utility Master Plan execution

by enabling planners to decide what to work on and why, and how they can best perform the work.

– may be the single most important technology solution for preventing operational surprises and reduce operating cost.

– helps cost-constrained operations further lower costs meet tougher performance and production targets comply with regulatory requirements (SSO etc) maximize return on assets (Maximize Asset Life Cycle)

An EAM/ERP implementation – will significantly impact the Utility Master Plan execution

by enabling planners to decide what to work on and why, and how they can best perform the work.

– may be the single most important technology solution for preventing operational surprises and reduce operating cost.

– helps cost-constrained operations further lower costs meet tougher performance and production targets comply with regulatory requirements (SSO etc) maximize return on assets (Maximize Asset Life Cycle)

Questions, Comments & Feedback

Documents

July 2007 WSSC IT Enterprise Technology Roadmap Enterprise Application Systems Implementation