VALUE ENGINEERING INDUSTRY SOLUTIONS EAM Roadmap to Value Driving Value in the Real-Time Enterprise EEI/AGA TAC Meeting, October 23, 2007 Henry Bailey, Vice President – Industry Solutions
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VALUE ENGINEERINGINDUSTRY SOLUTIONS
EAM Roadmap to Value
Driving Value in the Real-Time Enterprise
EEI/AGA TAC Meeting, October 23, 2007
Henry Bailey, Vice President – Industry Solutions
US Utility Industry Drivers & Implications
Constrained Revenue GrowthDownward Margin Pressure
Shareholder Value ChallengeValidate EAM Strategy
Growth & Market Share
• Aging workers and assets• Slower growth rates• Higher growth expectations• Increasing M&A activity
Government Regulations
• Energy Policy Act• Sarbanes-Oxley• Deregulation• Emissions• FERC, NRC and NERC
High Capital Costs
• Infrastructure reliability• Management of emissions• Rising fuel costs
Changed Market Structure
• AMI Initiatives• Deregulation• Competition• Supply chain risks
Industry Value Network for Utilities Focus area: EAM
USA / Canada• Energy East• SCE• PG&E• Energen
Europe• EDF• E.ON• Electrabel
APJ• CLP• GNP• NCGC• Shanghai
• ASUG / DSUG• SAP Research
Where to focus?
Peer Group Average
Peer Worst Peer Best
Utility C10%-9%Utility ARevenue Growth 5%
Utility EUtility A
0.762.60
Operating Income Per Employee
1.76Utility C Utility BAsset
Utilization
82% 60%74% Utility DUtility B
Days Sales Outstanding
Utility A 65 days 21 days Utility C
0.05M 0.12M 0.2M
47 days
Every 1% increase in revenue growth = $1M in operating income
Every 1% improvement in CoO = $6M in operating income
Every 1% improvement in Asset Utilization = $13M in freed up capital
Every day of improvement in days sales outstanding = $2.1M in free cash flow
What Moving the Needle Could Meanto a $750M Revenue Electric Utility
CoO1 as a % of Revenue
EAM Benchmarking Survey
End-to-End Process Benchmarking
• Enterprise Asset Mgmt • Customer Care• Supply Chain Mgmt• Human Capital Mgmt• Financial Mgmt• Total Cost of Ownership• 10+ additional surveys
http://www.asug.com
Source: ASUG Utility Benchmarking
Schedule attainment 87% 34%
Correlation between Maintenance 41% 13% Program and Compliance performance
Enterprise Asset management – Value Discovery
High performers have a more productive
utilization of time across different functions
High performers have a more productive
utilization of time across different functions
Traveling
Planning & Scheduling
Reliability Functions
Repair & PreventiveMaintenance
Analyzing Readings
Troubleshooting
Looking for Materials
Reporting
48%
70%
KPIs
% allocation of time in maintenance function
Top Performer Asset Management Impact
Allows assets to be managed & replaced more efficiently
Improves business processes for asset management Analytics in scheduling
Notifications
Regulatory reporting
Maintenance costs reduced by 50% Procurement costs reduced by 30%
“Ranked #2 in top 40 Energy Companies”Utilities Fortnightly, 2007
Call to Action
Benchmark Current Performance1
Execute a Value-Based Deployment 3
Identify Value and Further Align IT with Business2
Measure Value Obtained and Market Success4
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