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Crafting the GIS Business CaseCrafting the GIS Business CaseReturn on Investment for UtilitiesReturn on Investment for Utilities

Bill Meehan,Bill Meehan,Director, Utility SolutionsDirector, Utility Solutions

Pat DolanPat DolanSolutions Team LeadSolutions Team Lead

ESRIESRIOctober 21,2008October 21,2008

ChallengesChallengesAging Assets

22

ChallengesChallenges……Cost Containment

33

ChallengesChallenges……Financing

44

ChallengesChallenges……Climate Issues

55

ChallengesChallenges……Workforce Issues

66

ChallengesChallenges……New New Regulations

77

ChallengesChallenges……Infrastructure Threats & Security Mandates

88

ChallengesChallenges……Public Awareness and Anxiety

99

ChallengesChallenges……21st century customers

1010

GIS Is Invaluable Helping Utilities Meet These Challenges

. . . the key is making a compelling business case

1212

ExecutiveExecutive’’s Guide to Killing Business Casess Guide to Killing Business Cases

1313

ExecutiveExecutive’’s Guide to Killing Business Casess Guide to Killing Business CasesThe “Gimme Names” Rule

YOUR EXECUTIVE’S COMEBACK:“Saving FTE’s, huh? Give me the names of the people so I can

lay them off.”

YOUR BUSINESS CASE: Shows labor savings in full time equivalents (FTE’s)

1414

ExecutiveExecutive’’s Guide to Killing Business Casess Guide to Killing Business CasesThe “Time Isn’t Really Money” Rule

YOUR EXECUTIVE’S COMEBACK:“Shorten the design cycle? We can’t afford it – no payback.”

YOUR BUSINESS CASE: Shows shorter design cycle

1515

ExecutiveExecutive’’s Guide to Killing Business Casess Guide to Killing Business CasesThe “Compliment Without Commitment” Rule

YOUR EXECUTIVE’S COMEBACK:“Great job. I’ll push for funding. Ahem, next year?”

YOUR BUSINESS CASE: Highly praised by senior management

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ExecutiveExecutive’’s Guide to Killing Business Casess Guide to Killing Business CasesThe “Pull the Rug Out From Under Your Feet” Rule

YOUR EXECUTIVE’S COMEBACK:“You convinced me that the design process is completely

screwed up. Outsource the whole thing!”

YOUR BUSINESS CASE: Shows the design process is inefficient

1717

ExecutiveExecutive’’s Guide to Killing Business Casess Guide to Killing Business CasesThe “GIS Stands for Something Else” Rule

YOUR EXECUTIVE’S COMEBACK:“I thought GIS stood for Gas Insulated Switchgear”

YOUR BUSINESS CASE: Justifies GIS

1818

ExecutiveExecutive’’s Guide to Killing Business Casess Guide to Killing Business CasesThe “So This Cuts Your Budget” Rule

YOUR EXECUTIVE’S COMEBACK:So you are asking for a budget reduction. Right?”

YOUR BUSINESS CASE: Shows annual O&M Savings

1919

Crafting a Good Business Case Crafting a Good Business Case Follow the MoneyFollow the Money

•• Translate into annual budgetsTranslate into annual budgets•• Income statementsIncome statements•• Earnings per shareEarnings per share•• Use standard corporate business Use standard corporate business

languagelanguage•• Tell real life storiesTell real life stories•• Make the executive a hero by saving Make the executive a hero by saving

moneymoney•• Align the business case with corporate Align the business case with corporate

strategystrategy

. . . no technospeak

2020

Crafting a Good Business CaseCrafting a Good Business CaseAlign to Corporate StrategyAlign to Corporate Strategy

•• Strategic PlanStrategic Plan•• GoalsGoals•• ObjectivesObjectives•• InitiativesInitiatives

Customer

Employee Community

Shareholder

. . . the gaps are where the money is

2121

Utility Strategic PlanUtility Strategic PlanWhatWhat’’s important to your companys important to your company’’s CEOs CEO

•• Customer Customer –– Timely connectionsTimely connections–– Accurate BillsAccurate Bills–– Reliable and Clean PowerReliable and Clean Power–– Calls answeredCalls answered

•• ShareholderShareholder–– Total Shareholder returnTotal Shareholder return–– Reduce costsReduce costs–– Healthy balance sheetHealthy balance sheet

. . . drives the direction of the company

2222

Utility Strategic PlanUtility Strategic PlanWhatWhat’’s important to the Board of Directorss important to the Board of Directors

•• Employee Employee –– Safe work environmentSafe work environment–– High employee motivationHigh employee motivation–– TrainingTraining

•• CommunityCommunity–– Good regulatory relationsGood regulatory relations–– No environmental finesNo environmental fines–– Positive public imagePositive public image

. . . determines who is the CEO

2323

Crafting a Good Business CaseCrafting a Good Business CaseForget the IntangiblesForget the Intangibles

•• Measure or estimate everythingMeasure or estimate everything–– Both costs and performance metricsBoth costs and performance metrics–– Count, count, countCount, count, count

•• Should have begun the business case 5 years Should have begun the business case 5 years agoago

•• Think of the process from beginning to end, Think of the process from beginning to end, across the enterpriseacross the enterprise

•• Leave no stone unturnedLeave no stone unturned

. . . use corporate metrics

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The GIS Business CaseThe GIS Business CaseFill the Corporate GapsFill the Corporate Gaps

•• Lowering costsLowering costs•• Increasing revenueIncreasing revenue•• Improving performanceImproving performance

–– Customer serviceCustomer service–– SafetySafety–– ReliabilityReliability–– EfficiencyEfficiency

•• Avoiding future costsAvoiding future costs

. . . all relate to corporate strategy

2525

Go After the Big Ticket ItemsGo After the Big Ticket ItemsLearn about the company’s finances

•• LaborLabor•• MaterialMaterial•• FleetFleet•• Inventory and warehousingInventory and warehousing•• TaxesTaxes•• Fuel Fuel •• CommodityCommodity

. . . scour the income statement

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Do the MathDo the MathReturn on InvestmentReturn on Investment

•• Breakeven Analysis Breakeven Analysis –– Payback PeriodPayback Period

•• Net Present ValueNet Present Value•• Internal Rate of ReturnInternal Rate of Return•• Balanced ScorecardBalanced Scorecard

. . . do it by the book!

ROI MethodologyROI MethodologyThe 10 Step ProgramThe 10 Step Program

•• Prepare for the ROI ProjectPrepare for the ROI Project•• Identify business opportunitiesIdentify business opportunities•• Prioritize the business opportunitiesPrioritize the business opportunities•• Construct the GIS ProgramConstruct the GIS Program•• Define project controlDefine project control•• Specify and cost the GIS projectsSpecify and cost the GIS projects•• Estimate business benefitsEstimate business benefits•• Create a benefits roadmapCreate a benefits roadmap•• Calculate financial metricsCalculate financial metrics•• Built and present the final reportBuilt and present the final report

2008 EGUG Conference2008 EGUG Conference 2727

. . . then do the complete business case

Project CostsProject CostsMust differentiate between Capital and Expense (O&M)Must differentiate between Capital and Expense (O&M)


Corporate MetricsCorporate MetricsBenefits should link to whatBenefits should link to what’’s really importants really important


More Corporate MetricsMore Corporate Metrics


. . . ROI is about finances, Business case is more

Income StatementIncome StatementCEOCEO’’s really, really care about thiss really, really care about this


BenefitsBenefitsThis is the hard partThis is the hard part


More BenefitsMore BenefitsTransmission right of way dataTransmission right of way data


BenefitsBenefitsProvide a means to organize benefits by corporate metricProvide a means to organize benefits by corporate metric


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Payback PeriodPayback PeriodPeriod where net investmentPeriod where net investment

•• When will I get my money back?When will I get my money back?•• StrengthsStrengths::

–– Easy to calculate and understandEasy to calculate and understand

•• WeaknessesWeaknesses::–– DoesnDoesn’’t account for time value of moneyt account for time value of money–– Ignores performance after the breakeven periodIgnores performance after the breakeven period

. . . is offset by the savings

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Payback PeriodPayback Period

-150000

-100000

-50000

0

50000

100000

0 1 2 3 4 5Project AProject B

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Net Present ValueNet Present ValuePresent value of future savingsPresent value of future savings

•• Value of a multiyear investment expressed in todayValue of a multiyear investment expressed in today’’s s currencycurrency

•• Strengths:Strengths:–– Considers time value of moneyConsiders time value of money–– Interest rate considerationInterest rate consideration–– Cost of capital, opportunity costs, etcCost of capital, opportunity costs, etc

•• Weaknesses:Weaknesses:–– Looks only at investment/savings and doesnLooks only at investment/savings and doesn’’t consider t consider

profit and lossprofit and loss–– Very sensitive to the discount (interest) rate usedVery sensitive to the discount (interest) rate used

. . . minus the present value of the investment

3838

Net Present ValueNet Present Value

5432 )1(30000

)1(30000

)1(30000

)1(30000

)1(30000100000

iiiiiNPVA +

++

++

++

++

+−=

5432 )1(60000

)1(60000

)1(30000

)1(20000

)1(10000100000

iiiiiNPVB +

++

++

++

++

+−=

3939

Net Present ValueNet Present Value

Project NPV year 0 year 1 year 2 year 3 year 4 year 5

A $18,316 100,000$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$

B $115,887 10,000$ (10,000)$ (20,000)$ (30,000)$ (60,000)$ (60,000)$

Excel formula is Excel formula is NPV(rate,value1,value2, ...)NPV(rate,value1,value2, ...)

4040

Internal Rate of ReturnInternal Rate of ReturnInterest rate the produces an NPV of ZeroInterest rate the produces an NPV of Zero

•• The cutThe cut--off rate of return (avoid projects with an off rate of return (avoid projects with an IRR less than desired rate of return)IRR less than desired rate of return)

•• Strengths:Strengths:–– Very popular with accountants and financiersVery popular with accountants and financiers

•• Weaknesses:Weaknesses:–– Not easy to understandNot easy to understand–– Can be difficult to calculateCan be difficult to calculate

. . . for an investment/savings series

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Internal Rate of ReturnInternal Rate of Return

Project IRR year 0 year 1 year 2 year 3 year 4 year 5

A 15% 100,000$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$

B 164% 10,000$ (10,000)$ (20,000)$ (30,000)$ (60,000)$ (60,000)$

Excel formula is IRR(values,guess)Excel formula is IRR(values,guess)


Pat

Use Case IUse Case IMobile Deployment Mobile Deployment

•• Number of field users: Number of field users:

–– 12001200

–– End users: End users: inspectorsinspectors, , designersdesigners, , constructionconstruction crewscrews

•• Business objectives:Business objectives:–– One addition job One addition job / / save one hour save one hour save per daysave per day

•• Accessing work orders w/out going into the officeAccessing work orders w/out going into the office•• Routing of jobs and locating facilitiesRouting of jobs and locating facilities

–– StreamlineStreamline the asthe as--built processbuilt process•• Markups in the fieldMarkups in the field

–– Improve Improve data qualitydata quality•• Validating field dataValidating field data

–– Geographic locationGeographic location–– Attribute informationAttribute information

UC2008 Technical WorkshopUC2008 Technical Workshop 4343

Use Case I Use Case I –– ArcGIS EngineArcGIS Engine

•• User RequirementsUser Requirements

–– Data Access: Facility and land base dataData Access: Facility and land base data

–– Editing: Full editing capabilities to support design/inspectionEditing: Full editing capabilities to support design/inspectionss

–– Analysis: Tracing and routingAnalysis: Tracing and routing

–– Other: Accessing work order informationOther: Accessing work order information

•• Hardware DeploymentHardware Deployment

–– Panasonic tough booksPanasonic tough books

•• Data Synchronization MethodologyData Synchronization Methodology

–– Synchronization: TwoSynchronization: Two--wayway

–– Connectivity: Disconnected environmentConnectivity: Disconnected environment


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Business AssumptionsBusiness Assumptions

Industry Standard variables:Industry Standard variables:•• Corporate tax rate = 40%Corporate tax rate = 40%

•• Cost of capital = 10%Cost of capital = 10%

•• Net salvage cost = 10%Net salvage cost = 10%

•• Straight line depreciation Straight line depreciation (over fives years)(over fives years)

Deployment costs:Deployment costs:•• Hardware = Hardware = 22 servers + servers + 12001200 tough bookstough books

•• Software = ArcGIS Software = ArcGIS ServerServer, ArcGIS , ArcGIS EngineEngine, , ArcFMArcFM MobileMobile

•• Implementation = Configuration/TrainingImplementation = Configuration/Training

Saving/Cost EstimatesSaving/Cost Estimates

Estimated labors cost savingsEstimated labors cost savings

•• Hours saved per year/per person = Hours saved per year/per person = 260 hours260 hours

•• Hourly wage = Hourly wage = $20$20

•• Total hours savings: Total hours savings: 312,000 hrs312,000 hrs

Estimated Project CostEstimated Project Cost

•• InvestmentInvestment

•• Phase I = Phase I = $7.5 million$7.5 million

•• Phase IIPhase II == $3.7 million$3.7 million


4747

Return on Investment AnalysisReturn on Investment Analysis

Pessimistic Realistic Optimistic

Savings % 30mins 45mins 60mins

NPV $1.4 million $6.4 million $11.3 million

IRR 22% 38% 52%

Payback period (years) 3 2.2 1.7

Discounted Payback (years)

5.1 3.6 2.8

NPV (NPV (Net Present ValueNet Present Value): ): Measurement of how much value is created today by Measurement of how much value is created today by

pursuing the investmentpursuing the investment

IRR (IRR (Internal Rate of ReturnInternal Rate of Return): ): Single rate of return; summarizes the projectSingle rate of return; summarizes the project’’s s valuevalue

Payback periodPayback period: Length of time to recover initial investment: Length of time to recover initial investment

Discounted payback periodDiscounted payback period: Time period until sum of discounted cash flow is equal : Time period until sum of discounted cash flow is equal to the initial investmentto the initial investment

DemonstrationDemonstration

ArcGIS EngineArcGIS Engine


Use Case IIUse Case IILogistics Logistics

•• Number of field users: Number of field users:

––4646

––End Users: End Users: Construction and inspectorsConstruction and inspectors

•• Business objectives:Business objectives:

–– Minimize windshield time Minimize windshield time

–– Improve safety (lower risk)Improve safety (lower risk)


Use Case II Use Case II –– ArcLogistics ArcLogistics

•• User RequirementsUser Requirements

–– Data Access: Facility and land base dataData Access: Facility and land base data

–– Editing: View onlyEditing: View only

–– Analysis: Analysis: importing routesimporting routes

•• Hardware DeploymentHardware Deployment

–– LaptopsLaptops

•• Data Synchronization MethodologyData Synchronization Methodology

–– Synchronization: oneSynchronization: one--wayway

–– Connectivity: Connectivity: Disconnected Disconnected environmentenvironment


5151

Business AssumptionsBusiness Assumptions

Industry Standard variables:Industry Standard variables:

•• Corporate tax rate = 40%Corporate tax rate = 40%

•• Cost of capital = 10%Cost of capital = 10%

•• Net salvage cost = 10%Net salvage cost = 10%

•• Straight line depreciationStraight line depreciation

Deployment CostsDeployment Costs

•• Hardware = Hardware = 11 servers + servers + 4646 tough bookstough books

•• Software = ArcGIS Software = ArcGIS ServerServer, , ArcLogisticsArcLogistics

•• Implementation = Configuration/TrainingImplementation = Configuration/Training

5252

Sample Data Set Sample Data Set -- Two week analysisTwo week analysis

VariablesVariables

•• Fuel Cost: Fuel Cost: $4.75 $4.75 ($2.91 in 2007)($2.91 in 2007)

•• Miles per gallon: Miles per gallon: 1010

•• Hourly rate: Hourly rate: $45$45

AnalysisAnalysis

•• 493493 miles savedmiles saved

•• 65%65% reductionreduction

Mile

s

Days

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Analysis ContinuedAnalysis Continued-- Two week analysisTwo week analysis

Fuel SavingsFuel Savings

•• For two weeks: For two weeks: $243 $243 ($144*)($144*)

•• Projected for a year: Projected for a year: $6095 $6095 per driver per driver ($3734*)($3734*)

•• Projected for the company: Projected for the company: $280,385 $280,385 ($171,773*)($171,773*)

Labor SavingsLabor Savings•• For two weeks: For two weeks: 24 hrs24 hrs

•• Labor savings: Labor savings: $1,067$1,067

•• Projected savings: Projected savings: $33,836$33,836

•• Total projected savings:Total projected savings:

* 2007 Savings

Hou

rs

Days

$1.5 million

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Return on Investment AnalysisReturn on Investment Analysis

Fuel Savings = Fuel Savings = $280,000$280,000Hours Savings = Hours Savings = $1.5 million$1.5 millionCombined Savings = Combined Savings = 1.8 million1.8 million

Fuel Savings Hours Savings Fuel/Hours Savings

NPV <$432,000> $2.5 million $3.1 million

IRR <9%> 90% 108%

Payback period (years) 3.5 .62 .52

DemonstrationDemonstration

ArcLogistics/NavigatorArcLogistics/Navigator



Bill

5757

Balanced ScorecardBalanced ScorecardSet of PrinciplesSet of Principles

•• Analytics for improving performanceAnalytics for improving performance–– FinancialsFinancials–– Customers, Customers, –– LearningLearning–– Internal processesInternal processes

•• Excellence Excellence –– BalancedBalanced–– Holistic view Holistic view –– Not solely through financial controlNot solely through financial control

. . . aligns with corporate strategy

5858

RecommendationsRecommendationsCreate ROI DocumentCreate ROI Document

•• Explains what youExplains what you’’re pitching, and why, and re pitching, and why, and what the options arewhat the options are

•• Justify the expenditures in terms of how theyJustify the expenditures in terms of how they’’ll ll make money or be more usefulmake money or be more useful

•• DonDon’’t calculate an int calculate an in--depth ROI for every depth ROI for every project; base the effort on the scale of the project; base the effort on the scale of the projectproject

•• DonDon’’t forget to include an assessment of riskst forget to include an assessment of risks

. . . simple, simple, simple

5959

Follow the MoneyFollow the MoneyStart from the top downStart from the top down

TerritoryTerritory 2000 sq. miles2000 sq. miles

CustomersCustomers 500000500000

EmployeesEmployees 15001500

AssetsAssets $4.8B$4.8B

Common SharesCommon Shares 188M188M

DebtDebt $1.5B$1.5B

Fleet SizeFleet Size 1000 vehicles1000 vehicles

InventoryInventory $12.8 M$12.8 M

. . . drill into the detail

6060

Follow the MoneyFollow the Money

Straight Time Employee CostsStraight Time Employee Costs

# of Employees# of Employees 15001500

Fully Loaded UnitFully Loaded Unit $50k/ Employee$50k/ Employee

Total Employee CostTotal Employee Cost $75M$75M

% O & M% O & M 64%64%

Employee O&MEmployee O&M $48M$48M

Employee CapitalEmployee Capital $27M$27M

6161

Operations & MaintenanceOperations & Maintenance$105M$105M

Employee CostsEmployee Costs $48M$48M

Overtime/contractorOvertime/contractor $15M$15M

FleetFleet $ 15M$ 15M

Non Employee ITNon Employee IT $9.2M$9.2M

MaterialMaterial $3.5M$3.5M

Vegetation ManagementVegetation Management $15M$15M

Inventory Carrying CostInventory Carrying Cost $2.5M$2.5M

Street light CostStreet light Cost $4.6M$4.6M

OtherOther $0.5M$0.5M

Total O&MTotal O&M $105M$105M

6262

Annual Capital PlanAnnual Capital Plan66 Million66 Million

Capitalized Employee Capitalized Employee $27M$27M

Capitalized Overtime/ContractorCapitalized Overtime/Contractor $ 8M$ 8M

Capitalized Material/ServicesCapitalized Material/Services $20M$20M

Capitalized FleetCapitalized Fleet $10M$10M

OtherOther $ 1M$ 1M

Total Annual Capital CostTotal Annual Capital Cost $66M$66M

6363

Income StatementIncome Statement

RevenueRevenue $1.5B$1.5B

Fuel/Purchased PowerFuel/Purchased Power $530M$530M

O&MO&M $105M$105M

DepreciationDepreciation $210M$210M

Non Income TaxesNon Income Taxes $ 50M$ 50M

Interest/Capital CarryingInterest/Capital Carrying $ 85M$ 85M

Income TaxIncome Tax $210M$210M

OtherOther $ 50M$ 50M

Net IncomeNet Income $365M$365M

EPSEPS $1.91$1.91

6464

OpportunitiesOpportunities

•• Engineering ImprovementsEngineering Improvements–– Data Gathering Data Gathering –– 30%30%–– Analysis Analysis -- 20%20%–– Reporting Reporting -- Packaging the results 50%Packaging the results 50%

•• 15% overall reduction in labor15% overall reduction in labor•• $250k per year savings$250k per year savings

6565

OpportunitiesOpportunities

•• Mapping ImprovementsMapping Improvements–– 3 hours per work order to 1.83 hours per work order to 1.8–– 40% Improvement40% Improvement

•• $300k per year savings$300k per year savings•• Could use the savings to fund reduction in Could use the savings to fund reduction in

records back logrecords back log–– Annual work order volume is 20,000 work Annual work order volume is 20,000 work

ordersorders–– Assuming 1.8 hours per work orderAssuming 1.8 hours per work order–– Backlog reduction to zero is or about $1.4MBacklog reduction to zero is or about $1.4M

6666

LogisticsLogistics

•• GIS can reduce travel time and milesGIS can reduce travel time and miles•• 1000 vehicles1000 vehicles•• Average usage of 25k miles per yearAverage usage of 25k miles per year•• Total miles driven: 25MTotal miles driven: 25M•• Cost of $.50 per mileCost of $.50 per mile•• Total fleet cost: $25MTotal fleet cost: $25M•• 5% saving by GIS routing: $1.25M per 5% saving by GIS routing: $1.25M per

yearyear

6767

LogisticsLogistics

•• Total annual miles not driven Total annual miles not driven –– 1,875k1,875k•• Gain in productivity:Gain in productivity:

•• Assume 40mphAssume 40mph•• Total hours not traveling Total hours not traveling –– 46,87546,875•• Savings of about 22.5 FTESavings of about 22.5 FTE’’s (assuming s (assuming

one person in the vehicle)one person in the vehicle)•• Productivity savings of $2.2M per yearProductivity savings of $2.2M per year•• Reduction in overtime and contractorsReduction in overtime and contractors

6868

Other Logistics SavingsOther Logistics Savings

•• Other Logistics SavingsOther Logistics Savings–– Fewer miles traveled means fewer Fewer miles traveled means fewer

accidentsaccidents–– Wait timesWait times–– Warehouse costsWarehouse costs–– InventoryInventory

6969

Vegetation ManagementVegetation Management

•• Annual tree trimming program Annual tree trimming program -- $15M$15M•• How effective is it?How effective is it?•• Use GIS to:Use GIS to:

–– Help with deploymentHelp with deployment–– Upfront assessmentUpfront assessment–– Mapping of troublesome areasMapping of troublesome areas

•• Pest mappingPest mapping

–– Map trimming to reliability statsMap trimming to reliability stats–– Manage new growthManage new growth

•• Could either reduce costs or improve effectiveness Could either reduce costs or improve effectiveness –– say 5% say 5% -- $750k$750k

7070

Customer Connection ProcessCustomer Connection ProcessCase Study Case Study -- MetricsMetrics

•• Elapsed TimeElapsed Time 3 Weeks3 Weeks•• In service dateIn service date On timeOn time•• Work order closeWork order close 3 Weeks3 Weeks•• Call Center costsCall Center costs 10 minutes 10 minutes -- $5$5•• Engineering costsEngineering costs ½½ hour hour -- $20$20•• All other processes automatedAll other processes automated

•• Total transaction costs: $25 (not counting construction)Total transaction costs: $25 (not counting construction)

. . . how it’s supposed to work

7171


•• Elapsed TimeElapsed Time 70 Weeks70 Weeks•• In service dateIn service date 11 weeks11 weeks•• Work order closeWork order close 70 Weeks70 Weeks•• Call Center costsCall Center costs 40 minutes 40 minutes •• Engineering costsEngineering costs 12 hours 12 hours •• Mapping costsMapping costs 2 hours2 hours•• Billing departmentBilling department 2 hours2 hours

. . . how probably works

7272


•• Plant Accounting Plant Accounting 2 hours2 hours•• Lost revenue Lost revenue $40$40•• JimJim’’s lost payments lost payment $348$348•• PavingPaving $1400$1400•• Total Total $2895$2895

. . . customer satisfaction - painful

7373

MeehanMeehan’’s Lawss LawsGiven without proofGiven without proof

•• Law 1 Law 1 –– Handoffs are 70% effectiveHandoffs are 70% effective•• Law 2 Law 2 –– 70% of field changes are reported70% of field changes are reported•• Law 3 Law 3 –– 70% of data from field changes are 70% of data from field changes are

unintelligible after one yearunintelligible after one year

……you know they are trueyou know they are true

7474

MeehanMeehan’’s Lawss LawsAssets are not being managedAssets are not being managed

•• Law 4 Law 4 –– if Laws, 1, 2 and 3 arenif Laws, 1, 2 and 3 aren’’t fixed, t fixed, the design process produces 70% the design process produces 70% accurate designsaccurate designs

•• Law 5 Law 5 –– every 1% improvement in design every 1% improvement in design efficiency, produces 1% in construction efficiency, produces 1% in construction efficiencyefficiency

……follow the moneyfollow the money

7575

Looking Under the CoversLooking Under the CoversStill doing things like we did in the 1920Still doing things like we did in the 1920’’ss

•• DataData’’s Long Journeys Long Journey•• No single source of No single source of ““officialofficial”” datadata•• Lack of control on the quality of the data Lack of control on the quality of the data •• Long cycle times from work order inception to work Long cycle times from work order inception to work

closeoutcloseout

7676

Implications of Inaccurate DesignsImplications of Inaccurate DesignsReal money lostReal money lost

•• Larger inventoriesLarger inventories–– Yet still run out of materialYet still run out of material

•• Added travel timesAdded travel times•• ReworkRework•• Longer to constructLonger to construct•• ConfusionConfusion

… have to figure out how to capture the costs

Crafting A Strong Business CaseCrafting A Strong Business CaseMake the case that GIS will make the company betterMake the case that GIS will make the company better

•• Good data about current practiceGood data about current practice•• Follow the moneyFollow the money•• Tie GIS Benefits to Corporate MetricsTie GIS Benefits to Corporate Metrics•• Lay the GroundworkLay the Groundwork•• Lobby your case Lobby your case •• Follow the book on ROIFollow the book on ROI•• DonDon’’t just look at numberst just look at numbers•• Gather some storiesGather some stories


… now convince senior management!!

7878

Your Executive Defense PlanYour Executive Defense PlanThe “Gimme Names” Rule

YOUR EXECUTIVE’S COMEBACK:“Saving FTE’s, huh? Give me the names of the people so I can

lay them off.”

YOUR BUSINESS CASE: Shows labor savings in full time equivalents (FTE’s)

YOUR COUNTERMOVES:Create a redeployment plan for the saved FTE’s

Focus on reducing overtime, premium time and contractor laborPut people in a work pool – get them out of the process”

7979

Your Executive Defense PlanYour Executive Defense PlanThe “Time Isn’t Really Money” Rule

YOUR EXECUTIVE’S COMEBACK:“Shorten the design cycle? We can’t afford it – no payback.”

YOUR BUSINESS CASE: Shows shorter design cycle

YOUR COUNTERMOVES:Link cycle time to customer care metrics

Research complaints and PUC investigationsCalculate the actual cost of project delays – carrying costs, lost revenueRedeploy construction crews to maintenance which reduces corrective

costs

8080

Your Executive Defense PlanYour Executive Defense PlanThe “Compliment Without Commitment” Rule

YOUR EXECUTIVE’S COMEBACK:“Great job. I’ll push for funding. Ahem, next year?”

YOUR BUSINESS CASE: Highly praised by senior management

YOUR COUNTERMOVES:Show savings the same year as budget year

Do your homework – create pre business case expectationsFocus on the corporate objectives

8181

Your Executive Defense PlanYour Executive Defense PlanThe “Pull the Rug Out From Under Your Feet” Rule

YOUR EXECUTIVE’S COMEBACK:“You convinced me that the design process is completely

screwed up. Outsource the whole thing!”

YOUR BUSINESS CASE: Shows the design process is inefficient

YOUR COUNTERMOVES:Be prepared for an outsourcing alternative case study

Focus on improvements in core business – not in the mapping process

8282

Your Executive Defense PlanYour Executive Defense PlanThe “GIS Stands for Something Else” Rule

YOUR EXECUTIVE’S COMEBACK:“I thought GIS stood for Gas Insulated Switchgear”

YOUR BUSINESS CASE: Justifies GIS

YOUR COUNTERMOVES:Set the stage early

EducateDo presentations

Get real benchmark dataBegin the business case early

Create a culture of counting labor hours

8383

Your Executive Defense PlanYour Executive Defense PlanThe “So This Cuts Your Budget” Rule

YOUR EXECUTIVE’S COMEBACK:So you are asking for a budget reduction. Right?”

YOUR BUSINESS CASE: Shows annual O&M Savings

YOUR COUNTERMOVE:You Bet!

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