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PUBLIC DOCUMENT – TRADE SECRET INFORMATION EXCISED –PUBLIC DATA–
Direct Testimony and Schedules David C. Harkness
Before the Minnesota Public Utilities Commission State of Minnesota
In the Matter of the Application of Northern States Power Company for Authority to Increase Rates for Electric Service in Minnesota
Docket No. E002/GR-15-826 Exhibit___(DCH-1)
Business Systems
November 2, 2015
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Table of Contents
I. Introduction 1
II. Business Systems Overview 7
III. Capital Investments 10
A. Overview 10
B. Business Systems Investment Strategy 22
1. Key Investment Needs 22
2. Reasonableness of Overall Budget 30
3. Business Systems Governance 33
4. Ongoing Capital Cost Controls 39
5. Cost Allocation to the Company 42
6. Major Capital Projects 42
C. 2016 Capital Additions 44
1. Aging Technology 44
2. Cyber Security 53
3. Enhancing Capabilities 54
4. Emergent Demand 57
5. Productivity Through Technology (PTT) 61
D. 2017 Capital Additions 96
1. Aging Technology 96
2. Cyber Security 101
3. Enhancing Capabilities 101
4. Emergent Demand Account 102
5. Productivity Through Technology (PTT) 103
E. 2018 Capital Additions 103
1. Aging Technology 104
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2. Cyber Security 110
3. Enhancing Capabilities 110
4. Emergent Demand Account 112
IV. O&M Budget 113
A. O&M Overview 113
B. O&M Budget Process 120
C. O&M Budget Detail 122
1. Network Services 122
2. Software Licenses and Maintenance 124
3. Company Labor 125
4. Distributed Systems Services 126
5. Application Development and Maintenance 127
6. Contract Labor and Consulting 128
7. Shared Asset Allocation 128
8. Hardware Purchases and Maintenance 129
9. Employee Expenses 129
10. Mainframe 130
11. Equipment Maintenance 131
12. Online Information Services 131
13. Donations, Dues, and Fees 131
14. Other 132
15. Productivity Through Technology O&M 132
D. Multi-Year Rate Plan O&M Costs 136
V. Completeness Information 138
VI. Conclusion 141
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Schedules
Statement of Qualifications Schedule 1
Capital Investment Additions Schedule 2
2016 Additional Investments to Enhance Capabilities Schedule 3
Risk and Health Assessment – Corporate Passport Application Schedule 4
Risk and Health Assessment – Maximo Application Schedule 5
Risk and Health Assessment – Nuclear Passport Application Schedule 6
2012 Site Visit Benchmarking Summary Schedule 7
Preliminary Recommendations Schedule 8
Six Options – High Level Cost Estimates Schedule 9
Passport Functions Linked to General Ledger Schedule 10
RFI Evaluation – System Selection Results Schedule 11
RFP – Consolidated Scoring & Evaluation Schedule 12
RFP – Cost Comparison & Risk Assessment Results Schedule 13
Cost Benchmarking Data Schedule 14
2017 Emergent Demand Account Schedule 15
O&M Costs by General Ledger Account Schedule 16
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I. INTRODUCTION 1
2
Q. PLEASE STATE YOUR NAME AND OCCUPATION. 3
A. My name is David C. Harkness. I am the Chief Information Officer (CIO) 4
and Vice President of Xcel Energy Services Inc. (XES), the service company 5
affiliate of Northern States Power Company, a Minnesota corporation (NSPM 6
or the Company) and an operating company of Xcel Energy Inc. (Xcel 7
Energy). 8
9
Q. PLEASE SUMMARIZE YOUR QUALIFICATIONS AND EXPERIENCE. 10
A. I have more than 30 years of experience in Information Technology (IT), with 11
26 of those years in a management role. I joined Xcel Energy and Northern 12
States Power Company in November 2009, following six years at PNM 13
Resources in New Mexico, where I first served as Senior Director, Business 14
Process Outsourcing, then as Senior Director of Business Transformation 15
and, finally, as Vice President and CIO. While in New Mexico, I was also 16
appointed by Governor Richardson to New Mexico’s Information 17
Technology Commission, where I helped establish and direct the IT Strategy 18
for the State of New Mexico. Prior to that experience, I held several IT 19
Leadership roles for McLeod USA, MCI, and Rockwell International, where I 20
began my career in 1986. 21
22
In my current position, I am responsible for the XES Business Systems 23
organization, which provides IT services to Xcel Energy’s shared services and 24
the operating companies. In this role, I am also responsible for information 25
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technology disaster recovery. My Résumé is attached as Exhibit___(DCH-1), 1
Schedule 1. 2
3
Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING? 4
A. I present and support the Company’s capital and operation and maintenance 5
(O&M) budgets for the Business Systems area. I also support the Company’s 6
Work and Asset Management system implementation, which is a major capital 7
project to be completed in cooperation between Business Systems and the 8
business areas that will use the system. 9
10
Q. PLEASE PROVIDE AN OVERVIEW OF BUSINESS SYSTEMS’ PLANS FOR THE NEXT 11
THREE YEARS. 12
A. Business Systems provides information technology services across Xcel 13
Energy. Xcel Energy, like all modern utilities, must invest in computers, 14
software, networks, mobile devices and other information technology each 15
year in order to (among other things): 16
• Coordinate work in the field 17
• Interact with customers 18
• Operate and dispatch generation facilities 19
• Run our transmission system 20
• Provide current information to our state and federal regulators 21
• Purchase fuel 22
• Bill and collect efficiently 23
• Develop budgets and track expenditures 24
• Manage vendors and vendor contracts, and 25 2 Docket No. E002/GR-15-826 Harkness Direct
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• Pay employees. 1
2
Each of these activities is necessary to provide reliable electricity and good 3
customer service. No modern business, including utilities, can function 4
without dependable and up-to-date information technology. 5
6
Over the next three years, Business Systems will continue much of the 7
fundamental information technology work described in our last Minnesota 8
rate case, including replacing aging technology; protecting customers against 9
cyber security risks and attacks; and enhancing our information technology 10
capabilities on behalf of our customers and employees where doing so makes 11
sense. With respect to replacing aging technology, we are continuing to make 12
sure our employees have the basic technology tools to contribute to the 13
provision of electricity to customers. While some of these tools (desk and 14
laptop computers, mobile phones, software versions, for example) need to be 15
patched, updated, or replaced on a reasonably regular basis just to keep up, in 16
other areas we have been able to harvest maximum value from older systems 17
and delay investments. I described in the last Minnesota rate case that our 18
capital and O&M investments have recently increased because we previously 19
delayed new investments to the maximum extent in many areas, as with our 20
prior, outdated Windows XP system, our prior general ledger system, our 21
geographical information system (GIS), and our prior regulatory information 22
system. We have begun necessary replacements for these legacy systems. 23
24
We also need to protect the security of data belonging to our customers, our 25
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employees, and our business. Over the next several years, we will continue to 1
identify new cyber-attack risks that emerge regularly, and must make the 2
necessary investments to respond appropriately to ensure our customers’ and 3
our business’s security. 4
5
Lastly, there are areas where we not only need to replace old systems, but have 6
the opportunity to enhance our capabilities and become more efficient in 7
doing so. As an example, in 2016 we plan to implement a Substation Asset 8
Management System (SAMS) project that will enable the Company to access, 9
store, and analyze all of the data needed to calculate an algorithm for setting 10
priorities for inspections, preventive maintenance, and corrective maintenance 11
at our substations. This will ensure better, more efficient substation 12
protection to help ensure reliable electric service. 13
14
As an example of work that spans these key focus areas, our Productivity 15
Through Technology effort encompasses both the General Ledger 16
replacement project described in our Minnesota rate case filed in 2013, as well 17
as the Work and Asset Management system we are implementing in 2016 and 18
2017. The Work and Asset Management system is an enterprise-wide 19
resource that will replace multiple separate and outdated inventories, work 20
crew, and asset management systems we are presently using throughout the 21
Company. By adopting an integrated system across Xcel Energy, we not only 22
replace the old systems we currently have; we also increase our ability to work 23
as an integrated company and improve areas such as crew scheduling, 24
inventory procurement, the efficiency of field work. 25
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Technology changes constantly. The average lifespan of IT assets is 1
considerably shorter than for some business areas, with a typical life of 2
roughly three to seven years for NSPM (depending on the system). We have 3
been able to harvest greater value from larger systems, but on average our 4
assets need attention more frequently – especially with respect to unexpected 5
technology changes. As a result, Business Systems must manage its budget to 6
ensure we can adapt to and promptly address emerging issues and risks. This 7
may mean that smaller, less urgent projects will be delayed as other needs 8
become a high priority, or accelerated if the need for the project increases as 9
compared to other needs. 10
11
That said, our larger initiatives require longer lead times, advance planning, 12
and investment of resources such that it is critical to keep those projects on 13
track. The General Ledger is a key example of a larger initiative, and we are 14
pleased to report it is on track to be placed in service at the end of this year as 15
anticipated in our last rate case. Looking ahead, the Work and Asset 16
Management system is a similar initiative during the course of this multiyear 17
rate plan. 18
19
Q. PLEASE PROVIDE A SUMMARY OF YOUR TESTIMONY. 20
A. In my Direct Testimony, I describe the Business System organization, as well 21
as some of the information technology and business continuity services we 22
provide. I carry forward the discussion from our last electric rate case in 23
Minnesota, illustrating that our capital and O&M investments have increased 24
after several years of minimizing investments in new information technology. 25
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As the technology world continues to evolve, I explain the kinds of 1
investments we are currently making, why they are important, and how we 2
work to ensure reasonable costs for those investments. 3
4
I explain that we are proposing capital additions of approximately $99.8 5
million for 2016, $147.9 million for 2017 and $58 million for 2018 on a total 6
Company basis.1 I describe in detail why a major component of those capital 7
additions consists of our Work and Asset Management system, and how we 8
have carefully planned for this needed investment. I explain that our existing 9
work crew and utility inventory and asset management platforms are old, are 10
at risk of work interruption due to hardware or software failure, and are no 11
longer covered by vendor “patches” or simple updates that protect against 12
cyberattacks. Continuing the discussion in our last rate case regarding the 13
need to replace our General Ledger, I explain why an integrated system and 14
productivity through technology initiative is best for the business and our 15
customers. I also illustrate the costs, operational benefits, and customer 16
benefits of the resource we selected as well as the alternatives we considered 17
but did not select. Finally, I describe how we have carefully planned for this 18
Xcel Energy-wide investment that will allow our core business functions to 19
continue to operate. Given the importance of this large, complex project, we 20
have dedicated significant resources to help ensure it stays on track and on 21
budget through final implementation. 22
23
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I then discuss the Business Systems O&M budget for 2016, which is driven by 1
employee labor and non-labor costs, software maintenance, network 2
communications, application development, and distributed systems such as 3
servers, data storage, and desktop computer and printer maintenance. I 4
explain why our O&M budget is reasonable and reflects the types of 5
expenditures we must make to keep the technology side of our business 6
running productively. 7
8
Q. HOW HAVE YOU ORGANIZED YOUR TESTIMONY? 9
A. My rest of my testimony is organized into the following sections: 10
• Section II – Business Systems Overview 11
• Section III – Capital Investments 12
• Section IV – O&M Budget 13
• Section V – Completeness Information 14
• Section VI – Conclusion 15
16
II. BUSINESS SYSTEMS OVERVIEW 17
18
Q. PLEASE DESCRIBE BUSINESS SYSTEMS’ KEY ROLES AND RESPONSIBILITIES. 19
A. Business Systems is the Company’s centralized IT organization, providing 20
technology services across all operating companies, including NSP-Minnesota. 21
These services include support for the following business operations: 22
• Foundational Technology Infrastructure. Business Systems is responsible 23
for providing support for each employee’s hardware and software 24
needs. This includes maintaining and updating the operating system 25
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used on employee computers and providing sufficient data storage 1
capabilities. Business Systems is also charged with protecting the 2
security of the Company’s data from cyber-attacks. 3
• Systems Controls. We provide technology support to our generation, 4
transmission, and distribution units to help manage and operate the 5
electric and gas system. This includes providing and supporting 6
software applications such as Supervisory Control and Data 7
Acquisition (SCADA), which is used to monitor the health of the 8
transmission and distribution systems. 9
• Customer Support. We provide support for infrastructure and software 10
that facilitate interactions with our customers. This includes 11
maintaining the Customer Resource System, which is the Company’s 12
customer information system of record, and which generates 13
approximately 4 million billing statements to Xcel Energy customers 14
on a monthly basis. We also support the Interactive Voice Response 15
(IVR) software that enables interaction with customers via telephone 16
keypad or speech recognition. Business Systems is also responsible for 17
maintaining the Company’s website that provides valuable 18
information to customers about their accounts and Company 19
operations. 20
• Corporate Support. We provide IT support for necessary corporate 21
functions of the Company such as Human Resources and Financial 22
Management. This includes providing and maintaining software 23
applications that assist in the creation, tracking, reporting, and analysis 24
of budget and forecast information. 25
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Q. WHY IS BUSINESS SYSTEMS IMPORTANT TO THE COMPANY AND ITS 1
CUSTOMERS? 2
A. Business Systems provides the technologies and supporting services necessary 3
for system reliability and security, operational decision-making, and improving 4
customer support and business capabilities. Technology is evolving; to 5
operate in such an environment, we must be smart and proactive by 6
identifying technologies that will both advance our business and protect it 7
from technological attacks. For example, the advancements in two-way 8
communications, intelligent devices, and SCADA necessitate the convergence 9
of information and operational technologies to support a smarter grid, system 10
optimization, a more effective workforce with better-enabled employees, and 11
more informed stakeholders, through closer connections with external parties. 12
These developments increase the importance of Business Systems to the 13
Company and each of our stakeholders. 14
15
Q. HOW DOES BUSINESS SYSTEMS SUPPORT THE FUNCTIONS DESCRIBED ABOVE? 16
A. Along with our day to day work with the information technologies we have 17
deployed, Business Systems makes capital investments and incurs O&M costs 18
to support other business areas and functions across Xcel Energy as discussed 19
above. I will discuss our capital investments and O&M trends in more detail 20
below. 21
22
23
24
25
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III. CAPITAL INVESTMENTS 1
2
A. Overview 3
Q. FOR 2012-2014, WHAT WERE BUSINESS SYSTEMS’ KEY STRATEGIC GOALS AND 4
FOCUS DRIVING YOUR CAPITAL INVESTMENTS? 5
A. Through approximately 2012, Business Systems had a relatively steady level of 6
IT investment. We limited our capital investments in updating and replacing 7
our existing IT systems due to limits on capital availability, our ability to 8
continue making effective use of our current systems, and other priorities 9
within the Company. During that time, we focused our incremental 10
investments largely on maintaining existing IT assets, and took steps to 11
maintain service levels while managing or reducing the capital additions 12
associated with our systems. Due to the maturity of our current systems, we 13
were able to limit our investments in these years while harvesting the value of 14
existing assets. 15
16
However, as noted in Direct Testimony in our most recent Minnesota electric 17
rate case, the aging nature of our IT systems, along with changing business 18
and regulatory requirements and evolving technologies, required us to enter a 19
phase of replacement and upgrade of these systems beginning with rising 20
capital expenditures in 2012 and increased capital additions in 2013. 21
22
Q. AND HOW DID YOUR CAPITAL INVESTMENTS BREAK INTO CAPITAL BUDGET 23
GROUPINGS THAT REFLECTED THOSE GOALS? 24
A. The five key areas driving information technology investments are: 25
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• Addressing evolving cyber security threats and requirements, 1
• Replacing aging technology, 2
• Enhancing the capabilities of our business and our ability to serve 3
customers, 4
• Addressing emergent demands that arise in the course of managing 5
changing technology needs for an adaptive business, 6
• Increasing our Productivity Through Technology by replacing our General 7
Ledger and several Work and Asset Management systems that reached 8
the end of their useful lives. 9
10
Q. FOR THOSE YEARS, CAN YOU PROVIDE A SUMMARY OF HOW YOUR 11
INVESTMENTS FELL INTO THOSE CAPITAL BUDGET GROUPINGS? 12
A. Yes. Table 1 and Figure 1 below illustrate our capital expenditures for 2012 13
through 2014. Table 2 and Figure 2 below illustrate our capital additions for 14
this same period. 15
16
Note that the Emergent Demand grouping was a new addition to the Business 17
Systems capital budget groupings in 2013, and all dollars initially budgeted for 18
emerging demands are eventually utilized and incorporated into other capital 19
budget groupings. Therefore, the tables below do not include dollars 20
associated with Emergent Demand. 21
22
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Table 1 1 2
3
4
5
6
7
8
9
Figure 1 10 11
12
13
14
15
16
17
18
19
20 21 *Total amounts do not include AFUDC 22
23
24
25
26
27
2012-2014 Actual Capital Expenditures (Dollars in Millions)
NSPM 2012 2013 2014 Aging Technology 28.4M 41.3M 34.5M Cyber Security 7.4M 4.1M 5.8M Enhance Capabilities 18.9M 23.1M 17.9M Productivity Through Technology 0.0M 2.4M 16.3M
Total $54.7M $70.9M $74.6M *Total amounts do not include AFUDC
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1
Table 2 2 3
4
5
6
7
8
9
10 Figure 2 11
12
13
14
15
16
17
18
19
20
21
22
Q. CAN YOU EXPLAIN WHY THE AMOUNTS OF YOUR INVESTMENTS IN THESE 23
GROUPINGS CHANGED OVER THESE THREE YEARS? 24
A. Yes. Our investments in addressing Aging Technology vary year over year 25
depending on the needs of existing technology systems. In addition, one of 26
the most significant recent undertakings was the development of a new 27
2012-2014 Actual Capital Additions NSPM 2012 2013 2014 Aging Technology 19.9M 28.7M 45.0M
Cyber Security 0.0M 9.3M 4.0M
Enhance Capabilities 15.2M 11.0M 40.2M
Productivity Through Technology 0.0M 0.0M 0.0M
Total $35.1M $49.0M $89.2M *Total amounts include AFUDC
*Total amounts include AFUDC
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General Ledger system that was discussed in our last rate case. The majority 1
of the investments in that system were undertaken in 2014 through 2015, with 2
some preliminary work in 2013 and some post-implementation follow-up in 3
early 2016. 4
5
Beginning in 2013 and 2014, we also began work on the major project of 6
replacing our dated Passport and Maximo work management and asset 7
management systems with an integrated set of Work and Asset Management 8
systems that will be placed in service in 2016 and 2017. Combined, the 9
General Ledger and Work and Asset Management projects make up our 10
Productivity Through Technology initiative. These projects are together 11
referred to as our “Productivity Through Technology” or “PTT” initiative. 12
13
Q. HOW DID YOUR TOTAL CAPITAL INVESTMENTS OVER THESE YEARS COMPARE 14
TO YOUR BUDGETS? 15
A. Business Systems’ 2012 and 2014 capital additions were, on average, 16
approximately 0.4 percent lower than the budget in those years. 17
18
Q. LOOKING AT THIS HISTORY, WHAT DO YOU CONCLUDE? 19
A. Business Systems’ capital additions tracked budget in order to support the 20
technologies needed to provide electric service to our customers. Without 21
ongoing investment in technologies, we would lack the tools to measure 22
reliability and security, support functional decision-making, enable 23
communications and “smart” resources, and protect such fundamentally 24
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important resources as our grid, our customer information, our generation 1
management, and our financial data. 2
3
Q. CAN YOU ADDRESS BUSINESS SYSTEMS’ WORK IN 2015 SO FAR? 4
A. Yes. We have continued to invest in routine maintenance as well as projects 5
to address outstanding business needs, with a focus on Aging Technology. 6
We have also continued to dedicate substantial resources to our Productivity 7
Through Technology project, and will be placing the General Ledger system 8
in service in 2015 as planned. 9
10
Q. LOOKING AHEAD, WHAT ARE YOUR CAPITAL FORECASTS FOR 2016-2018 BY 11
CAPITAL BUDGET GROUPING? 12
A. Our capital expenditure forecasts for 2016 through 2018 are set forth in Table 13
3 and Figure 3 below. Our capital addition forecasts for 2016 through 2018 14
are set forth in Table 4 and Figure 4. Our individual capital investment 15
additions are listed in Exhibit___(DCH-1), Schedule 2.2 16
Table 3 17 18
19
20
21
22
23
24
25
2 In some cases, rounding may result in a slight variation between some tables and Exhibit___(DCH-1), Schedule 2.
2016-2018 Actual Capital Expenditures NSPM 2016 2017 2018 Aging Technology 26.8M 26.6M 42.6M
Cyber Security 3.5M 3.2M 2.5M
Enhance Capabilities 11.2M 4.7M 16.2M
Emergent Demand 3.7M 7.2M 3.0M
PTT 54.7M 38.6M 0.0M
Total $100.0M $80.3M $64.4M *Total amounts do not include AFUDC
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Figure 3 1 2
3
4
5
6
7
8
9
10
11
12
13
14
Table 4 15
16
17
18
19
20
21
22
23
24
25
26
2016-18 Actual Capital Additions NSPM 2016 2017 2018 Aging Technology 47.5M 30.6M 37.8M
Cyber Security 1.9M 2.6M 2.7M
Enhance Capabilities 11.1M 4.3M 13.5M
Emergent Demand 4.1M 6.6M 3.9M
PTT 35.2M 103.8M 0.0M
Total $99.8M $147.9M $57.9M *Total amounts include AFUDC
*Total amounts do not include AFUDC
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Figure 4 1 2
3
4
5
6
7
8
9
10
11
As illustrated by Table 3 above, Business Systems’ is devoting significant 12
resources to PTT through 2017, after which we will rededicate resources to 13
Aging Technology, Cyber Security, and Enhancing Capabilities. 14
15
It is important to note that while the capital addition trend is directly affected 16
by our capital expenditures, the capital additions trend may not mirror the 17
capital expenditure trend and may fluctuate more depending on the length of 18
time individual projects require to complete. The capital expenditure trend 19
reflects the progress of the project through the months, whereas the capital 20
addition trend reflects the total at the conclusion of the construction or 21
implementation process when the asset is placed in service. Company witness 22
Ms. Lisa H. Perkett addresses how the Company’s overall capital additions 23
align with budgeted capital additions in any given year. 24
25
Q. PLEASE EXPLAIN WHY EMERGENT DEMAND AND CYBER SECURITY 26
*Total amounts include AFUDC
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INVESTMENTS INCREASE IN LATER YEARS, WHILE PRODUCTIVITY THROUGH 1
TECHNOLOGY HAS NO FURTHER CAPITAL EXPENDITURES OR ADDITIONS 2
AFTER 2017. 3
A. The Productivity Through Technology program is a major capital investment 4
for us that will occur over a limited duration, with the primary capital 5
additions occurring in 2015 through 2017. As that program is completed, we 6
will be better able to devote limited resources to other needs. Further, we 7
know that cyber security threats and requirements are arising all the time and 8
must anticipate the need to make significant investments again in a few years 9
to ensure our systems are properly protected. 10
11
Q. WHAT KEY PROJECTS WILL YOU INVEST IN OVER THIS TIME PERIOD? 12
A. In addition to Productivity Through Technology, our aging network 13
infrastructure is another driver of increased investment and requires attention 14
on an ongoing basis. Network connectivity is a critical operational foundation 15
which is required for the Company to provide a safe and reliable product. 16
Failure to replace aging network mechanisms increases the risk of component 17
level failures resulting in systemic outages across service venues. Specific 18
Business Systems projects to address the replacement of aging network 19
infrastructure will be discussed in more detail later in the testimony. 20
21
Q. WHAT OTHER PROJECTS DO YOU EXPECT TO DRIVE YOUR INVESTMENTS OVER 22
THESE YEARS? 23
A. As depicted in Table 4 above, we will continue to invest in aging technology, 24
cyber security, the need to enhance our capabilities, and emerging demands we 25
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know will occur in some form. Table 5 below illustrates that we do not 1
anticipate returning our capital addition levels to 2013 or earlier levels because 2
other technology needs, such as increased capacity requirements and cyber 3
risks, continue to grow and market costs continue to increase. 4
5
Table 5 6 7
8
9
10
11
12
13
14
15
16
17
Our overall 2012 through 2018 capital expenditures and capital additions are 18
set forth in Tables 6 and 7 below. 19
20
Table 6 21
22
23
24
25
26
2012-2018 Capital Expenditures
NSPM 2012 Actual
2013 Actual
2014 Actual
2015 Forecast
2016 Budget
2017 Budget
2018 Budget
Business Systems $54.7M $70.9M $74.6M $110.3M $100.0M $80.3M $64.4M *Total amounts do not include AFUDC
*Total amounts include AFUDC
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Table 7 1
2
3
4
5
6
7
8
9
Q. WHAT KINDS OF CHANGES COULD OCCUR THAT MAY LEAD TO A RE-10
PRIORITIZATION OF YOUR INVESTMENTS AND CHANGE THE PERCENTAGES 11
THAT YOU INVEST IN EACH CAPITAL BUDGET GROUPING? 12
A. Technology changes constantly. As a result, issues with older software or 13
equipment may not seem critical during budget creation but become critical if 14
systems begin to show signs of issues or failure, or no longer serve their 15
intended purpose. Additionally, cyber security threats are constantly in flux 16
and may result in additional investment in a given year to ensure that cyber 17
security tools and resources continue to change in response to new threats to 18
our information systems. 19
20
Q. Why is the ability to change these investment percentages important to the 21
company and your customers? 22
A. Given the ever changing nature of information technology coupled with the 23
potential materialization of new cyber security threats, Business Systems must 24
have the flexibility in its budget to adapt to and promptly address emerging 25
2013-2018 Capital Plant Additions
NSPM 2013 2014 2015 2016 2017 2018 Aging Technology 28.7M 45.0M 32.7M 47.5M 30.6M 37.8M Cyber Security 9.3M 4.0M 9.6M 1.9M 2.6M 2.7M Enhance Capabilities 11.0M 40.2M 13.8M 11.1M 4.3M 13.5M Emergent Demand 0.0M 0.0M 0.9M 4.1M 6.6M 3.9M Productivity Through Technology
0.0M 0.0M 36.3M 35.2M 103.8M 0.0M
Total $49.0M $89.2M $93.1M $99.8M $147.9M $57.9M *Total amounts include AFUDC
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issues and risks. Our business and our service of customers depend on having 1
reasonably current technology that allows the Company to perform its core 2
functions in an effective manner. 3
4
Q. IS IT NECESSARY FOR BUSINESS SYSTEMS TO ADJUST PROJECT PLANNING ON A 5
REGULAR BASIS? 6
A. Yes, for the reasons noted above. As a recent example, Enterprise 7
Governance Risk and Compliance Phase 2 was removed from the 2016 and 8
2017 budgets due to competing priorities in the portfolio and insufficient 9
funding to accommodate additional demand. The project scope included 10
adding a system where we could capture a wide variety of regulatory policies 11
and requirements, including (for example) those related to audit, cyber 12
security, Sarbanes- Oxley, gas distribution, and corporate safety. In turn, our 13
plan was to integrate the Governance Risk and Compliance system with other 14
Company systems, which would help to ensure consistent compliance with 15
regulatory requirements across many different areas and better meet customer 16
and regulator needs. Since the project was not funded, these functions will 17
continue to be managed via manual processes and reporting unless or until we 18
have the resources to devote to a more efficient solution. 19
20
Q. SHOULD CUSTOMERS BE CONCERNED THAT SPECIFIC PROJECT PLANS EVOLVE? 21
A. No – rather, we make these adjustments to better serve our businesses’ and 22
our customers’ most pressing needs in a cost-effective way. When the need 23
arises to accelerate a project, we assess the situation to make sure we are doing 24
so for the right reasons and in a prudent manner. Similarly, we assess 25
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potential project delays or cancellations to make sure we are still meeting 1
business and customer needs in a reasonable way. 2
3
Q. EVEN IF YOUR INVESTMENT PERCENTAGES CHANGE FROM THE CURRENT 4
FORECAST, WILL BUSINESS SYSTEMS STILL MANAGE ITS OVERALL CAPITAL 5
INVESTMENTS TO ITS OVERALL BUDGET? 6
A. Yes, but history shows that if anything our budgets are a conservative 7
indicator of our investments. Ultimately, we plan to invest in technologies 8
and supporting services as necessary to ensure system reliability and security, 9
to facilitate operational decision-making, and to provide the necessary levels of 10
support to our customer support and business capability functions. 11
12
Q. WHAT DO YOU CONCLUDE ABOUT BUSINESS SYSTEMS’ 2016 – 2018 CAPITAL 13
INVESTMENT FORECASTS? 14
A. I conclude that our capital forecasts represent an accurate, reasonable, and 15
representative picture of our investments over these years. If anything, history 16
demonstrates that these forecasts are likely to be conservative and that the 17
Company will make the investments necessary to serve customers safely and 18
reliably. Therefore, these forecasts can be relied on to set just and reasonable 19
rates for our customers. 20
21
B. Business Systems Investment Strategy 22
1. Key Investment Needs 23
Q. WHAT ISSUES ARE DRIVING BUSINESS SYSTEMS’ STRATEGIC CAPITAL 24
PLANNING? 25
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A. As I discussed above, the five key areas driving information technology 1
investment are addressing evolving cyber security threats and requirements, 2
replacing aging technology, enhancing capabilities, addressing emergent 3
demands, and PTT. 4
5
a. Aging Technology 6
Q. WHAT ARE THE PRIMARY ISSUES FACING THE COMPANY WITH REGARD TO 7
AGING TECHNOLOGY? 8
A. Business Systems supports the operations of the Company with a large and 9
growing IT infrastructure. Information assets are no different from physical 10
assets in that they are subject to aging, technological obsolescence, increasing 11
maintenance costs, and they may no longer adequately meet the business 12
needs for which they were initially developed. A reasonably up-to-date 13
infrastructure is necessary for the Company to continue to meet increasingly 14
demanding data security, reliability, and compliance requirements, as well as 15
the service expectations of our customers. For example, aging technologies 16
are not equipped with the most current data security measures, meaning they 17
are more vulnerable to attack. In addition, the recovery of aging technologies 18
after an outage can be compromised if those systems are no longer supported 19
by their vendor. 20
21
Another area of IT that must keep pace with current needs is our Company’s 22
data storage capabilities. The increasing use of technology across the 23
organization is resulting in the need to store, transmit, and manage ever larger 24
amounts of data – and our systems must be able to keep pace with these 25
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growing data storage needs. While solutions such as routine information 1
purging and data warehousing can help reduce the impact of this data 2
“explosion,” they are not sufficient to fully mitigate it. As a result, we need to 3
increase our storage capacities and the speed and flexibility of our networks, 4
and improve our tools to cost effectively manage our data and information. 5
6
Q. HOW DOES THE COMPANY DETERMINE WHEN AN EXISTING TECHNOLOGY 7
NEEDS TO BE REPLACED? 8
A. Business Systems strives to maximize our technology investments by 9
maintaining existing software and hardware until the risk and costs associated 10
with keeping these aging technologies in place require attention. For instance, 11
new software systems are often necessary when the existing software is no 12
longer supported by the vendor. 13
A recent example is the Company’s migration to the Windows 7 desktop 14
operating system from the Window XP system. In April 2014, Microsoft 15
ceased supporting Windows XP and the Company moved to Windows 7. 16
However, by using the Windows 7 operating system past the time when many 17
companies had already moved to Windows 8, and by not upgrading to 18
subsequent operating systems until absolutely necessary, the Company 19
maximized its initial investment and value to customers. 20
21
As a further example, we are implementing a new General Ledger system this 22
year and a new Work and Asset Management system over the next two years. 23
The systems we are replacing are based on outdated technology and no longer 24
have vendor support. Overall, our Business Systems governance processes, 25
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described later in my testimony, ensure a rigorous process for evaluating 1
current needs and proposed technology solutions. 2
3
b. Cyber Security 4
Q. PLEASE SUMMARIZE THE CYBER SECURITY ISSUES FACING THE COMPANY. 5
A. There are four cyber security issues the Company must address: (1) keeping 6
hackers out of our systems; (2) detecting hackers if they attempt to gain access 7
to our systems; (3) removing hackers that gain access to our systems; and (4) 8
returning our systems to their original state if hackers gain access. As the 9
number of cyber threats, attacks, and regulatory requirements continues to 10
increase in volume and complexity, it is imperative that the Company 11
establishes and maintains the proper tools to protect the integrity and 12
confidentiality of our data and our systems. Given that these threats are 13
constantly in flux, it is important that these tools and resources continue to 14
change in response to new threats to our information systems. 15
16
It is important to note that cyber security is not simply a matter of 17
implementing a standardized base of security controls and processes that 18
cover all the regulatory and legal requirements. Effective cyber security also 19
requires filling the security gaps that would exist if we focused solely on 20
regulatory and legal compliance. Many large financial companies that have 21
had their data hacked in recent years were compliant with regulatory and legal 22
requirements. 23
24
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Q. WHAT IS BUSINESS SYSTEMS DOING TO ADDRESS THOSE ISSUES? 1
A. The Company has taken great strides to address cyber security issues. This 2
includes creation of a dedicated department within Business Systems (IT 3
Security & Risk Management) to focus on these issues, implementing new 4
technologies and new systems, partnering with federal agencies to learn about 5
new threats and solutions, and in-sourcing the Company’s disaster recovery 6
services. I will address each of these initiatives in turn. 7
8
First, the IT Security & Risk Management department exists to manage our 9
overall cyber security posture, implement processes and plans to be able to 10
quickly mitigate any adverse events, respond appropriately and effectively to 11
large scale events that would otherwise cause significant harm to the bulk 12
electric system and/or natural gas delivery systems, and ensure regulatory 13
compliance. 14
15
Second, to meet the needs and demands of today's security requirements, 16
Business Systems has implemented multiple security systems and technologies. 17
We have implemented technologies to date that include: Vulnerability 18
Management, Advanced Threat Protection, Security Forensic tools, Advance 19
Firewalls, Intrusion Prevention Devices, Data Loss Prevention software, and a 20
Security Incident and Event Management system to correlate all the data and 21
bring visibility to what is happening on our infrastructure. 22
Third, we have enhanced our partnerships with both regulatory and 23
state/federal agencies to ensure we are tapped into the stream of information 24
available regarding impending threats and attacks. These agencies include 25
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Edison Electric Institute, National Infrastructure Advisory Council, American 1
Gas Association, the Federal Bureau of Investigation, and Homeland Security. 2
3
Finally, we have in-sourced our disaster recovery services to improve these 4
functions and increase our capabilities in this area. In particular, we have 5
implemented an isolated infrastructure and computing platform to enable 6
thorough testing of all recovery plans to ensure full recoverability. We have 7
also revisited and revised the recovery plans for critical systems and continue 8
to expand into secondary systems. 9
10
c. Enhancing Capabilities 11
Q. HOW DOES BUSINESS SYSTEMS ASSIST IN ENHANCING CAPABILITIES FOR THE 12
COMPANY? 13
A. Technology can offer the opportunity to improve productivity, enhance 14
communications between systems and between people, and use data more 15
efficiently. A simple example that illustrates this point is the mobile phone. 16
Mobile phones were not necessarily invented to solve a problem with land-17
based telephone lines or service. However, as they emerged, and as they 18
become increasingly sophisticated, they have changed the culture – and we 19
have learned how much efficiency can be gained from what have become 20
wireless mobile computing devices. Business Systems is constantly evaluating 21
new technologies and helping the business areas examine ways to increase 22
efficiencies and enhance communications between systems that benefit the 23
Company and our customers. 24
25
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Q. HOW DOES BUSINESS SYSTEMS DETERMINE WHICH CAPABILITIES-ENHANCING 1
TECHNOLOGY TO IMPLEMENT? 2
A. The key is to identify these new technologies and to implement only those 3
technologies that can offer efficiency benefits that outweigh their 4
implementation costs. Business Systems works with various business units to 5
evaluate new technologies to determine whether they can be used to improve 6
the efficiencies in the way tasks are completed, data is used, or in the way 7
communications are conducted within the organization and with external 8
stakeholders, including our customers. For example, adding land mobile 9
radios at our nuclear facilities and, going forward, within the Twin Cities 10
metropolitan area, enhances our ability to conduct secure communications 11
between work crews across highly sensitive locations. 12
13
d. Productivity Through Technology 14
Q. WHAT IS PRODUCTIVITY THROUGH TECHNOLOGY? 15
A. PTT is the name we have given the overall initiative to replace our outdated 16
General Ledger system (formerly JDE) and work and asset management 17
systems between the years of 2012 and 2017. Overall, Productivity Through 18
Technology is a large, integrated effort to replace a set of aging technologies 19
that are central to our business. 20
21
Q. WHAT IS A WORK AND ASSET MANAGEMENT SYSTEM? 22
A. A Work and Asset Management system or systems is the core technology for 23
overseeing utility work planning and scheduling, designing jobs and collecting 24
costs, outage management, vendor contract management, materials 25
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procurement and inventory management, and asset maintenance and support. 1
Today we have three core work and asset management systems: Maximo 5.2 2
(Maximo), which is our Energy Supply work and asset management system; 3
Corporate Passport, which is the work and asset management system for 4
Supply Chain (procurement) and the other Business Areas; and Nuclear 5
Passport, which is a separate work and asset management system used by our 6
nuclear plants. Through the Work and Asset Management portion of our 7
Productivity Through Technology initiative, we are replacing these three old 8
systems with an integrated solution that provides current technology and will 9
work in tandem with our new General Ledger system. 10
11
Q. WHY IS THE COMPANY IMPLEMENTING A WORK AND ASSET MANAGEMENT 12
SOLUTION AT THIS TIME? 13
A. Corporate Passport was placed in service in 2001; Nuclear Passport was 14
placed in service in 2005; and Maximo was placed in service in 2004. These 15
systems are very dated for software systems of the type, and therefore do not 16
have the functionality needed for a modern utility. Further, given the age of 17
these systems, the original software vendors are no longer providing full 18
support or upgrades with robust protection against system failure or cyber-19
attacks. This not only leaves us vulnerable, but makes repairs more costly to 20
our customers with risk of delays that could jeopardize certain aspects of our 21
day-to-day operations. As such, we cannot wait any longer to replace the 22
dated technologies. Because our JDE (General Ledger), Corporate Passport, 23
Nuclear Passport, and Maximo systems are all facing the need for replacement 24
at approximately the same time, we have identified an integrated Enterprise 25
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Asset Management System by vendor SAP to replace these current solutions. 1
2
Q. WHY IS WORK AND ASSET MANAGEMENT IN A SEPARATE CATEGORY OF 3
BUSINESS SYSTEMS PROJECTS, RATHER THAN JUST WITHIN THE “AGING 4
TECHNOLOGIES” AREA? 5
A. Due to its size, complexity, and effects on business areas throughout Xcel 6
Energy, implementing a new Work and Asset Management system is a major 7
undertaking that involves more than the usual complex Business System 8
implementation efforts. Rather, employees from various Business Areas are 9
involved in the development, planning, and implementation of this system to 10
help ensure it functions properly and is designed consistently for all groups. 11
Further, the project should enhance our productivity and capabilities and 12
protect sensitive information from hackers as opposed to simply replacing 13
aging technology with the same, slightly updated, technology. Finally, this is 14
an effort of limited duration (2012-2017) that does not neatly fit within any of 15
the other capital budget groupings. I discuss the components of the Work 16
and Asset Management project in more detail later in my testimony. 17
18
2. Reasonableness of Overall Budget 19
Q. PLEASE MAKE THE BUSINESS CASE FOR THE BUSINESS SYSTEMS CAPITAL 20
PROGRAM. 21
A. As discussed previously, the Business Systems capital program is critical to 22
provide the Company with the technologies we need to provide electric 23
service to our customers. Without ongoing investment in technologies, we 24
would lack the tools to measure reliability and security, support functional 25
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decision-making, enable communications and “smart” resources, and protect 1
such fundamentally important resources as our grid, our customer 2
information, our generation management, and our financial data. 3
4
Q. HOW DOES THE BUSINESS SYSTEMS AREA ESTABLISH A REASONABLE CAPITAL 5
BUDGET FOR A GIVEN YEAR? 6
A. The appropriate annual capital budget for Business Systems is based on a 7
partnership between corporate management of overall finances and the 8
business needs we identify for our constituents. Company witness Mr. 9
Gregory J. Robinson explains how the Company establishes overall business 10
area capital spending guidelines and budgets based on financing availability, 11
specific needs of business areas, and overall needs of the Company. 12
13
The Business Systems area itself employs a “bottom up” approach to planning 14
for the needs our business area addresses. Business Systems uses a portfolio 15
prioritization and balancing process, called IT Governance, to determine the 16
needs we must address and decide how to allocate limited funds according to 17
the highest business priorities, including the greatest risks our IT systems face 18
in each year. The portfolio is regularly evaluated, prioritized and balanced to 19
support established strategic objectives using predefined portfolio 20
management criteria, the organization’s desired risk profile, portfolio 21
performance metrics, and capacity constraints. These projects are then rolled 22
up to total budgeted costs by capital budget groupings. Often the desired 23
initial budget exceeds the spending guidelines–-which then require review 24
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meetings with managers, directors, and vice presidents to assess the requested 1
budget and determine the right course of action. 2
3
Because this happens throughout the Company, a higher or lower percentage 4
of the Company’s overall resources may be allocated to Business Systems in 5
any given year, depending on the priority of needs throughout the Company. 6
Ultimately, corporate leadership determines the amount of money to be 7
allocated to Business Systems for each year. 8
9
Once that amount is known, the IT Governance Board has final approval for 10
either maintaining the portfolio ‘‘as is’’ or adjusting the portfolio within the 11
established budget thresholds. The process of adjusting the portfolio may 12
include: 13
● Adding new projects that have been selected and prioritized for 14
inclusion in the budget; 15
● Identifying projects that are not authorized based on the review 16
process; or 17
● Eliminating projects to be suspended, reprioritized, or terminated 18
based on the review process. 19
I explain the overall governance process in more detail later in my Testimony. 20
21
Q. IS THE OVERALL LEVEL OF BUSINESS SYSTEMS CAPITAL ADDITIONS 22
REASONABLE? 23
A. Yes. In each year, Business Systems capital additions are necessary to 24
maintain stability and reliability of the IT systems used by employees to serve 25
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Minnesota customers, efficiently manage business operations, protect 1
company data and information, and meet evolving regulatory and legal 2
requirements. Overall, they support important investment strategies that 3
focus on the key IT needs of the Company and our customers while balancing 4
the need for overall cost containment and prioritization. 5
6
3. Business Systems Governance 7
Q. CAN YOU PROVIDE MORE INFORMATION ABOUT THE IT GOVERNANCE 8
PROCESS AND HOW YOU USE IT TO DETERMINE WHAT LEVEL OF INVESTMENT 9
IS APPROPRIATE FOR BUSINESS SYSTEMS? 10
A. Yes. IT Governance is Business Systems’ budget development, project 11
prioritization, and project management process. Our IT capital investments 12
are driven by the needs of Xcel Energy’s business areas. IT works with each 13
business area to determine its specific IT needs, and then these needs are 14
prioritized based on a particular set of factors. In turn, these priorities are 15
converted into a proposed Business Systems budget as described earlier in my 16
testimony. 17
18
The IT Governance process also monitors the end-to-end project 19
implementation lifecycle for each proposed project, from its conception to in 20
service, to help keep the project within budget and on schedule, and performs 21
as expected for the specified business objective. 22
23
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The IT Governance process also oversees and must approve any changes in 1
project scope or budget at the corporate level based on overall Company 2
priorities and spending levels 3
4
Q. WHAT ARE THE STEPS IN THE IT GOVERNANCE PROCESS? 5
A. Business Systems employs a gated approval process called the “Governance 6
Gates Process” to oversee IT projects throughout their lifecycle. Projects 7
move through specific gates or approvals from the IT Governance Board and 8
other stakeholders as they progress. The Governance Gates Process enables 9
regular review of project metrics (schedule, budget, scope), and institutes 10
corrective action plans or modification as appropriate. 11
12
Q. WHO MAKES UP THE IT GOVERNANCE BOARD? 13
A. The IT Governance Board is comprised of myself, our Senior Director of IT 14
Account Management, Senior Director of IT Governance and Portfolio 15
Management, Director for Enterprise Architecture, Director of IT Security 16
and Risk Management, Director of Infrastructure, and Senior Director of 17
Enterprise Applications. 18
19
Q. PLEASE IDENTIFY THE DIFFERENT GATES OR APPROVALS THAT ARE PART OF 20
THE IT GOVERNANCE GATES PROCESS. 21
A. The four approvals that each capital project must garner before it is initiated 22
and ultimately placed in service are as follows: (1) Approval to Initiate; (2) 23
Approval to Plan; (3) Approval to Proceed; and (4) Approval to Implement. 24
25
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a. Approval to Initiate 1
Q. WHAT IS THE PURPOSE OF THE “APPROVAL TO INITIATE” GATE? 2
A. The purpose of this gate is to determine whether a project is sound, viable, 3
and worthy of funding, support, and inclusion in the Company’s IT portfolio. 4
Generally speaking, this is the project idea phase of development. Each 5
Business Systems account management team is responsible for partnering with 6
a specific business unit within the organization to determine that area’s long-7
term strategic objectives, and identify whether IT investments can enable 8
achievement of those objectives. 9
10
Q. WHAT IS THE NEXT STEP IN THE APPROVAL TO INITIATE PROCESS? 11
A. From the idea stage, project ideas are grouped and evaluated, ranked, and 12
selected based on a common set of filters. This process weighs a multitude of 13
criteria including the financial and non-financial benefits of a project, the 14
potential for other existing technologies to address the business need, and the 15
degree to which the project is needed to meet regulatory requirements or to 16
ensure system reliability and security. This categorization process allows 17
Business Systems to evaluate the benefits and risks associated with each 18
project idea, and results in a list of ranked project ideas. 19
20
Q. WHAT IS THE NEXT STEP AFTER THE PROJECT IDEAS ARE RANKED? 21
A. The IT Governance Board reviews the ranked project ideas to determine 22
which projects should be implemented and included in the Business Systems 23
budget. This process requires further refinement of the budget figures for 24
each project, and prioritization of possible projects. 25
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Q. WHAT HAPPENS ONCE AN IDEA HAS BEEN “APPROVED TO INITIATE”? 1
A. Once an idea is “Approved to Initiate,” a project is formally created and is 2
eligible to be included in future budgets or forecasts. Within the confines of 3
the budget, funding is made available to complete scoping, cost, and schedule 4
planning in more detail. 5
6
b. Approval to Plan 7
Q. WHAT IS THE NEXT REQUIRED APPROVAL IN THE IT GOVERNANCE PROCESS? 8
A. The next gate is the “Approval to Plan.” The purpose of this approval is to 9
ensure that the initial budget and schedule have been adequately documented 10
since the “Approval to Initiate” gate, and that the strategy is appropriately 11
developed to move the project forward. 12
13
Q. WHAT HAPPENS WITH A PROJECT UPON APPROVAL OF THIS GATE? 14
A. Upon approval of this gate, the project profile, budget, and schedule are 15
assessed and modified as appropriate. Approval at this gate also allows some 16
or all of the funding from the capital budget to be released, to allow the 17
project to begin detail requirements and design activities. 18
19
c. Approval to Proceed 20
Q. WHAT IS THE NEXT APPROVAL REQUIRED IN THE IT GOVERNANCE PROCESS? 21
A. The next gate is “Approval to Proceed.” This approval provides the final 22
check of a project before production begins to ensure that the proposed 23
design meets the identified needs and any technical problems are resolved. 24
25
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Q. WHAT OCCURS AT THIS STEP IN THE PROCESS? 1
A. At this gate, the detailed design of a project is reviewed and validated by a 2
Technical Review Board to ensure that the project satisfies its intended 3
business objectives. Overall project status, technical solutions, software 4
products, documentation, and definitive estimates are reviewed to ensure 5
completeness and consistency with design standards and to resolve any 6
technical issues with the project. After approval is obtained at this gate, the 7
project will receive any remaining budget funds, and the project team will 8
begin to build and deploy the project. 9
10
d. Approval to Implement 11
Q. WHAT IS THE FINAL APPROVAL REQUIRED IN THE IT GOVERNANCE PROCESS? 12
A. The last gate is “Approval to Implement.” This is a formal inspection 13
conducted by the IT Technical Review Board to determine whether the 14
technology solution is ready to be placed in service. The business unit 15
sponsoring the solution must also approve the project at this stage, and 16
confirm that it meets the business unit’s objectives, and that the operational 17
procedures and tools (such as user training) are in place to ensure its 18
successful and secure operation in the production environment. 19
20
e. Changes in Planned Projects 21
Q. IS IT POSSIBLE TO PLAN PRECISELY FOR PROJECTS THAT WILL NEED TO BE 22
DONE IN FUTURE YEARS? 23
A. No, not in all circumstances. For some projects – as with the General Ledger 24
replacement project we are currently completing – the complex nature of the 25
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project implementation and long lead times mean we must plan for the project 1
and carry it out over a long period of time. In these situations, we typically 2
know what the project will be but may need to adjust project cost 3
expectations, timelines, or scope as the details of the project become more 4
certain over time. 5
6
Other projects may have shorter lead times, a lower priority, or other reason 7
why they are important but could be delayed if a higher priority comes to light. 8
However, we remain obligated to manage to our budget and use the IT 9
Governance process to re-prioritize projects within a year to stay within our 10
overall budget. 11
12
Q. DO CHANGES IN PROJECT METRICS PRIOR TO IN-SERVICE REQUIRE APPROVAL 13
FROM THE IT GOVERNANCE BOARD? 14
A. Yes. Any change to the budget, schedule, or scope of a project must be 15
approved by the IT Governance Board to ensure that the change is necessary 16
and well-documented. 17
18
We must seek approvals in addition to the IT Governance process, including 19
possibly Board approval, if costs of larger projects exceed certain pre-20
approved levels. 21
22
Q. PLEASE EXPLAIN THE PROCESS TO ACCOMMODATE NECESSARY UNFORESEEN 23
CAPITAL INVESTMENTS THAT OCCUR DURING THE PLANNED CAPITAL 24
INVESTMENT YEAR. 25
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A. We utilize the portfolio prioritization and balancing process to evaluate new 1
demand or changes to existing project budgets and determine the most 2
appropriate course of action to take. Newly identified projects must still 3
proceed through the Gate’s process and any may push other projects further 4
down the priority list. In other situations, we may be able to accommodate a 5
new project or expanded project scope or cost by approving an appropriate 6
distribution of funds from the Emergent Demand account. 7
8
Q. WHAT IS THE EMERGENT DEMAND ACCOUNT? 9
A. The Emergent Demand Account is a capital investment account created to 10
ensure we are able to meet the unanticipated aging technology, cyber security 11
threats, and efficiency needs that inevitably emerge in each year. Given the 12
ever-changing nature of technology and emerging risks, it is not possible to 13
identify all projects that may arise or become critical in a given year. For 14
example, it is not always possible to predict what kind of security risk might be 15
created by hackers as technology continues to develop. In other situations, as 16
we develop a project with a particular scope we may determine that additional 17
benefits or long-term cost savings could be captured by expanding the scope 18
of the project. The Emergent Demand Account allows the Company to 19
address such issues without necessarily delaying or cancelling previously-20
planned projects or otherwise absorbing unplanned work and costs. 21
22
4. Ongoing Capital Cost Controls 23
Q. AS A PROJECT MOVES THROUGH DEVELOPMENT, DOES BUSINESS SYSTEMS 24
TAKE STEPS TO MONITOR VARIANCES BETWEEN ITS ACTUAL EXPENDITURES 25
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AND ITS BUDGET? 1
A. Yes. In each key area of Business Systems, management monitors actual 2
versus budget expenditures for both capital and O&M on a monthly basis. 3
Any deviations are then evaluated to determine whether costs are appropriate. 4
In addition, action plans are developed to mitigate variations in actual to 5
budgeted expenditures. These mitigation plans may either reduce or delay 6
other expenditures to support the overall authorized budget. If authorized 7
budget adjustments are required, they are identified and approved at an 8
appropriate level of management. 9
10
Q. DO EMPLOYEES WITHIN THE BUSINESS SYSTEMS DEPARTMENT ANTICIPATE 11
AND MANAGE DEVIATIONS FROM THE BUDGET? 12
A. Yes. Employees in Business Systems with budget responsibility have 13
budgetary goals that are incorporated into their performance objectives. 14
Performance is measured on a monthly basis to ensure adherence to the goals 15
and provide for an action plan to address any variances. 16
17
Q. IN ADDITION TO THE IT GOVERNANCE PROCESS, DOES BUSINESS SYSTEMS 18
UNDERTAKE OTHER ONGOING STEPS TO CONTROL ITS COSTS? 19
A. Yes. Business Systems is continually taking steps to control costs. These 20
efforts may include: increasing or decreasing the scope of outsourced services; 21
increasing or decreasing the use of consultants; and changing service 22
providers. We also use competitive bidding practices and a multi-vendor 23
sourcing strategy where possible, which enables us to utilize a combination of 24
internal and external resources as appropriate to minimize costs and maximize 25
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efficiencies in running our systems. 1
2
In addition, Business Systems actively interacts with other IT organizations to 3
learn how they control costs. For instance, I am the chair of the Edison 4
Electric Institute/American Gas Association Technical Advisory Council 5
(TAC). The TAC is a group of utility CIOs that meet to discuss IT issues, 6
including how to manage costs. Through our participation in such groups, we 7
are able to monitor and implement industry best practices for managing 8
technical projects and controlling costs. 9
10
Q. CAN YOU IDENTIFY SPECIFIC COST CONTROL MEASURES THE COMPANY HAS 11
UNDERTAKEN TO MANAGE COSTS IN RECENT YEARS? 12
A. Yes. In our last rate case, we discussed efforts to renegotiate contracts with 13
key vendors and our effort to use a multi-vendor sourcing strategy to maintain 14
competition between them for our business. Those benefits are ongoing. 15
One new example is our increased use of fixed bid versus time and materials 16
agreements with vendors for project delivery activities. This improvement 17
places a shared burden on the service providers to ensure costs remain within 18
the expected totals. 19
20
Q. CAN YOU EXPLAIN IN MORE DETAIL WHY A MULTI-VENDOR SOURCING 21
STRATEGY IS BENEFICIAL? 22
A. Yes. Business Systems relies on approximately 130 different vendors for 98 23
percent of the capital investments and O&M support, with our top ten 24
vendors comprising 63 percent of our total costs in 2014. By utilizing multiple 25
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vendors, we require these vendors to compete against each other for our 1
business and create an incentive to keep the price of their services 2
competitive. Also, having multiple vendors available minimizes the risks 3
associated with relying solely on one vendor. 4
5
5. Cost Allocation to the Company 6
Q. HOW DO CAPITAL PROJECTS EXECUTED BY BUSINESS SYSTEMS AFFECT THE 7
MINNESOTA JURISDICTION? 8
A. Many of the Business Systems projects are planned and budgeted at the Xcel 9
Energy Services or operating company level, and implemented throughout our 10
system. Most projects benefit multiple jurisdictions – as when we implement 11
new software throughout Xcel Energy – and therefore must be allocated or 12
assigned to the appropriate operating companies. 13
14
In instances where a project is more fully-dedicated to the Minnesota 15
jurisdiction, a greater portion of the project costs may be assigned to 16
Minnesota. In some cases where projects are dedicated wholly to Minnesota, 17
as with the land mobile radios we purchased specifically for our nuclear plants 18
(and which were discussed in our prior rate case), those costs may be directly 19
assigned to Minnesota. Overall, Xcel Energy cost allocations are discussed by 20
Company witness Mr. Adam R. Dietenberger. 21
22
6. Major Capital Projects 23
Q. WHAT IS THE PURPOSE OF THIS SECTION OF YOUR TESTIMONY? 24
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A. This section of my testimony discusses the major planned investments 1
Business Systems anticipates for 2016 through 2018. 2
3
Q. HOW DID BUSINESS SYSTEMS IDENTIFY ITS MAJOR PLANNED INVESTMENTS 4
OVER THE PLAN PERIOD? 5
A. To identify these investments, we looked for unique projects that will require a 6
greater than normal quantity of Business Systems resources to complete. 7
8
Q. WHAT MAJOR CAPITAL PROJECTS DOES BUSINESS SYSTEMS ANTICIPATE 9
COMPLETING OVER THE PERIOD OF THE COMPANY’S MYRP REQUEST? 10
A. As depicted below in Table 8, we anticipate undertaking six major capital 11
projects from 2016 through 2018. These projects include: 12
13
Table 8: 2016-2018 Major Capital Projects 14 15
16
17
18
19
20
21
Some of these projects, including the Work and Asset Management system, 22
Network Strategy - T&D Substation Connectivity, and Security Technology 23
Refresh will continue over multiple years, with portions of the project placed 24
in service as they are put to use each year. The major capital projects we 25
expect to complete during the plan period, as well as the additional key 26
Project 2016 2017 2018 Dynamic EMS (DEMS) Environment Phase 2 18.2M Minnesota Metro Radio Refresh 5.6M Network Strategy - T&D Substation Connectivity 7.0M 4.7M 3.8M Network Strategy – Dist. System Intelligence Connectivity 0.1M 2.5M 4.1M Security Technology Refresh 1.4M 2.6M 2.7M Work and Asset Management 32.4M 103.8M NSPM Total $59.0M $113.7M $16.2M
*Total amounts include AFUDC
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projects we anticipate completing in 2016, 2017, and 2018, are discussed in 1
more detail under each plan year, below. 2
3
C. 2016 Capital Additions 4
Q. WHAT CAPITAL ADDITIONS IS BUSINESS SYSTEMS PROPOSING TO MAKE IN 5
2016? 6
A. The total NSPM Business Systems 2016 capital additions are budgeted to be 7
approximately $100 million. This capital addition budget includes the capital 8
budget groupings, listed below in Table 9, that align with the key investment 9
needs described earlier in my testimony, plus the “Emergent Demand” 10
category that exists to support project changes in the other capital budget 11
groupings. 12
13
Table 9: 2016 Total Capital Additions 14
15
16
17
18
19
20
1. Aging Technology 21
Q. ARE ANY CAPITAL PROJECTS TO REPLACE AGING TECHNOLOGY INCLUDED IN 22
THE 2016 TEST YEAR? 23
A. Yes. We anticipate that investments in aging technology for 2016 will total 24
$47.5 million as depicted below in Table 10. 25
2016 Capital Additions 2016 Total Dollars Replace Aging Technology $47.5 million Cyber Security $1.9 million Enhance Capabilities $11.1 million Emergent Demand $4.1million Productivity Through Technology $35.2 million NSPM Total $99.8 million
*Total amounts include AFUDC
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Table 10: 2016 Aging Technology Capital Additions 1 2
3
4
5
6
7
8
9
I discuss the projects that account for the majority of the 2016 costs in this 10
capital budget grouping below. 11
12
Q. WAS A COMPETITIVE BID PROCESS USED FOR ANY OF THESE PROJECTS? 13
A. Yes. I note that for projects (a) through (e) below, the project team used, or 14
will use, a competitive bid process for each of these five projects to ensure 15
that: (1) costs remain in-line with the approved budget; (2) Xcel Energy 16
receives quality service at a fair price; and (3) business value is delivered per 17
the agreed requirements. In addition, the project costs and schedules for 18
these projects were based on internal experience with similar implementations 19
and in most cases, coupled with input from third-party consultants who we 20
commissioned to ensure that the projects will deliver functionality that 21
supports organizational objectives. 22
23
a. Corporate Network Infrastructure Upgrade - Core routing 24
Q. PLEASE DESCRIBE THIS PROJECT. 25
A. This project includes the detail design, planning, installation and 26
2016 Aging Technology IT Investments 2016 Total Corporate Network Infrastructure Upgrade - Core routing $1.6 million Dynamic EMS (DEMS) Environment Phase 2 $18.2 million GIS Upgrade Project $2.4 million Network Strategy – Dist. System Intelligence Connectivity $0.1 million Network Strategy - T&D Substation Connectivity $7.0 million Windows 2003 Server Upgrade $2.1 million Aging Technology Other (16 projects) $6.1 million Annual Refreshes $10.0 million NSPM Total $47.5 million
*Total amounts include AFUDC
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commissioning of equipment that comprises the backbone network of the 1
corporate (i.e. not Transmission or Distribution) infrastructure and includes 2
new optical infrastructure for corporate fiber, fiber optic termination 3
equipment, upgraded routing and switching equipment and associated labor to 4
configure, install and test. This effort is focused on the WAN (Wide Area 5
Network) component of the corporate network infrastructure and replacing 6
equipment that has reached the end of its life and is out of support. 7
8
This effort is dictated by the move to a more standard, robust network that 9
supports the evolving requirements of the various business areas. This will 10
also ensure alignment and full functionality between the corporate network 11
and the Transmission and Distribution network elements. This project will 12
enable us to fully use planned application rollouts by business areas that 13
require stronger network connectivity, more robust network capabilities and 14
bandwidth and to ensure required regulatory and reliability metrics are met. If 15
we do not complete this project, business areas may be unable to fully use 16
planned applications and we could experience instability in our networks. In 17
turn, these issues tend to result in higher support costs with longer outages 18
that are not in our customers’ interests. As noted above, the project costs and 19
schedule are based on a competitive bid process, as well as internal experience 20
with similar implementations. 21
22
b. Dynamic EMS (DEMS) Environment Phase 2 23
Q. PLEASE DESCRIBE THIS PROJECT. 24
A. The project is a five-year effort to replace the Energy Management System 25
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(EMS), a critical technology that is used for the monitoring and management 1
of the Bulk Electric System by our transmission and distribution systems. The 2
EMS interfaces with field devices that collect information about the health of 3
the bulk electric system. This real-time, two-way communication provides 4
Transmission and Distribution Operations the ability to remotely control the 5
flow of electricity during outage and maintenance periods, which is a key 6
driver of our ability to maintain efficient and reliable service to our customers. 7
8
This project is driven by the need to: (1) improve reliability of the current 9
antiquated system, and (2) meet critical infrastructure protection (NERC CIP) 10
requirements. The current system, Siemens Spectrum EMS, was implemented 11
15 years ago and has reached the end of its life. Xcel Energy utilized software 12
customizations to keep the Siemens system current for some time, but it has 13
become too expensive to maintain and hard to support, and evolving 14
regulatory requirements warranted a full upgrade or replacement. Our 15
anticipated in-service dates are based on the project currently nearing its end 16
and successful implementation of the initial project phase. 17
18
c. GIS Upgrade Project 19
Q. PLEASE DESCRIBE THIS PROJECT. 20
A. This project will upgrade our Geographical Information System (GIS) 21
platform. The GIS provides a geospatial representation of Xcel Energy’s 22
transmission and distribution physical assets to support field operations in the 23
deployment and maintenance of these assets on behalf of customers. In short, 24
this work supports infrastructure reliability. The current version of our 25
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platform (GIS Smallworld) is nearing the end of its life and will no longer be 1
supported by the vendor at the end of 2016. In addition to maintaining 2
system reliability, this upgrade will provide additional capabilities and 3
enhanced system performance. This project is in the initial stages of planning, 4
and we expect it to be in service in 2016 based on our past experience 5
delivering this type of project. 6
7
d. Network Strategy - Distribution System Intelligence Connectivity 8
Q. PLEASE DESCRIBE THIS PROJECT. 9
A. This project includes the detailed design, planning, installation and 10
commissioning of equipment that will extend the company’s corporate local 11
and wide area network to field locations across Xcel Energy operating 12
territories' Field Area Network (FAN) and upgrade or replace network 13
components that are beyond their individual end of life and will no longer be 14
supported at the end of 2017. The FAN provides a private, secure, reliable 15
conduit for two-way electronic transfer of data to "smart" devices to optimize 16
and create more efficient electric operations on behalf of customers. 17
18
While the initial plans for this project include the mechanism for "smart" 19
distribution devices to gather data for optimization and pro-active control 20
measures, other uses may include various metering monitoring and control, 21
street lighting, and gas operations. The FAN project is the core infrastructure 22
to support several optimization initiatives across many business segments. 23
24
This is a multi-year project, with various components placed in service as 25
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assets are deployed. 1
2
e. Network Strategy - T&D Substation Connectivity 3
Q. PLEASE DESCRIBE THIS PROJECT. 4
A. This project includes the detail design, planning, installation and 5
commissioning of equipment that comprises an expansion and privatization of 6
the company’s corporate Wide Area Network (WAN) across our service 7
territories. The project scope includes upgrades to existing substations that 8
enable them to act as a communication hub, replacement of aging equipment 9
being discontinued by third party providers (AT&T & CenturyLink) and fiber 10
optic and microwave communication upgrades that expand and privatize the 11
company’s WAN capabilities. 12
13
The updates being made in response to technology that will be discontinued in 14
2017 are necessary to avoid customer or system outages. Introduction of new 15
communication equipment into substations and expansion of our fiber and 16
microwave communication capabilities provide support for the data collected 17
across FAN to systems in various company locations. 18
This is a multi-year project, with various components placed in service as 19
assets are deployed. 20
21
f. Windows 2003 Server Upgrade 22
Q. PLEASE DESCRIBE THIS PROJECT. 23
A. This project will upgrade the company’s outdated Windows Server 2003 24
operating system, which went out of extended support on July 15, 2015, to 25
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Windows Server 2012. The project includes the testing and remediation of 1
over 600 applications that use the servers to ensure they continue to function 2
after the Server upgrade. This project will enable consistent system availability 3
to both internal business users and external customers. Without this upgrade, 4
critical applications would be at risk of failure with significant impact to the 5
core business operations that serve our customers. The project costs and 6
schedule are based on internal experience with similar implementations and 7
the determination of the scope of work to complete. 8
9
g. Annual Refresh Projects 10
Q. PLEASE DESCRIBE “ANNUAL REFRESH” PROJECTS. 11
A. Like any asset, our technology infrastructure must be refreshed. We refresh 12
smaller components on regular cycles and annually budget for these 13
replacements as routine projects, as they are critical to our everyday functions. 14
These projects include replacing aging equipment based on a pre-determined 15
rolling life-cycle, annual updates to software and hardware to meet demand 16
growth, and replacement of equipment that fails or is unable to meet our 17
needs. A summary of the various types of refreshes we undertake is set forth 18
in Table 11 below. 19
20
21
22
23
24
25
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Table 11 1 2
3
4
5
6
7
8
9
Q. CAN YOU DESCRIBE THE DIFFERENT TYPES OF TECHNOLOGY THAT ARE 10
COVERED BY EACH OF THESE REFRESH WORK ORDERS IN TABLE 11 ABOVE? 11
A. Yes. These refreshes cover: 12
• Annual Network Refresh: Planned replacement of network devices 13
(switches, routers, radios, channel banks and voice systems) due to 14
aging technology, out-of-support equipment, security vulnerabilities, 15
and to enable new required capabilities. 16
• Annual Server Refresh: Planned replacement of aging servers. 17
• Annual EMS Infrastructure Refresh Project: Replaces end-of-life servers, 18
routers, switches, and other hardware that support electric and gas 19
system operations, including generation, dispatch, transmission, and 20
distribution. 21
• Annual PC Refresh: Planned replacement of aging desktop and laptop 22
computers, as well as those that are lost or inoperable. 23
• Annual Data Storage Refresh: Replaces data storage hardware that is no 24
longer cost-effective to support, or that presents significant risk to 25
2016 Annual Refresh Capital Additions 2016 Total
Annual Network Refresh $3.9M Annual Server Refresh $1.4M Annual EMS Infrastructure Refresh Project $0.4M Annual PC Refresh $1.3M Annual Data Storage Refresh $2.2M Annual MDT Refresh $0.7M Annual Handheld Mobile Collector Refresh $0.1M NSPM Total $10.0M
*Total amounts include AFUDC
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operations due to aging components or lack of vendor support. 1
• Annual MDT Refresh: Planned replacement of aging, lost or damaged 2
mobile data terminals used by field workers. 3
• Annual Handheld Mobile Collector Refresh: Planned replacement of aging 4
or irreparable handheld and mobile meter reading devices. 5
6
Q. CAN YOU PROVIDE AN EXAMPLE OF HOW A REFRESH PROJECT WORKS? 7
A. An example of this type of project is our Annual Planned PC Refresh project. 8
We use a “rolling PC Lifecycle refresh” approach which replaces 9
approximately 20 percent of the desktop computers annually based on the 10
four-year average lifespan of a desktop computer. This lifecycle program was 11
established in 2007 to ensure that the personal computers maintain their 12
functionality and are compatible with existing software and other systems. 13
14
Within our Annual PC Refresh list, we also know that Annual Unplanned PC 15
Refreshes will be needed. Unplanned refreshes cover PCs that must be 16
replaced outside the pre-determined rolling life-cycle refresh. These are 17
devices that may be stolen or fail prematurely. It also covers new business 18
demand, such as increases in computer user headcount. The project budget is 19
based on historical trends and forecast demand growth. 20
21
Q. HOW DOES BUSINESS SYSTEMS DEVELOP ITS BUDGETS FOR REFRESH 22
PROJECTS? 23
A. While the budget methodology varies depending on the nature of the assets to 24
be refreshed, generally a refresh budget is determined by one or more of the 25
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following factors: 1
• The number of devices or systems that will reach end of life during 2
the budget period. This is typically based on an established lifecycle 3
plan. For example, PCs, mobile data terminals, and portable meter 4
reading devices have a four-year life. Thus approximately 20 percent 5
of them are replaced in an average year. 6
• The number of devices expected to permanently fail outside warranty, 7
and in the case of portable devices, the number expected to be 8
damaged, lost, or stolen. This is based on historical trends. 9
• Planned incremental growth in demand (e.g., data storage, network 10
bandwidth, number of computer users, new physical sites, etc.). This 11
is based on Company and industry trends and known business plans. 12
• The devices or systems that must be replaced to meet new security, 13
software compatibility, or business requirements. 14
• The devices or systems for which vendor support will cease or 15
become prohibitively expensive. 16
17
2. Cyber Security 18
Q. ARE ANY CAPITAL PROJECTS TO ADDRESS EVOLVING CYBER SECURITY THREATS 19
AND REQUIREMENTS INCLUDED IN THE 2016 TEST YEAR? 20
A. Yes. We anticipate that investments in cyber security for 2016 will total $1.9 21
million. I address the project that comprises the majority of the 2016 cyber 22
security capital additions below. 23
24
25
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a. Security Technology Refresh 1
Q. PLEASE DESCRIBE THIS PROJECT. 2
A. The Security Technology Refresh is the primary Cyber Security project that 3
will be put into service in 2016, for $1.4 million. While we call this a 4
“refresh,” it is an update of security technology rather than a routine annual 5
refresh like those described above. The scope of this project is to update 6
critical cyber security technology including perimeter security, internal 7
infrastructure security, application security, and to implement vulnerability 8
management to protect sensitive customer and business information. It is 9
imperative to refresh our technology to ensure continued compliance with 10
regulatory requirements (as for customer data) and overall corporate security 11
objectives while reducing our business’s and our customers’ exposure to 12
evolving cyber security risks and vulnerabilities. 13
14
This is a multi-year project that we expect to continue through 2018. Refresh 15
work is placed in service as the individual pieces of technology become ready 16
for use. This project is in the initial stages of planning, with cost and schedule 17
estimates based on internal experience with similar implementations. We will 18
follow a competitive bid process to ensure that costs remain in-line with the 19
approved budget that Xcel Energy receives quality service at a fair price, and 20
that business value is delivered per the agreed requirements. 21
22
3. Enhancing Capabilities 23
Q. ARE ANY CAPITAL PROJECTS TO ENHANCE COMPANY CAPABILITIES INCLUDED 24
IN THE 2016 TEST YEAR? 25
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A. Yes. As depicted in Table 12 below, we anticipate that investments planned to 1
enhance capabilities for 2016 will total $11.1 million. 2
3 Table 12 4
5
6
I discuss these costs in more detail below. 7
8
9
10
Q. WAS THERE A COMPETITIVE BID PROCESS USED FOR ANY OF THESE PROJECTS? 11
A. Yes. For the three projects discussed in detail below, the project team used, 12
or will use, a competitive bid process to ensure that: (1) costs remain in-line 13
with the approved budget; (2) Xcel Energy receives quality service at a fair 14
price, and (3) business value is delivered per the agreed requirements. In 15
addition, the project costs and schedules for these projects were based on 16
internal experience with similar implementations and, in some cases, coupled 17
with input from third-party consultants who we commissioned to ensure that 18
the projects will deliver functionality that supports organizational objectives. 19
20
a. Network Monitoring Tools 21
Q. PLEASE DESCRIBE THIS PROJECT. 22
A. This project will construct new monitoring devices and reports for effective 23
operations, administration and maintenance of the WAN/LAN segments 24
within the company. This project will enable heightened visibility and 25
awareness of network incidents, system configuration, and performance of the 26
2016 Enhance Capabilities Capital Additions 2016 Total Network Monitoring Tools $1.0 million SharePoint 2013 Phase II $1.4 million Substation Asset Management System (Enterprise Reliability) $1.4 million Enhance Capabilities Other (19 projects) $7.3 million NSPM Total $11.1 million
*Total amounts include AFUDC
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telecommunications infrastructure (voice and data), which will yield higher 1
network availability and greater resource productivity for our customers. 2
3
b. SharePoint 2013 Phase II 4
Q. PLEASE DESCRIBE THIS PROJECT. 5
A. The SharePoint 2013 Phase II project will upgrade our SharePoint software 6
from version 2007 to version 2013. SharePoint is a web application that 7
enables employees to collaborate from across all business units and to work 8
more efficiently by letting users share documents and data while maintaining 9
security and version control. The new version will provide a more powerful 10
platform and enable new capabilities such as enhanced sharing of information 11
in a controlled manner and improved information governance and security. 12
13
c. Substation Asset Management System 14
Q. PLEASE DESCRIBE THIS PROJECT. 15
A. The Substation Asset Management System (SAMS) project will implement a 16
solution to access, store, and analyze all of the data needed to calculate an 17
algorithm for setting priorities for program-driven inspections, preventive 18
maintenance, and corrective maintenance at our substations. The SAMS 19
application will provide the ability to systematically evaluate equipment health, 20
failure history analysis event/condition notification, and lifecycle cost analysis 21
so that we can better manage our substations on behalf of our customers. 22
23
d. Additional Investments to Enhance Capabilities 24
Q. WHAT ADDITIONAL INVESTMENTS IS THE COMPANY MAKING TO FURTHER 25
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ENHANCE CAPABILITIES IN 2016? 1
A. The Company is making technology investments to provide enhanced 2
capabilities across many areas in 2016. For example, system investments in 3
the call center, website and other systems used to support our customers are 4
planned to improve the communication and interaction between customers 5
and the Company. Other examples are investments to improve compliance 6
reporting capabilities to meet new and evolving regulatory requirements. Our 7
2016 additional investments in this category are listed in Exhibit___(DCH-1), 8
Schedule 3. 9
10
4. Emergent Demand 11
Q. DOES BUSINESS SYSTEMS HAVE CAPITAL COSTS THAT SPREAD ACROSS THE KEY 12
OBJECTIVES OF MANAGING CYBER SECURITY, REPLACING AGING 13
TECHNOLOGY, AND ENHANCING CAPABILITIES? 14
A. Yes. Given the ever-changing nature of technology and emerging cyber 15
security risks, it is usually not possible to identify all projects that may be 16
needed in a given year. To ensure that we are able to meet our overall 17
objectives, we created the Emergent Demand Account as an efficient way to 18
fund important and unexpected projects. 19
20
Q. HOW DOES THE EMERGENT DEMAND ACCOUNT HELP ENSURE THAT 21
BUSINESS SYSTEMS MEETS ITS KEY OBJECTIVES? 22
A. The Emergent Demand Account provides Business Systems with the ability to 23
assess and address, as appropriate, emerging technology needs as they arise. 24
25
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For instance, we may identify a risk associated with existing technology that 1
needs to be addressed earlier than initially planned. In other instances, we 2
might begin implementing new software and then learn of a new function that 3
is cost-effective to adopt at the same time the project is implemented. 4
5
Whether the funding requirement is from a scope change to an existing 6
project, or to address a new risk or a new identified need, the Emergent 7
Demand Account allows us to effectively ensure adequate funding for projects 8
that cannot always be predicted in our fast-changing environment. 9
10
Q. IS THIS HOW BUSINESS SYSTEMS HAS ALWAYS MANAGED EMERGENT NEEDS OF 11
THE ORGANIZATION? 12
A. No. Because our project budgets typically do not contain contingencies, prior 13
to creation of the Emergent Demand account in 2013 we had to delay or 14
cancel previously-planned projects or absorb unplanned work and costs when 15
a new technology or critical need was identified. These changes would often 16
disrupt the parts of the business relying on our original plan, and would 17
impact other long-term plans that affect the Company, our customers, or 18
both. 19
20
Q. WHAT PROCESS WAS USED TO ESTABLISH THE TEST YEAR EMERGENT DEMAND 21
ACCOUNT BUDGET? 22
A. For years prior to 2016, we had analyzed scope change and new demand 23
trends to determine the appropriate amount for the Emergent Demand 24
Account. Business Systems looked at data from 2010, 2011, and 2012 and 25
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determined that demands for new projects or changes in scope amounted to, 1
on average, approximately 15 percent of the total Business Systems budget. 2
This is how we established our Emergent Demand level for 2013 ($5.9M for 3
the second half of the year), 2014 ($17.5M) and 2015 ($12.5M). As indicated 4
in Table 4 above, the 2013 and 2014 Emergent Demand Account was 5
completely distributed to other projects. Likewise, the remaining 2015 6
Emergent Demand Account ($0.9M) will be fully distributed to other projects 7
in 2015. 8
9
For 2016 and beyond, we reviewed our experience with the Emergent 10
Demand account and determined we could tailor the budget for this account 11
to forecasted spending levels. The 2016-2018 budget level was established by 12
reviewing the capital plan and then creating an Emergent Demand funding 13
level for each budget year based on business priorities, balanced by the overall 14
business area capital spending guidelines. Using this forward-looking 15
approach, we felt we could reduce the dollars in the Emergent Demand 16
account for the next few years and thereby direct a greater percentage of our 17
dollars to specific projects. We continue to refine the Emergent Demand 18
budget with each new budgeting cycle, removing dollars from this capital 19
budget grouping and assigning them to projects that have become more 20
definite in scope and planning. 21
22
Q. ARE THERE ADDITIONAL BENEFITS TO BUDGETING FOR AN EMERGENT 23
DEMAND ACCOUNT? 24
A. Yes. In addition to the needs and benefits I previously discussed, an 25
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Emergent Demand Account allows us to more comprehensively vet requested 1
changes in individual project scope than would be practical with a project-2
specific contingency arrangement. In addition, including a contingency within 3
every project budget for unforeseen circumstances assumes that every project 4
will need a contingency amount. Rather than estimating an overall 5
contingency to handle both project-specific and broader emergent issues that 6
face the organization, we use the Emergent Demand Account to distribute 7
funding solely to those projects that require emergent funding. 8
9
Q. ARE THERE TIMES WHEN A CONTINGENCY IS NEEDED DESPITE THE 10
EMERGENT DEMAND ACCOUNT? 11
A. Yes, but only on a very limited exception basis. As I discuss in more detail 12
below, we determined that it was appropriate to add a contingency to the 13
Work and Asset Management project we expect to place in service in 2016 14
and 2017. This is due to the size, scope, schedule, and complexity involved in 15
replacing and remediating the older systems. 16
17
Q. IS THE BUSINESS SYSTEMS BUDGET HIGHER THAN PREVIOUS YEARS BECAUSE 18
OF THE EMERGENT DEMAND ACCOUNT? 19
A. No. As I discussed above, Business Systems previously funded emergent 20
issues by reallocating dollars from existing, planned projects. With the 21
establishment of the Emergent Demand Account, we approximated the level 22
of funding for it by assessing our project plans and then only including 23
projects in our plan that would maintain our approved level of spending. As a 24
result, Business Systems has fewer projects than it might have otherwise to 25
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enable the funding of the Emergent Demand Account. 1
2
Q. HOW ARE REQUESTS FOR FUNDING FROM THE EMERGENT DEMAND 3
ACCOUNT HANDLED? 4
A. Any request for funds from the Emergent Demand Account must be 5
approved by the IT Governance Board. The IT Governance Board closely 6
scrutinizes each request to determine whether it is reasonable and necessary, 7
as previously described for other Business Systems projects. The Emergent 8
Demand Account therefore provides another layer of governance for existing 9
projects, because they must receive an additional round of approval before 10
being allocated funds from the Emergent Demand Account. 11
12
5. Productivity Through Technology (PTT) 13
Q. ARE ANY CAPITAL PROJECTS FOR THE PRODUCTIVITY THROUGH 14
TECHNOLOGY INITIATIVE INCLUDED IN THE 2016 TEST YEAR? 15
A. Yes. We are implementing our Work and Asset Management project in 2016, 16
continuing through 2017, to address the procurement, work scheduling, and 17
asset management needs of our Business Areas, including Energy Supply in 18
2016 and Distribution, Nuclear, Transmission, and Corporate Services in 19
2017. We anticipate placing the Work and Asset Management portion related 20
to Energy Supply and some post-implementation General Ledger costs in 21
service in 2016 for a total Company capital addition cost of $35.2 million, and 22
placing the remaining systems in service in 2017 for a total Company capital 23
addition cost of $103.8 million. 24
25
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Since our General Ledger system was discussed in our last rate case (Docket 1
No. E-002/GR-13-868) and is being placed in service in 2015, I will focus the 2
remainder of my Productivity Through Technology discussion on the Work 3
and Asset Management project. 4
5
a. Purpose of Work and Asset Management 6
Q. WHAT UTILITY NEEDS DOES A WORK AND ASSET MANAGEMENT SYSTEM 7
SERVE? 8
A. An asset management system provides tools to enable a utility to manage its 9
workforce and infrastructure effectively. Work and Asset Management can be 10
broadly defined as the technology supporting asset management, work 11
management, and materials management. 12
13
Utilities are asset-intensive entities and are responsible for managing a large 14
number and variety of electric and gas transmission and distribution systems 15
and power generation facilities. The effectiveness with which utilities manage 16
these assets translates into safer, more reliable, and often quicker service for 17
customers. 18
19
Q. HOW COMMON ARE WORK AND ASSET MANAGEMENT SYSTEMS FOR UNITED 20
STATES UTILITIES? 21
A. Based on our assessments as we looked at the Company’s options for its 22
existing work and asset management systems, many, if not most, of the major 23
electric and gas utilities in the United States are using or developing broad-24
based information technology systems referred to as Work and Asset 25
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Management systems. 1
2
Q. CAN YOU PROVIDE MORE DETAIL REGARDING WHAT WORK AND ASSET 3
MANAGEMENT TOOLS DO? 4
A. Yes. Work and Asset Management systems are the technology used to 5
manage essentially three categories of fundamental utility needs: work crew 6
scheduling and work assignment, work execution and documentation, and 7
procurement optimization. 8
9
Q. PLEASE DESCRIBE HOW THE WORK AND ASSET MANAGEMENT SYSTEM WILL 10
ENABLE SCHEDULING AND WORK ASSIGNMENT. 11
A. The Work and Asset Management system will become the basic foundation 12
through which we manage scheduling and work assignment. 13
14
Under our current system, we manage scheduling and work assignments to 15
field crews through a relatively manual process. We are not able to monitor 16
work progress on a real-time basis and therefore cannot readily fill in work 17
through electronic dispatching. Crews have to call their supervisor or planner 18
to let them know they are finishing early and need additional work 19
assignments. In addition, a crew’s work is scheduled for the day based on jobs 20
clustered in a specific community, which may or may not be the optimal route. 21
22
The move from semi-manual to fully automated scheduling through updated 23
technology will enable better coordination of job site readiness before crews 24
are dispatched. Employees will have better planning tools to ensure that 25
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material is available and properly staged; planning time to create and attach 1
permits to jobs will be reduced; and there will be better coordination of 2
ancillary resources to ensure all job pre-requisites have been completed before 3
work crews arrive at the job site. Supervisors will be able to spend more time 4
in the field, and coordination between work groups on outages will improve 5
due to better coordination of jobs. 6
7
More specifically, with the improved Work and Asset system managers can 8
better plan job timing. Using better technology to optimize scheduling, we 9
anticipate creating more "wrench time" in the field (which is the percentage of 10
a worker’s day devoted to actual project-based work). Schedules can be 11
maintained in one common system based on the type of work, and can be 12
optimized to minimize drive time allowing for more jobs per day per crew. 13
Mobility devices will monitor work progress in real-time, allowing additional 14
work to be scheduled through electronic dispatching if crews finish early. 15
Each of these improvements in job management will improve the work of our 16
crews, the use of materials, and the efficiency of jobs for the benefit of our 17
customers. 18
19
We will use the new Work and Asset Management system to not only 20
coordinate when work is done, but in what manner it is done and how the 21
work is documented. 22
23
Q. PLEASE PROVIDE AN EXAMPLE OF THE CURRENT SEMI-MANUAL PROCESS. 24
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A. For example, if a work crew is working on an outage in the field and identifies 1
an unexpected part needed, they have to contact someone back in the office, 2
who makes the changes to blueprints and work orders. The updated work 3
order information is then sent back to the field crew. With the new 4
technology and mobile devices, work crews will have access to technical 5
information at the work site in case changes are needed to the current work 6
plan. Further, integration with the Geographical Information System (our 7
system for managing spatial and geographical data) allows field access to 8
electronic work packets, annotations and redline drawings. 9
10
Another example is when a nuclear crew today working in a safety 11
containment area identifies an issue with a piece of equipment, they have to 12
leave containment, remove special clothing, exit the building and go back to 13
the workshop to call for assistance. The work document is revised, the team 14
returns to the building, puts special clothing back on, and returns to the 15
containment building. This results in several hours of lost time until the crew 16
can restart work. However, with current, integrated mobile technology, the 17
same crew goes to a low dose area to meet the team lead, who can link a 18
handheld mobile device to the central system. The needed changes are then 19
sent back to the mobile device for team approval. Because the team does not 20
have to leave the area entirely, change clothing, exit the building, etc., this 21
revised process is much simpler and takes less time. 22
23
Q. PLEASE DESCRIBE HOW THE WORK AND ASSET MANAGEMENT SYSTEM WILL 24
SUPPORT “PROCUREMENT OPTIMIZATION,” AND HOW THIS WILL BENEFIT 25
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CUSTOMERS. 1
A. We will also utilize the new Work and Asset Management system to manage 2
how and when we procure materials and inventory from vendors, allowing us 3
to better manage inventory and get materials to workers and job sites in an 4
increasingly timely fashion. 5
6
Currently we manage the procurement process across three different systems, 7
making it more difficult to coordinate and aggregate purchases. We will also 8
be able to conduct more transactions electronically than is possible today. 9
10
Our Work and Asset Management system will help us optimize procurement 11
efforts by operating as an integrated solution across Business Areas that 12
enables automatic re-ordering of materials when inventory starts to run low, 13
and enables more accurate forecasting of total company resource needs in 14
order to lock in long-term contracts with more favorable pricing. In 15
conjunction with implementation of the Work and Asset Management system 16
we will also be able to improve our supply chain processes as follows: 17
• Pre-qualify suppliers for commonly used goods and services. The 18
goods and services can then be provided under long term contracts, 19
benefiting the entire company since they will be centrally managed. 20
• Improve material order processes to obtain materials more efficiently 21
and on an enterprise-wide basis because the Work and Asset 22
Management system will know which suppliers provide that good or 23
service and route the order accordingly. 24
• Improve overall supplier invoice accuracy to ensure amounts 25
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negotiated are invoiced by having the system verify pricing accuracy, 1
reducing any manual intervention that may be required today. 2
• Improve invoice processing efficiencies to better take advantage of 3
prompt payment discounts. 4
5
Q. HOW DO THE ABOVE FACTORS BENEFIT A UTILITY'S CUSTOMERS? 6
A. By using work and asset systems to more efficiently maintain our assets and 7
deploy our workforce, the Company will improve service, safety, reliability, 8
and overall customer service response. 9
10
b. The Company’s Existing Systems 11
Q. WHAT SYSTEMS ARE CURRENTLY MANAGING THE UTILITY’S DAY-TO-DAY 12
WORK AND ASSETS? 13
A. We currently use vendor Ventyx’s3 Corporate Passport Version 10.0.5 to 14
manage our electric and gas distribution, transmission, and supply chain 15
functions. We use a separate instance of Ventyx Passport 10.0.6 to manage 16
our nuclear facilities due to security considerations. Finally, we currently use 17
IBM’s Maximo Version 5.2 to support work activities at our Energy Supply 18
generation units. 19
20
Q. CAN YOU DESCRIBE THE CORPORATE PASSPORT FUNCTIONS IN MORE DETAIL? 21
A. Yes. Passport supports approximately 3,200 users across multiple Xcel 22
Energy business areas and handles approximately 77 million transactions on 23
an annual basis across all operating companies. Corporate Passport is a 24
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“mission critical” application for the Company, as it manages daily work 1
activity such as preventative maintenance, new construction, and outage 2
response among other critical functions. 3
4
Q. DOES XCEL ENERGY PERIODICALLY ASSESS THE RISKS OF ITS EXISTING 5
SYSTEMS? 6
A. Yes. As part of our ongoing system review and planning process, Business 7
Systems periodically prepares an application risk assessment and provides 8
recommendations for actions needed to maintain system capabilities. This 9
assessment includes a review of system statistics (i.e., number of transactions), 10
architecture, hardware and software, interfacing systems, storage and disaster 11
recovery. 12
13
Q. WHAT RISKS DOES THE CORPORATE PASSPORT SYSTEM PRESENTLY FACE? 14
A. Our application risk assessment of this system indicates a need to replace it in 15
the short term. Exhibit___(DCH-1), Schedule 4 is the risk and health 16
assessment for the Corporate Passport application. While it shows the overall 17
system health as “green,” the application’s server hardware and software is in a 18
“red” status. The software application environment is on hardware that was 19
discontinued in early 2009. The operating system is an IBM Unix version that 20
is no longer supported by the vendor under standard agreements. The 21
software code is written in COBOL 4.3, which has been out of standard use 22
for over 10 years. These considerations and the “red status” of the hardware 23
and software put the Company in a position where any major outage would 24
require specialized third-party support or sub-optimal hardware sourcing. We 25
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have identified a backup server onsite that could potentially be used, but if this 1
backup server fails during a restoration it could result in very challenging 2
hardware sourcing through resellers. This creates a heightened risk of an 3
unacceptable extended outage. 4
5
Q. CAN YOU DESCRIBE MAXIMO IN MORE DETAIL? 6
A. Yes. Maximo version 5.2 is currently used to support work activities at the 7
Company’s power generation units. Maximo has similar functional capabilities 8
as Passport, in that it is a critical asset for Energy Supply and has 2,180 users. 9
10
Q. WHAT RISKS DOES THE MAXIMO SYSTEM PRESENTLY FACE? 11
A. Exhibit___(DCH), Schedule 5, which is the risk and health assessment for the 12
Maximo application, shows the overall system health as risk level “red.” 13
Maximo presently has multiple single points of failure and unsupported 14
components. IBM stopped providing full support for the Company’s current 15
version (Version 5.2) in September of 2010. 16
17
Maximo is also preventing a number of underlying technologies from 18
progressing in their capabilities. The underlying application servers, databases, 19
and operating systems are all restricted to their current versions due to 20
Maximo’s incompatibility with newer technology. If Maximo were to fail, the 21
interfaces with other systems such as Passport, JDEdwards, and Time (our 22
timekeeping system) would no longer function. In addition, upgrades to a 23
new internet browser version are not supported by Maximo. Adobe Reader 24
versions used by Maximo users are also unsupported and are creating user 25
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challenges. 1
2
Q. CAN YOU DESCRIBE NUCLEAR PASSPORT IN MORE DETAIL? 3
A. Yes. Nuclear Passport supports approximately 1,500 users (approximately 4
2,000 during refueling outages) across Nuclear. Nuclear Passport is a 5
“mission critical” application for the Company, as it performs many of the 6
same activities as Corporate Passport, such as accounts payable, contract 7
management, and purchasing. Some of the other functions Nuclear 8
Passport performs include: 9
• The Action Tracking module is used for the nuclear corrective action 10
program, which tracks actions to improve the safety and reliability of 11
the nuclear plants. 12
• The Engineering Change module is used to track modifications and 13
improvements to the nuclear plants. 14
• The Work Management module is used to perform needed work for 15
the nuclear plants, including fixes to equipment and/or modifications 16
identified in the Engineering Change Module. 17
• The Equipment Tag Out module is used to keep work crews safe 18
while working on equipment by verifying safety tags are hung on 19
equipment before work begins. 20
• The Controlled Document and Records module keeps track of 21
updates to documents and records needed in the nuclear plants. 22
23
Q. WHAT RISKS DOES THE NUCLEAR PASSPORT SYSTEM FACE? 24
A. Exhibit___(DCH-1), Schedule 6 is the risk and health assessment for the 25
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Nuclear Passport application. Nuclear Passport was placed in service in 2005, 1
and our current version will be replaced in late 2016 through early 2017 with 2
the WAM project. We are currently using an unsupported version of Passport 3
that Ventyx is not updating with patches, and Ventyx will stop hosting our 4
current version of Nuclear Passport at the end of 2015. 5
6 Relying on an unsupported software version increases our risk of security 7
vulnerabilities to the software. Nuclear Passport is also currently running on 8
outdated hardware, which makes it difficult to get replacement parts if needed. 9
This could cause extended Passport outages. 10
11 To continue hosting and support services with Ventyx, Nuclear would need to 12
upgrade to a recent version of Passport’s successor product Asset Suite and 13
place this on updated and supported hardware. 14
15
Q. WHY DO SOFTWARE VENDORS DISCONTINUE FULL SUPPORT OF AN 16
APPLICATION VERSION? 17
A. Most companies replace their core technology systems within 10 years of 18
initial implementation due to aging hardware and software, changing 19
technologies, cyber security risks, and similar issues like those we are facing 20
with both Corporate and Nuclear Passport and Maximo. Since most of a 21
software vendor’s customers have upgraded or replaced a software version 22
once it has passed the 10-year mark, it is no longer cost-effective for the 23
vendor to continue to train employees on outdated versions. As a result, it is 24
common in the industry for a software vendor to switch to a limited support 25
status for older versions so that a company continuing to use outdated 26 71 Docket No. E002/GR-15-826 Harkness Direct
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systems, rather than the vendor, bears the greatest risk and costs associated 1
with system problems. 2
3
Q. YOU HAVE MENTIONED THE VALUE OF AN INTEGRATED SYSTEM. WHY 4
DIDN’T THE COMPANY IMPLEMENT SUCH A TOOL 10-15 YEARS AGO, INSTEAD 5
OF UTILIZING SEPARATE PASSPORT, MAXIMO, AND GENERAL LEDGER TOOLS? 6
A. We did not previously encounter a time when the various Work and Asset 7
systems that had served the Company and its predecessors all needed to be 8
replaced at once. With the merger of NCE and NSP in 2000, the combined 9
company initially had two general ledger systems. The combined company 10
analyzed viable solutions based on the needs of the company at that time, and 11
selected JDEdwards in August of 2000. 12
13
With respect to Work and Asset Management, at the time of the NCE/NSP 14
merger NCE had recently implemented Passport (in 1998), so we made the 15
general decision to retire the NSP systems and migrate the users to Passport. 16
However, both the nuclear generating plants at Monticello and Prairie had 17
been using a functioning Work and Asset Management system known as 18
CHAMPS since the mid 1990’s. As such, it was not necessary to incur the 19
costs of migrating Nuclear to Passport in 1998. 20
21
By 2002, both companies’ generation/Energy Supply work and asset 22
management systems needed to be replaced to accommodate Energy Supply 23
needs. Rather than incurring the cost of replacing the entire Passport system, 24
the Company selected Maximo as the better fit for the Energy Supply 25
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function. Finally, when the CHAMPS system required replacement in 2005, 1
we needed a platform that could support Nuclear with adequate security 2
features and preferably in the form of a single solution for managing work 3
across the nuclear fleet. Since Maximo could not support these needs, we 4
implemented a newer version of Passport for Nuclear. 5
6
c. Initial Strategic Review 7
Q. DID XCEL ENERGY TAKE PRELIMINARY STEPS TO BETTER UNDERSTAND ITS 8
OPTIONS WITH RESPECT TO A SOLUTION FOR THE AGING GENERAL LEDGER, 9
PASSPORT, AND MAXIMO SYSTEMS? 10
A. Yes. The Company formed a team to evaluate current versions of our existing 11
applications, as well as software vendors that had a product that could replace 12
all three systems. The team obtained research from industry expert 13
consultants, conducted benchmarking visits with peer utilities that went 14
through a similar decision process in the last five years, and brought in internal 15
functional experts for multiple planning sessions to assess these options. 16
17
Q. CAN YOU DESCRIBE THE PROCESS OF GATHERING DATA FROM INDUSTRY 18
CONSULTANTS AND ASSESSING BENCHMARKING DATA? 19
A. Yes. To learn from industry experts, the Company participated in 20 20
technology briefings to determine whether a market leading, integrated 21
Enterprise Solution, or a combination of an integrated Enterprise solution and 22
a non-integrated work and asset management solution or solutions, would 23
meet the business needs of Xcel Energy. We also gathered over 200 ideas 24
from Xcel Energy employees for improving technology. 25
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To further benchmark options, we established a cross functional team with 31 1
employee representatives from Operations, Supply Chain, Finance, Human 2
Resources and Customer Care, and industry experts from Trissential, 3
Utiligent, Accenture and IBM. The team conducted site visits with Con 4
Edison (New York), Mortenson Construction (Minneapolis), Portland Gas & 5
Electric (Oregon), and San Diego Gas & Electric for day long information 6
gathering sessions to discuss lessons learned from their similar projects. We 7
also spent a day with Pacific Gas & Electric in Minneapolis. Additionally, we 8
discussed implementation with representatives of Cargill, which was 9
implementing a SAP solution with business process improvements, to better 10
understand the complexity and impacts of making significant changes to 11
process and software tools at the same time. 12
13
A summary of the information gathered from the 2012 site visits we 14
conducted as part of our benchmarking is attached as Exhibit___(DCH-1), 15
Schedule 7. 16
17
Q. WHAT DID YOU LEARN FROM THE BENCHMARKING AND EXPERT 18
CONSULTATIONS? 19
A. The utilities confirmed the likelihood that new technologies could help us 20
standardize process, data, and analytics across the company. We learned that a 21
centralized, integrated work and asset management system can simplify 22
processes while improving crew and design productivity. Further, system 23
analytics can improve access to information and support effective risk-24
informed maintenance decisions by reducing the number of repeat trips, 25
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materials and service costs. Utilizing geographic information systems as the 1
centralized source for information and expanding the use of mobile device 2
terminals that provide better field information drove field efficiencies for the 3
utilities we benchmarked. 4
5
Key themes that emerged through these visits are as follows: 6
• Advanced Asset Monitoring Technologies: As these technologies 7
become increasingly economical, near real-time monitoring initiatives 8
can result in more proactive maintenance cycles. 9
• Employee Mobility Technologies: Wherever there is paper, a mobile 10
electronic device should be considered. 11
• Enterprise Asset and Work Management Tools: An upgrade or 12
replacement to Maximo and Passport could be expected to help 13
realize labor productivity through automation and simplification. 14
• System Integrations: There are significant and consistent work efforts 15
required due to the lack of system integration between financial and 16
operational systems; a focus on improving planning, scheduling, 17
design and standards can simplify these efforts. 18
19
In addition, strategically, a consolidated tool or tools are easier to implement, 20
replace and upgrade. Each module has a similar look and feel, and uses data 21
in similar ways. 22
23
Q. CAN YOU DESCRIBE THE INTERNAL PLANNING SESSIONS? 24
A. Using information gained during the benchmarking team visits, the team 25
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completed a series of six internal “immersion session” workshops to define 1
how we operate today, how we want to operate tomorrow, and how to bridge 2
the gap. We also used Accenture’s tools to evaluate our current capabilities as 3
compared to industry standards in each Company business area. 4
5
Q. WHAT DID THE TEAM RECOMMEND AT THE END OF THIS INITIAL REVIEW? 6
A. They recommended that we consider six options, including: 7
• Option 1: SAP only – covering the General Ledger and all Work and 8
Asset needs. 9
• Option 2: Oracle only – covering the General Ledger and all Work 10
and Asset needs. 11
• Option 3: IBM/Maximo (our current work and asset management 12
system for Energy Supply) paired with SAP. 13
• Option 4: IBM/Maximo paired with Oracle. 14
• Option 5: Ventyx/Passport (our current work and asset management 15
system for all business areas except Energy Supply) paired with SAP. 16
• Option 6: Ventyx (Passport) paired with Oracle. 17
18
The preliminary recommendations are set forth in Exhibit___(DCH), 19
Schedule 8. 20
21
Q. WAS THE RECOMMENDATION TO MOVE FORWARD WITH THESE SIX OPTIONS 22
APPROVED? 23
A. No. At the beginning of the recommendation phase, the team made the 24
assumption that “doing nothing” (continuing to use existing systems farther 25
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into the future) was not feasible in light of the annual asset health assessments 1
for existing systems and that our software vendors were discontinuing full 2
support in the next couple of years. As a result, the above six options did not 3
include a solution that involved simply extending the life of the existing 4
software. However, to ensure all feasible options were considered, project 5
leadership asked the team to include options for extending the life of the 6
current software and hardware before they made a final decision. 7
8
Q. WHAT REVISED OPTIONS DID THE TEAM PRESENT TO THE PROJECT’S 9
LEADERSHIP? 10
A. The team presented six new scenarios, ranging from maintaining the systems, 11
consolidating from three work and asset management systems to one or two, 12
with and without Nuclear, upgrading JDE, and implementing SAP ERP. 13
Each of these options considered potential non-technology process 14
improvements. These six options and high level cost estimates are set forth in 15
Exhibit___(DCH), Schedule 9. The analysis of these options showed that 16
implementing the SAP-only Enterprise Resource Planning (ERP) solution was 17
the most comprehensive plan and the most expensive assumption (Option 6). 18
19
In second place was Option 5, which involved consolidating our three work 20
and asset management systems down to one system, Maximo, and upgrading 21
JDE. The lowest cost option was Option 1, which was to maintain our 22
current systems with limited hardware upgrades. 23
24
Q. WHAT DID THE COMPANY LEARN FROM RE-EXAMINING ITS EXISTING SYSTEMS 25
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AS PART OF THIS PROCESS? 1
A. We learned that achieving the main benefit of “doing nothing” – which is 2
delaying the effort and cost of implementing new systems – was not feasible 3
given the risks of relying on these aging systems software and hardware just to 4
keep them going. In particular, we would risk the reliability of our systems 5
and services without ongoing vendor support. Although the Company 6
actively uses third-party vendors for system support and issue resolution when 7
the installed versions become unsupported by the original vendor (as with the 8
current versions of Passport and Maximo), leveraging third-party support and 9
the fundamental need to update underlying hardware increased the risk and 10
the time required to resolve issues. We could not risk losing access to our 11
financial or work management systems over the long term and cannot predict 12
all the costs and delays we would incur if these core systems were to become 13
increasingly incompatible or fail. 14
15
Therefore, even if there are cost savings as compared to investing in new 16
systems in the short term, extending the life of our existing systems was not 17
sustainable in the long term. 18
19
Q. WHAT WOULD HAPPEN IF THESE SYSTEMS FAILED? 20
A. With respect to the General Ledger, our state and federal regulatory reporting, 21
as well as financial reporting to the SEC and other regulators, is dependent on 22
proper functioning of this system. An extended loss of access to financial data 23
could prevent Xcel Energy from meeting these requirements. 24
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In addition, the work and asset management systems are critical to managing 1
our work crews, inventory, and assets. A failure of the work and asset 2
management systems would limit our ability to perform routine daily 3
operations and respond to emergency or critical needs in the field. A system 4
failure would also impact our ability to respond quickly and safely to customer 5
electrical outages, emergency gas leaks, damages to gas and electric property, 6
and/or equipment failures at our power plants. Required dispatching of field 7
crews and required coordination with our suppliers would be more 8
challenging. The failure of the system would ultimately impact overall quality 9
of service to our customers, as well as the regulatory accuracy of reporting our 10
overall customer outage response times and associated costs. 11
12
Q. CAN YOU PROVIDE A SPECIFIC EXAMPLE OF THE RISKS OF INCOMPATIBILITY 13
ENCOUNTERED BY THE OLD SYSTEMS? 14
A. Yes. As we were upgrading Xcel Energy to Windows 7, it was discovered that 15
our current version of Passport did not function with Windows 7. One of the 16
services we lost when the vendor moved to a limited support status for 17
Passport was the software vendor certification that the existing version was 18
(or was not) compatible with new operating systems at the time of release. 19
Without the certification, we must wait until the testing phase of the 20
conversion to determine the extent to which our hardware and software will 21
be compatible with the new version. 22
23
Since it turned out that Windows 7 was not compatible with our current 24
version of Passport, the Company contacted third-party specialist Sheffield 25
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Scientific to correct the problem. It took over two months to resolve what 1
amounted to a couple of days of actual coding work. This process delayed the 2
roll-out of the Windows 7 upgrade for the 3,200 Passport users for about two 3
months. We would risk similar issues in the future if we had continued to use 4
the aging systems indefinitely. 5
6
Q. WHAT DID THE COMPANY CONCLUDE BASED ON THE ASSESSMENTS YOU 7
DESCRIBE ABOVE? 8
A. Passport and Maximo – as well as our General Ledger system – needed to be 9
upgraded or replaced due to their age. As noted above, staying with our 10
current software and hardware was not feasible. At the same time, each of 11
these three systems needed replacement in a common timeframe. As 12
demonstrated in Exhibit___(DCH), Schedule 10, Passport functions are 13
integrally linked with the General Ledger and other work and asset 14
management applications. 15
16
Q. WHAT DID THE PROJECT’S LEADERSHIP ULTIMATELY APPROVE AS A NEXT 17
STEP? 18
A. They agreed with the team’s assessment that doing nothing was not an option. 19
This left two feasible strategies: (1) Consider moving to an Enterprise 20
Resource Planning (ERP) system for a single, integrated solution; or (2) 21
Adopt separate applications for different needs, while looking at opportunities 22
to consolidate our existing work and asset management systems to reduce the 23
number of separate applications. We therefore went back to the original six 24
options, which were to explore both ERP and separate Work and Asset 25
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Management tools that would allow efficient implementation and operations 1
going forward. 2
3
d. Specific Project Selection 4
Q. WHAT WERE THE NEXT STEPS IN THE COMPANY’S PROCESS TO FURTHER ASSESS 5
AND SELECT A SOLUTION TO REPLACE THE EXISTING WORK AND ASSET 6
MANAGEMENT APPLICATIONS? 7
A. Having ruled out the possibility of doing nothing based on our benchmarking, 8
industry information, and assessment of our own systems, we began to 9
evaluate our options. The system selection process, which took place in 2013, 10
consisted of the four distinct phases explained below: 11
• Phase I: An RFI from various vendors, which consisted of 12
information sharing sessions, understanding the capabilities of a new 13
Enterprise Resource Planning (ERP) tool or separate but new General 14
Ledger and Work and Asset Management systems, and establishing 15
vendor contacts. 16
• Phase II: An RFP from vendors, including a demonstration of how 17
their systems would handle various business case scenarios provided 18
by the Company, estimated costs to implement the software, and 19
options for rolling out the new software in phases. 20
• Phase III: An evaluation of the RFPs. 21
• Phase IV: Propose a solution based on the information gathered in 22
the benchmarking process and the project selection phases described 23
above. 24
25
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Q. CAN YOU PROVIDE MORE DETAIL WHAT YOU MEAN BY AN “ENTERPRISE 1
RESOURCE PLANNING TOOL?” 2
A. An ERP tool is a suite of integrated applications that a company can use to 3
collect, store, manage and interpret data from many different business 4
activities in a consistent and integrated manner. An enterprise-level solution is 5
designed to standardize business processes, data and analytics across the 6
Company. With individual software packages, data fields and standards are 7
determined by the application design. For example, Maximo has a different 8
chart of accounts built into the application. When data is fed from Maximo to 9
Passport or our current general ledger system, a mapping tool is required to 10
convert the chart of accounts data to the corporate structure. Additional data 11
fields are used to capture other information needed to track project details. 12
These data requirements vary by application and by business area, creating 13
potential inconsistency. The data governance requirements in an ERP force 14
the use of common and consistent data fields. 15
16
Another benefit of an ERP is that it has modules for many other functions, 17
such as a billing system and a payroll system. Adopting an ERP that is a viable 18
option for those replacements would lead to a further consolidation of 19
applications and the potential for a more streamlined implementation of 20
future systems – especially those, like our current billing system, that are also 21
beginning to age. 22
23
That said, because an ERP is the only option that fully addresses all three of 24
the Company’s Work and Asset Management systems and covers most of 25
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Company’s key business functions, costs may be higher in the implementation 1
phase. Since an ERP acts as a single system to which multiple remaining 2
legacy systems must connect, implementing an ERP is a larger single effort 3
than implementing multiple individual systems over time. 4
5
Given these pros and cons, we investigated both an ERP and upgrading 6
existing systems in our RFI and RFP processes. 7
8
Q. PLEASE DESCRIBE THE PROCESS AND RESULTS OF PHASE I (RFI) IN MORE 9
DETAIL. 10
A. We issued an RFI to learn more about the solutions that existed to address 11
our existing JDEdwards, Maximo, and Passport system. The RFI included a 12
series of questions that were intended to confirm the applications’ 13
functionality by demonstrating how their software would fit our business 14
requirements. IBM (Maximo), SAP, Oracle (JDEdwards) and Ventyx 15
(Passport) responded to our RFI. The team reviewed the responses to the 16
questions, and scheduled three weeks of product demonstrations with the 17
vendors to learn about the applications in more detail. The system selection 18
team evaluated the pros and cons of each software application, and 19
recommended moving forward by issuing an RFP to all four vendors. The 20
results of the RFI evaluation are attached as Exhibit___(DCH), Schedule 11. 21
22
Q. PLEASE DESCRIBE THE PROCESS OF PHASE II (RFP) IN MORE DETAIL. 23
A. We issued an RFP in July 2013, seeking project proposals from the vendors 24
who responded to the RFI. Based on the results of our prior strategic 25
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assessment and RFI results, we requested proposals for the following scenarios: 1
• Option 1: SAP only – covering the General Ledger and all Work and 2
Asset needs. 3
• Option 2: Oracle only – covering the General Ledger and all Work 4
and Asset needs. 5
• Option 3: IBM/Maximo (our current work and asset management 6
system for Energy Supply) paired with SAP. 7
• Option 4: IBM/Maximo paired with Oracle. 8
• Option 5: Ventyx/Passport (our current work and asset management 9
system for all business areas except Energy Supply) paired with SAP. 10
• Option 6: Ventyx (Passport) paired with Oracle. 11
12
We asked the vendors to propose overall solutions and to demonstrate how 13
their application would handle certain business scenarios, which were 14
provided by Finance, Human Resources, Customer Care, Transmission, 15
Distribution, Nuclear, Energy Supply, Supply Chain, and Business Systems. 16
17
Q. PLEASE DESCRIBE THE PROCESS AND RESULTS OF PHASE III (RFP REVIEW) IN 18
MORE DETAIL. 19
A. We consolidated and weighted the results of the vendor self-scoring (10 20
percent), the scoring responses to the RFP questions (25 percent) and 21
demonstrations (65 percent). The results showed Option 1 (SAP) with the 22
highest score, followed by Option 3 (SAP/Maximo), and Option 4 23
(Oracle/Maximo). 24
25
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An evaluation of the responses to our RFP, provided as Exhibit___(DCH), 1
Schedule 12, shows the consolidated scoring results of the three options 2
mentioned above. Each option was scored on a scale of one to three, with 3
three being the most favorable score. 4
5
Q. WERE YOU ABLE TO NARROW DOWN THE OPTIONS? 6
A. Yes. Ultimately, Option 2 (Oracle) was eliminated from further consideration 7
because there are no nuclear facilities in the United States using the Oracle 8
product, and it offers limited transmission and distribution functionality. 9
Options 5 (SAP/Passport) and 6 (Oracle/Passport) were eliminated from 10
consideration because Ventyx was just starting a long term overhaul of its 11
application and its long term strategy was in flux, making these options highly 12
risky. 13
14
Q. CAN YOU ELABORATE ON THE BARRIERS TO SIMPLY UPGRADING THE 15
PASSPORT AND MAXIMO APPLICATIONS? 16
A. Yes. With respect to Passport, we determined that no single out-of-life 17
component could be upgraded without a full replacement/upgrade of the suite 18
of hardware, software, and operating systems that make up “the system.” 19
Concurrently, Ventyx, is in the process of re-platforming its code base to Java 20
and Microsoft.NET languages, which tactically means that an upgrade to the 21
current offered version of the software required installing a completely new 22
system. In addition, the risks of moving to the untested platform contributed 23
to our assessment that simply upgrading Passport was not a realistic or 24
effective solution. 25
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With an upgrade of Maximo, the Company would still have to replace the 1
underlying hardware and operating systems that are creating a high level of 2
risk today. In addition, there is no integrated financial system and our historic 3
Maximo use was limited to Energy Supply. This option was less than optimal 4
because integrations between systems and business areas would still be 5
required, preventing real time access to integrated financial and operational 6
data. 7
8
Q. HOW DID COST COMPARISONS AND CONSIDERATIONS FACTOR INTO THE 9
COMPANY’S RFP ASSESSMENT? 10
A. We estimated cost for each of the options and factored that into our overall 11
analysis. In addition to cost, we looked at qualitative considerations, including 12
the application fit/alignment in terms of business and technical complexity, 13
our future state operating model, and technology strategic direction. In 14
addition, we evaluated the risks of implementation, sustainment, business 15
operations, and technology operations. The results of the cost comparison, 16
application fit, and risk assessment are attached as Exhibit___(DCH-1), 17
Schedule 13. 18
19
Q. PLEASE DESCRIBE THE PROCESS AND RESULTS FOR PHASE IV 20
(RECOMMENDATION) IN MORE DETAIL. 21
A. As illustrated in Schedule 13, although SAP was the most expensive in the 22
short term, it fully addressed long term technical and system operational risk, 23
reduced the potential need for future investment to consolidate future 24
application upgrades, introduces system controls to support process changes, 25
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and enables mobility. Options 3 and 4 were less expensive in the short term, 1
but had risks of potentially complex integrations between Maximo and Oracle 2
to tie financial data to operational data, and would require 5,300 users to 3
migrate from Passport to Maximo. Having also ruled out Options 2, 5, and 6, 4
Option 1 (SAP only) was selected as the overall best solution for Xcel Energy. 5
6
Q. WHY DID THE COMPANY FEEL THAT THE MOST EXPENSIVE SOLUTION WAS 7
STILL THE BEST SOLUTION? 8
A. SAP was the only solution that could meet the business requirements for the 9
replacement of the General Ledger and WAM. Any other solution would have 10
to be a combination of two different vendors, requiring us to build and 11
maintain integrations between the two software packages for the reasons 12
discussed previously in my testimony. In addition, SAP has a broad spectrum 13
of modules that could support our other core business activities, such as 14
payroll and customer billing, which allows for further integration of systems as 15
we move towards replacing those in the future. 16
17
e. Project Implementation 18
Q. PLEASE DESCRIBE THE COMPANY’S APPROACH TO BEGIN IMPLEMENTING THE 19
PROJECT AFTER SELECTING THE SAP SOLUTION. 20
A. Like other large and complex IT undertakings, the Work and Asset 21
Management process will go through several phases of implementation. 22
These include the phases of (i) initial design and requirements (scoping), 23
(ii) blueprint, (iii) design, (iv) build, (v) test and (vi) deploy (operate). 24
25
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Q. PLEASE DESCRIBE WHAT HAPPENS IN EACH PHASE OF THE PROJECT LIFECYCLE. 1
A. The objective of the scoping phase is to define high level requirements and 2
the basic project structure, and to estimate the overall cost and schedule. 3
4
The blueprint phase defines business requirements and future business 5
processes, their impact on the organization and the required training for 6
project success. 7
8
The design phase completes the functional designs from the business 9
requirements developed in the blueprint phase. 10
11
The objective of the build phase is to build out the packaged software 12
configuration and to test and prepare deployment with cut-over tasks, and a 13
technical and data migration plan. 14
15
Also included in the design and build phases is the retrofit or remapping of 16
the “legacy applications,” which are those Xcel Energy software applications 17
that will continue exist apart from the General Ledger and Work and Asset 18
Management implementations, and will either receive from or send data to the 19
General Ledger and/or Work and Asset Management system. 20
21
The testing phase validates that the solution meets business requirements, and 22
the deployment phase rolls out the application to users and transitions 23
maintenance of the system to the ongoing support staff. 24
25
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Q. WHAT IS THE CURRENT PHASE OF THE WORK AND ASSET MANAGEMENT 1
PROJECT? 2
A. We have completed the blueprint phase and now have a reasonable level of 3
project definition. We have signed vendor contracts for the next two phases 4
of the project -- design and build -- and we have purchased most of the 5
needed hardware and software. We also have completed sufficient blueprint 6
and design efforts to know there are 50+ legacy applications that have to be 7
remediated for the Work and Asset Management system to function properly 8
and integrate with other systems. This remediation is factored into our cost 9
estimate. We have also determined our deployment strategy, which identifies 10
the sequence in which employees will begin using SAP and the length of the 11
project. 12
13
Q. PLEASE DESCRIBE HOW THE COMPANY DETERMINED THE COST OF THE WORK 14
AND ASSET MANAGEMENT PROJECT. 15
A. Xcel Energy hired an experienced SAP system integrator, Accenture, to help 16
run the project and estimate project costs. Initial scoping cost estimates for 17
the project were developed using Accenture’s modeling tool, which allows the 18
user to input certain criteria to estimate the cost for each portion of the 19
program. Criteria include the SAP application modules in scope, technology 20
architecture factors, multi-location aspects, complexity factors by work stream 21
and the number of Reports, Interfaces, Conversions, Extensions, Forms and 22
Workflows (RICEFW). We subsequently added a contingency to the project 23
and adjusted it as we developed more insight into the costs of remediating 24
legacy systems during the phases of project development. 25
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Q. WHAT STEPS HAS THE COMPANY TAKEN TO ENSURE THE WORK AND ASSET 1
MANAGEMENT COSTS ARE REASONABLE? 2
A. We have taken several steps. First, our contracts reflect substantial 3
negotiations with our vendors to obtain discounts where possible and ensure 4
appropriate pricing. Second, we worked to ensure proper project scope to 5
tailor the project to our needs, as described above. Third, we utilized 6
benchmarking and industry data on cost. In particular, we obtained cost 7
estimates from six peer utilities with comparable revenues, number of 8
employees, capital expenditures and jurisdictions who had recently 9
implemented SAP. The cost benchmarking data we obtained is set forth in 10
Exhibit___(DCH-1), Schedule 14. As Schedule 14 illustrates, our total project 11
budget is in line with past costs of combined General Ledger and Work and 12
Asset Management implementations, even without incorporating inflation. 13
14
Further, our total project budget is well below the one outlier, which not only 15
implemented the additional Human Resources and Payroll modules but also 16
encountered unforeseen circumstances.4 Based on the information from 17
comparable utilities implementing similar solutions, we believe that our total 18
project estimate of $350 million for Xcel Energy’s Work and Asset 19
Management is reasonable. 20
21
Q. WHAT IS THE CONTINGENCY IN THE WORK AND ASSET MANAGEMENT 22
BUDGET? 23
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A. We have included a project contingency of $70 million which is 20 percent of 1
our total project budget, based on the level of information we have coming 2
out of the blueprint phase of the project, including the complexity, size, 3
integrated nature, and legacy remediation work that was identified for 4
remaining systems. We utilized Association for the Advancement of Cost 5
Engineering (AACE) guidance to establish an appropriate contingency given 6
this stage of the project. Given the stage of the project, this level of 7
contingency is consistent with best practices according to AACE. In fact, we 8
could have included a higher contingency under AACE standards, but believes 9
a 20 percent contingency is consistent with completion of the blueprint phase 10
of the project. 11
12
Q. WHAT HAS THE COMPANY DONE TO MANAGE THE COSTS OF THIS PROJECT 13
DURING THE DEVELOPMENT PROCESS? 14
A. The Company is using similar governance practices as discussed earlier in my 15
testimony, which have been adjusted to address a project with this level of 16
complexity and scope. The project has its own Project Management Office 17
(PMO), which is responsible for setting governance levels and requirements. 18
The next level of governance is handled through the Integration Council, with 19
membership from senior leaders across the functional areas of the business, 20
including operations, finance, human resources and supply chain. The 21
Integration Council reviews and approves scope and cost changes to the 22
project to be moved forward to the third and final level of governance, the 23
Project Sponsors. They also review and recommend approval to the project 24
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sponsors of each Individual Statement of Work (ISOW). New ISOWs are 1
signed at the beginning of each new phase of the project. 2
3
Q. WHAT LEVEL OF ASSURANCE CAN YOU PROVIDE THAT THE WORK AND ASSET 4
MANAGEMENT COSTS WILL BE WITHIN A REASONABLE RANGE OF CURRENT 5
ESTIMATES? 6
A. We are very confident in our cost estimates for this project. The Company 7
has done a great deal of due diligence on this project, and proceeded through 8
several phases noted above. In addition, the Company has signed 17 ISOW’s 9
with Accenture and IBM, as well as numerous SOWs with third party 10
contractors for the project to date. The Work and Asset Management project 11
has also executed contracts through the build phase, which ends on March 31, 12
2016. These contracts contain terms to incent vendor support to keep the 13
project aligned with Company goals. 14
15
The remaining contracts for the two final phases of the project, the testing 16
and deployment phases will be signed in April 2016, after the build phase is 17
complete. This process will further confirm the project schedule. While we 18
cannot predict all issues we might encounter during the design, build, and test 19
phases, we are confident in the overall cost and implementation schedule 20
given the status of the project, the work completed to date, and the remaining 21
contingency. 22
23
Q. DOES THE COMPANY ANTICIPATE COST SAVINGS OR AVOIDANCE AS A RESULT 24
OF THIS PRODUCTIVITY THROUGH TECHNOLOGY INITIATIVE? 25
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A. Yes. We expect both qualitative and quantitative benefits, but they are 1
difficult to quantify as a whole. The Company anticipates incremental 2
efficiencies once the General Ledger and Work and Asset Management 3
projects are complete and new processes are well understood and 4
institutionalized. It is difficult to quantify specific cost reductions from the 5
implementation of new technology, as there is a learning curve with new 6
technology and some benefits are in the form of increased productivity or cost 7
growth containment rather than specific cost savings. Further, it is difficult to 8
quantify some types of benefits – such as the dollar value of more consistent, 9
detailed financial outputs or the specific cost savings associated with tailored 10
maintenance efforts due to better, more accessible information about what is 11
happening with an asset at a given time. Each scenario depends on 12
assumptions about how much time things would have taken under individual 13
factual circumstances that can vary greatly. 14
15
That said, we have identified a number of operational efficiencies that will 16
help us contain long term O&M growth. Some examples of these operational 17
efficiencies include: 18
• Condition based maintenance, which uses equipment performance 19
history, and analysis of previous maintenance performed to predict 20
when future maintenance will be required. For example, a pump can 21
be monitored for performance and indication of wear such as 22
vibration, allowing maintenance to be scheduled when threshold 23
conditions are met. This applies as well to motors, valves, turbines, 24
generators, and many other types of equipment. 25
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• Optimized investment in assets from having all equipment in one 1
integrated solution allows the sharing of knowledge and experience 2
systematically throughout the Company. For example, many types of 3
circuit breakers used in our electric distribution function are used in 4
fossil and nuclear generation as well. Problems or issues with various 5
types of circuit breakers can be accessed across the company, and this 6
information allows for better decisions in asset purchases and 7
maintenance requirements. We have found benefits in utilizing this 8
knowledge starting with Energy Supply’s implementation of its 9
operations playbook, and our Work and Asset Management program 10
can help to further these efforts. 11
12
Q. HAS THE COMPANY QUANTIFIED ALL POSSIBLE EFFICIENCIES OR SAVINGS 13
FROM THE WORK AND ASSET MANAGEMENT SYSTEM? 14
A. No – nor would it be possible to do so. We anticipate some benefits will be 15
quantifiable; some will result in better service but not necessarily reduced 16
costs; and some will result from avoiding the risks of continuing to use aging, 17
inefficient, potentially vulnerable systems. 18
19
That said, we have identified a series of performance metrics that we will be 20
monitoring once we go live to identify where there are ways to improve 21
performance and the quality of service whether it is across the system, in a 22
specific geographical location, or in a specific business area. 23
24
Some examples of these performance metrics are listed below: 25
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• Average time taken by a system designer to contact the customer for 1
the first time after a service request has been assigned to him/her; 2
• Average elapsed time from work order approval to work order 3
acceptance by the Construction group; 4
• The number of work order designs that are approved based on the 5
first review, as compared to total number of approved designs; and 6
• The percentage of time a work order construction packet is approved 7
the first time as compared to total approved work order packets. 8
9
Overall, the greatest benefits of this project come in the form of reduced risk 10
and increased productivity. 11
12
Q. WHAT IS YOUR CONCLUSION REGARDING THE REASONABLENESS OF THE 13
COMPANY’S MANAGEMENT OF THE WORK AND ASSET MANAGEMENT PROJECT 14
AND THE COSTS INCLUDED IN THIS RATE CASE? 15
A. This is an important project that has been thoroughly and appropriately 16
assessed, scoped, priced and planned. While we cannot quantify every benefit 17
that may result from the project, the functions provided by these core systems 18
are critical to the work the Company performs every day on behalf of 19
customers. In addition, the overall timing and cost of this project are 20
consistent with industry standards and are reasonable for our Minnesota 21
utility. 22
23
24
25
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D. 2017 Capital Additions 1
Q. WHAT CAPITAL ADDITIONS IS BUSINESS SYSTEMS PROPOSING TO MAKE IN 2
2017? 3
A. The total NSPM Business Systems 2017 capital additions are budgeted to be 4
approximately $148 million. This capital additions budget includes a number 5
of projects that are categorized below in Table 13 according to the capital 6
budget groupings described earlier in my testimony. 7
8
Table 13: 2017 IT Capital Additions 9 10
11
12
13
14
15
16
17
1. Aging Technology 18
Q. ARE ANY CAPITAL PROJECTS TO REPLACE AGING TECHNOLOGY INCLUDED IN 19
THE 2017 PLAN YEAR? 20
A. Yes. We anticipate that $30.6 million will be spent to replace aging technology 21
assets in 2017 as depicted below in Table 14. 22
23
24
25
26
2017 Capital Additions Total 2017 NSPM Dollars
Replace Aging Technology $30.6 million Cyber Security $2.6 million Enhance Capabilities $4.3 million Emergent Demand $6.6 million Productivity Through Technology $103.8 million NSPM Total $148 million
*Total amounts include AFUDC
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Table 14: 2017 Capital Aging Technology IT Investments 1
2
3
4
5
6
7
8
There are four significant individual projects beginning in 2017, which are 9
Core HR Application (Payroll Benefits), Fleet Focus Upgrade, Meter Reading 10
Acquisition System (MRAS) Consolidation to Itron Enterprise Edition (IEE) 11
and Reading Management System (RMS), and Next Generation Desktop. I 12
discuss these four projects in more detail below. 13
14
Additionally, there are two significant individual projects for 2017 that I 15
described earlier that are continuing from 2016. These two projects are the: 16
(1) Network Strategy - Distribution System Intelligence Connectivity and (2) 17
Network Strategy - T&D Substation Connectivity. As previously noted, these 18
projects are being placed in service as assets are deployed and are being used 19
to perform their intended function. In addition, refreshes are ongoing as 20
illustrated above in Table 14, which are discussed in greater detail below. 21
22
Q. IS THE COMPANY UNDERTAKING COMPETITIVE BIDDING FOR ANY OF THE 23
PROJECTS BEGINNING IN 2017? 24
A. Yes. Each of these projects is in the initial stages of planning, with cost and 25
2017 Aging Technology Capital Additions 2017 Total Core HR Application (Payroll Benefits) $2.1 million Fleet Focus Upgrade $2.0 million MRAS Consolidation to IEE and RMS $1.6 million Network Strategy – Dist. System Intelligence Connectivity $2.5 million Network Strategy - T&D Substation Connectivity $4.7 million Next Generation Desktop $3.5 million Aging Technology Other (8 projects) $3.4 million Annual Refreshes $10.8 million NSPM Total $30.6 million
*Total amounts include AFUDC
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schedule estimates based on internal experience with similar implementations. 1
We will follow a competitive bid process to ensure that costs remain in-line 2
with approved budget that Xcel Energy receives quality service at a fair price, 3
and that business value is delivered per the agreed requirements. 4
5
a. Core HR Application (Payroll Benefits) 6
Q. PLEASE DESCRIBE THIS PROJECT. 7
A. The Core HR Application project is required to maintain functionality of the 8
core human resource system used to provide payroll, benefits administration 9
and job record tracking to employees and retirees of Xcel Energy. The 10
current system (PeopleSoft) will lose vendor support as of October 2017. If 11
this project is not completed, the Company would not be able to provide 12
accurate payroll to our workers or comply with regulatory requirements. 13
14
b. Fleet Focus Upgrade 15
Q. PLEASE DESCRIBE THIS PROJECT. 16
A. The Fleet Focus Upgrade project will upgrade our Fleet Management tool to 17
incorporate efficiencies in process, productivity, and capabilities of its users. 18
This tool will standardize processes, enable integration with other Xcel Energy 19
and vendor’s systems, increase equipment availability, optimize fleet size, 20
improve reporting and trend analysis, and potentially reduce vehicle ownership 21
costs. Fleet Focus has been on its current version since 2002 and is 22
unsupported. An upgrade is necessary to ensure our ability to maintain system 23
reliability and quickly respond to outages. 24
25
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c. MRAS Consolidation to IEE and RMS 1
Q. PLEASE DESCRIBE THIS PROJECT. 2
A. Our Meter Read Acquisition System (MRAS) collects meter readings from 3
multiple sources, stores and manages meter readings in a repository and 4
provides meter reading to customer and billing systems. The primary 5
objective of the MRAS Consolidation project is to eliminate duplicate meter 6
reading data storage and consolidate functions and platforms to provide a 7
long-term, supported solution for the collection, and storage of meter read 8
data. The current MRAS solution is highly customized and an upgrade is 9
necessary given that the vendor support ended in 2015and an MRAS failure or 10
outage would impact our ability to collect meter reads, bill customers, and 11
access historical data. 12
13
d. Next Generation Desktop 14
Q. PLEASE DESCRIBE THIS PROJECT. 15
A. The Next Generation Desktop project will evaluate and implement a new 16
Microsoft Windows operating environment to support expanding capabilities, 17
such as emerging mobile and tablet technologies, across our business. Failure 18
to adopt a next generation operating system would result in abandoning or 19
limiting our ability to adopt mobile technology offerings like tablets, since 20
these products are configured to run on newer operating systems than our 21
current Windows 7 environment. 22
23
e. Annual Refresh Projects 24
Q. DO YOU ALSO ANTICIPATE UNDERTAKING REFRESHES IN 2017? 25
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A. Yes. As discussed above, we must refresh certain hardware devices on a 1
regular basis to address end-of-life issues, maintain reasonably current 2
technology, and replace systems that fail or break unexpectedly. Our 2017 3
budget for Refreshes is set forth in Table 15 below: 4
5
Table 15 6
7
8
9
10
11
12
13
14
Q. WHY IS THE COST OF REFRESHES INCREASING BETWEEN 2016 AND 2017? 15
A. While most of the refresh project budgets are steady or declining from 2016 to 16
2017, the Annual PC Refresh project increased. This is because Business 17
Systems elected to reduce PC refreshes in 2016 given other corporate 18
priorities, resulting in a $2 million reduction in the project budget. While the 19
2017 Annual PC Refresh budget increases somewhat, it is still at the low end 20
of the amounts spent on this project in recent years. We anticipate increased 21
investment in PC Refreshes in 2018. The PC Refresh budgets also vary year-22
to-year due to an uneven distribution of PC inventory across the four-year 23
lifecycle of the devices. 24
25
2017 Annual Refresh Capital Additions 2017 Total
Annual Network Refresh 3.4M Annual Server Refresh 1.3M Annual EMS Infrastructure Refresh Project 0.5M Annual PC Refresh 2.7M Annual Data Storage Refresh 1.9M Annual MDT Refresh 0.9M Annual Handheld Mobile Collector Refresh 0.1M NSPM Total $10.8M
*Total amounts include AFUDC
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2. Cyber Security 1
Q. ARE ANY CAPITAL PROJECTS TO ADDRESS EVOLVING CYBER SECURITY THREATS 2
AND REQUIREMENTS INCLUDED IN THE 2017 PLAN YEAR? 3
A. Yes. Our in-service cyber security investments for 2017 are expected to total 4
$2.6 million. However, there is only one significant individual project for 5
2017, which is the Security Technology Refresh project that is continuing 6
from 2016 and which I described earlier in my testimony. As noted previously, 7
this project is being placed in service as the individual pieces of technology are 8
refreshed. 9
10
3. Enhancing Capabilities 11
Q. ARE ANY CAPITAL PROJECTS TO ENHANCE COMPANY CAPABILITIES INCLUDED 12
IN THE 2017 PLAN YEAR? 13
A. Yes. Our investments to enhance capabilities and be placed in service in 2017 14
are expected to total $4.4 million as depicted below in Table 16. However, we 15
anticipate one project, Network Operations Center (NOC) Integration and 16
Tooling project will make up the majority of our Enhancing Capabilities asset 17
additions in 2017. 18
19 Table 16 20
21
22
23
24
25
26
2017 Enhance Capabilities Capital Additions 2017 Total
Network Operations Center (NOC) Integration & Tooling $1.4 million Enhance Capabilities Other (7 projects) $3.0 million NSPM Total $4.4 million
*Total amounts include AFUDC
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a. Network Operations Center (NOC) Integration & Tooling 1
Q. PLEASE DESCRIBE THE NOC INTEGRATION & TOOLING PROJECT. 2
A. This project includes the detail design, planning, and installation of software 3
and equipment that will be used to monitor and operate our newly constructed 4
Field Area Network (FAN), described earlier in my Direct Testimony. This 5
project is necessary to integrate the planned FAN into existing operations. 6
This project will provide our NOC with the data to streamline decision 7
making and minimize service disruptions to our business operation groups. 8
Without this system, our NOC will be unable to access the performance and 9
service of our privatized FAN and would rely upon physical inspection or 10
reactive measures when evaluating performance or making decisions. 11
12
As with the Aging Technology projects planned for 2017, the NOC 13
Integration and Tooling Project are in the initial stages of planning, with cost 14
and schedule estimates based on internal experience with similar 15
implementations. We will follow a competitive bid process to ensure that 16
costs remain in-line with approved budget that Xcel Energy receives quality 17
service at a fair price, and that business value is delivered per the agreed 18
requirements. 19
20
4. Emergent Demand Account 21
Q. DOES BUSINESS SYSTEMS INCLUDE AN EMERGENT DEMAND ACCOUNT IN ITS 22
2017 BUDGET, AS IT DID FOR 2016? 23
A. Yes, although the dollar amounts are not the same given the different IT 24
needs of our Company in different years. At the time we developed our 2017 25
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budget, the Emergent Demand Account included $6.6 million allocated to the 1
Company based on business priorities for the year, balanced by the overall 2
business area capital spending guidelines. We have since applied 3
approximately 44 percent of that budget to three individually-identified capital 4
projects. Exhibit___(DCH), Schedule 15 to my testimony identifies the 5
projects that have been allocated dollars from the 2017 Emergent Demand 6
Account. 7
8
5. Productivity Through Technology (PTT) 9
Q. ARE ANY CAPITAL PROJECTS FOR THE PRODUCTIVITY THROUGH 10
TECHNOLOGY INITIATIVE INCLUDED IN THE 2017PLAN YEAR? 11
A. Yes. As discussed earlier in my testimony, we anticipate placing the Work and 12
Asset Management systems in service as they are completed for each Business 13
Area. We anticipate the work will be completed in 2017, with systems being 14
placed in service for the remaining Business Areas during this year. As such, 15
we do not anticipate any capital additions for PTT in 2018. 16
17
E. 2018 Capital Additions 18
Q. WHAT CAPITAL ADDITIONS IS BUSINESS SYSTEMS PROPOSING TO MAKE IN 19
2018? 20
A. The total NSPM Business Systems 2018 capital additions are budgeted to be 21
approximately $58 million. This capital additions budget includes a number of 22
projects that are categorized below in Table 17 according to the capital budget 23
groupings described earlier in my Testimony. I note that we will remove 24
Productivity Through Technology from our capital budget groupings in 2018 25
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because that initiative will be completed in 2017. 1
2 Table 17 3
4
5
6
7
8
9
10
1. Aging Technology 11
Q. ARE ANY CAPITAL PROJECTS TO REPLACE AGING TECHNOLOGY INCLUDED IN 12
THE 2018 PLAN YEAR? 13
A. Yes. We anticipate that investments in aging technology for 2018 will total 14
$37.8 million, as depicted below in Table 18. 15
16
Table 18: 2018 Capital Aging Technology IT Investments 17 18 19 20 21 22
23
24
25
26
2018 Aging Technology Capital Additions 2018 Total Customer Care Interactive Voice Response (IVR) Upgrades $1.1 million Emptoris Upgrade Phase 2 $1.7 million Integrated Energy Management Upgrade $1.1 million Minnesota Metro Radio Refresh $5.6 million Network Strategy - Distribution System Intelligence Connectivity $4.1 million Network Strategy - T&D Substation Connectivity $3.8 million Network Management System (NMS) 1.x Upgrade $1.2 million Aging Technology Other (10 projects) $4.5 million Annual Refreshes $14.7 million NSPM Total $37.8 million
*Total amounts include AFUDC
2018 Capital Additions Total
Replace Aging Technology $37.8 million Cyber Security $2.7 million Enhance Capabilities $13.5 million Emergent Demand $3.9 million NSPM Total $57.9 million *Total amounts include AFUDC
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Within the Aging Technology capital budget grouping, there are five 1
significant individual projects beginning in 2018: Customer Care IVR 2
Upgrades, Emptoris Upgrade, Integrated Energy Management Upgrade, 3
Minnesota Metro Radio Refresh, and NMS 1.x Upgrade. Additionally, there 4
are two significant individual projects for 2018 that are continuing from 2017 5
and which I described earlier in my testimony. These two projects are the 6
Network Strategy - T&D Substation Connectivity and Network Strategy - 7
Distribution System Intelligence Connectivity projects. As noted previously, 8
these projects are being placed in service as assets are deployed and are being 9
utilized to perform their intended function. In addition, refreshes are ongoing 10
as illustrated above in Table 18 and are discussed in greater detail below. 11
12
a. Customer Care Interactive Voice Response (IVR) Upgrades 13
Q. PLEASE DESCRIBE THE CUSTOMER CARE IVR UPGRADES PROJECT. 14
A. This project will upgrade the Company’s Customer Care IVR and Contact 15
Center infrastructure to maintain appropriate and efficient response to the 16
approximately 8 million customer calls we receive each year. These upgrades 17
will help ensure continued reliability of the private branch exchange (PBX) 18
phone system, compliance with service level reporting required by our state 19
regulators, and continued integration of the multiple channels customers use 20
to transact business with Xcel Energy. 21
22
b. Emptoris Upgrade 23
Q. PLEASE DESCRIBE THIS PROJECT. 24
A. Xcel Energy's Supply Chain organization uses the Emptoris software 25
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application to create contracts (approximately $3 billion annually) with 1
suppliers and send requests for proposal to suppliers. The Emptoris Upgrade 2
project will ensure the overall technical infrastructure is operating under 3
current versions of the software and hardware. It is necessary to upgrade this 4
technical infrastructure (software & hardware) to avoid loss of standard 5
vendor support for maintenance and defect resolution; loss of standard 6
software and hardware “patching,” which increases security vulnerabilities and 7
infrastructure instability; and incremental costs to support the platform in the 8
form of extended and non-standard warranty pricing from vendors. The 9
project will also look for opportunities to implement increased data analytics 10
to further improve our contracting practices on behalf of customers. 11
12
c. Integrated Energy Management Upgrade 13
Q. PLEASE DESCRIBE THIS PROJECT. 14
A. Integrated Energy Management (IEM) is an application that accounts for the 15
energy that is sold and purchased hourly between Xcel Energy and our 16
neighboring utilities through the bulk electrical system (BES). It interfaces 17
with the Energy Management System (EMS) to obtain the actual energy that 18
flowed through the lines to compare with the pre-agreed quantities and prices 19
of that energy. 20
21
The IEM Upgrade project is necessary to ensure the overall technical 22
infrastructure is operating under current versions of the software and 23
hardware. As with the Emptoris upgrade, it is necessary to upgrade this 24
technical infrastructure (software & hardware) to avoid loss of standard 25
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vendor support for maintenance and defect resolution; loss of standard 1
software and hardware “patching,” which increases security vulnerabilities and 2
infrastructure instability; and incremental costs to support the platform in the 3
form of extended and non-standard warranty pricing from vendors. This 4
upgrade would also incorporate software function improvements, as well as 5
updates to reflect potential new FERC/NERC energy accounting 6
requirements. 7
8
d. Minnesota Metro Radio Refresh 9
Q. PLEASE DESCRIBE THIS PROJECT. 10
A. The Minnesota Metro Radio Refresh project involves implementation of a 11
closed Land Mobile Radio (LMR) system for NSP-Minnesota across the Twin 12
Cities metropolitan area. The primary objective of this program is to deploy 13
secure communications equipment across the metropolitan area crews, 14
allowing them to complete their work for customers with reliable 15
communications between team members as needed. 16
17
By way of further background, an LMR is a wireless communications system 18
intended for users (subscribers) in vehicles (mobile) or on foot (portables). 19
Private LMRs are used widely across utility organizations to meet a wide range 20
of communication requirements, including coordination of people and 21
materials, important safety and security needs, and quick response in times of 22
emergency. These systems make these day-to-day activities possible. 23
24
The reliability of the current system is at risk due to aging hardware that has 25
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been in service for 15 years. An industry standard life cycle for LMR systems 1
is generally accepted as 10 years. Major components within the system are no 2
longer supported by original equipment manufacturer (OEM) or third party 3
parts suppliers, resulting in a ‘high’ risk profile. The legacy system is also 4
deficient in satisfying functional needs due to the increased area of our 5
operations, regulation-driven safety improvement requirements, security, and 6
emergency response procedures. 7
8
e. Network Management System (NMS) 1.x Upgrade 9
Q. PLEASE DESCRIBE THIS PROJECT. 10
A. The Network Management System (NMS) application is the electric outage 11
event escalation engine and distribution's switch management tool. This 12
application identifies and consolidates outage events across the Company to 13
support faster response and restoration of customer power, and develops 14
integrated real-time detailed distribution switching plans. NMS is necessary to 15
satisfy public utility and public service commission outage reporting 16
requirements in the states served by Xcel Energy. The current software and 17
hardware for this system is dated, such that we are nearing the period when 18
original vendor support and security upgrades will no longer be available and 19
maintenance costs are likely to increase to support the system. 20
21
f. Annual Refresh Projects 22
Q. DO YOU ALSO ANTICIPATE UNDERTAKING REFRESHES IN 2018? 23
A. Yes. As discussed above, we must refresh certain hardware devices on a 24
regular basis to address end-of-life issues, maintain reasonably current 25
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technology, and replace systems that fail or break unexpectedly. Our 2018 1
budget for Refreshes is set forth in Table 19 below: 2
3
Table 19 4 5
6
7
8
9
10
11
12
13
Q. WHY IS THE COST OF REFRESHES INCREASING BETWEEN 2017 AND 2018? 14
A. As described previously, most of the refresh project budgets are relatively 15
steady year over year. We have particularly worked to keep these investments 16
largely flat during 2016 and 2017, as depicted below in Figure 5, while 17
resources were being directed to the Productivity Through Technology 18
initiative. However, the need to replace certain systems, such as data storage 19
and network equipment, coupled with the overall increase in the use of 20
technology to support day-to-day Company operations, drives the projected 21
incremental increase in investments illustrated below in Figure 5. 22
23
24
25
26
2018 Annual Refresh Capital Additions 2018 Total
Annual Network Refresh $4.6 million Annual Server Refresh $1.4 million Annual EMS Infrastructure Refresh Project $0.4 million Annual PC Refresh $4.7 million Annual Data Storage Refresh $2.6 million Annual MDT Refresh $0.9 million Annual Handheld Mobile Collector Refresh $0.1 million NSPM Total $14.7 million
*Total amounts include AFUDC
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Figure 5 1 2 3 4
5 6
7
8
9
10
11
2. Cyber Security 12
Q. ARE ANY CAPITAL PROJECTS TO ADDRESS EVOLVING CYBER SECURITY THREATS 13
AND REQUIREMENTS INCLUDED IN THE 2018 PLAN YEAR? 14
A. Yes. Our cyber security capital additions for 2018 are expected to total $2.7 15
million. However, there is only one significant individual project for 2018, 16
which is the Security Technology Refresh project that is continuing from 2017 17
and which I described earlier in my testimony. As noted previously, this 18
project is being placed in service as the individual pieces of technology are 19
refreshed. 20
21
3. Enhancing Capabilities 22
Q. ARE ANY CAPITAL PROJECTS TO ENHANCE COMPANY CAPABILITIES INCLUDED 23
IN THE 2018 PLAN YEAR? 24
A. Yes. Our investments to enhance capabilities for 2018 are expected to total 25
$13.5 million, as depicted below in Table 20. There are two significant 26
individual projects that will be placed in service for the first time in 2018, 27
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which are Advanced Distribution Management System (ADMS) and Content 1
& Records Management Upgrade. 2
3
Table 20 4 5
6
7
8
9
10
a. Advanced Distribution Management System (ADMS) 11
Q. PLEASE DESCRIBE THE ADVANCED DISTRIBUTION MANAGEMENT SYSTEM 12
(ADMS) PROJECT. 13
A. Advanced Distribution Management System (ADMS) is a collection of core 14
functions and applications designed to monitor and control the entire electric 15
distribution network efficiently and reliably. This project is necessary to 16
take full advantage of information technology (IT) and operational technology 17
(OT) to make system data available real time to the Trouble Dispatch, Field 18
Operations Construction and Engineering business functions. 19
20
The anticipated outcomes of this project include reduction of multiple 21
handoffs of data for entry into various applications, which will minimize data 22
errors and inconsistencies, and supporting increased deployment of smart 23
assets and automated switching devices across the distribution grid. The 24
project is in the early stages of planning and the scope continues to be refined. 25
2018 Enhance Capabilities Capital Additions 2018 Total Advanced Distribution Management System (ADMS) $4.4 million Content & Records Management Upgrade $2.9 million Enhance Capabilities Other (11 projects) $6.2 million NSPM Total $13.5 million
*Total amounts include AFUDC
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It is expected that the ADMS project will extend beyond 2018 as the scope is 1
fully determined. 2
3
We will be seeking recovery of the larger overall ADMS capital project as part 4
of our grid modernization rider (and as discussed in our Biennial Report filed 5
October 30, 2015) and will ensure we provide a detailed discussion of the cost 6
recovery mechanics in our cost recovery request next fall. 7
8
b. Content & Records Management Upgrade 9
Q. PLEASE DESCRIBE THE CONTENT & RECORDS MANAGEMENT UPGRADE 10
PROJECT. 11
A. Content and Records Management relates to storage and retention of key 12
operations documentation for the Company. The scope of the project 13
includes providing more effective storage and accessibility of regulatory, legal, 14
and operational information. The Content & Records Management Upgrade 15
project will also move the utility toward improved process standardization for 16
content and records management, while reducing the current technology 17
footprint from seven disparate technologies to one centralized repository. 18
This project is in the early stages of planning. 19
20
4. Emergent Demand Account 21
Q. DOES BUSINESS SYSTEMS INCLUDE AN EMERGENT DEMAND ACCOUNT IN ITS 22
2018 BUDGET, AS IT DID FOR 2016 AND 2017? 23
A. Yes, although the dollar amounts are not the same given the different IT 24
needs of our Company in different years. The 2018 Emergent Demand 25
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Account budget includes $3.9 million allocated to the Company based on 1
forecasted business priorities for the year, balanced by the overall business 2
area capital spending guidelines. We have not yet distributed funding from the 3
2018 Emergent Demand Account. 4
5
Q. WHAT DO YOU CONCLUDE WITH RESPECT TO THE OVERALL LEVEL OF 6
BUSINESS SYSTEMS CAPITAL COSTS THE COMPANY IS SEEKING TO RECOVER IN 7
THIS RATE CASE? 8
A. The overall level of Business Systems costs is reasonable, as shown by the 9
above discussion, and is necessary to support an appropriate level of service to 10
our customers. Finally, the costs included in our 2016 through 2018 capital 11
budgets are representative of the types of work we must do year over year. 12
13
IV. O&M BUDGET 14
15
A. O&M Overview 16
Q. WHAT IS INCLUDED IN YOUR O&M BUDGET? 17
A. The Business Systems O&M budget consists of costs related to the operation 18
and maintenance of existing IT assets such as software systems, computers, 19
printers, phones, radio systems, and servers. It also includes annual software 20
contract and license fees, as well as maintenance agreements, for existing 21
software and hardware. In addition, the O&M budget includes non-22
capitalized costs associated with developing, enhancing, and maintaining other 23
new or existing IT systems. 24
25
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Q. WHAT ARE THE OVERALL TRENDS FOR BUSINESS SYSTEM’S O&M EXPENSES? 1
A. From 2008 through 2011, Business Systems kept O&M costs relatively flat 2
largely due to its ability to maintain prior IT capital investments. Beginning in 3
2012, as we entered a new phase of capital investment, our costs began to 4
increase. This was reflected in the 2014 test year in our most recent rate case. 5
Looking ahead to 2016 through 2018, we anticipate continued cost increases 6
reflecting the addition of new capital investments, particularly to support the 7
new SAP (General Ledger and Work and Asset Management) system. 8
9
Q. HOW DO YOU RECONCILE THESE HIGHER BUDGETS WITH YOUR EARLIER 10
STATEMENTS ABOUT CUSTOMER BENEFITS RELATED TO THESE INVESTMENTS? 11
A. Our customers have benefited from lower O&M and capital costs through the 12
years where we deferred and avoided technology investments by harvesting 13
maximum value from our current systems. However, as previously discussed, 14
we could not defer investments in dated technology or old hardware 15
indefinitely and need to make investments to continue to serve our customers 16
and to protect them and our business from cyber security and system failure 17
risk. Without making these investments, we could not provide reliable, quality 18
service to our customers. 19
20
Q. WHAT IS THE COMPANY’S BUSINESS SYSTEM’S O&M BUDGET FOR THE 2016 21
TEST YEAR? 22
A. The total Business Systems O&M budget for the 2016 test year is $80.4 23
million. The basis for this budget is set forth in detail below, utilizing the 24
same categories of O&M utilized in our most recent rate case. 25
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Q. WHAT ARE THE BASIC CATEGORIES OF THE O&M BUDGET? 1
A. The $80.4 million Business Systems O&M budget can be broken down into 13 2
categories comprising approximately 99.3 percent of the Business Systems test 3
year O&M budget: (1) Network Services; (2) Software Licenses and 4
Maintenance; (3) Company Labor; (4) Distributed System Services; (5) 5
Application Development and Maintenance; (6) Contract and Consulting; (7) 6
Shared Assets; (8) Hardware Purchases and Maintenance; (9) Employee 7
Expenses; (10) Mainframe; (11) Equipment Maintenance; (12) Online 8
Information Services; (13) Donation, Dues, and Fees. The remaining costs in 9
the Business Systems O&M budget pertain to small individual costs, such as 10
administrative and office supplies. Table 21 below shows the 2016 Business 11
Systems O&M budget by category: 12
13
14
15
16
17
18
19
20
21
22
23
24
25
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Table 21 1 2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Q. WHAT ARE THE MAJOR COST DRIVERS OF THE 2016 BUSINESS SYSTEMS O&M 21
BUDGET? 22
A. Of the categories listed above, I would describe six as primary drivers of our 23
Business Systems budget: (1) Network Services; (2) Software License and 24
Maintenance; (3) Company Labor; (4) Distributed Systems Services; (5) 25
Application Development and Maintenance; and (6) Contract and Consulting. 26
Business Systems 2016 O&M Budget by Category
NSPM
Cost Category 2016
Budget ($Million)
Percent of Total Budget
Network Services 17.8 22%
Software License and Maintenance 20.5 26%
Application Development & Maintenance 10.0 13%
Company Labor 14.7 18%
Distributed Systems Services 11.2 14%
Contract and Consulting 8.3 10%
Mainframe 0.8 1%
Hardware Maintenance & Purchases 1.5 2%
Employee Expenses 1.0 1%
Online Information Services 0.6 1%
Equipment Maintenance 0.8 1%
Donations, Dues, and Fees 0.2 0%
Shared Assets -7.6 -9%
Other 0.6 1%
Total 80.4 100%
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I describe each of the budget categories later in my testimony, and explain 1
why network needs, licensing costs, labor costs, and the ongoing need to 2
update our distributed systems services and application development are 3
increasing. 4
5
Q. HOW DOES THE 2016 BUDGET COMPARE WITH 2014 ACTUAL COSTS? 6
A. The 2016 budget is 2.1 percent higher than the 2014 actual costs. The primary 7
drivers of the increase are the support cost for the new General Ledger 8
system, partially offset by an increase to the shared asset credit. The General 9
Ledger support costs include labor to run the system, hardware maintenance 10
on the equipment that the system runs on and software maintenance for the 11
licenses. 12
13
Q. HOW DOES THE 2016 BUDGET COMPARE WITH THE 2015 FORECAST? 14
A. The 2016 budget is 1.7 percent higher than the 2015 forecast, due to the need 15
to continue investing in network services, software, and other technology that 16
is seeing increased use over time. These increases are offset somewhat by a 17
higher allocation of services that are shared between Xcel Energy operating 18
companies to jurisdictions other than NSP Minnesota, consistent with our 19
cost allocation policy. This offset has the effect of reducing the portion of the 20
Business Systems budget allocated to Minnesota, but does not reflect a 21
reduction in overall Xcel Energy Business Systems costs. These trends are 22
depicted in more detail in Table 22 below: 23
24
25
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Table 22 1 2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Exhibit___(DCH), Schedule 16 provides a detailed breakdown of O&M costs 24
by general ledger account. 25
26
Cost Category 2012 Actual
2013 Budget
2013 Actual
2014 Budget
2014 Actual
2015 Forecast
2016 Budget
Network Services 14.1 13.8 15.7 18.0 17.1 16.7 17.8
Software License and Maintenance
13.9 15.2
16.6
18.4 17.6 18.7 20.5
Application Development & Maintenance
10.6 10.7
9.5 8.7 9.7 9.5 10.0
Company Labor 11.6 12.9 12.4 14.2 13.0 14.3 14.7
Distributed Systems Services 8.8 9.7 10.9 10.3 10.8 10.8 11.2
Contract and Consulting 5.1 5.9 7.8 8.0 8.0 9.2 8.3
Mainframe 1.2 1.4 0.8 0.8 0.8 0.9 0.8
Project Office 2.0 3.2 1.2 1.2 1.2 0.8 0.0
Hardware Maintenance & Purchases 0.8 1.2 1.0 1.2 1.0 0.9 1.5
Employee Expenses 0.6 0.7 0.8 0.8 0.9 0.7 1.0
Online Information Services 0.5 0.6 0.6 0.6 0.6 0.6 0.6
Equipment Maintenance 0.0 0.7 0.8 0.7 0.9 0.7 0.8
Donations, Dues, and Fees 0.2 0.2 0.3 0.1 0.0 0.2 0.2
Shared Assets 1.4 2.3 0.5 -2.8 -3.2 -5.7 -7.6
Other 0.2 0.2 0.3 0.3 0.4 0.6 0.6
NSPM Total $70.9M $78.7M $79.3M $80.5M $78.8M $79.1M $80.4M
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Q. TABLE 22 ABOVE INDICATES THAT BUSINESS SYSTEMS’ 2014 ACTUAL O&M 1
WAS LOWER THAN THE 2014 BUDGET. CAN YOU EXPLAIN WHY THIS IS THE 2
CASE? 3
A. Yes. For 2014 there were several cost categories that spent less than planned 4
– primarily Network, Software and Company Labor. These costs were 5
partially offset by higher spending than budget in the Applications area, but 6
the net result is that overall costs were below budget. This reflects actions 7
taken to reduce O&M in 2014 which was accomplished by postponing 8
employee hires including the in-sourcing of Program Management Office 9
staff. In contrast, our 2013 actual expenditures were slightly higher than the 10
2013 budget. Overall, we have managed to within small deviations from the 11
budget on a Business Area and Company basis, as described in more detail by 12
Company witness Mr. Gregory Robinson. 13
14
Q. DOES THE BUSINESS SYSTEMS BUDGET ALSO INCLUDE O&M FOR 15
PRODUCTIVITY THROUGH TECHNOLOGY EFFORTS? 16
A. Yes, but only in part. The Business Systems budget includes the ongoing, 17
post-implementation support and maintenance costs for the new General 18
Ledger and Work and Asset Management projects. These costs include labor 19
to support the application, software maintenance with the vendor, hardware 20
maintenance for the servers and similar devices and labor to support the 21
hardware. Placing the General Ledger in service in late 2015 is the primary 22
reason for the increase in software license fees and maintenance expenses in 23
2016. 24
25
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However, the O&M costs associated with the implementation of the project 1
are tracked separately in the Company’s overall O&M budget. 2
3
Q. CAN YOU DESCRIBE THE PRODUCTIVITY THROUGH TECHNOLOGY EXPENSES 4
THAT ARE NOT HELD WITHIN THE BUSINESS SYSTEMS BUDGET? 5
A. Yes. These O&M costs represent the non-capital costs specific to 6
implementing the Productivity Through Technology program, such as the cost 7
relating to our consultants’ support for plan investigation and development. 8
Table 23 below shows the O&M costs for project implementation. 9
10 Table 23 11
12
13
14
15
These O&M costs will continue through 2017 and then end with final project 16
implementation. After 2017, the on-going O&M costs to support the capital 17
investments are captured in the Business Systems budget. I provide a 18
breakdown of these expenses in more detail later in my testimony. 19
20
B. O&M Budget Process 21
Q. HOW DOES THE COMPANY SET THE O&M BUDGET FOR THE BUSINESS 22
SYSTEMS BUSINESS UNIT? 23
A. Our O&M budget process is similar to our capital budget process in that both 24
are based on a partnership between corporate management of overall finances 25
and the business needs we identify. Company witness Mr. Greg Robinson 26
NSPM Cost Category 2013 Actual
2014 Actual
2015 Budget
2015 Forecast
2016 Budget
Productivity Through Technology
$2.0M $2.7M $2.3M $4.1M $4.2M
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explains how the Company establishes overall business area O&M spending 1
guidelines and budgets based on financing availability, specific needs of 2
business areas, and overall needs of the Company. Overall we establish a 3
reasonable annual O&M level that allows Business Systems to complete 4
priorities that are important to providing a reasonable level of services to the 5
Company and our customers. 6
7
Q. DOES BUSINESS SYSTEMS EVER NEED TO CHANGE THE USE OF O&M FUNDS 8
DURING THE FINANCIAL YEAR? 9
A. Yes, there are times when O&M funds are shifted within Business Systems 10
during the year, typically to address unplanned requirements. For example, 11
during 2015 funding was reduced in the Enterprise Architecture budget and 12
increased in the CIO budget to fund the Company’s Critical Infrastructure 13
Protection compliance program. 14
15
Q. HOW DOES THE COMPANY DETERMINE CHANGES IN THE BUSINESS SYSTEMS 16
O&M BUDGET? 17
A. As part of the Company’s annual budget process, Business Systems performs 18
a review of existing services and expected new services to determine budget 19
needs for future years. This includes an evaluation of annual contract cost 20
escalators for vendors, annual merit increases, changes in the quantity of 21
services estimated to be consumed and new services. This information is 22
reviewed and evaluated through the budget process and a budget is established 23
for Business Systems for future years. 24
25
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Q. PLEASE EXPLAIN HOW THE BUSINESS SYSTEMS BUSINESS UNIT MONITORS 1
O&M EXPENDITURES. 2
A. As previously described for the capital budget, Business Systems management 3
monitors actual versus budget expenditures for both capital and O&M efforts 4
on a monthly basis. Deviations are evaluated and action plans are developed 5
to mitigate variations in actual to budgeted expenditures. These mitigation 6
plans may either reduce or delay other expenditures to support the overall 7
authorized budget. If authorized budget adjustments are required, they are 8
identified and approved at an appropriate level of management. 9
10
C. O&M Budget Detail 11
1. Network Services 12
Q. WHAT ARE NETWORK SERVICES? 13
A. This category includes costs related to the maintenance of existing circuits, 14
phones, microwave and radio systems, and other IT network infrastructure 15
assets. Network activities provide operation and management of the 16
Company’s internal and external data transmission requirements. Network 17
services are budgeted based on a price times a quantity in addition to Fixed 18
Management Fees (FMF) with various vendors. These costs are dependent 19
upon Xcel Energy’s service usage levels and the number of assets in use. As 20
more IT infrastructure is put in place, network maintenance costs increase. 21
22
Q. WHAT NETWORK ENHANCEMENTS COST CHANGES ARE YOU ANTICIPATING 23
FOR THE TEST YEAR? 24
A. Network system growth in 2016 reflects the increased usage of the 25
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organization’s network to support new applications and demand for greater 1
speed and capacity to support existing systems. These usage and demand 2
needs increase each year, as technology advances. As an example that impacts 3
the test year, the implementation of the new SAP software requires existing 4
circuits that connect Xcel Energy facilities to be expanded to support the large 5
amount of data that must be transmitted when users access the system. 6
7
Network services also encompass the need to upgrade and replace aging 8
components of the network. For example, the SCADA circuits that have been 9
in place for many years for transmission and distribution purposes are based 10
on analog technology. That technology is now digital and those new circuits 11
require maintenance to keep current. Another example is the Company’s 12
investment in expanding the wireless network to aid productivity. This 13
expansion places new assets in service that must be maintained. 14
15
In addition, from a cost-specific perspective the Company’s network services 16
contracts with IBM (which provides network operations and management), 17
and Motorola (which provides radio and microwave support) include a 18
negotiated annual contractual escalation adjustment of approximately 2 19
percent, consistent with industry practice. Overall, costs in this category are 20
increasing to $17.8 million in the 2016 budget compared to $17.1 million in 21
2014. 22
23
Q. PLEASE DISCUSS EFFORTS TO MINIMIZE INCREASES IN NETWORK SERVICES 24
COSTS. 25
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A. Cost savings have been achieved as a result of the renegotiation of the 1
Company’s contract with IBM in 2012. In addition, we have operated much 2
of our older network equipment without maintenance, opting for a time and 3
material repair strategy as needed and thereby reducing costs. 4
5
2. Software Licenses and Maintenance 6
Q. WHAT IS SOFTWARE LICENSES AND MAINTENANCE? 7
A. This category includes expenses for payments to vendors for license 8
agreements associated with various applications and desktop tools used by the 9
Company to perform services. These payments cover updates, support 10
patches, fixes and technical support. 11
12
Q. WHAT SOFTWARE LICENSE AND MAINTENANCE COST CHANGES ARE YOU 13
ANTICIPATING FOR THE TEST YEAR? 14
A. There are two major drivers of increase to the 2016 budget. First is the 15
software maintenance associated with the new General Ledger system. 16
Second is the estimated 4 percent annual escalation costs based on contractual 17
agreements with vendors. Overall, software license and maintenance costs 18
have increased from $17.6 million in 2014 to $20.5 million in the 2016 budget. 19
20
Q. PLEASE DISCUSS EFFORTS TO MINIMIZE INCREASES IN SOFTWARE 21
MAINTENANCE COSTS. 22
A. There are several efforts used to reduce the growth in this category. First, we 23
evaluate the need for maintenance support on applications that will be 24
replaced. For example, the Company no longer pays for maintenance for the 25
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existing general ledger since the replacement system will be implemented in 1
late 2015. Second, we evaluate the usage of desktop software to determine if 2
the usage justifies the continued need for a product. For example, if a 3
computer user has not used a software product recently, we redeploy the 4
license to another user, thereby avoiding the need to purchase a new license. 5
Finally, we renegotiate contracts with larger vendors as part of the renewal 6
process to reduce costs. For example, we might extend the term of a 7
maintenance agreement in order to receive a larger discount. 8
9
3. Company Labor 10
Q. WHAT COMPANY LABOR COSTS ARE INCLUDED IN THE BUSINESS SYSTEMS 11
O&M BUDGET? 12
A. Our labor costs typically include the cost associated with all employees in the 13
Business Systems department. 14
15
Q. WHAT COMPANY LABOR COST CHANGES DO YOU ANTICIPATE FOR THE 2016 16
TEST YEAR? 17
A. Labor costs have increased from $13.0 million in 2014 to $14.7 million in the 18
2016 budget. These increases are largely attributable to increases in salary 19
resulting from earned merit pay increases and more employees charging time 20
to O&M after the completion of our increased investment in capital projects 21
in recent years. In addition, we will in-source IT Program Management Office 22
(PMO) staff in late 2015, and a portion of their labor will be included in the 23
Business Systems’ O&M budget. These headcount increases will result in 24
higher annual labor costs for the full year in 2016 as well as higher employee 25
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expense in future years. 1
2
Q. PLEASE DISCUSS EFFORTS TO MINIMIZE INCREASES IN COMPANY LABOR COSTS. 3
A. Business Systems thoroughly reviews requests for increases in employee 4
headcount through a process that includes a business justification that 5
demonstrates the need, associated risks with not approving the request, and 6
alternatives considered. This process has worked effectively for many years 7
and we believe has limited the historic growth in headcount. 8
9
4. Distributed Systems Services 10
Q. WHAT IS DISTRIBUTED SYSTEMS SERVICES? 11
A. This category includes expenses related to support and maintenance of 12
servers, data storage, personal computers, printers, and similar components of 13
the overall computing environment. 14
15
Q. WHAT DISTRIBUTED SYSTEMS SERVICES COST CHANGES DO YOU ANTICIPATE 16
FOR THE TEST YEAR? 17
A. We anticipate having maintenance agreements on a total of approximately 18
2,500 servers for 2016, including 338 new servers compared to 2014. Growth 19
in the number of servers is largely driven by capital projects that went in 20
service in 2014 or 2015, including Commodity Management System, 21
Regulatory Information System, Geographic Information System for 22
Transmission, General Ledger, and others. As the number of servers grows, 23
so does the amount of storage because each new server requires storage to 24
function. Overall, Distributed Systems Services costs have increased from 25
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$10.8 million in 2014 to $11.2 million in the 2016 budget. 1
2
Q. PLEASE DISCUSS EFFORTS TO MINIMIZE INCREASES IN DISTRIBUTED SYSTEMS 3
SERVICES COSTS. 4
A. To reduce cost growth and implement savings in this area, the Company 5
renegotiated server and storage costs as part of our IBM contract 6
renegotiation, and has implemented data retention rules to curb storage 7
growth. For example, all email is purged after 90 days in a user’s inbox. 8
Despite these efforts, however, storage growth increased by 19 percent since 9
2014, and remains a driver of this cost category. 10
11
5. Application Development and Maintenance 12
Q. WHAT IS APPLICATION DEVELOPMENT AND MAINTENANCE (ADM)? 13
A. ADM includes costs of services to develop, enhance, maintain, and consult on 14
new or existing IT software and hardware applications. 15
16
Q. WHAT ADM COST CHANGES DO YOU ANTICIPATE FOR THE TEST YEAR? 17
A. ADM costs have remained relatively flat for the past several years, due largely 18
to the 2012 contract renegotiation with IBM. In addition, we continue to 19
thoroughly evaluate our application portfolio on a regular basis, to limit new 20
development for those applications that will be replaced in the near future. 21
Overall, ADM costs increased from $9.7 million in 2014 to $10.0 million in 22
the 2016 budget. 23
24
25
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6. Contract Labor and Consulting 1
Q. WHAT COSTS ARE INCLUDED IN THE BUDGET AS CONTRACT LABOR AND 2
CONSULTING? 3
A. These costs consist of fees and expenses for professional consultants or 4
knowledge-based experts that are not employees of the Company. This 5
category also includes staff augmentation through staffing agencies. 6
7
Q. WHAT CONTRACT LABOR COST CHANGES DO YOU ANTICIPATE FOR THE TEST 8
YEAR? 9
A. Contract labor costs are expected to remain relatively flat compared to 2014, 10
increasing from $8.0 million in 2014 to $8.3 million in the 2016 budget. The 11
2015 forecast is higher than the 2016 budget due primarily to non-recurring 12
costs associated with compliance activities and the implementation of the IT 13
Network Operations Center (NOC), used to monitor IT network assets. 14
15
Q. PLEASE DISCUSS EFFORTS TO MINIMIZE INCREASES IN CONTRACT LABOR COSTS. 16
A. As each potential new project arises, we evaluate carefully whether we have 17
the necessary subject matter experts to scope and initiate a project internally. 18
We avoid adding contractors or consultants unless and until we determine an 19
important need cannot be met by internal resources. 20
21
7. Shared Asset Allocation 22
Q. WHAT IS SHARED ASSET ALLOCATION? 23
A. This category reflects the allocation of Business System costs to or from the 24
NSPM operating company, depending on where the asset was purchased and 25
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how an investment will be utilized between Xcel Energy operating companies. 1
The dollars associated with this category are, in a sense, a true-up of costs 2
related to a certain investment by assigning to the appropriate jurisdiction(s). 3
This number fluctuates in part on the basis of the jurisdiction in which an 4
investment is purchased, consistent with our cost allocation policy. For 5
example, the dollars in this account will decrease when an asset is purchased in 6
NSPM but is also utilized in other operating companies. 7
8
8. Hardware Purchases and Maintenance 9
Q. WHAT IS INCLUDED IN THE HARDWARE PURCHASE AND MAINTENANCE 10
CATEGORY? 11
A. Our hardware maintenance costs relate largely to vendor contracts we 12
maintain to support hardware systems. This cost category also includes 13
miscellaneous hardware equipment purchases, such as for batteries, memory 14
cards, keyboards, headsets, and related technical tools. 15
16
Q. WHAT HARDWARE PURCHASES AND MAINTENANCE COST CHANGES TO DO 17
ANTICIPATE FOR THE TEST YEAR? 18
A. Costs for this category are expected to increase to $1.5 million in the 2016 19
budget year compared to cost of $1.0 million in 2014. The major driver of the 20
increase is related to the maintenance costs required to support the new 21
hardware for the new General Ledger system. 22
23
9. Employee Expenses 24
Q. WHAT EMPLOYEE EXPENSES ARE INCLUDED IN THE BUSINESS SYSTEMS 25
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BUDGET? 1
A. These costs are primarily related to employee travel, occurring on an as-2
needed basis. 3
4
Q. WHAT EMPLOYEE EXPENSE COST CHANGES DO YOU ANTICIPATE FOR THE TEST 5
YEAR? 6
A. Costs for the 2016 budget of $1.0 million are slightly higher compared to 2014 7
costs of $0.9 million. 8
9
Q. PLEASE DISCUSS EFFORTS TO MINIMIZE INCREASES IN EMPLOYEE EXPENSES 10
COSTS. 11
A. We use technology such as video-conferencing as a measure to reduce travel 12
related employee expenses. Overall, we encourage a conservative approach 13
and limit approval of planned travel accordingly. 14
15
10. Mainframe 16
Q. WHAT ARE MAINFRAME COSTS? 17
A. These are costs for maintaining the centralized applications running on the 18
mainframe computer, which serve multiple business needs such as batch 19
processing for customer billing and meter reading. 20
21
Q. WHAT MAINFRAME COST CHANGES DO YOU ANTICIPATE FOR THE TEST YEAR? 22
A. Mainframe costs are expected to remain flat for the 2016 budget at $0.8 23
million compared to 2014. 24
25
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11. Equipment Maintenance 1
Q. WHAT EQUIPMENT MAINTENANCE COSTS ARE INCLUDED IN THE BUSINESS 2
SYSTEMS BUDGET? 3
A. This category includes the usage costs of multi-function copier/printers used 4
by all employees across the Company. 5
6
Q. WHAT EQUIPMENT MAINTENANCE SERVICES COST CHANGES DO YOU 7
ANTICIPATE FOR THE TEST YEAR? 8
A. Costs for equipment maintenance are expected to decrease to $0.8 million in 9
the 2016 budget from 2014 costs of $0.9 million based on decreased usage. 10
11
12. Online Information Services 12
Q. WHAT ARE ONLINE INFORMATION SERVICES? 13
A. The costs cover our gathering of online data regarding industry standards and 14
IT trends. 15
16
Q. WHAT ONLINE INFORMATION SERVICES COST CHANGES DO YOU ANTICIPATE 17
FOR THE TEST YEAR? 18
A. Costs for this category of $0.6 million for the 2016 budget are flat compared 19
to 2014 costs. 20
21
13. Donations, Dues, and Fees 22
Q. WHAT DONATIONS, DUES, AND FEES ARE INCLUDED IN THE BUSINESS 23
SYSTEMS BUDGET? 24
A. These costs cover our participation in organizations that supply best practices 25
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guidance for IT, such as Gartner Consulting. Also included are costs for fees 1
paid to regulatory agencies for compliance related items. 2
3
Q. WHAT CHANGES IN DONATIONS, DUES, AND FEE COSTS DO YOU ANTICIPATE 4
FOR THE TEST YEAR? 5
A. Costs for the 2016 budget of $0.2 million are equivalent to the average cost 6
for this category for the years 2012-2015. 7
8
14. Other 9
Q. WHAT COSTS REMAIN IN THE “OTHER” CATEGORY? 10
A. This category includes very small purchases for administrative materials, fleet 11
expenses, and internal building moves. 12
13
Q. WHAT CHANGES IN “OTHER” DO YOU ANTICIPATE FOR THE TEST YEAR? 14
A. Costs for this category increased slightly to $0.6 million for the budget year 15
compared to costs of $0.4 million in 2014. 16
17
15. Productivity Through Technology O&M 18
Q. WHAT TYPE OF EXPENDITURES ARE INCLUDED IN THE O&M COSTS FOR THIS 19
PROJECT? 20
A. As described above, the Productivity Through Technology program has a 21
large scale and multi-year duration, such that a separate Program Management 22
Office consisting of Xcel Energy employees and Accenture staff is required to 23
oversee project implementation. The “Enterprise Transformation Office” is 24
responsible for maintaining project documentation, reviewing and approving 25
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key design decisions, ensuring the project meets all milestones and 1
deliverables, monitoring and mitigating program risk, planning and monitoring 2
internal and external staffing levels, and managing internal communication and 3
change management. The ETO consists of Xcel Energy Services employees, 4
some staff augmentation for temporary roles, and our Accenture business 5
partners who will oversee the project from the initial scoping phase through 6
the implementation and post go-live support period. 7
8
The work provided by these groups consists of the majority of Work and 9
Asset Management (PTT) implementation O&M for 2016 and 2017. After 10
that time, the Work and Asset Management system will be turned over to 11
Business Systems to maintain. 12
13
Q. PLEASE PROVIDE A BREAKDOWN OF THE PRODUCTIVITY THROUGH 14
TECHNOLOGY O&M COSTS THAT ARE NOT PART OF THE OTHER BUSINESS 15
SYSTEMS O&M CATEGORIES. 16
A. The PTT O&M costs in Table 24 below consist of Xcel Energy labor 17
expenses, Accenture consulting costs, and costs for other third party vendors 18
and consultants that Xcel Energy engages to provide assistance throughout 19
the program. Because Accenture resources represent the majority of the 20
consulting costs, we have listed their estimated portion separately. 21
22
23
24
25
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Table 24 – O&M Costs 1
2
3
4
5
6
7
Q. CAN YOU PROVIDE MORE DETAIL REGARDING THE CONSULTING COSTS FOR 8
THE PROJECT? 9
A. Yes. Accenture was hired to assist us based on their extensive experience with 10
these types of projects, particularly in the utility industry. Due to the 11
complexity of this type of implementation, and the fact that this is only a 12
once-every-decade event, Accenture’s knowledge and expertise are critical. In 13
addition, we periodically bring in other industry experts to review our progress 14
to date, and our plans for the remainder of the project to ensure we have an 15
independent review of the project and aren’t missing and risks or issues. 16
These advisors also review major contracts for each phase of the project to 17
ensure that we are getting the best contract terms possible without sacrificing 18
quality of the final product. While some of these overall consulting costs are 19
capital costs consistent with the Company’s capitalization policy the majority 20
of the costs to oversee the program are O&M, and are required to successfully 21
manage this project. 22
23
Q. HOW ARE THESE COSTS DETERMINED? 24
Cost Category 2013 Actual
2014 2015 2015 2016 Actual Budget Forecast Budget
Internal Labor $0.4 $0.5 $0.8 $0.7 $0.5
Consulting - Accenture 1.1 1.5 1.1 2.5 2.6
Consulting - Other 0.5 0.7 0.4 1.0 1.1
NSPM Total $2.0M $2.7M $2.3M $4.1M $4.2M
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A. The costs are estimated based on the same process used for the capital portion 1
of the project, including the RFP process and contract negotiations. These 2
costs are specific to program management, communication, training, and 3
change management activities that are typically considered operational rather 4
than capital costs per our Company capitalization policy. 5
6
We have signed contracts with Accenture in place for the next two phases of 7
the project, the design and build phases, and will be signing contracts in 8
March/April 2016 for the remaining two phases of the project (testing and 9
deployment). For our major contract with Accenture, the contracts are based 10
on achieving milestones and deliverables, rather than on a time and materials 11
basis. As a result, they are limited to what additional costs they can collect 12
from us if they exceed the contract terms. The advisor costs I mentioned 13
above represent the majority of the other remaining consulting costs. 14
15
Q. WHY ARE THESE O&M EXPENDITURES REASONABLE? 16
A. These costs are critical to the success of the program, which was confirmed in 17
our discussions with peer companies and industry experts who have 18
implemented a program of this scale. In addition, we have hired advisors to 19
review each contract for each phase of the project to ensure that we are 20
getting the best contract terms possible without sacrificing quality of the final 21
product. For our major contract with Accenture, the contracts are based on 22
achieving milestones and deliverables, rather than on a time-and-materials 23
basis. As a result, our vendors are limited to what additional costs they can 24
collect if they exceed the contract value. 25
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D. Multi-Year Rate Plan O&M Costs 1
Q. WHAT IS THE LEVEL OF O&M EXPENSE THAT BUSINESS SYSTEMS SEEKS TO 2
RECOVER FOR THE 2017 AND 2018 PLAN YEARS? 3
A. Company witness Mr. Aakash H. Chandarana explains the basis of the 4
Company’s overall approach to its O & M expense requests for the 2017 and 5
2018 Plan Years and Company witnesses Mr. Charles Burdick and Mr. John 6
Mothersole explain the basis for the Company’s selection of the particular 7
factors used in our rate requests for these years. 8
9
Q. WHILE THE COMPANY PROPOSES USING THESE FACTORS, ARE THERE SPECIFIC 10
DRIVERS OF BUSINESS SYSTEMS’ 2017 AND 2018 NON-OUTAGE O&M 11
BUDGETS? 12
A. Yes. As shown in our 2017 and 2018 supporting information, provided in 13
Volume 6a of our Initial Filing, Business Systems will see the need for changes 14
in O&M expenses for Plan Year 2017 in the following areas: 15
• An increase of $0.8 million due to application development and 16
maintenance support 17
• An increase of $1.4 million due to a lower shared asset credit 18
• An increase of $0.4 million due to Company labor 19
20
And for Plan Year 2018 in the following areas: 21
• An increase of $1.1 million due to software license and maintenance 22
• An increase of $3.5 million due to a lower shared asset credit 23
• An increase of $0.6 million due to Company labor 24
25
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Q. PLEASE EXPLAIN THE PURPOSE AND IMPACT OF APPLICATION DEVELOPMENT 1
AND MAINTENANCE ON BUSINESS SYSTEMS’ 2017 O&M BUDGET. 2
A. Application development and maintenance costs will increase in 2017 when 3
the new Work and Asset Management system must be supported, just as the 4
2016 budget increased to support the new General Ledger system. 5
6
Q. PLEASE EXPLAIN THE PURPOSE AND IMPACT OF SHARED ASSET ON BUSINESS 7
SYSTEMS’ 2017 O&M BUDGET. 8
A. Shared asset costs will increase in 2017 through a reduction in the credit 9
compared to the 2016 budget, based on the cost allocations described by 10
Company witness Mr. Adam Dietenberger. 11
12
Q. PLEASE EXPLAIN THE PURPOSE AND IMPACT OF COMPANY LABOR ON BUSINESS 13
SYSTEMS’ 2017 O&M BUDGET 14
A. Company labor will increase in 2017 compared to 2016 based on projected 15
merit salary increases as discussed by Company witness Ms. Ruth K. 16
Lowenthal. The headcount for Business Systems is flat from 2016 to 2017. 17
18
Q. PLEASE EXPLAIN THE PURPOSE AND IMPACT OF SOFTWARE LICENSE AND 19
MAINTENANCE ON BUSINESS SYSTEMS’ 2018 O&M BUDGET. 20
A. Software license and maintenance costs will increase in 2018 due primarily to 21
annual escalation costs included in software vendor contracts. 22
23
Q. PLEASE EXPLAIN THE PURPOSE AND IMPACT OF SHARED ASSET ON BUSINESS 24
SYSTEMS’ 2018 O&M BUDGET. 25
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A. Shared asset costs will increase in 2018 through a reduction in the credit 1
compared to the 2017 budget. 2
3
Q. PLEASE EXPLAIN THE PURPOSE AND IMPACT OF COMPANY LABOR ON BUSINESS 4
SYSTEMS’ 2018 O&M BUDGET 5
A. Company labor will increase in 2018 compared to 2017 based on projected 6
merit salary increases. The headcount for Business Systems is flat from 2017 7
to 2018. 8
9
Q. BUSINESS SYSTEMS’ FORECASTED O&M COST INCREASES AT APPROXIMATELY 10
4.6 FROM 2016 TO 2017 AND 6.3 PERCENT FROM 2017 TO 2018 ARE A GREATER 11
PERCENTAGE INCREASE THAN IN SOME OTHER AREAS OF THE COMPANY. CAN 12
YOU EXPLAIN WHY? 13
A. Yes. Fundamentally the O&M cost increases reflect the new technology 14
investments being implemented at the Company, primarily the General Ledger 15
and Work and Asset Management systems. These investments require higher 16
levels of on-going support than the systems that were replaced. The replaced 17
systems were at end-of-life and support in the form of labor and maintenance 18
was deliberately kept at a lower level. The larger increases in both 2017 and 19
2018 are due to the phasing in of the new systems support compared to the 20
2016 budget year. 21
22
V. COMPLETENESS INFORMATION 23
24
Q. WHAT IS THE PURPOSE OF THIS SECTION OF YOUR TESTIMONY? 25
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A. In this section of my testimony I discuss and present the IT Key Performance 1
Indicator (KPI) for purposes of the Annual Incentive Program (AIP), in 2
compliance with Order Point 29 in the Commission’s May 8, 2015 Order in 3
Docket No. E002/GR-13-868. Company witness Ms. Ruth K. Lowenthal 4
discusses the AIP more broadly. 5
6
Q. PLEASE EXPLAIN HOW THE BUSINESS SYSTEMS BUSINESS UNIT FITS WITHIN 7
THE COMPANY’S OVERALL AIP. 8
A. As explained by Ms. Lowenthal, the Company’s AIP has three components: 9
individual, business area, and corporate. For the individual component, 10
employees have performance goals tied to job functions. The business area 11
and corporate components use KPIs to measure goals. Each business area 12
uses a scorecard that identifies priorities, KPIs, and target goals. 13
14
The Business Systems organization rolls up to the Utilities and Corporate 15
Services business unit and the KPI results of the Utilities and Corporate 16
Services business unit determine the business area AIP results for my group. 17
18
Q. PLEASE IDENTIFY AND EXPLAIN THE KPI MEASUREMENTS FOR THE BUSINESS 19
SYSTEMS ORGANIZATION THAT ARE USED IN THE CORPORATE SCORECARD. 20
A. The 2013 to 2015 Business Systems KPI measurements and the description of 21
these measurements, included in the Utilities and Corporate Services scorecard 22
are set forth in Table 24 below: 23
24
25
139 Docket No. E002/GR-15-826 Harkness Direct
PUBLIC DOCUMENT – TRADE SECRET INFORMATION EXCISED –PUBLIC DATA–
Table 24 1
2
3
4
5
6
7
Q. HOW WERE THE KPI GOALS FOR THE BUSINESS SYSTEMS ORGANIZATION 8
DETERMINED? 9
A. The KPI was chosen by looking at what measures are the most important for 10
processes within our organization, and what other, similar organizations 11
measure throughout the utility industry. In particular, we identified the 12
reliability of critical applications as a key measure to determine how successful 13
we are at providing services to users of the systems. 14
15
The IT reliability KPI is modeled along a similar approach to the System 16
Average Interruption Duration Index (SAIDI) more commonly used in the 17
utility industry to measure electrical outages to customers. For Business 18
Systems, this measures the amount of unplanned outage minutes experienced 19
by users of the most critical (48) systems used to run our business. 20
21
Q. WHY HAS THE BUSINESS SYSTEMS KPI GOAL REMAINED THE SAME OVER 22
THE PAST FEW YEARS? 23
A. This KPI was set to establish reasonable but challenging outage levels, which 24
remain a key indicator of IT system reliability. As we add new systems while 25
Key Performance
Indicator Description 2013
Target 2013
Result 2014
Target 2014
Result 2015
Target
IT Reliability (SAIDI)
Unplanned outage minutes for critical systems per employee
100-156 minutes
150 minutes
100-156 minutes
125 minutes
100-156 minutes
140 Docket No. E002/GR-15-826 Harkness Direct
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other systems age, we reassess the KPI targets each year to make sure they 1
are still reasonable. While we have successfully achieved acceptable KPI 2
results in 2013 and 2014, our performance has varied and the systems we 3
must support also evolve. This is a very challenging KPI, as a single outage 4
affecting a large number of users can severely impact our measurement of 5
outage minutes. 6
7
Q. BASED ON YOUR REVIEW, WHAT DO YOU CONCLUDE ABOUT THE INCENTIVE 8
METRIC USED BY THE BUSINESS SYSTEMS BUSINESS UNIT? 9
A. The goal for Business Systems is based on keeping our technology systems 10
operating effectively, and therefore supports our ability to provide reliable 11
customer service. As Company witness Ms. Lowenthal explains, in order to 12
serve as true incentives, KPIs must be set at levels that require outstanding 13
performance, but not so high that they are unattainable. I believe the Business 14
Systems KPI levels meet this requirement. We must work very hard to 15
achieve our KPI levels, and even with the best of efforts, we still may not 16
achieve our desired results. Business Systems’ goals in the Annual Incentive 17
Program are set appropriately and sufficiently challenge the Company and its 18
employees to meet them. 19
20
VI. CONCLUSION 21
22
Q. PLEASE SUMMARIZE YOUR TESTIMONY. 23
A. I recommend that the Commission approve the Business Systems capital and 24
O&M budget presented in this rate case. Our planned capital investments are 25
141 Docket No. E002/GR-15-826 Harkness Direct
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managed appropriately and established to address aging technology, cyber 1
security, and capability needs of the Company. Certain major projects, such as 2
our investment in a new Work and Asset Management enterprise-wide system, 3
address multiple needs and position the Company to operate with increasing 4
productivity in the future. The budgets we propose are a reasonable 5
representation of the activities we will undertake on behalf of the Company 6
and ultimately our service to customers through 2018. 7
8
Q. DOES THIS CONCLUDE YOUR PRE-FILED DIRECT TESTIMONY? 9
A. Yes, it does. 10
142 Docket No. E002/GR-15-826 Harkness Direct
Northern States Power Company Docket No. E002/GR-15-826 Exhibit __(DCH-1) Schedule 1 Page 1 of 4
DAVID C. HARKNESS
Chief Information Officer • Senior IT Executive • Chief Technology Officer • Vice President of IT
PROFILE
Talented and accomplished senior IT executive and corporate officer with consistent record of success in promoting corporate growth through effective management of technology operations. Special expertise in change management, turnaround leadership, business transformation, multi-sourcing, technology development. Proven ability to establish and lead technical teams, programs and portfolios. Familiar with supporting M&A activities. Adept at building relationships with business stakeholders. IT Governance • Strategic Planning • Enterprise Business Transformation • Turnaround Operations Service Delivery • Project/Program Management • Relationship Management • Cost/Budget Control
Technology Development • Succession Planning • Enterprise Infrastructures/Architectures Six Sigma/Lean/ITIL • Compliance • Outsourcing • Solution Development • Shared Services
PROFESSIONAL EXPERIENCE XCEL ENERGY, Minneapolis, MN 2009 - Present Senior Vice President; Chief Information Officer Responsible for all information technology development, operations and governance, cyber security functions, and Xcel Energy’s overall business continuity program. Drives innovation and transformation by leveraging technology to create business value for $10.6B Gas and Electric energy company operating in 8 states. Administer $300M combined budget and supervise 900 direct and indirect reports, including senior IT leadership team. Manage strategy development and ensure alignment with corporate goals. Build and maintain strategic partner relationships, primarily IBM, Accenture, Dell, Motorola, PWC. Direct infrastructure operations, including data / voice communications, service levels, and security. • Drove $200M Productivity Through Technology program across enterprise including all 4
subsidiaries. • Restructured primary sourcing contract spend by $25M annually; representing a 25% reduction. • Increased deployment capacity 100% through increased IT throughput program. • Developed 10-yr IT strategic Roadmap including Business Unit plans, Platform Risk
Assessment, Cyber Security Requirements and Enterprise Architecture principles and reference architectures.
• Transform IT Help Desk operations resulting in $2M annual savings.
Northern States Power Company Docket No. E002/GR-15-826 Exhibit __(DCH-1) Schedule 1 Page 2 of 4 PNM RESOURCES, Albuquerque, NM 2003 - 2009 Vice President; Chief Information Officer (2006-2009) Oversee all technology management and development for $2.6B energy company with 4 subsidiaries in Southwest. Administer $70M combined budget and supervise 260 direct and indirect reports, including executive management team. Manage strategy development and ensure alignment with corporate goals. Identify needs and implement improvements. Evaluate new technologies and determine ROI for purchase vs. build strategies. Build and maintain partner and vendor relationships. Direct infrastructure operations, including data / voice communications, service levels, and security. • Reduced spending 20% and headcount 40% over 18-month period. • Increased deployment capacity 400% and internal client satisfaction 30% by implementing new
portfolio management process. • Improved staff retention by enhancing focus on growth and development. • Transitioned organization from vertical utility model to shared services model. • Saved >$2M per year through discrete outsourcing of workload and responsibilities. • Enhanced performance levels by implementing ITIL process standardization. • Led Enterprise’s Smart Grid Strategy. • Served as Lead to IT Steering Committee and Capital Allocation Team.
Executive Director, Business Transformation (2006) Managed organizational development, corporate training, Six Sigma Black Belt and Lean process improvement, and M&A operations. Supervised staff of 25. • Implemented enterprise-wide competency model that included performance management,
leadership development, and roundtable review. Launched online / classroom training program. Executive Director, Business Process Outsourcing, First Choice Power (2005-06) Directed major outsourcing project for $600M subsidiary. Project encompassed call center, field offices, bill printing, remittance processing, and various system conversions. Managed provider relationship. Created program plan and operating model. Supervised staff of 20. • Brought call center and bill printing online in 2 months and remittance processing in 3 months. • Facilitated >$4M in annualized savings through successful completion of initiative.
Executive Aide to CEO, President, & Chairman (2004-05) Completed 6-month program of corporate officer mentorship. Attended board meetings, long-range strategic planning sessions, investor/regulator meetings and more. Actively involved in corporate governance and ethics review and planning sessions. • Led officer-level analysis functions during merger with TNP Enterprises. Identified methods for
improving business processes and organizational restructuring.
Northern States Power Company Docket No. E002/GR-15-826 Exhibit __(DCH-1) Schedule 1 Page 3 of 4 MCLEODUSA, Cedar Rapids, IA 1996 - 2003 Director, Enterprise Applications Development Supervised development, business analysis, systems analysis, project management, IT due diligence, technology integration, product improvement, and application development for $1B telecom company. Supervised staff of more than 120 developers. Administered $20M budget. Supported Inbound/Outbound Call Centers, Field Sales, and Order Entry units. • Oversaw all maintenance, support and upgrades for Siebel Sales/CRM application. • Effectively maintained call center telephony for 6 centers across 5 states with over 1,000 agents. • Supported multiple M&A activities through complex due diligence and system integrations.
MCI COMMUNICATIONS, Cedar Rapids, IA 1991 - 1996 Manager, Business Analysis Developed and led software projects for 800 Card marketing group and Intelligent Services Platform. Supervised 8 senior-level analysts and administered $8M+ budget. • Led analysis, prioritization and development for 70% of IT initiatives. • Wrote requirements for highly visible products such as 1-800-COLLECT. • Earned Chairman’s Inner Circle Award.
CAREER NOTES: Previously held position of Software Engineer at ROCKWELL INTERNATIONAL (1985-1991). Wrote patented algorithm for robot manufacturing equipment.
ADDITIONAL EXPERIENCE
STATE OF NEW MEXICO, Santa Fe, NM 2005 - 2009 State Commissioner, Information Technology Commission Appointed by governor to commission responsible for state information architecture and strategic information technology plan.
EDUCATION
BS in Computer Science/ BA in Applied Mathematics, The University of Iowa, Iowa City, IA
TRAINING & DEVELOPMENT Utility Executive Course, The University of Idaho Merger Week, Kellogg School of Business, Northwestern University
Northern States Power Company Docket No. E002/GR-15-826 Exhibit __(DCH-1) Schedule 1 Page 4 of 4
CURRENT AFFILIATIONS
Board of Directors, BestPrep, an organization driven to improve business and financial literacy of MN youth Board of Directors, Minnesota High Tech Association, organization of Minnesota based businesses
driving to improve the technology literacy and maturity in the state of Minnesota Chair, EEI (Edison Electric Institute) Technology Advisory Council; Group of EEI and AGA
(American Gas Association) CIOs designated to collaborate on key technical and business challenges facing utility Industry.
Member of EEI Executive Advisory Committee CIO group; consult on technology policy; advises Energy CEOs
Advisory Board University of Idaho Utility Executive Course – Premier Utility industry executive development program since 1952 CIO Advisory Board for IBM’s Global Infrastructure Volunteer for EarthDay; Feed my Starving Children; Big Brothers/Big Sisters
PAST AFFILIATIONS Chair, College Success Network Board of Directors 2006-2010 Vice Chair, PNM Resources Foundation Board of Trustees 2008-2009 Director, First Choice Power Board of Directors CIO Executive Council Governing Body PNM Resources Speakers Bureau and Community Crew
AWARDS / PUBLICATIONS / SPEAKING ENGAGEMENTS ComputerWorld Magazine’s 100 Premier IT Leaders 2008 Author/Contributor - Managing Your IT Department as a Business: Leading CTOs and CIOs on
Assessing Client Needs, Driving IT Costs Down, and Measuring Performance; Aspatore, September, 2009
Radio Interview – CIOTalkRadio CIO Magazine / Martha Heller CIO Paradox Multiple Interviews/Publications for EnergyCentral, EnergyBiz, Intelligent Utility, Five Point
Partners, Utility CIO Knowledge Conference, CIO Global Forum
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 2
Page 1 of 5
Category Project Name Parent # Classification 2016 2017 2018 DateAging Technology Annual PC Refresh 10006534 Common General Plant 15 - - RoutineAging Technology MRAS Consolidation to IEE and RMS 10810837 Common Intangible Plant - 1,576,710 - 12/31/2017Aging Technology Dynamic EMS (DEMS) Environment Phase 2 10818773 Electric General Plant 12,248,681 - - 3/31/2016Aging Technology Annual PC Refresh 11490051 Common General Plant 632,714 - - RoutineAging Technology Annual Server Refresh 11490148 Common General Plant 888,000 - - RoutineAging Technology Annual Network Refresh 11490678 Common General Plant 3,819,400 - - RoutineAging Technology Annual Data Storage Refresh 11490693 Common General Plant 3 - - RoutineAging Technology Annual Network Refresh 11490696 Common General Plant 55,019 - - RoutineAging Technology Annual PC Refresh 11490702 Common General Plant 58,455 - - RoutineAging Technology Annual Server Refresh 11491012 Common General Plant 77,817 - - RoutineAging Technology Annual Server Refresh 11491141 Common General Plant 1 - - RoutineAging Technology Annual EMS Infrastructure Refresh Project 11491254 Electric General Plant 47,213 - - RoutineAging Technology Annual PC Refresh 11491350 Common General Plant 638,000 - - RoutineAging Technology Annual Server Refresh 11491382 Common General Plant 480,000 - - RoutineAging Technology Annual Data Storage Refresh 11491598 Common General Plant 2,175,000 - - RoutineAging Technology Annual EMS Infrastructure Refresh Project 11491662 Electric General Plant 332,104 104,192 - RoutineAging Technology Dynamic EMS (DEMS) Environment Phase 2 11584375 Electric General Plant 5,959,194 - - 3/15/2016Aging Technology Annual Network Refresh 11614847 Common General Plant - 3,385,200 - RoutineAging Technology Annual PC Refresh 11614866 Common General Plant - 2,030,000 - RoutineAging Technology Annual Server Refresh 11615198 Common General Plant - 888,000 - RoutineAging Technology Annual PC Refresh 11615355 Common General Plant - 638,000 - RoutineAging Technology Annual Server Refresh 11615686 Common General Plant - 480,000 - RoutineAging Technology Annual EMS Infrastructure Refresh Project 11615735 Electric General Plant - 392,102 - RoutineAging Technology Annual Data Storage Refresh 11615744 Common General Plant - 1,920,000 - RoutineAging Technology Annual MDT Refresh 11615750 Common General Plant - 66,700 - RoutineAging Technology Annual MDT Refresh 11615756 Common General Plant - 849,700 - RoutineAging Technology Annual MDT Refresh 11616674 Common General Plant 66,700 - - RoutineAging Technology Integrated Energy Management Upgrade (IEMU) 11620754 Electric Intangible Plant - - 1,069,976 12/31/2021Aging Technology Minnesota Metro Radio Refresh 11621447 Common General Plant - - 5,600,000 12/31/2018Aging Technology IT Xcel Corporate Network Transformation Program 11621467 Common General Plant 713,545 - - RoutineAging Technology Annual Network Refresh 11739360 Common General Plant - - 4,643,600 RoutineAging Technology Annual Server Refresh 11745530 Common General Plant - - 888,000 RoutineAging Technology Annual PC Refresh 11745635 Common General Plant - - 638,000 RoutineAging Technology Annual Server Refresh 11745751 Common General Plant - - 480,000 Routine
Addition Amount ($000s)
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 2
Page 2 of 5
Category Project Name Parent # Classification 2016 2017 2018 DateAddition Amount ($000s)
Aging Technology Annual Data Storage Refresh 11745830 Common General Plant - - 2,640,019 RoutineAging Technology Annual EMS Infrastructure Refresh Project 11745840 Electric General Plant - - 392,081 RoutineAging Technology Annual PC Refresh 11745853 Common General Plant - - 4,030,000 RoutineAging Technology Annual MDT Refresh 11746597 Common General Plant - - 66,700 RoutineAging Technology Annual MDT Refresh 11746661 Common General Plant - - 849,700 RoutineAging Technology Annual MDT Refresh 11764310 Common General Plant 627,270 - - RoutineAging Technology Annual Handheld Mobile Collector Refresh 11802128 Common General Plant 80,500 - - RoutineAging Technology Annual Handheld Mobile Collector Refresh 11802131 Common General Plant - 80,500 - RoutineAging Technology Annual Handheld Mobile Collector Refresh 11802134 Common General Plant - - 80,500 RoutineAging Technology Network Strategy - T&D Substation Connectivity 11802563 Electric General Plant 6,952,499 4,715,615 3,790,244 12/31/2021Aging Technology Network Strategy - Distribution System Intelligence Connectivity 11802573 Electric General Plant 54,247 2,536,845 4,064,943 12/31/2021Aging Technology Emptoris Upgrade Phase 2 11802595 Common Intangible Plant - - 1,702,998 12/12/2018Aging Technology Corporate Network Infrastructure Upgrade - Core routing 11939987 Common General Plant 1,156,950 - - 12/31/2016Aging Technology Data Center Network Integration 11939998 Common General Plant 150,000 - - RoutineAging Technology ERO Non-BES 11940037 Electric Intangible Plant - 452,724 - RoutineAging Technology GIS Upgrade Project 11940041 Common Intangible Plant 2,386,078 - - 12/31/2016Aging Technology Network Infrastructure Standardization 11940061 Common General Plant 264,903 - - RoutineAging Technology Transmission Asset Management System Phase 3 (TAMS3) 11940079 Electric Intangible Plant - - 872,197 RoutineAging Technology Transmission Operation Log Replacement 11940083 Common Intangible Plant - 621,994 - RoutineAging Technology Core HR Application (Payroll Benefits) 11940109 Common Intangible Plant - 2,056,639 - 11/30/2017Aging Technology Corporate Email Refresh 11942430 Common General Plant - 750,000 - RoutineAging Technology Metro SCADA Redundancy 11942468 Common General Plant 750,000 - - RoutineAging Technology Next Generation Desktop 11942512 Common Intangible Plant - 3,480,000 - 10/31/2017Aging Technology System Center Configuration Manager (SCCM) Upgrade 2018 11942575 Common Intangible Plant - - 580,000 RoutineAging Technology MAXR (Maximo) Data Silo Retirement 12002036 Common Intangible Plant - 173,406 - RoutineAging Technology Data Warehouse Environment Refresh 12002194 Common Intangible Plant - - 184,425 RoutineAging Technology Refresh MapFrame FieldSmart to 4.3x with Configuration 12002227 Common Intangible Plant - 609,485 - RoutineAging Technology Project Wise for Distribution 12002412 Common Intangible Plant - - 383,606 RoutineAging Technology HDB (non-outage OMS) Data Slio Retirement 12002462 Common Intangible Plant 186,060 - - RoutineAging Technology Asset Data Warehouse Replacement (ADW EDW MDW) 12002482 Common Intangible Plant - 230,625 - RoutineAging Technology GIS Upgrade 12002494 Common Intangible Plant - - 771,091 RoutineAging Technology NMS 1.x Upgrade 12002509 Common Intangible Plant - - 1,226,736 12/31/2018Aging Technology Customer Care IVR Upgrades 12002585 Common Intangible Plant - - 1,051,488 12/31/2018Aging Technology Visix Communication Upgrade 12002631 Common Intangible Plant - - 134,013 Routine
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 2
Page 3 of 5
Category Project Name Parent # Classification 2016 2017 2018 DateAddition Amount ($000s)
Aging Technology Active Directory Upgrade 2018 12002722 Common Intangible Plant - - 293,476 RoutineAging Technology Active Directory Upgrade 2016 12002741 Common Intangible Plant 293,476 - - RoutineAging Technology Enterprise Service BUS (ESB) Environment Refresh 12002878 Common Intangible Plant - 162,863 - RoutineAging Technology Circuit Management System (Consolidation) 12002973 Common Intangible Plant - 403,293 - RoutineAging Technology Unified Communication Strategy 12003018 Common Intangible Plant 149,021 - - RoutineAging Technology Fieldforce MDT Automation 12003022 Common General Plant - - 440,213 RoutineAging Technology RADIUS Authentication Replacement 12003032 Common Intangible Plant 78,270 - - RoutineAging Technology Network Topology Management and VoIP Support Toolset Enhanc 12003036 Common Intangible Plant 306,082 - - RoutineAging Technology Expansion of Guest Wireless 12003041 Common Intangible Plant 160,320 - - RoutineAging Technology Radio Microwave Planned Software Enhancements 12003046 Common Intangible Plant 180,148 - - RoutineAging Technology Intelligent Network Elements and Operation Performance 12003057 Common Intangible Plant 390,000 - - RoutineAging Technology Windows 2003 Server Upgrade 12058356 Common General Plant 2,130,111 - - 12/31/2016Aging Technology Fleet Focus Upgrade 12070880 Common Intangible Plant - 1,957,272 - 10/31/2017Aging Technology Verint Workforce Management upgrade or replacment 12071923 Common Intangible Plant 732,601 - - RoutineAging Technology Remittance Workstation and SAN Hardware Refresh 12071992 Common General Plant 500,000 - - RoutineAging Technology PowerPlan Upgrade 12077689 Common Intangible Plant - - 450,992 RoutineAging Technology Corporate Network Infrastructure Upgrade - Core routing 12173257 Common General Plant 240,632 - - 12/31/2016Aging Technology Corporate Network Infrastructure Upgrade - Core routing 12173258 Common General Plant 240,632 - - 12/31/2016Aging Technology 2018 CRS Tech Stack Upgrade Desktop 12173648 Common General Plant - - 499,998 RoutineAging Technology Automated Route Control System (ARCS) Replacment and Mobile 12173652 Common Intangible Plant 550,755 - - RoutineAging Technology Internet Browser Upgrade - 2015 12173656 Common Intangible Plant 726,870 - - RoutineAging Technology Total 47,479 30,562 37,825
Cyber Security Security Technology Refresh 11940070 Common Intangible Plant 1,352 2,570 2,702 RoutineCyber Security Corporate Firewall Enhancement 11920733 Common General Plant 201 3 RoutineCyber Security Symantec Endpoint Protection (SEP) Refresh 12002959 Common Intangible Plant 235 11/30/2016Cyber Security Nuclear Firewall Hardware Refresh 11944956 Electric Intangible Plant 150 4/30/2016Cyber Security Total 1,938 2,573 2,702
Emergent Demand Emergent Demand 11218029 Common Intangible Plant 4,112 6,604 3,851 12/31/2021Emergent Demand Total 4,112 6,604 3,851
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 2
Page 4 of 5
Category Project Name Parent # Classification 2016 2017 2018 DateAddition Amount ($000s)
Enhance Capabilities ADMS - Advanced Distribution Management System 11839687 Electric Intangible Plant 4,434 12/31/2018Enhance Capabilities Content & Records Management Upgrade_Expansion 11944967 Common Intangible Plant 2,900 11/30/2018Enhance Capabilities Substation Asset Mgmt System (Enterprise Reliability) 11888975 Electric Intangible Plant 1,447 5/31/2016Enhance Capabilities SharePoint 2013 Phase II 12078067 Common Intangible Plant 1,397 12/31/2016Enhance Capabilities NOC Integration & Tooling 2016 11944985 Common Intangible Plant 1,350 10/31/2017Enhance Capabilities Network Monitoring Tools 11944865 Common Intangible Plant 1,040 10/31/2016Enhance Capabilities Enterprise Technology Expansion SPS AMI - Command Center Int 12002933 Common Intangible Plant 1,030 12/31/2018Enhance Capabilities TWR Replacement 11940087 Electric Intangible Plant 847 12/31/2018Enhance Capabilities Interval and Complex Billing 11940048 Common Intangible Plant 790 12/31/2017Enhance Capabilities Electric Grid Training Simulator 11940018 Electric General Plant 745 6/30/2017Enhance Capabilities Trader Surveillance 12002072 Common Intangible Plant 742 12/31/2018Enhance Capabilities Federated Records Management- Phase 1 12076060 Common Intangible Plant 721 12/31/2016Enhance Capabilities Customer Care Agent Screen Pop and Single Screen 11939991 Common Intangible Plant 706 10/31/2016Enhance Capabilities Data Discovery Suite 12002108 Common Intangible Plant 682 12/20/2016Enhance Capabilities Speed To Market and Simulation 12002956 Common Intangible Plant 660 12/31/2018Enhance Capabilities Mobile Application Customer Engagement (MKT-CX) 12002471 Common Intangible Plant 599 12/20/2018Enhance Capabilities Service Reporting and Analytics 11944894 Common Intangible Plant 592 11/30/2018Enhance Capabilities Infrastructure Private Cloud 11942621 Common General Plant 580 12/31/2016Enhance Capabilities CIP Substation Compliance 12173674 Electric Intangible Plant 543 5/31/2016Enhance Capabilities Digital Application Process (MKT-DSM) 12172516 Common Intangible Plant 537 12/31/2016Enhance Capabilities Mobile Computing Infrastructure 11940057 Common Intangible Plant 500 12/31/2016Enhance Capabilities Network Services Test Lab 12003061 Common Intangible Plant 500 7/31/2016Enhance Capabilities NetOps Tools - Infoblox 12003050 Common Intangible Plant 463 8/31/2016Enhance Capabilities Customer Data Request Portal 11940105 Common Intangible Plant 431 12/31/2017Enhance Capabilities Rate Value Calculators - (MKT-CX) 12058172 Common Intangible Plant 430 12/31/2016Enhance Capabilities Customer Care Back Office Automation 11940100 Common Intangible Plant 427 12/31/2017Enhance Capabilities Transmission Metrics Dashboard 12002395 Common Intangible Plant 380 12/31/2018Enhance Capabilities Enterprise Search Portal - Phase I 12071722 Common Intangible Plant 357 12/15/2016Enhance Capabilities XE MA Micro targeted Engagement - (MKT-CX) 12071900 Common Intangible Plant 342 11/30/2017Enhance Capabilities Transmission Control Center IVR - 12030615 Common General Plant 337 12/31/2018Enhance Capabilities Contact Center Workstation Modernization 12002433 Common General Plant 300 12/31/2018Enhance Capabilities Matter Management 12003001 Common Intangible Plant 300 12/31/2018Enhance Capabilities My Account Integration with Salesforce (MKT-CX) 12071881 Common Intangible Plant 285 12/31/2016
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 2
Page 5 of 5
Category Project Name Parent # Classification 2016 2017 2018 DateAddition Amount ($000s)
Enhance Capabilities Multi-Site Customer Portal (billing, payment, energy mgmt) - (MKT- 12071705 Common Intangible Plant 272 12/31/2016Enhance Capabilities XpressNET and PowerSource Productivity Enhancements 12002463 Common Intangible Plant 238 12/31/2018Enhance Capabilities Enterprise Lat Long Management 12002919 Common Intangible Plant 157 12/31/2017Enhance Capabilities Fuelworx Reporting 12080509 Electric Intangible Plant 151 12/31/2016Enhance Capabilities WiFi for GO and Marquette (Full Building) 12003045 Common General Plant 130 12/31/2016Enhance Capabilities Service Center WIFI 12003006 Common General Plant 129 12/31/2018Enhance Capabilities Metadata Management Tool 12002770 Common Intangible Plant 113 7/31/2016Enhance Capabilities Crowdsourcing ER EM 12002279 Common Intangible Plant 99 12/31/2017Enhance Capabilities Wireless Project 11088691 Common General Plant 92 12/31/2021Enhance Capabilities Improve Outage Communications OMS POM Link 12002483 Common Intangible Plant 89 12/31/2016Enhance Capabilities Integrated Talent Management (ITM) 12069622 Common Intangible Plant 75 12/31/2015Enhance Capabilities Total 11,110 4,341 13,487
PTT Work and Asset Management 11491932 Common General Plant 29,372 103,848 8/30/2017PTT Work and Asset Management 12076705 Common General Plant 3,010 3/31/2016PTT General Ledger Replacement 11765111 Common General Plant 2,805 12/31/2015Productivity Through Technology Total 35,187 103,848
NSP-MN Company Total 99,826 147,927 57,865
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 3
Page 1 of 1
Addition Amount ($000s)
Category Project Name Parent # Classification 2016 DateEnhance Capabilities Other Federated Records Management- Phase 1 IDEA 12076060 Federated Record SW MN 721,264 12/31/2016Enhance Capabilities Other Customer Care Agent Screen Pop and Single Screen IDEA 11939991 Cust Care Agent Screen SW MN 705,654 10/31/2016Enhance Capabilities Other Data Discovery Suite IDEA 12002108 Data Discovery Suite SW MN 681,990 12/20/2016Enhance Capabilities Other Infrastructure Private Cloud IDEA 11942621 Purch Infra Private Cloud HW M 580,000 12/31/2016Enhance Capabilities Other CIP Substation Compliance 12173674 CIP Substation SW MN 542,868 5/31/2016Enhance Capabilities Other Digital Application Process (MKT-DSM) IDEA 12172516 Digital Appliance SW MN 536,730 12/31/2016Enhance Capabilities Other Network Services Test Lab IDEA 12003061 Network Services Test Lab SW M 500,000 7/31/2016Enhance Capabilities Other Mobile Computing Infrastructure IDEA 11940057 Mobile Computing Infra SW MN 500,000 12/31/2016Enhance Capabilities Other NetOps Tools - Infoblox IDEA 12003050 NetOps Tools Infoblox SW MN 462,533 8/31/2016Enhance Capabilities Other Rate Value Calculators - (MKT-CX) 12058172 Dynamic Pricing SW MN 430,439 12/31/2016Enhance Capabilities Other Enterprise Search Portal - Phase I 12071722 Enterprise Search Portal SW MN 356,624 12/15/2016Enhance Capabilities Other My Account Integration with Salesforce (MKT-CX) 12071881 My Account Integration SW MN 285,300 12/31/2016Enhance Capabilities Other Multi-Site Customer Portal (billing, payment, energy mgmt) IDEA - (MKT-CX) 12071705 Multi Site Customer SW MN 272,092 12/31/2016Enhance Capabilities Other Fuelworx Reporting 12080509 Fuelworx SW MN 151,065 12/31/2016Enhance Capabilities Other WiFi for GO and Marquette (Full Building) IDEA 12003045 WiFi for GO and Marquette HW M 130,000 12/31/2016Enhance Capabilities Other Metadata Management Tool IDEA 12002770 Metadata Management SW MN 113,060 7/31/2016Enhance Capabilities Other Wireless Project 11088691 2013 Wireless HW MN 91,844 12/31/2021Enhance Capabilities Other Improve Outage Communications OMS POM Link IDEA 12002483 Improve Outage Communication S 88,932 12/31/2016Enhance Capabilities Other Integrated Talent Management (ITM) 12069622 ITM Ph2 Recruiting SW MN 75,007 12/31/2015Enhance Capabilities Other Total 7,225
PUBLIC DOCUMENT: Docket No. E002/GR-15-826 TRADE SECRET INFORMATION AND Exhibit___(DCH-1), Schedules 4, 5 & 6 NON-PUBLIC DATA EXCISED Page 1 of 1
RISK AND HEALTH ASSESSMENTS
Schedule 4 – Passport Application Schedule 5 – Maximo Application
Schedule 6 – Nuclear Passport Application
NON-PUBLIC DOCUMENT: CONTAIN TRADE SECRET INFORMATION ENTIRE DOCUMENT IS NON-PUBLIC
Schedules 4, 5 and 6 are internal assessment summaries which the Company has designated as Trade Secret information in their entirety as defined by Minn. Stat. § 13.37, subd. 1(b) and that the analysis and information contained has not been publicly released. These summaries were prepared by Business Systems employees and their representatives between 2013 and 2015 in conjunction with the Company’s review of its internal operating system and software applications for transition to the Productivity Through Technology project. Because it derives independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, Xcel Energy maintains this information as a trade secret pursuant to Minn. Rule 7829.0500, subp 3.
PTT Benchmarking Learning from Others
September 2012
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 1 of 10
Benchmarking Lessons
We are effectively leveraging technology compared to peer companies.
There are ways to better leverage technology to improve productivity.
Change Management is key to a successful implementation
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 2 of 10
Technology Briefing: February 16
Reviewed technology implementations at five peer utilities
Key learning points: Centralized, integrated work and
asset management systems can save money while improving crew and design productivity
Analytics improve access to information and can support effective risk-informed maintenance decisions while reducing number of repeat trips, asset lifecycle costs, materials and goods/services costs.
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 3 of 10
Technology Briefing: February 22
Reviewed technology implementations at three peer utilities
Key learning points: Utilizing GIS as the centralized and
source for asset information drove improvements in productivity.
One, centralized work and asset management system can lead to productivity improvements and focused change management helps to support the improvements
Expanding the use of mobility – specifically MDTs – can also improve productivity.
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 4 of 10
Technology Briefing: April 11
Reviewed three technology solutions for utilities Key learning points:
Fleet Management tools improve compliance, reporting, driver safety and productivity while saving fuel and reducing environmental impact Knowing where, when, and how vehicles are used
enables field service teams to better serve their customers
More user-friendly interfaces can be added on top of enterprise applications (like SAP) to create a more simple, easy to understand application
Focus on improving Planning, Scheduling, Design and Standards can reduce downstream costs.
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 5 of 10
Site Visit: May 17
Key learning points: Heavy focus on initial and on-going training; have
dedicated change management organization Initiative include funding for change management and
expectation for productivity dip following implementation Focused on organization and process before identifying
solutions Realized productivity gains primarily though scheduling
process (+70 minutes per day per crew) Eliminated need to physically staff every substation
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 6 of 10
Site Visit: June 6
Key learning points: In process with 15 year OpEx2020 program that includes
six major initiatives: Maintenance & Inspection, Construction, GIS, Condition Based Maintenance & Asset Investment Support, Outage and Distribution Management Systems, and Customer Care
Have learned that more O&M is needed following implementation to support learning & ensure productivity gains; also that front-line supervisors should be engaged as early as possible
Condition based monitoring is in use; data is analyzed to determine if work is required, then work order is created
Projects are implemented with cross-functional teams, not silos
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 7 of 10
Site Visit: July 13
Key learning points: Building own networks to ensure connectivity,
as needed 4D scheduling tool is used to construct project
virtually to identify & eliminate potential construction conflicts (3D plus a time variable)
Implemented GPS controls for equipment Focused on well-defined process & standards in
order to reduce data entry Accountability encouraged by daily group status
meetings to monitor progress
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 8 of 10
PGE site visit: September 12 - 13 What we did: Change workshop facilitated
by Accenture Portland General Electric
site visit
Implementing common systems and processes
Transforming the culture to transform the business
What we learned: Executive sponsorship is
KEY for success Change management
activities are 20% of project costs
Change must be managed daily and consistently
Changing culture is difficult, requires tenacity and unwavering support
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 9 of 10
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 7
Page 10 of 10
1
Program Update
Sponsor Meeting August 28, 2013
2
Solution Option Summary Solution Selection Option – Preliminary Findings
Options Assessed: Customer HR Finance Supply
Chain
WAM Energy Delivery
WAM Energy Supply
Technology
SAP Only
Oracle Only
SAP & Maximo
Oracle & Maximo
SAP & PassPort
Oracle & PassPort
Low Capability Partial or Neutral Capability Full Capability Viable
3
Solution Option Summary Solution Selection Option Preliminary Findings
SAP or Oracle with Maximo Visually Appealing – User Interface Maximum Configurability WO Completion Tracking (wrench time)
SAP Only New Business model of integrated
functions Mobility, employee self services,
process configuration Relevant, transparent and timely
integrated financial information
Do we want one vendor for many functions? Could predefined processes lead to increased costs for process changes? What is the risk for potential business disruption? Will we really transform legacy system(s)? Maximum Configurability – will we limit to common processes? Would we lose SAP mobility benefits? Forrester report (Oracle’s Dilemma: Applications Unlimited Versus Fusion)
Open Questions
4
Industry Landscape / Peer Comparison Considerations
• Non-standard cross-BU business processes
• Minimal use of enterprise systems
• Principal enterprise system default for new applications
• Point solutions justified by incremental value
• Functionality consolidated to single enterprise system
• Point solutions limited to one off processes
Low High
• Differentiated business processes
• Enterprise systems for common or undifferentiated processes
Best-of-Breed Minimal Point Solutions Enterprise Multiple
Point Solutions
BU Autonomy & Flexibility
Enterprise / Process Integration
Degree of Enterprise / Process Integration
Xcel Energy Future Alternatives Oracle + Maximo
SAP Only
SAP + Maximo
Degree of IT Integration and Application Uniformity
5
Enterprise Solution Selection Industry Adoption of Similar Solutions
Utilities Aligned to ESS
Other utilities in Xcel territory are using similar platforms combinations. Ameren (Oracle, Power Plant, Mincom Ellipse), PNM (Oracle), Colorado Spring Utilities (Maximo), Denver Water Department (Maximo), Minnesota Power (Maximo)
Utility SAP
Oracle
Maxim
o
OG&E X
CenterPoint X
PSE&G X
PG&E X
FPL X
National Grid X
Hydro One X
Sempra X
American Water X
SCE X
DTE X X
SRP X X
Entergy* X X
Duke* X X
Southern* X X
Portland General* X X
Keyspan X X
NiSource X X
El Paso Electric X X
Nova Scotia Power X X
TVA X X
*running Oracle Peoplesoft HR / Finance
Represents ~70 North American Government / Municipal & Investor Owned Utilities
6
7
Solution Option Definition Process
Option List: SAP Only
New Business model of integrated functions
Mobility, employee self services, process configuration,
SAP or Oracle with Maximo Visually Appealing – User Interface (UI) Maximum Configurability WO Completion Tracking (wrench time)
ESS: By the numbers Team prep for vendor demonstrations:
4,800 hours Vendor demonstrations: 3,200 hours Team:
Directors: 13 Managers: 15 SMEs: 12+ Consultants: 6
Implementation Options Customer HR Finance Supply Chain
WAM Energy Delivery
WAM Energy Supply Technology
1. SAP Only
2. Oracle Only
3. SAP & Maximo
4. Oracle & Maximo
5. SAP & PassPort
6. Oracle & PassPort
Low Capability Partial or Neutral Capability Full Capability
8
Solution Option Details SAP Only
Functional Assessment – ability to deliver PTT Outcomes Strengths
New Business model of Ingratiated functions: Finance, HR, Supply Chain, W&AM
Demonstrated understanding of the utility industry Intuitive UI and workflow (but dated appearance) Mobility, employee self services, process configuration, Most disciplined deployment and maintain methodology Surprisingly strong experience in utility industry – growing nuclear
presence Strong business process change management - upgrade path
Weaknesses
Short – long cycle integrated scheduling – need greater insight for R2 Business Objects Analytics not developed for Utilities Least flexible data structure – how nimble can Xcel be on SAP – Really a
weakness?? Need to speak to this. Lock Out / Tag Out
9
Solution Option Details SAP Only, continued
Technical Assessment Strengths
Significant strength with regards to enabling efficient change management and supportability
Common information model enables fewer integrations and a simple technical foot print; Geospatial Data ready.
Most mature mobile technology platform Weaknesses
Rigidity of required change management and process provided needed structure but slows movement.
Risks One vendor for many functions Predefined processes could lead to increased costs for process changes
Customer Call with First Energy (Ohio, Penn, NJ) alternative PSEG (New Jersey)
Relationship – change over time as more functions added to SAP Change from BoB to ERP Nuclear processes (CAP, EC, RP,) Lock Out / Tag Out
10
Solution Option Details SAP and IBM – Maximo
SAP: Finance, HR, Customers & Supply Chain Functional Strengths
New Business model of Ingratiated functions: Finance, HR, Supply Chain, W&AM
Demonstrated understanding of the utility industry
Intuitive UI and workflow (but dated appearance)
Mobility, employee self services, process configuration,
Most disciplined deployment and maintain methodology
Surprisingly strong experience in utility industry – growing nuclear presence
Functional Weaknesses Short – long cycle integrated scheduling Business Objects Analytics not developed
for Utilities Least flexible data structure – how nimble
can Xcel be on SAP Lock Out / Tag Out
IBM - Maximo WAM Functional Strengths
Visually Appealing User Interface (UI) Maximum Configurability WO Completion Tracking (wrench time)
Functional Weaknesses
Short – long cycle integrated Scheduling Mobile application Lock Out / Tag Out Under development External document management
11
Solution Option Details SAP and IBM – Maximo, continued
SAP: Finance, HR, Customers & Supply Chain Technical Strengths
Significant strength with regards to enabling efficient change management and supportability
Common information model enables fewer integrations and a simple technical foot print; Geospatial Data ready.
Most mature mobile technology platform Technical Weaknesses
Rigidity of required change management and process provided needed structure but slows movement.
Risks One vendor for many functions Hidden costs for process changes
Customer Call with DTE Energy (Michigan) alt Dominion Relationship – change over time as more
functions added to SAP Change from Bob to ERP Nuclear processes (CAP, EC, RP,) Lock
Out / Tag Out
IBM - Maximo WAM Technical Strengths
Business rules flexibility and reporting capabilities
Well structured technology architecture that leverages proven industry standards
Technical Weaknesses Complex integrations required; 3rd party
vendor support for adapters lacks a clear and long-term strategy
Minimal insight into impact of changes to the technical environment
Risks Will Xcel really transform legacy system Maximum Configurability – will Xcel limit
to common processes Would you lose SAP mobility benefits?
Customer Call with DTE Energy (Michigan) alt Dominion SAP & Maximo integration and
relationship Supply Chain functions Nuclear Specific processes
12
Solution Option Details Oracle and IBM – Maximo
Oracle: Finance, HR, Customers & Supply Chain Functional Strengths
Intuitive UI Mobile tool (wrench time) Analytics – Supply chain
Functional Weaknesses Acquired components vs.. developed ERP
(BoB from one vendor?) Integration with Oracle acquired products –
Primavera, Portfolio tool?, Xcel needs to determines which 3rd party to
use (Signum does not understand our business)
IBM - Maximo WAM Functional Strengths
Visually Appealing User Interface (UI) Maximum Configurability WO Completion Tracking (wrench time)
Functional Weaknesses
Short – long cycle integrated Scheduling Mobile application Lock Out / Tag Out Under development External document management (offset
with Oracle?)
13
Solution Option Details Oracle and IBM – Maximo, continued
Oracle: Finance, HR, Customers & Supply Chain Technical Strengths
Well established application base at Xcel Energy including database, Primavera, NMS, PeopleSoft, JDE
Technical Weaknesses Unclear technology roadmap for Enterprise
Solutions including WAM ERP is composed of a significant number of
separate products Minimal insight into of how changes impact
the enterprise across the solution Risks
Forrester report (Oracle’s Dilemma: Applications Unlimited Versus Fusion)
Customer Call Southern Company (Atlanta) and/or TVA Oracles understanding of the Utility industry Integration of Oracle solutions (Primavera) and
3rd party products (GIS) Oracle & IBM integration and relationships Supply Chain functions
IBM - Maximo WAM Technical Strengths
Business rules flexibility and reporting capabilities
Well structured technology architecture that leverages proven industry standards
Technical Weaknesses Complex integrations required; 3rd party
vendor support for adapters lacks a clear and long-term strategy
Minimal insight into impact of changes to the technical environment
Risks Will Xcel really transform legacy system Maximum Configurability – will Xcel limit
to common processes Customer Call Southern Company (Atlanta)
and/or TVA Oracle & Maximo integration and
relationship Supply Chain functions Nuclear Specific processes
14
Solution Option Details Oracle Only or Combinations with Ventyx Passport
Oracle Only Functional Assessment: WAM (Energy
Delivery & Supply) No US Nuclear locations –
significant risk to be first. Very limited T&D experience Did not demonstrate significant
functional advantage to overcome the limited implementations in Nuclear
Functional Fit: Finance, HR, Customer & Supply Chain Oracle does have sufficient
deployed experience in utilities and demonstrated sufficient functional fit and experience
Combinations with Ventyx Passport Functional Assessment
Ventyx presents a significant strategic product upgrade agenda that would negatively impact Xcel Energy
Current underlying technology is many generations old forcing the upgrade approach
Ventyx did not demonstrate any significant functional advantage to overcome the risks of the upgrade agenda.
Inability to deliver against their strategic roadmap – e.g. Service Suite and Long Duration work
15
SAP Continued strong investment in technology Architectural foundation in place. No significant architectural changes expected over the
next 8 – 10 years. Primary technical areas of investment and growth will be in the HANA databases platform,
mobility, and analytics. Anticipating more cloud-based opportunities
Oracle
Continued acquisition strategy Continued strategy of integrating multiple separate applications to provide an enterprise
system Unclear strategic direction between their individual applications (Ebusiness Suite,
Peoplesoft, JDE, etc) and Fusion Applications. This concern is supported by Forrester. Significant drive towards ‘Oracle Engineered Systems’ which include Oracle software as well
as hardware. Strategic mobile platform does not currently exist. Anticipating additional acquisitions near-
term to fill out and establish their strategic mobile architecture.
Enterprise Solutions Overview Enterprise Architecture Observations - Strategic Technical Direction of Vendors
16
IBM / Maximo
Continued investment in the Maximo platform Strategic mobile platform communicated as being deployed in 2014. Expecting continued
variability due to the rate of change in the mobile technology industry domain. Anticipating that IBM will continue to extend Maximo into more non-utility industry areas. Asset management will remain a primary component
Ventyx / PassPort
Currently running extremely aged and variable technology. Communicated movement towards a common architectural platform based upon recent technology and methods.
Investment commitment to the underlying technology (current or future) is unclear. Architecture resources communicated that key components of the future architecture are not funded.
Expecting continued reliance on industry position and experience as opposed to integrity of the technical architecture.
No consistent vision for strategic mobile technology direction currently. Expecting that Ventyx will have to address this soon.
Continued product acquisition strategy. The Mincom product appears to be a preferred direction from a technical standpoint.
Enterprise Solutions Overview Enterprise Architecture Observations - Strategic Technical Direction of Vendors
17
Enterprise Solutions Architecture Executive Summary Enterprise Architecture Observations
PTT Scenario Analysis
November 22, 2013
2
Transformation Scenario # Scope definition (initiatives)
Process + Technology Maintenance (Current Technology Platforms)
1
- All process scope associated with PTT wave 1 and wave 2 scope including Finance - GL and CoA, WAM, Scheduling & Mobility, and any Asset Analytics, System
Intelligence assumed on current technology (JDE, Maximo, Ventyx, etc.) - Maintain current technology / technical upgrades; minor technology enhancements
per IT plan
Process + Partial Reimplementation of In-house Technology (GL/CoA OR EAM, Scheduling, Mobile)
2
- Same process scope as #1 (variant of process given technology changes) - Standardize GL and redesign CoA on latest JDE version - WAM, Scheduling & Mobility, Asset Analytics, System Intelligence assumed on
current technology (Maximo, Ventyx, etc.)
3
- Same process scope as #1 (variant of process given technology changes) - GL and CoA assumed on current technology (JDE) - Standardize WAM, Scheduling & Mobility, and SC on latest version of Maximo
(Nuclear, Fossil, Electric T&D, and Gas)
Process + Reimplementation of In-house Technology (GL/CoA AND EAM, Scheduling, Mobile)
4
- Same process scope as #1 (variant of process given technology changes) - Standardize GL and redesign CoA on latest JDE version - Standardize WAM, Scheduling & Mobility, and SC on latest version of Maximo
(Fossil, Electric T&D, and Gas) - Nuclear assumed on current technology (Ventyx)
5 - Same scope as #4 with exception of Nuclear - Nuclear in scope for standardization on latest version of Maximo
Integrated Process + New Enterprise Standardized Technology (wave 1+2)
6 - Same process scope as #1 (variant of process given technology changes) - Standardize GL/CoA, WAM, Scheduling & Mobility, and SC on SAP
PTT Scenario Analysis Summary Scenario Scope Definition
3
Upgrade to stabilize current system with negligible value/benefit.
Reduced Risk
• Eliminate risk associated with unsupported application
Improved Information • Minor improvements in work order spend • Minor improvements in account maintenance
Scalability
• No increased scalability
Create platform to drive integrated solutions and deliver qualitative value and benefits through the
organization.
Reduced Risk • Eliminate risk of an unsupported application • Single, consistent source of financial information • Replace manual work with more value focused analytic
efforts • Less complex and more stable IT environment; easier to
maintain
Improved Information • Potential for tight integration with operations • More available chart fields and attributes • Greater transparency and drill down capability
Simplified data structure
Scalability • Scalable to a significantly higher transaction volume • Common, standard data structure
Upgrade JDE – Scenario #3 Implement Integrated Solution Upgrade JDE or implement SAP?
PTT Scenario Analysis Outstanding Sub-Question to #3 (JDE v. Integrated Solution)
4
Scenario
Fit/Alignment To… Risks…
Business and Technical Complexity (Integration, Data, etc.)
Future State Operating Model
IT Strategic Direction & Plan
Implementation Risk / Program Complexity
Sustainment Risk
Business Operations Risk
IT Operations Risk
#1
#2
#3
#4
#5
#6
High Fit / Low Risk
Moderate Fit / Moderate Risk
Limited Fit / High Risk
Scale Note: See appendix for detailed fit/alignment and risks for each scenario
PTT Transformation Scenario Analysis Scenario Comparison - Alignment/Risks
5
PTT Scenario Analysis Pros and Cons
Scenario #1 Scenario #2 Scenario #3 Scenario #4 Scenario #5 Scenario #6
Pros
- Lowest cost - Addresses short-term
technical / system operational risk
- Process changes can be implemented in a shorter duration
- Core systems current / technically compliant at end of year 4
- Addresses / long-term technical / system operational risk for JDE
- Addresses short-term technical / system operational risk for Passport / Maximo
- WAM process changes can be implemented in a shorter duration
- Introduces Finance system controls
- Core systems current / technically compliant at end of year 4
- Addresses long-term technical / system operational risk for WAM platforms
- Addresses short-term technical / system operational risk for JDE
- Addresses most critical systems early in the overall program lifecycle
- Simplifies the overall WAM environment
- Introduces WAM system controls to support process changes
- Enables mobility
- Addresses long-term technical / system operational risk of both the JDE and WAM platforms
- Simplifies the overall technology environment
- Introduces Finance and WAM system controls to support process changes
- Enables mobility
- Addresses long-term technical / system operational risk of both the JDE and WAM platforms
- Simplifies the overall technology environment
- Introduces system controls to support process changes
- Enables mobility
- Most positive NPV - Greatest ability to
capitalize changes - Fully addresses long-
term technical / system operational risk
- Reduces potential need for future investment to consolidate legacy platforms
- Simplifies the overall technology environment
- Best aligns with IT strategic plan
- Introduces system controls to support process changes
- Enables mobility
Cons
- Lowest NPV - High O&M / D&R would
be expensed - Does not address
business and technical complexity
- Requires a more robust change management sustain changes
- Does not enable mobility
- High O&M / most D&R would be expensed
- Does not fully address business and technical complexity
- Requires a more robust change management sustain changes
- Does not enable mobility
- May require a complex integration and/or translation engine between consolidated WAM and legacy JDE platform / technology
- JDE will not be current / technically compliant until the end of year 5
- Consolidated WAM platform / technology may have to be integrated with 2 financial platforms
- Organization impact is significant - ~5,300 users have to migrate from Passport to Maximo
- Legacy systems remain technically / support non-compliant while new platforms are being implemented
- May require a complex integration and/or translation engine between legacy WAM platform / technology and consolidated JDE platform / technology while the new WAM platform / technology is being designed, built, and implemented
- Organization impact is significant - ~5,300 users have to migrate from Passport to Maximo
- Legacy systems remain technically / support non-compliant while new platforms are being implemented
- May require complex integration between legacy WAM platform / technology and consolidated JDE platform / technology while the new WAM platform / technology is being implemented
- Organization impact is significant - ~6,800 users have to migrate from Passport to Maximo
- Highest cost - Legacy systems remain
technically / support non-compliant while new platforms are being implemented
- May require complex integration between legacy WAM platform / technology and new finance functionality while the new WAM platform / technology is being implemented
- Organization impact is most significant - all users will have to migrate from current platforms to SAP
- New IT skills (e.g., SAP) need to be developed
6
PTT Scenario Analysis Detailed Scenario Analysis Scenario #1 (Page 1 of 2)
Scenario #1: Process Transformation and Current Technology Platform Maintenance
Scope Definition
- All process changes associated with PTT waves 1 and 2 scope (incl. finance) with all process changes enabled by current technology
- No new technology introduced into the environment
- The finance, WAM, scheduling, mobility, and supply chain platforms / applications assumed to remain on current technology - JDE, Maximo, Ventyx (Passport)
- The current technology is maintained to address technology risk - technical upgrades completed on an as needed / required basis
- Minor technology enhancements to continue per the IT plan
Cost Profile (Cash View) O&M Capital Total $64 $25 $90
7
Risks
- Postpones the investment / replacement of core systems while mitigating short term technical / operational risk - Upgrading core systems to the most current version might require significant investment to cleanse and migrate data; this
investment is unknown at this point and not included in the overall cost of scenario #1 (NOTE: a key assumption is to port data from the legacy technology using standard data migration tools)
- Carries a risk that process changes will be eroded without a new technology platform and improved system controls
Pros - Addresses / mitigates short-term technical / system operational risk - Process changes can be implemented in a shorter duration vs. more technology heavy scenarios thus accelerating benefits - Based on the current sequencing / timing, at the end of year 4, core systems will be current / technically compliant
Cons
- Does not address integration complexity, data integrity, and standards disparity; contradicts the IT strategic direction and roadmap
- Requires a more robust change management / performance management program and discipline to enable process change and benefit sustainment; assumption is no / limited technology controls to help support change
- Does not provide the system configuration and infrastructure to support a mobility capability
PTT Scenario Analysis Detailed Scenario Analysis Scenario #1 (Page 2 of 2)
Scenario #1: Process Transformation and Current Technology Platform Maintenance
8
PTT Scenario Analysis Detailed Scenario Analysis Scenario #2 (Page 1 of 2)
Scenario #2: Process Transformation, JDE Consolidation, and Current Technology Platform Maintenance
Scope Definition
- All process changes associated with PTT waves 1 and 2 scope (incl. finance); all process changes enabled by current technology with exception of JDE which is enabled by consolidated / upgraded technology
- Financial platforms, JDE and JDE-ES, are standardized / consolidated with a redesigned GL and chart of accounts
- The WAM, scheduling, mobility, and supply chain platforms / applications assumed to remain on current technology - Maximo, Ventyx
- The current WAM technology is maintained to address technology risk - technical upgrades completed on an as needed / required basis
- Minor technology enhancements to continue per the IT plan
Cost Profile (Cash View)
O&M Capital Total $74 $46 $120
9
PTT Scenario Analysis Detailed Scenario Analysis Scenario #2 (Page 2 of 2)
Scenario #2: Process Transformation, JDE Consolidation, and Current Technology Platform Maintenance
Risks
- Postpones the investment / replacement of most core systems (Passport, Maximo) while mitigating short term technical / operational risk
- Although scenario #2 does not include significant enhancements to Passport and Maximo, a redesigned GL and chart of accounts will require changes to the WAM platforms to align to the new GL / CoA and achieve the finance enabled benefits; the total cost of scenario #2 could be much higher due to finance / WAM alignment
- A sophisticated / complex integration will be required between WAM and the new JDE platform / technology; the cost of this integration is unknown at this point and not built into the cost of scenario #2
- Other applications (CIS, Core HR/PeopleSoft) beyond the scope of PTT will likely have to be modified to align to the new GL / CoA
- The technical upgrade of Passport and Maximo are delayed to align with the new GL / CoA - Upgrading core systems to the most current version might require significant investment to cleanse and migrate data; this
investment is unknown at this point and not included in the overall cost of scenario #2 (NOTE: a key assumption is to port data from the legacy technology using standard data migration tools)
- Carries a risk that WAM process changes will be eroded without a new technology platform and improved system controls
Pros
- Addresses / mitigates long-term technical / system operational risk for JDE and short-term technical / system operational risk for Passport / Maximo
- WAM process changes can be implemented in a shorter duration vs. more technology heavy scenarios thus accelerating benefits
- Based on the current sequencing / timing, at the end of year 4, core systems will be current / technically compliant
Cons
- Does not fully address integration complexity, data integrity, and standards disparity; contradicts the IT strategic direction and roadmap
- Requires a more robust change management / performance management program and discipline to enable WAM process change and benefit sustainment; assumption is no / limited technology controls to help support change
- Does not provide the system configuration and infrastructure to support a mobility capability
10
PTT Scenario Analysis Detailed Scenario Analysis Scenario #3 (Page 1 of 2)
Scenario #3: Process Transformation, WAM Consolidation, and Current Technology Platform Maintenance
Scope Definition
- All process changes associated with PTT waves 1 and 2 scope (incl. finance); finance process changes enabled by current technology; WAM process changed enabled by consolidated / upgraded technology
- The finance platforms / applications assumed to remain on current technology – JDE and JDE-ES (no redesigned GL and chart of accounts)
- WAM platforms, Passport and Maximo, standardized / consolidated (includes scheduling, mobility, and supply chain) for all lines of business (including Nuclear) and jurisdictions
- JDE and JDE-ES are maintained to address technology risk - technical upgrades completed on an as needed / required basis
- Minor technology enhancements to continue per the IT plan
Cost Profile (Cash View) O&M Capital Total $81 $155 $237
11
PTT Scenario Analysis Detailed Scenario Analysis Scenario #3 (Page 2 of 2)
Scenario #3: Process Transformation, WAM Consolidation, and Current Technology Platform Maintenance
Risks
- Postpones the investment / replacement of the finance systems while mitigating short term technical / operational risk - Although scenario #3 does not include significant enhancements to JDE and JDE-ES, a consolidated WAM platform /
technology may require a consolidation of the finance platform / technology (assumption is new WAM platform / technology is designed with a new GL / CoA in mind); the total cost of scenario #3 could be similar to scenario #5 if JDE and JDE-ES would need to be consolidated
- A sophisticated / complex integration / translation will be required between legacy JDE and the new WAM platform / technology; the cost of this integration / translation is unknown at this point and not built into the cost of scenario #3
- The technical upgrade of JDE / JDE-ES is delayed to align with the new WAM platform / technology - Upgrading JDE to the most current version might require significant investment to cleanse and migrate data; this investment
is unknown at this point and not included in the overall cost of scenario #3 - Implementation risk is significant with all lines of business and jurisdictions in scope for the WAM consolidation
Pros
- Addresses / mitigates long-term technical / system operational risk of the WAM platforms / technology; addresses most critical systems early in the overall program lifecycle; addresses short-term technical / system operational risk of JDE
- Simplifies the overall WAM environment - reduces overall integration complexity (less systems to integrate), improves data integration, and addresses standards disparity – better aligns with IT strategic direction and roadmap
- Consolidated WAM platform / technology introduces system controls into the environment which will help support process changes
- Provides the system configuration and infrastructure to support a mobility capability and achievement of mobility benefits
Cons
- May require a complex integration and/or translation engine between consolidated WAM and legacy JDE platform / technology
- JDE technical upgrade would likely have to be postponed and will not be current / technically compliant until year 5 - Consolidated WAM platform / technology may have to be integrated with 2 financial platforms / technology - Organization impact is significant as ~5,300 users have to migrate from Passport to Maximo
12
PTT Scenario Analysis Detailed Scenario Analysis Scenario #4 (Page 1 of 2)
Scenario #4: Process Transformation, JDE and WAM Consolidation (Excluding Nuclear)
Scope Definition
- All process changes associated with PTT waves 1 and 2 scope (incl. finance); finance and WAM process changes (excluding nuclear) enabled by consolidated / upgraded technology
- Nuclear WAM assumed to remain on current technology
- WAM platforms, Passport and Maximo, standardized / consolidated (includes scheduling, mobility, and supply chain) for all lines of business (excluding nuclear) and jurisdictions
- Nuclear WAM is maintained to address technology risk - technical upgrades completed on an as needed / required basis
- Minor technology enhancements to continue per the IT plan (as needed)
Cost Profile (Cash View) O&M Capital Total $88 $145 $233
13
PTT Scenario Analysis Detailed Scenario Analysis Scenario #4 (Page 2 of 2)
Scenario #4: Process Transformation, JDE and WAM Consolidation (Excluding Nuclear)
Risks
- While the new JDE and WAM platforms / technology are being designed, built, and implemented, legacy platforms / technology remain unsupported and at risk for significant operational / system failure
- A sophisticated / complex integration / translation will be required between legacy Nuclear WAM platform / technology and the new JDE platform / technology; the cost of this integration / translation is unknown at this point and not built into the cost of scenario #4
- If JDE platform / technology is consolidated before WAM platform / technology, there is a risk of a “double touch” on the WAM platforms / technology to ensure legacy WAM platforms / technology align with the consolidated JDE platform / technology while the new WAM platform / technology is being designed, built, and implemented
- Implementation risk is significant with all lines of business except Nuclear and jurisdictions in scope for the WAM and JDE consolidations
Pros
- Addresses / mitigates long-term technical / system operational risk of both the JDE and WAM platforms / technology - Simplifies the overall technology environment - reduces integration complexity, improves data integration, and addresses
standards disparity – better aligns with IT strategic direction and roadmap - Consolidated JDE and WAM platform / technology introduces system controls into the environment which will help support
process changes - Provides the system configuration and infrastructure to support a mobility capability and achievement of mobility benefits
Cons
- Legacy systems remain technically / support non-compliant while new platforms are being designs, built, and implemented - May require a complex integration and/or translation engine between legacy WAM platform / technology and consolidated
JDE platform / technology while the new WAM platform / technology is being designed, built, and implemented - Organization impact is significant as ~5,300 users have to migrate from Passport to Maximo
14
PTT Scenario Analysis Detailed Scenario Analysis Scenario #5 (Page 1 of 2)
Scenario #5: Process Transformation, JDE and WAM Consolidation (Including Nuclear)
Scope Definition
- All process changes associated with PTT waves 1 and 2 scope (incl. finance); finance and WAM process changes enabled by consolidated / upgraded technology
- WAM platforms, Passport and Maximo, standardized / consolidated (includes scheduling, mobility, and supply chain) for all lines of business and jurisdictions
- Minor technology enhancements to continue per the IT plan (as needed)
Cost Profile (Cash View) O&M Capital Total $93 $172 $265
15
PTT Scenario Analysis Detailed Scenario Analysis Scenario #5 (Page 2 of 2)
Scenario #5: Process Transformation, JDE and WAM Consolidation (Including Nuclear)
Risks
- While the new JDE and WAM platforms / technology are being designed, built, and implemented, legacy platforms / technology remain unsupported and at risk for significant operational / system failure
- If JDE platform / technology is consolidated before WAM platform / technology, there is a risk of a “double touch” on the WAM platforms / technology to ensure legacy WAM platforms / technology align with the consolidated JDE platform / technology while the new WAM platform / technology is being designed, built, and implemented
- Implementation risk is significant with all lines of business and jurisdictions in scope for the WAM and JDE consolidations
Pros
- Addresses / mitigates long-term technical / system operational risk of both the JDE and WAM platforms / technology - Simplifies the overall technology environment - reduces integration complexity, improves data integration, and addresses
standards disparity – better aligns with IT strategic direction and roadmap - Consolidated JDE and WAM platform / technology introduces system controls into the environment which will help support
process changes - Provides the system configuration and infrastructure to support a mobility capability and achievement of mobility benefits
Cons
- Legacy systems remain technically / support non-compliant while new platforms are being designs, built, and implemented - May require complex integration between legacy WAM platform / technology and consolidated JDE platform / technology
while the new WAM platform / technology is being designed, built, and implemented - Organization impact is significant as ~6,800 users have to migrate from Passport to Maximo
16
PTT Scenario Analysis Detailed Scenario Analysis Scenario #6 (Page 1 of 2)
Scenario #6: PTT Scope - Process and Technology Transformation (SAP)
Scope Definition
- All process changes associated with PTT waves 1 and 2 scope (incl. finance)
- Standardize finance, WAM, scheduling & mobility and supply chain on SAP
Cost Profile (Cash View) O&M Capital Total $77 $254 $331
17
PTT Scenario Analysis Detailed Scenario Analysis Scenario #6 (Page 2 of 2)
Scenario #6: PTT Scope - Process and Technology Transformation (SAP)
Risks
- While the new SAP platform / technology is being designed, built, and implemented, legacy platforms / technology remain unsupported and at risk for significant operational / system failure
- If finance functionality is consolidated before WAM functionality, there is a risk of a “double touch” on the legacy WAM platforms / technology to ensure legacy WAM platforms / technology align with new SAP finance functionality while the new WAM functionality is being designed, built, and implemented
- Implementation risk is significant with all lines of business and jurisdictions in scope for the WAM and JDE consolidations
Pros
- Addresses / mitigates long-term technical / system operational risk of both the JDE and WAM platforms / technology - Reduces potential need for future investment to consolidate legacy platforms (NOTE: will require ongoing maintenance
support investment – similar to all other scenarios) - Simplifies the overall technology environment – significantly reduces integration complexity, improves data integration, and
addresses standards disparity – most closely aligns with IT strategic direction and roadmap - Introduces system controls into the environment which will help support process changes - Provides the system configuration and infrastructure to support a mobility capability and achievement of mobility benefits
Cons
- Legacy systems remain technically / support non-compliant while new platforms are being designs, built, and implemented - May require complex integration between legacy WAM platform / technology and new finance functionality while the new
WAM platform / technology is being designed, built, and implemented - Organization impact is most significant as all users will have to migrate from current platforms to SAP
18
PTT Scenario Analysis Cost Estimating Approach
Component Estimating Approach
Current Software Technical Upgrades / Ongoing Maintenance
JDE and Maximo Consolidations / Process Design
Impl
emen
tatio
n
Build Costs / Upgrade Costs (Labor/PM/Conversion)
Historical gathered estimates, reviewed by management team
Preliminary scoping with a “top down” estimate using Accenture’s estimating models; validation against Rec Phase
estimates
Change Management / Communications / User Training % of upgrade cost % of build cost
Software Licenses Current license cost Current license cost
Hardware / Hosting / Infrastructure Current hosting cost Current hosting cost
Transition to Sustainment (IT) No incremental costs Rec Phase estimates
Ong
oing
(A
nnua
l)
Software Maintenance Historical including annual estimated increases
20% of license costs with a 4% year over year increase
Application / Environment Support Current support costs % of current application support with a factor for increased support requirements
Other Ongoing Costs Historical server costs including server replacement every 5 years
Historical server costs with a factor for increase based on scale
19
Skire Unifier
Cor
pora
te F
inan
cial
Sys
tem
s
CBS (Budget and Forecast) Powerplant (Fixed Asset Accounting – Subledger) Corporate JDE (General Ledger) ES JDE
HR
IS a
nd T
ime
Trac
king
Dat
a W
areh
ouse
PassportMaximo
PeoplesoftHR, Payroll
Accounting String Hierarchy for ES:JDE Parent Project Number (G/L string)
Subledger (a.k.a. “JDE Child Work Order”)Maximo Work Order
SOX Compliance Report (new)
Total Cost Report(exists)
Nuclear Passport (future)
Material, PO
Estimates to Actuals
Report (new)
A project is defined as a “funding parent”, “funding work order” or “parent work order”. Projects are work orders that generally have one or more “child work orders” that roll up into the project. (REF: CBS p. 6)
GL Time is linked to JDE at a higher level because we can’t show costs by employee.
FERC Uniform System of Accounts
DatesESD Estimated Start DateEISD Estimated In-Service DateECD Estimated Completion DateAISD Actual In-Service DateACD Actual Completion Date
Capital Expenditures and the WBS:Materials or GoodsServices or Labor (Xcel Employee labor+benefits, Contract labor)Indirects
Key Object Accounts (F0911.GLOBJ):CWIP (730000-733998, 733999=CWIP clearing) FERC install=010700RWIP (740000-743998, 743999=RWIP clearing) FERC removal=010800O&M (700000-729999)Deferred (748000-748998, 748999=Deferred clearing)AFUDC (733500=Debt, 733600=Equity)Overheads (733200=CWIP, 743200=RWIP)
Other Information:Capital projects are budgeted at the parent project levelActuals are posted to the childrenInstallation (CWIP) and Removal (RWIP) can be tracked using the same parent work order
JD Edwards Account String (a.k.a. Corporate Account String) – 3 Segments:[JDE Business Unit] (Always Required)
[JDE Object Account] (Always Required)[Subsidiary] (often blank or ‘000’)
Subledger (when necessary; not considered part of account number)
ES Account StringChild (not parent) WO#
In-Service Date:When the commercial operation begins, such as when the line is energized or main pressurized. (CBI p. 20)The asset is in use or producing revenue – move the constructed asset from CWIP to Plant in-serviceAFUDC stopsBook Depreciation beginsStart testingTurn over construction project from construction manager to operations managerEstimated in-service date for forecasting and budgeting
Completion Date:After the In-Service Date (can’t be earlier than in-service date)All costs are recognized to a [JDE Parent] work order“closing a work order”Project is doneReady for unitizationAuto-unitizable assets for DistributionManual unitizable assets for ESReview final As-Built
“Bolt-On” connector to JDEP5548201
Create new ES Account Strings(manual batch process)
MaximoDatabase
Staging table
Staging table
MaximoAccount string
+ data
Save
Realtime interface(via WebMethods):
Upon action, transfer Maximo Account String+data to ES JDE.
Actions:Receipt: upon saveMaterial: upon save
Labor: upon approval
1
No parent numbers in Maximo. Only Child numbers in Maximo.Contracts put “M” in front of PO#
PassportDetails
Data feed MaximoDetails
Data feed
Detail table
Posted transactions
Need to set up combo in CBS manually because CBS validates the combo against corporate JDE
PO and WO info only,not labor
Nightly load
ES to JDE codes
Chart of Accounts
Unix script (every 2
secs)
1. Batch process: nightly unix script2. Posting process (R09801): scheduled job every morning 7:30 am3. Transfer non-error transactions to Corp JDE (nightly)
1-Translation (R550911i71)started manually
2
2-Validation (R550911i72)Started by #1 or manual
3-Transfer (R550911i73)Started by #2
3
Error report
Fix errors
Unvalidated account
Validatedaccount
Validate account
Staging tables Good transactions
nightly
RequestParent#
ReceiveParent#
GetNextWO Number1xxxxxxx
Send to Powerplant
Passport Staging
table
Accounts payable TransactionAnd all charges
Key:Passport WO# is the Subledger#
Capital uses subledger numberO&M has no subledger number“From” or “providing” or “performing” department“To” or “receiving” department. The “receiving” department should always be the same as the “providing” department in Corp JDE for Energy Supply.
ESBU (a.k.a. “Financial center”) translation only occurs if O&M (subledger is 05xxxxxx). If Capital, (subledger is 1xxxxxxx), then the non-labor performing department maps directly to the Corp JDE BU.
Facilities, Transmission, or Distribution may request project
number from Powerplant, not CBS.
“Unitize” Date:As-Built formTurn Corp JDE Child WO into an asset
Per FERC:Not to exceed
90 days120 days (Nuclear)
Per Xcel1 day to 1 year
Typically 6 months
Vendor info
Non-unitized Property Unitized Property
CBS Staging
table
Maximo contains Work orders, Purchase Orders/Contracts, Vendors (from Passport)
Passport is the Corporate Accounts Payable system and contains Purchase Orders (material), Contracts (services), work orders, vendor invoices.
Validate parent
Powerplant is the system of record for corporate assets.Capital Asset Accounting (CAA) performs the Capitalization Policy Test to ensure a project meets criteria for capitalization and calculates AFUDC.Powerplant calculates: plant additions, book and tax depreciation, equity and debt AFUDC, deferred income tax expense.
Errors?Convert Powerplant
to JDE data and send to JDE
No
G/L
HR, Payroll, Time, Expenses
Fixed AssetsBudget & Forecast
Reporting & Analytics
Send vendor data to Maximo
A Standard PO can have partial payments (not releases)A Blanket PO can have recurring releases, which are child PO’s. A release PO belongs to a blanket PO; you can’t have a release without a blanket.
Labor at Maximowork order level, not detail level
batch file monthly
Receive A/P data from Maximo
230190.701500.000.W.10899135.A.AAA.P.PC.E.010800.S.230290Maximo Account String (a.k.a. ES Account String) - 13-segments:
CBS contains 6 years of forecast data, current year YTD actuals and remaining months forecast.
Send COA to ES JDE
Send A/P data to
Passport
Receive vendor data
from Passport
Peoplesoft department number contains employees
and their labor costs.
Data Warehouse
Interface
Unifierforecast
Summarized PassportTransactions, (PO, WO, etc)
Payment Details
Key:Maximo WO#
Corporate A/P and Non Energy SupplyWork Management, Purchasing, Inventory
Energy SupplyWork Management, Purchasing, Inventory
Xcel Employee
(ES)
Enter Time
Labor(hours)A/P Data
Vendor Data
Task#(00-99)
Vendor
invoiceProduct
Create PO & send to vendor
PO
Ship product or perform service & send invoice
Receive product or service
& enter invoice
Pay invoice
Pay to
$
payment
1 2 3Service
LDAP Interface
Scope TBD
Unifier uses Crystal and Xcelsius for reporting
Doc Type (GLDCT non-labor):JE=Journal Entry (Manual adjustments, accruals)PP=Prior Period Journal EntryUB=SC Misc Expense AllocationsXB=ES-JDE (Maximo) MaterialsXD=TimeXE=Passport A/PXH=FleetAnywhereXI=Powerplant (AFUDC, overhead)XK=Passport MaterialsXL=Concur (Xcel employee expenses)XU=Nuclear Passport A/P (future)XV=Nuclear Passport Materials (future)
JDE contains all actuals transactions and Journal Entries which are entered directly into JDE
Labor hoursRealtime TCP/IP
GL Time contains:Maximo WO# in Cost Object 1Subledger and Cost Object 1
Translate account string
Approve
1
2
Concuremployee expensesPTRS
Time entry
Time reportsBO
RealtimeCICS
batch
230290.730400.000.W.10899135
JDE Account String - 3-segments:
New Staging
tableNew
Process
REQ# 14.7ACR# 1202564
REQ# 14.2ACR# 1196521
Business Objects
Run reports
REQ# 14.11ACR# (n/a)
Crystal,Xcelsius
Run reportsReports
REQ# 14.12ACR# (n/a)
PMP universe
JDE Transactions(from Maximo, Passport)
Primavera Interface(included)
Project & Portfolio Management
O&
M
Create andvalidate Parent
Create Child(ren)
5 Perform work & collect Actuals
Update Dates & Forecasts
7 Report results
3.8 x 1.6
Material use tax? (MATUSETRANS)Material Receipts (MATRECTRANS)Service Receipts (SERVRECTRANS)Invoice Receipts (INVOICETRANS)Invoice Transactions (INVTRANS)Labor Transactions (LABTRANS)
# Maximo ESJDE JDE13 Performing Department (non labor) ? Business Unit (Cost Object 4)12 Convenience Pmt Cost Type 4 CT4 not used (F1620.CTABT1)11 FERC Account (WOEQ9) Cost Object 3 FERC Account10 Utility Type Cost Type 3 CT3 not used (F1620.CTABT1)
9 Cost Category (WOEQ8) Cost Object 2 CO2 not used8 Budget Category (WOEQ7) Cost Type 2 CT2 not used (F1620.CTABT1)7 Activity Cost Object 1 CO1=Maximo/Passport WO#6 Activity Type Cost Type 1='A' Cost Type 1='E' (F1620.CTAB1)5 JDE Work Order (WOEQ6) ? Child Work Order4 JDE WO type WO Type? WO Type?3 Subsidiary Subsidiary? Subsidiary?2 Resource Object Account? Object Account1 Financial Center (WOEQ5) ? Business Unit
Labor(hours)
IQNTime entry
Enter Time
Labor(hours)
Receive time from IQN
Labor (hours)Weekly feed
Outsidecontractor
CBS forecast
MaximoData
SkireData
PeoplesoftData
Employee Name + Title
Assign object
account
Labor(hours) $$
GL TimeData
Concatenate JDE Description
EPM Systems and Process OverviewDRAFT
Attachment AS-1.vsd, Printed: 7/20/2015, by Bob Harbeck 612-330-5693
Key:Parent ID,
Budget Combo Number
Key:Parent IDor Child ID
ALS
Get project ID
PassportProject
every minute
MS-OutlookInterface
Document Interface
Documentum for plant-related document management, Sharepoint for collaboration and document managementProjectwise for drawings
Batch Monitor
WO Control TBD?
reportCompare
Dates
ESD, EISD,ECDAs-built (future)
REQ# 14.1ACR# (n/a)
E&C PPMTool User
Update ForecastOn demand
PowerplantData
Actuals,Retirement units
report
Compare Forecast
Provide actuals & retirement unit data
REQ# 14.6ACR# 1202567
JDEData
REQ# 14.8, 14.9, 14.10
Feedback from Powerplant to ensure dates in Unifier match Powerplant. Ref REQ 14.4
TimeLabor
costing and distribution
Send update to CBS
CBSData
Update datesUpdated dates
Parent#ESDEISDECD
Update dates
Create (real time)Update (batch 7 pm daily)
Active/ApprovedREV
UNA
REJ
VAL
Open
Projectdata
1
2ES Submit Parent for validation
SUBCAA validate Parent and send to Powerplant
3
2aES enter data into Unifier
ES fix errors2c
CAA
Send ‘VAL’ to
CBS
ES Create (or fix) Child
Yes
JDE Staging table
Create child in Powerplant automatically creates child in JDE with estimated dates and status=’pending’.
Later, when child is validated by CAA in Powerplant, status changes to ‘Active/Approved’.
Next: create Maximo Account Strings (after 10 am, 1 pm, 4 pm, 10 pm)
ESD, EISD, ECD
CAA Validate
ChildErrors? No
Yes(status remains ‘Initiated’)
CAA Set status to Open and send to JDE
Open
Typically a few minutes for CAA to validate child
ES FinancialAnalyst
(or Project Lead)
ES Create Parent
Typically a few minutes from REV to VAL. Once in VAL status, can create Child in Powerplant. Pending
Active/Approved
CAA
Validatedparent
ESD, EISD, ECD
Key data flows:RED=ParentBLUE=ChildGREEN=ForecastPURPLE=Xcel Labor
3
Upon arrival of Parent from Powerplant (status was automatically set to ‘Active/Approved’), send ‘VAL’ status to CBS.
To JDE Via EAI every 10 minutes
Time data sent to JDE on last working day of month
1b2
Updated dates
PassportData
When dates are updated in Powerplant, they get pushed to JDE and then CBS
ES FinancialAnalyst
(or Project Lead)
ES FinancialAnalyst
(or Project Lead)
ES Create Journal Entries / accruals as needed
Cost Object 1 (F0911T.GLABR1) contains Maximo WO#
ClarityTime entry
by IBM
Labor(hours)
Actuals (rolled to Parent)From JDE to CBS
pay
WebMethods (WBI, MQ Series, EAI) to distribute next WO#
Enter TimeEnter
Time
RequestChild#
ReceiveChild#
BU.ObjAcct.Subsidiary Subledger
Child Data sent from JDE to ESJDE 4x per day at 10 am, 1 pm, 4 pm, 10 pm. After these times, ES Financial Analyst creates Maximo Account strings using the Bolt-On.
ES create budget combosAny time after parent created
2b
BudgetCombo
data
Email project lead to start charging in Maximo
1
2
ES FinancialAnalyst
(or Project Lead)
1
Translations for Capital:Capital: ESBU (CO4) = Corp BU
ES Obj + Cost Category (CO2) = Corp Obj(O&M: ESBU (CO4) + FERC (CO3) = Corp BU)
Cost Categories:PC = Project Capital (CWIP)-most common
PR = Project Removal (RWIP)-most commonOC = Overhaul Capital (CWIP)-rare
OR = Overhaul Removal Capital (RWIP)-rarePY=CWIP & RWIP-rare
All other codes are typically O&M which is not in current scope.
Many (e.g. 20) times per day
Later, upon receipt of In Service Unit Estimate, CAA change status of Child to ‘Complete’.complete
ES completePreliminaryUnit Estimate
1a
Create Maximo Account Strings4
Update Dates
On demandREQ# 14.4
ACR# 1196519
REQ# 14.5, 14.5.1ACR# 1368994
Powerplant Interface
Unifier forecast
Create Estimate
Receive Actuals
ESImport
forecastProof
ES Fix forecast
yes
Fixedforecast
CBS Interface
6REQ# 14.2, 14.3ACR# 1202569
PPM
Too
l
Automatically Email project lead if errors from Powerplant
Error table
Initiated
no
Corp FinImport
forecastUpdate
Errors?
Initiate Ideas and projects
reportCompare actuals to estimates
Errors?
ES Fix datesESD
EISDECD
As-built (future)
yes
Fixeddates
no
Actuals to Unifier Via Web Service
Estimates
ESDEISDECD
(ASD)AISDACD
As-built (future)Retirement unit data
Xcel Employee(Not ES)
6a
6b
ES update dates to Powerplant first, then forecast to CBS. Because dates can affect forecast. For example, if estimated completion date moves up, can’t forecast beyond this new date.
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 1 of 12
RFI Evaluation & CommentsDate Vendor
Pros15-May IBM / Maximo
Comments
16-May ABB / Ventyx Acknowledged FinanceThey started to write a GL & stopped (based on customer input), but gained insight into a GL, with a focus now on solid integration with GL vendorGIS acknowledged (important for us with regard to Tax)Liked the Roadmap (plan as to where they are going)Liked accounting is invisible (operator does not make accounting decisions or use the language)Liked Focus on configuration not customization.
Comments
22-May Oracle Tax Engine (integration)Tree Structures (data can be rolled up in different ways)Multiple Ledger functionality (FERC & GAAP, also Tax and Cash reporting)Account derivation
Comments Didn’t seeAccounting Management Reporting HUB Simulations / Activity Based / Product CostingThe service billing & allocation cases should get to it. May need to add one case.Total Labor Allocation – data is not entered daily & allocations happen monthly. Real costs will not tie directly to GL data, but operations should be able to get in the ballpark.Use Standard Cost – What needs to tie back to finance for labor vs. what is needed to make management decisions.
23-May SAP Small compact code block – tighter integration with accountingDrill back capability is evident in the presentationSegregation of duty flags & ability to identify and manage / control exceptionsApproval workflow / approvals
Comments Follow up: New business warehouse in memoryFor SAP a business warehouse needs to be there (a good thing)Tables are in GermanFERC reporting – there is no standard accepted process (follow up with references & dig deeper with vendors. Parallel ledger model? Attributes in WBS to designate the FERC account. Need to determine the best model for accounting Did not see allocations.
Finance
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 2 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
ConsYikes – No general ledger Hoping to s e e more GIS inte gra tion
Utilitie s a re a prima ry ta x pa ye r – ne e d to ide ntify
jurisdictions Not fully inte gra te d ERP , s o difficult to a s s e s how this will
work. Doe s not inte gra te with P owe rP la nt in curre nt ve rs ion
They have a lot of new upper management (good or bad?)Solid strategic vision – will that change?Do we want to be the beta for their new strategy?Not an ERPNot a lot of technology detail, gave us 2 words (connector, XML)
Vision Statements (excuse) was weekAsset management not adequately addressedHow to you do allocations & service functions & Trace backDashboard are only as good as the data, timeliness, and structure
Lost time in transition / clunkyCore ERP vs. add on products
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 3 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
ProsNice to see more about Time Keeping portionHelpful to see what matters to other areas
Saw some analytics todayCertification & Skills available to capture information
Checklist Organization functionsSelf Service (manager dashboards) – liked employee information availabilityFast formula – building business rules (was interesting)
Audit dashboard is great – today we do hundreds by handAbility to move a person to a new position & get the position attributes Portal for benefits enrollment, before they start work (oh yea)Look & feel navigation / real access to the system (as an employee)Able to see who has submitted their timeIntegration of scheduling & certification, work components
HR
Lots of time on talent mgmt, but need time, labor & ???
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 4 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
ConsLike to see;Field level auditingVisual workflow design – good featureAbility to add user defined fields – are the fields available in future screens Understanding future data integration capability – how do we link to this information?
People, process & Tech (light on the people side)
Need deeper dive on back endSelf service (available in peoplesoft, but can’t handle multiple simultaneous users or events)Need to *Add HR Administrator Case (set up’s) 241 benefit programs
Like to see background check informationScheduling – spend less time on performance managementMake sure EE & MGR role, but also more time on the administration & integrationIncorporate HR with knowledge transfer – not sure where this fits.
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 5 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
Pros ConsOpportunity for the organization to coordinate work across the enterpriseCustomer Service should benefit from thisParallel processing in the workflowIntegration with old systems – allows for varied lengths of fields.Able to test for assets – MDMA could go away.
Potential Use Case: Determine where are we sending our crew and materials, based on a roll up of PO’s?
Cus tome r P orta l ha s informa tion ne e de d (s imila r to toda y)
Utility e xpe rie nce (could a ls o be ne ga tive )
Our is s ue s toda y a re mos tly due to our own cus tomiza tion
Dashboards (expansions)Drilling downIntegrationMeter data managementMeter to bill process (could replace IEH – although out of scope)
They said “integration” less than yesterday, and yet it seemed to be better integrated.Appointment scheduling feature was pretty slick / customers ask for small work. Up north they use outlook. This tool looks like it will work.Meters – capability to use bi-directional meters. Can lock out remotelyReading net-meters for solarCustomer master data & work data integratedData platform will never change
Customer
Did not see scheduleing tool embedded in their systemDid not see much with workflows
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 6 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
Pros Es ca la tion tool
Built in que rie s
Cus tomiza tion of us e for us e r work groups
Us e r group will be he lpful.
Like to see more Inte gra tion
Work ma na ge me nt
Da s h boa rding
Ana lytics – wha t’s a va ila ble
Wha t do the y me a n by Ba s e Da ta (da ta s tructure s ); do we ha ve the da ta ne e de d to ma ke us e
of the functionality. Te ch – do not ha ve logica l da ta vie w, but do ha ve phys ica l da ta vie w.
Do we ha ve a cce s s to the te ch s pe c’s to s tudy furthe r – we a re be hind the curre nt ve rs ion.
Spoke Xcel Energy language – good focus on utilitiesStrategic & forward thinkingNew to ventyx – presented well / truthful (targeting activities but may not reduce PM costs)Asset Health has their algorithms & allows us to customize our own.
Very prepared – did their homeworkShow the mobile tech in the presentationUnderstood the system very quickly
Its all about our data – they did show good integrationMobile stuff is fantastic Integration against GIS is much more than what we’ve seen elsewhereTheir deployments are a good thingWill force us to standardize & get our data clean
Transmission
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 7 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
Cons Fle xibility re quire s us to de fine e ve ry da ta fie ld & proce s s – re quire s gove rna nce
S e curity le ve ls mus t be s e t s o a s not to impe de ope ra tions
Links could be broke n, s o mus t be ma na ge d a nd ma inta ine d.
Skipped over Access to ABB’s data (equipment information) – aggregation of that information could be beneficial to transmission.What’s the future cost structure given all of the independent modules (further research release strategy & pricing)
Still don’t know much about their mobile technologyLots of windows – how will that affect Large system – will need to buy a lotNeed to see a lot more scheduling
It will be a radical change
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 8 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
Pros Ope n a rchite cture – one s ys te m of re cord
Embe dde d workflows – s e e who is doing wha t
Que ry & loa d to s pre a ds he e t
Ca pa bility for a tta chme nts – hype rlinks , e tc . (mus t ma inta in)
Us e r group s upport – s ta nd a lone input ca pa bility
We ca n a djus t to re gula tory cha nge s
Auto populated data Send back to scheduling
User friendly intuitiveDashboardRole clarity in process flows Diverse customer based (ottertail)Customer information / enterprise wide generated ideas for additional savings (i.e. ability to go into meter maint in mass)Green button
Instant data modelWe will come to see how you do business (a very welcoming remark)They have customer councils to understand their customerIntegrationMobiltiy seems more mature & more flexible than the othersFluidity ability to stage deployment – can provide value right awayLiked approach to role based security – what we could seeHR module from field manager’s perspective, was goodHeirarchy asset manger plant manger model, but also a linear approach for Gas, etc.
Distribution
Like to see more info on; S che duling – how to ma na ge cre ws & work (e nd of ye a r e ve nts , e tc .) Mus t be s ca la ble for ope ra tions .
Like to s e e more ba ck e nd work comple tion proce s s e s . How doe s the info ge t loa de d into the ba ck e n
Te ch – wha t do the y do a round da ta wa re hous ing? Ava ila biltiy bus ine s s obje cts
Work optimiza tion a lloca tion ba s e d on combining work for a loca tion
Mobile
Automa te d time ke e ping
didn’t see Fleet management tool Too much info on managing equipment vs. Gas & electric.
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 9 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
Cons
Ha rd to te ll wha t is the re now vs . wha t is in the pla n
How do Ma te ria ls tie ba ck to othe r pa rts of the proce s s
S ta nda rd S e rvice De live ry proce s s e mbe dde d wa s difficult to s e e
Saw a lot of the front of the system (finance), but how does the crew see it? How do work types make their way to the asset base?- need to relook at additional scenarios- Need to see GIS integration across (backbone of our efficiency (geo spasial data integrity
Going to their big data platform – will there be performance issues?
How to s e t up a cre w or s tructure s to be s che dule d.
nd s ys te m
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 10 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
ConsEnergy Supply
Are the scenarios & use cases currently at the right level of detail to see what we need to see?
Corporate passport has 150 customizations today
Da ta S tructure toda y is much like wha t we ’ve s e e n toda y s o conve rs ion is like ly to be pre tty s tra ightforwa rd.
Ca nnot cha nge ide ntifica tion of Rive rs ource a s a Coa l pla nt. Wha t ha ppe ns if we move .
Ability to ma ke cha nge s s a ve s us a lot of de ve lopme nt e ffort.
S ta nda rdiza tion vs . fle xibility – we a re s e e king S ta nda rdiza tion, though it will be difficult. Though we ha ve a
common system in 3 locations, we do not have common processes. Ca n we re pla ce e clips e ? We would ne e d to s e e more to know tha t this ca n ha ppe n.
P roce s s Ma pping re minds us of Blue Works . We do not ha ve to s ta rt a t s qua re one . We ha ve Us e rs Group is a n
effective place to gain insights. Ability to s e t diffe re nt s cre e ns for diffe re nt role s – re duce the numbe r of time s da ta ne e ds to be e nte re d.
Ad Hoc re porting – da ta pulle d down into e xce l s pre a ds he e t me e ts a curre nt ne e d for informa tion.
Will s till ne e d Bus ine s s Obje cts to produce ope ra ting re ports
Ability to a pply s e curity by role would be he lpful – like to e xplore furthe r.
S ingle ins ta nce s (s e curity) s hows tha t nucle a r ca n be is ola te d.
Will need to determine, although they appear to be good across the board, but where does it need to be supplemented?
Trying to s e ll us ye s te rda y’s te chnology tomorrow
Cobol progra mming is not wha t we e xpe ct toda y – the ir vis ion is right, but do we wa nt to be the firs t to try it out?
Toda y we did not ge t the de pth tha t we ’d like to s e e (how ma ny time s do we ne e d to click? ) Ne e d to s e e the
system operate. Did not he a r a bout s che duling (a high priority) – S e rvice S uite is be ing looke d a t.
A s trong utility product – us e d prima rily for work ma na ge me nt (70% of the ma rke t North Ame rica ) – As k a bout
Market Share and Market Share Trends. The y ha ve a s olid tra ck re cord in the bus ine s s , but le s s fle xibility – the y will dic ta te how the proce s s works .
Strength is embedded in Cobol code. Little informa tion provide d with re ga rd to the ir cus tome r ba s e .
They got the Bling factor (but don’t get blinded)What exactly is a field employee is going to see?Impressive across the board – how well do they do specific thingsDuke a major customer (they don’t use them for work & asset management)Short term scheduling – Primavara is not a good response (outages, Plant work, Field applications, etc.)Did not see integration evidence – Primavara & SchedulingScheduling scenarios should pull this out – we are OK there.How will they utilize a foreign scheduling tool? Their Drop down looks like Microsoft Project
Need to dive deeper re: how robust is the work executionAsk questions about lockout tagoutNobody showed anything in the safety systems areaFollow up on a scenario & add critical incidentsERP plus a bolt on is what gives us the functionality (will probably still use premavara) – this is the roadmapdiscussion – How does this get put in place and in what order?How does the process all work together?
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 11 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
Pros Te chnica l Fit – Ma turity of Te chnology is much diffe re nt tha t wha t we ha ve toda y
S tructure s look norma l – lots of fle xibility, re dunda ncy
Fle xibility will re quire proce s s & gove rna nce to ma inta in s ys te m inte grity
We do not wa nt to ove rly cons tra in functions in the na me of control
Inte gra tion ca pa bility is pre tty robus t / ope n – ca n do point to point inte gra tion with ERP s ’
Inte gra tion with GIS – did not a s k a bout this .
Mobile ca pa bility – a pp ca n ope ra te in dis conne cte d mode , or a pply s cre e ns conne cte d to a
mobile app format. No da ta wa re hous e – ne e d to inte gra te with te rra da ta (which is wha t we wa nt)
Re porting is not Bus ine s s Obje cts (e nvironme nt ca lle d Burt). The y ca n inte gra te with BO
Inte ra ction with e nte rpris e bus ine s s proce s s might be difficult to inte gra te be yond the
boundaries of the App.
Technology SoundAble to ScaleTech footprint, able to Role based security & security standardsActive Monitoring of slow responseIntegration architecture is matureThe pieces are there to make the Mobile very user friendly
Foundation / architecture – very sound (no gaps are evident)The way they use the centralized data model helps eliminate some of the integration concernsGetting to that point from today will be a tough journey.How do we end up with a master list of vendors / need to rationalize the list of apps.Integrated suite (not so much integration)You need to use their They have strong lifecycle management (enhancement packs vs. support packs), can choose which to implement when. They provide great insight into the impacts when the packs are released.S l bilit & f (i ) ill b t Th i i d t b b Their foundation can be used for other mobility platforms – we will need to choose.They control the entire stack of their architecture – they have a service bus that might drive us to use different standards.They have a customer using this with 1.3 mil employees in China
Business Systems: Did not hear anything on the small world side of it.SAP has a document management product embedded in the productThey have a slight tax section, presentation on Finance was kind of weakDashboards were presented, but did not spend all day on it.Work flows – process flows – they have it, but we did not see it.* G id d kfl f th d d t thi i
Tech
Look for from Vendor that will alleviate work that we are doing today.
Behind the ball (due to acquisitions), it may be difficult to catch up.Mincom was another recent acquisition.
Not going to say I loved it.Pro – moving off of current architectureDid not get visibility on where they are moving to today. We need to see what they are moving to.Elipse was presented as a tool that they are leveraging – don’t know what that is.Much of their future product is faith in what will be delivered by end of 2014Move from Cobol – danger in copying bad habits into the new code basePage, scrolling does not show the best practices in presenting UIDid not provide integration & technology specifics – would need to see this.Want to be able to provide business configuration flexibility, but their approach seems restrictive fo
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 11
Page 12 of 12
RFI Evaluation & CommentsDate Vendor
15-May IBM / Maximo
Comments
16-May ABB / Ventyx
Comments
22-May Oracle
Comments
23-May SAP
Comments
Cons
Oracle Fusion is not there – they are building out their portfolio / may be soft on functionalityData dictionary is still evolvingCore focus – they are a technology company Information was not available regarding how systems are talking with each other – they are not a utility company
Support impact – business systems would really need to be ramped up. Changes would need to be tightly controlled.Their support resources are very expensive – a major support costSAP philosophy is that we use their components & do it their way (not so flexible as it is today)Can’t see how we could migrate a piece at a time.If we diverge away from the SAP foundation, we would loose out on the benefits do the decision does not make sense unless we are committed (in policy and change governance) to the long haul.Build of configuration appears to be much more complex in order to provide the breadth of f t
r the business.
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 12
Page 1 of 4
Solutions Selection Option SummaryFinal Findings Summary
Options Assessed and Ranking Customer HR Finance Supply ChainWAM-Energy
DeliveryWAM-Energy
Supply Technology
1. SAP Only
2. Oracle & Maximo
3. SAP & Maximo
Full Capability
Partial or Neutral Capability
Low Capability
Note: Although the Scoring Rollup had SAP/Maximo ahead of Oracle/Maximo the team didn't feel there was enough improvement leveraging an SAP/Maximo WAM solution over an SAP WAM solution. This coupled with the other business area ESS Final Readout feedback adjusted the final ranking as displayed on this worksheet.
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 12
Page 2 of 4
SAP
Business Capability AreaRFP Requirements Score (10%)
RFP Response to Questions Score (25%)
Product Demonstration Score (65%) Business Area Score
Customer 13.84 0 18.77 13.58Finance 15.34 10.28 15.62 14.26Human Resources 16.34 14.67 11.32 12.66Supply Chain 16.55 12.59 14.44 14.19WAM - Energy Delivery 15.71 17.93 19.06 18.44WAM - Energy Supply 15.71 16.01 16.86 16.53
Net Total = 89.66
Oracle & Maximo
Business Capability AreaRFP Requirements Score (10%)
RFP Response to Questions Score (25%)
Product Demonstration Score (65%) Business Area Score
Customer 14.12 0 15.47 11.47Finance 16.37 15.94 16.25 16.18Human Resources 15.75 10 6.87 8.54Supply Chain 16.3 14.64 11.72 12.91WAM - Energy Delivery 16.46 14.93 11.86 13.09WAM - Energy Supply 16.46 16.49 14.92 15.47
Net Total = 77.65
SAP & Maximo
Business Capability AreaRFP Requirements Score (10%)
RFP Response to Questions Score (25%)
Product Demonstration Score (65%) Business Area Score
Customer 13.84 0 18.77 13.58Finance 15.34 10.28 15.62 14.26Human Resources 16.34 14.67 11.32 12.66Supply Chain 16.55 12.59 14.44 14.19WAM - Energy Delivery 16.46 14.93 11.86 13.09WAM - Energy Supply 16.46 16.49 14.92 15.47
Net Total = 83.24
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 12
Page 3 of 4
ESS Business Area Recommendations - Working Session Readouts10/4/2013
Business Area Recommendation1 Recommendation2 Recommendation3 Summary Comments
Business Systems SAP Oracle/Maximo SAP/Maximo
While complex, all alternatives are supportable and viable. SAP was given a higher rating due to integrated solution benefits. SAP’s integrated solution avoids complex integrations with Maximo. Long-term supportability benefits of common underlying data model and built-in integrations are potentially significant.
Customer SAP SAP/Maximo Oracle/Maximo
SAP provides immediate cost savings because of ease in billing configuration and handling complex rates. The Oracle would need IT help to accomplish. SAP is better at integrating user-friendly screens; CRS isn't planned for replacement until 2020 so meter assets will be complex in any ERP solution and will require complex integration. Oracle/Maximo solution currently not felt to be viable for Customer due to some double entry and integrations. Data cleanup will be long and difficult for both solutions;
Distribution SAP Oracle/Maximo (SAP Mobile) SAP/Maximo
SAP strong prep led to showing integrated solution; strong drilldown; strong scheduling tool. Oracle/Maximo solution would require an SAP Mobile solution to address needed functionality.
Energy Supply, Fossil SAP Oracle/Maximo (SAP Mobile) SAP/Maximo
Aligned with Nuclear's assessment; Lockout/Tagout and logging robustness questions for reporting requirements, possible bolt-on; Corrective Action Plan questions-possible bolt-on; currently feels more secure about this with Maximo; mobility is key and SAP is ahead; long-term scheduling-IBM dropping Primavera support, so would need to develop an in-house product; Apparent SAP mobile nimbleness is positive; concerns about SAP User Interface.
Finance SAP Oracle/Maximo SAP/Maximo
Oracle improved demo in Round 2; Both ERPs can handle Finance; Oracle ahead SAP for FERC, GAAP ledgers as no direct mapping required; Oracle suffered on allocations; traceability dependent on integrations; Oracle scored higher, but SAP philosophically better fit; SAP not understanding all questions; relying on System Integrator, staff for recommendation; SAP weaker on FERC-not able to be derived, has to be mapped; no clear true derivation; allocation transactions have no attributes. Finance will soldier on under all circumstances. SAP's tighter integration is more valuable especially with reporting and drill down.
Gas, Engineering, & Ops SAP Oracle/Maximo (SAP Mobile) SAP/Maximo
Notes SAP integrated system drives data integrity / QA / QC, project management and resource management systems enable increased resource utilization / crew productivity, mobile application is industry leading.
HR SAP SAP/Maximo Oracle/Maximo
SAP & Oracle both have good self service, mass updates. SAP better on mobile, real-time integration, replacing PAFs via Smart Forms, better integration with SuccessFactors. Stopper: Oracle E-Business Suite cannot pay an employee from two pay cycles during same time period, which happens regularly (BW-SM switches). Oracle has no canned integration between Payroll and Accounts Payable.
Nuclear SAP Oracle/Maximo (SAP Mobile) SAP/MaximoThe Nuclear industry will be changing for sure. Maximo Users Group strong; SAP gaining market share in US, wider worldwide
Northern States Power Company Docket No. E002/GR-15-826Exhibit___(DCH-1), Schedule 12
Page 4 of 4
ESS Business Area Recommendations - Working Session Readouts10/4/2013
Business Area Recommendation1 Recommendation2 Recommendation3 Summary Comments
Supply Chain SAP SAP/Maximo Oracle/Maximo (SAP Mobile)
SAP provides functionality to perform tactical work (purchasing, materials, accounts payable) more efficiently enabling shift to more strategic work (category management, sourcing and contracting). Visibility will improve to BU plans improving demand planning, supplier collaboration tool enables supplier lifecycle management (from onboarding, through sourcing to SRM), and integration will improve services and material management (fleet capabilities still under review). Ariba is a particularly strong sourcing platform. So SC functionality will improve, but real benefit is end to end integration from when a project is conceived to when it is closed out.
Transmission SAP Oracle/Maximo (SAP Mobile) SAP/Maximo
SAP benefits: short-term scheduling/dispatch, mobile, both of which are the core benefits in the PTT Business Case; long-term scheduling and project portfolio weak; Integrated system with SAP is a big plus, data in one place; Maximo: very weak in mobile, would need to add-on a mobile solution in order to get benefits with field personnel; Recommend Oracle/Maximo as a possible second solution because Xcel Energy has already chosen Oracle for a Project/Portfolio Management solution and Transmission is slated to move to that solution. Xcel Energy also has other Oracle software that would be easier to integrate with and Oracle/Maximo solution. Oracle has a more open architecture and more willing to work with Maximo; would need to add a mobile solution to an Oracle/Maximo solution.
SAP: Unanimous Oracle/Maximo 7-3 Split SAP/Maximo 3-7 Split
PUBLIC DOCUMENT: Docket No. E002/GR-15-826 TRADE SECRET INFORMATION AND Exhibit___(DCH-1), Schedules 13 & 14 NON-PUBLIC DATA EXCISED Page 1 of 1
COST COMPARISON, RISK ASSESSMENT & BENCHMARKING
Schedule 13 – Cost Comparison & Risk Assessment Results
Schedule 14 – Cost Benchmarking
NON-PUBLIC DOCUMENT: CONTAIN TRADE SECRET INFORMATION ENTIRE DOCUMENT IS NON-PUBLIC
Schedules 13 and 14 are internal cost comparisons, benchmarking and risk assessment results that the Company has designated as Trade Secret information in their entirety as defined by Minn. Stat. § 13.37, subd. 1(b), because they contain information that has not been publicly released. These cost details were prepared by Business Systems employees and their representatives between 2013 and 2015 in conjunction with the Company’s review of its internal operating system and software applications for transition to the Productivity Through Technology project. Because it derives independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, Xcel Energy maintains this information as a trade secret pursuant to Minn. Rule 7829.0500, subp 3.
Northern States Power Company Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 15 Page 1 of 1
Schedule 15
In-Service Projects with Emergent Demand Account Funding • No additional funds have been distributed from Emergent Demand Account for 2016 or 2018 since the data pull
• The following projects received distribution of Emergent Demand Account funds for 2017:
Project Name Originally
Included in the 2017 Budget
Reason for Distribution Need for Project Project Description
Wireless Project
YES Increased scope Aging Systems
Emergent Demand Account funding was distributed to this project due to the need to implement, upgrade, or replace wireless networking equipment in additional Company facilities as a means to increase productivity and streamline the network footprint.
VoIP Refresh
YES Increased scope Aging Systems
Emergent Demand Account funding was distributed to this project due to the need to replace outdated phone and voicemail systems at additional facilities. Voice over Internet Protocol (VoIP) communication systems enable unified communications services (phone calls, faxes, voice mail, e-mail, Web conferences) running over a single network, resulting in streamlined networks and reduced bandwidth requirements.
IrthNet Damage Prevention Replacement
NO New project Aging Systems
Xcel Energy’s Damage Prevention organization completed 1.8 million locate requests in 2014 with an anticipated 3% growth rate. Xcel Energy’s current locating ticket system (IrthNet) provides underground locating capability, public safety, work assignment, communications, reporting and gathering and analyzing data for regulatory locating and damage prevention programs, and will reach end-of-life in December 2017. Emergent Demand Account funding was distributed to this project to ensure system stability and process continuity.
General Ledger Account 2012 Actual 2013 Budget 2013 Actual 2014 Budget 2014 Actual
2015 July
Forecast 2016 Budget
711142 Productive Labor 9,689,509 11,036,600 10,256,133 12,096,097 10,722,845 11,952,490 12,368,096
711143 Reg Labor Loading-NonProductiv 1,753,686 2,228,554 1,875,904 2,444,417 1,993,073 2,373,377 2,682,885
711146 Prod Lab-Attrit (frmly taxes) - (441,464) - (483,844) - (230,621) (494,724)
711150 Premium Time 5,026 17,940 4,704 9,345 4,969 4,542 4,913
711190 Overtime 134,379 91,289 288,493 105,192 208,661 149,392 106,681
711270 Other Compensation - - - 66,560 65,461 -
711275 Other Comp- Welfare Fund - 738 - - 448 -
712110 Contract Labor 2,341,547 2,667,439 4,104,397 4,204,266 4,938,882 5,562,822 5,234,921
713000 Consulting/Prof Svcs-Other 2,466,018 3,246,075 3,611,614 3,721,494 2,931,616 3,555,600 2,982,446
713050 Contract LT Outside Vendor 38,581 86,323 21,276 113,076 97,083 95,208
713055 Outside Srvcs-Cust Care - 101 - 2,580 2,872 -
713100 Consulting/Prof Svcs-Legal 209,521 8,237 - 7,545 (2,679) -
714000 Materials 97,148 104,668 170,039 138,745 235,351 122,037 111,763
714100 Print/Copy-Other 4,436 2,809 8,855 2,848 8,855 5,614 5,899
714500 Equipment Maintenance 70 709,011 792,387 730,383 866,890 740,480 813,565
715100 IT Hardware Maintenance 505,755 754,648 607,913 780,763 562,348 701,122 1,246,492
715200 IT Hardware Purchases 278,799 400,328 406,730 379,547 457,051 178,408 225,235
715200.90 IT Hardware Purchases-S3 - - - - (3) -
715300 Software Purchases 1,216,458 113,706 1,976,385 857,616 2,363,570 835,117 939,752
715300.90 Software Purchases S3 (73) 719,121 (52) - (146) - -
715400 Software - term lic purch 1,216,417 1,366,971 1,327,388 1,371,281 630,505 1,624,647 1,682,869
715500 Software Maintenance 10,723,387 11,801,611 12,609,672 14,911,140 13,754,823 15,226,591 16,968,806
715600 Personal Communication Devices 105,510 66,100 199,339 122,759 237,443 170,695 262,079
715700 Network Services 920,221 1,499,795 379,492 107,666 398,896 319,969 321,106
715700.90 Network Services - S3 (70) (54) - (63) (38) (61)
715710 Network Voice 4,168,600 3,859,339 4,204,727 4,924,208 4,296,861 4,679,895 4,136,094
715710.90 Network Voice-S3 (10,763) (7,849) (3,477) (3,116) (2,181) (956) (5,013)
715720 Network Data 3,941,612 3,755,734 4,560,345 6,255,642 4,358,781 4,479,298 4,759,212
715720.90 Network Data-S3 (6,483) (0) - - - -
715730 Network Telecom 3,772,832 2,904,287 5,093,372 5,341,731 6,190,157 5,399,947 6,669,180
715740 Network Radio/Pgr/MW 1,349,993 1,737,922 1,495,714 1,355,966 1,836,131 1,871,026 1,949,265
715800 Mainframe Services 1,186,627 1,371,471 809,477 797,069 805,954 862,102 806,161
715810 Distributed Systems Services 8,814,896 9,721,316 10,929,441 10,330,908 10,792,410 10,807,872 11,169,007
715810.90 Distributed System Serv-Sherco (19,980) (469) (269) (469) (273) (305) (286)
715820 App Dev & Maint 10,579,149 10,713,787 9,461,296 8,747,099 9,654,287 9,503,011 10,044,788
715820.90 App Dev & Maint-Sherco (11,807) (0) - - - -
715830 Project Office 1,960,539 3,178,187 1,208,832 1,215,136 1,199,532 844,955 -
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 16
Page 1 of 3
General Ledger Account 2012 Actual 2013 Budget 2013 Actual 2014 Budget 2014 Actual
2015 July
Forecast 2016 Budget
715900 Software - ASP 751,784 1,235,157 719,229 1,284,405 831,763 965,977 943,195
721005 EE Exp Airfare 104,569 146,127 127,052 139,597 155,623 159,424 189,162
721010 EE Exp Car Rental 11,188 14,148 15,247 12,440 19,311 16,536 27,158
721015 EE Exp Taxi/Bus 12,706 13,429 13,328 21,288 16,010 13,744 19,060
721020 EE Exp Mileage 23,411 48,824 23,889 48,622 26,679 29,217 31,611
721025 EE Exp Conf/Semnrs/Trng 105,613 132,506 187,156 155,249 147,455 135,265 159,806
721030 EE Exp Hotel 114,637 149,134 140,513 136,614 176,630 141,787 200,717
721035 EE Exp Meals/EE's 51,987 71,151 58,314 84,559 78,494 57,437 75,962
721040 EE Exp Meals/Incl.Non-EE's 28,974 10,300 8,144 6,864 7,050 9,161 7,226
721045 EE Exp Parking 25,998 24,237 28,479 38,872 31,942 30,310 31,577
721050 EE Exp Per Diem - - 71 - - -
721055 EE Exp Safety Equip 4,257 4,559 2,564 4,648 6,373 7,779 5,089
721060 EE Exp Other 36,828 9,600 35,681 45,468 42,475 (25,185) 6,910
721500 Office Supplies 22,902 21,393 31,057 19,186 28,257 24,588 23,550
721700 Workforce Admin Expense - - - 361 - -
721750 Recog - Employee Engagement - - - - 1,625 -
721800 Safety Recognition 170 275 - 1,595 - -
721810 Life Events/Career Events 1,195 1,574 - 1,323 1,058 749
721850 Employee Performance Recogntn 11,356 9,579 - 10,640 3,626 -
721851 Non-Recoverable Recognition 3,017 3,332 - 1,249 4,017 -
722000 Transportation Fleet Cost 58,567 69,108 57,649 69,428 56,195 67,143 55,342
723021 Routine Janitorial - - - 6,799 2,308 6,751
723027 General Interior/Exterior Main - 11,048 - - - -
723032 Gas Use Costs - 15 - 147 126 -
723036 Trash Removal Costs - - - - - -
723040 Moves/Adds/Changes 8,752 14,642 - 4,976 156,958 3,461
723300 Lease Costs - - - - 372 -
723400 Postage 21,363 26,936 32,621 28,869 36,895 39,044 29,535
723480.1000 Injuries & Damages FERC 426.5 - - - 49,964 - -
723710 Brand/Image Advertising - 3,804 - - - -
723720 Advertising - General - 2,423 - - - -
723810 Professional Association Dues 15,900 14,863 116,685 115,766 156,387 161,292 155,453
723820 Utility Association Dues 66,398 156,182 105 - 10,680 2,263 -
723821 Electric Util Assoc Dues - 38 - - - -
723833 Charitable Contributions - 41 - 513 2,832 922
723834 Community Sponsorships 780 463 - 384 606 243
723835 Civic & Political - 537 - 549 - -
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 16
Page 2 of 3
General Ledger Account 2012 Actual 2013 Budget 2013 Actual 2014 Budget 2014 Actual
2015 July
Forecast 2016 Budget
723836 Chamber of Commerce Dues - 8 - - - -
723850 Social Service Dues 679 601 - - - -
723854 Deductions-Corp Tickets 389 1,596 626 1,630 5,158 1,489 3,903
723855 Other Deductions 484 2,661 2,161 3,261 2,660 3,545 1,890
723890 Environmental Permits & Fees - - - 53 - -
723895 License Fees & Permits 759 968 - 2,595 69,675 -
723897 Penalties 80,356 175,910 - (166,182) - -
724100 Misc O&M Credits (9,740) (1,580) (739) (681) (506) (247) (1,494)
724100.90 Misc O&M Credits-S3 - - - - - 76
724500 Shared Asset Costs 10,429,026 11,604,324 12,359,359 16,239,245 14,345,251 18,631,140 23,907,546
724510 Shared Assets-Owning Co Cr (8,984,888) (9,280,369) (11,887,164) (19,083,121) (17,504,855) (24,292,409) (31,795,070)
725000 Other (19,123) (33,268) 8,696 (44,672) 186,092 402,044
725005 Online Information Services 503,909 580,805 586,109 611,119 611,905 574,647 582,216
Grand Total 70,915,742 78,674,016 79,324,256 80,477,260 78,795,115 79,085,512 80,160,927
Northern States Power Company
Docket No. E002/GR-15-826 Exhibit___(DCH-1), Schedule 16
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