As the U.S. electric power industry unbundles, the industry and its regulators grapple with two big questions concerning the degree to which distribution services should be unbundled. First, what...
Making a Case for Information Technologies
in terms of putting systems to work and linking them with other existing computer systems.
Figure 2 shows how benefits are allocated at a typical electric or gas company. Labor savings typically account for only 30 to 40 percent of projected benefits over the typical 15- to 20-year life of a project study. Considerable upside potential also resides in strategic benefits, business geographics applications, asset-related benefits, the asset value of databases, and issues associated with growth and change in the utilities. On the other hand, industry trends assign only minor benefit to utility sales of GIS products to the marketplace or reductions in external costs.
Strategic benefits clearly drive most projects: attracting new customers based on "lifestyles" and demographics, developing and supporting new customer-specific programs and services, better understanding a competitor's capabilities. In many assessments, they literally make the financial difference in presenting a project to senior executives. Yet the fast-changing business environment all but ensures that the strategic benefits of a GIS will shift between the time a project is begun and the time it is fully implemented, which can take two to seven years. "A lion's share of the benefits being created today were not originally quantified in the cost/benefit analysis simply because times have changed," says Chuck Wormann, manager of facilities information systems, Citizens Gas & Coke Utility. "Fortunately, AM/FM/GIS provides a flexible tool to help stay ahead of change."
AM/FM/GIS can be thought of as "enabling" technologies that help a corporation achieve customer satisfaction, safe operational performance, and profitability more quickly and economically. The companywide integration of a GIS provides a common database for a wide variety of users, permits single-point updating, avoids redundant data capture, and helps improve the accuracy and responsiveness of decisions. Many progressive executives now consider GIS a critical tool for differentiating a utility's products or services, particularly those related to marketing, sales, customer outage management, and DSM initiatives.
GIS also offers a wide range of intangible benefits, depending on the type of cost-benefit analysis being performed:
s Improved customer service and responsiveness
s Improved corporate image
s Improved data management
s Faster or more uniform responses to regulatory agencies
s Improved management decisionmaking
s Integration with other corporate databases
s Improved revenue-producing potential.
The big operational benefits of a GIS, however, do not lie in reducing labor associated with map and record creation and maintenance activities. GIS works its real magic by integrating data and applications. Customer information systems, trouble outage entry/ analysis, work management systems, and related operations systems can be fully integrated using AM/FM/GIS as a backbone technology. Adding business geographics applications to a GIS may increase overall project cost 6 to
10 percent, but can also boost a project's return on investment toward 30 percent.
Translating IT Benefits
Increasingly, senior managers seek the means to gauge the effectiveness of IT investments like GIS, which they consider critical to their business missions for the 1990s. Many cost-benefit analyses today focus on the relationship between critical success factors, business missions, and the component of a utility's geographic data embraced by GIS. Executives