Does the utility industry have the financial strength sufficient to meet the combined challenges of: (1) sharply increasing and highly volatile fuel and purchased-power costs; (2) significant...
The CIO Forum: IT Weathers the Storm
the very end of last year, they made a decision to put all of the IT group in corporate and move it to an enterprise function. . . . Well, the [shared services concept in the pipeline group] worked so well at the pipeline level that they took the shared services concept to the corporate level. In January, I was responsible for leading the transformation to enterprise of both finance and IT.
We have re-organized ourselves twice since then … [We] literally created an organization that didn't exist, from scratch. In six weeks' time we went from concept to literally naming it down to the employee level…
We roared through it. I remember the day we finished it, because it coincided with the day employees had to make a decision under our early retirement program. And that was our driver, quite frankly. We didn't think it was fair for employees to make decisions on taking early retirement when they didn't even know if they had a job.
How has the IT department been impacted by the downturn in the merchant sector?
[B]y late May, we were in a total stock price meltdown, and the world changed on us again. We were faced with the need for draconian cost reductions… Overnight, the projects were just getting whacked left and right. We started a process of calibrating the demand for our services.
We looked at 2002 as a baseline, looked at O&M, G&A, mandatory capital, expansion capital, efficiency capital. How much do you spend, whether it's expensed or capitalized? Whether it's mandatory or efficiency? We did that for 2002, and took a forecast for 2003. We were grinding these numbers into their capital budgets, so they could go back to our outside board of directors, and show them, here's what our businesses look like. We were a major part of their expenses.
Once we calibrated demand, we started looking at the supply side of the equation. Then what we did, we started down a process of what I call high-grading our organization. We created an 11-page template of talent assessment… We evaluated people with what I call a consistent Right Way, Right Results performance measure. What was kind of neat about that was, we had every manager rank every employee. Then we got all the managers in a room together, and they had to explain how they ranked every employee. It was real interesting. I remember one manager gave everyone in his group an exceptional rating. I didn't have to say one word before managers jumped up and said, get out of here, what makes you think your people walk on water? It opened up a really fantastic dynamic, and we got into a debate about what does exceptional performance look like. So it really level-set the playing field.
[T]hen we had to balance supply and demand. It's a nice way of saying we needed to reduce [the workforce]… Including contractors and employees, we're down 50 percent. So now, where are we?
After having gone through that, we're restructuring again, in recognition of the