Austin Energy contracted with IBM in 2009 to modernize its legacy billing system and integrate it with newer technologies like smart meters. However, the project was plagued with delays and software bugs. Thousands of customers received inaccurate or no bills at all, causing operational and financial issues for Austin Energy. Both Austin Energy and IBM shared blame for not properly planning and managing the project. Steps that should have been taken included developing an information system plan, clarifying roles and responsibilities, ensuring adequate infrastructure and testing, and implementing risk management strategies and project management best practices.

1. G S T 5 0 8 3
INFORMATION SYSTEMS & ELECTRONIC COMMERCE
Group Members

2. Austin Energy handles electrical, water and waste disposal for the City of
Austin, Texas and surrounding counties, serving more than 1 million
residents. It is publicly owned company and an arm of city government,
and returns its profits to the community each year. The company has
provided $1.5 billion in dividends back to Austin since 1976, which help
fund city services such as fire, police, emergency medical services, parks
and libraries.
Austin Energy has one of the largest renewable energy programs in the
country, but its legacy billing systems did not integrate with smart meters
and other newer technologies. It also lacked newer customer assistance
options, like the ability to choose the time of the month that a customer
prefers to pay bills. To modernize the billing system and to bring its
information systems up to date with newer energy conservation methods,
Austin Energy contracted with IBM in 2009 to create a centralized billing
system and to run the system for five years.
Introduction

3. Yes, the Austin Business Project is failure because :
Modernization billing project delays
• Austin and IBM project late completion, delay schedule, software bugs
• Complexity new billing system with 73 different interface
Software bugs
• Error of thousand of bills
• 65000 never received bills
• 35000 in accurate bills, overcharging
Question 1 :
Is Austin Business Project is a failure?

4. Instability issues
• Seriously impact business and customer
• Persistent system error from billing department
• Revenue loses
Customer services employee
• Employee response one to one assistant for account accessing and
correcting error.
• Called them selves as alpha tester
Customer
• Unable to access system online portal
• System causes a lot of problem, not friendly and hard time for customer.
IBM failure
• Billing software system failure
CONT’S

5. Operation
• Mostly affected is billing department.
• Difficulties of issuing bills because of billing software failure.
• Common error of customer not received bills, customer receive in accurate
bills, account automatically cancelled.
• Incurred more cots in utilities and operation. Since business function is
interconnected, one function failure give impact of another function such
as production.
• Business service is inaccurate, it give impact in revenue and profit even
though they don’t have pressure of competitor.
Question 2 :
Describe the business impact of the faltering Austin Energy project.

6. Customer service
• The department mostly affected.
• Employee work in high level of stress.
• Extra effort need to solve customer problem. They still need to
serve customer better even though customer angry to show their
disappointment towards the company.
• Employee also treated in the same way as usual, do not receive any
appreciation from the company.
• Give impact of public relationship disaster.
CONT’S
Sales and marketing
• Company also faced difficulties in determining the actual sales since
the system leads more error.
• Sales and profit decreasing.
• Company might face law suit for this issues. If it is happening, more
cost to handle legal costs. It is bad for company since give negative
impact in their legacy.
• Company also incurred more cost in advertising to give explanation to
the public

7. Finance and accounting
• Inaccurate financial report since the actual value of revenue and profit
inaccurate recorded.
• Give impact of financial planning and investment.
• The project is delayed, suppose fully operational in early 2011 but it still
not fully operational and incurred more cost.
Management
• Wrong decision making of having IBM to develop the software as the bad
experience IBM performance in inventory management.
• The service give by IBM is bad and disappointment.
• Need to train all employees with new technology.
CONT’S
Customer
• Mostly affected.
• System also not user friendly, Austin portal also always have problem,
customer cant access account information.
• Company also doesn’t think of their preference such as ability to
choose time of the month that customer prefers to pay bills.

8. IBM not really responsive to the problems.
It made Austin Energy appealed so many times to IBM officials ranging from
the managers of billing system project up to IBM CEO.
IBM responsible in find the roof of problem, make system correction, test the
latest system version and implement the system.
Question 3 :
To what degree was IBM responsible for the problem countered by the
Austin Energy billing project ?
Was Austin Energy at fault for the problem?
Yes, Austin Energy is at fault for the problem. It is because:
• Austin Energy as a user had to be committed to the system.
• Probably, Austin Energy did not plan very properly in the project to
develop the billing system.
• They must have clear and proper project management objective which
should deal with five major variables: scope, time, cost, quality and risk.
• The agreement should clearly define the roles and responsibilities of
both party.

9. Organizational
• Employee could not be committed enough and described as if they are alpha tester when
they encountered bugs and issues that never have made it to a live version.
• Unable to meet customer satisfaction.
• No realignment internally and externally.
• Caused vastly on costs that exceed budgets.
• Fail to meet customer expectation.
• Lost trust draws customer away.
Technical
• No specific infrastructure.
• Unreliable system caused money loss.
• Did not work closely with third party vendors like oracle.
• Customers unable to access the system’s online portal.
Management
• No strategy which cause time slippage.
• No business solutions.
• Interrelated with manpower.
• Repeating mistakes and delays.
Question 4 :
What were the specific organizational or technical factors as well as
management factors involve in this project failure ?

10. Austin Energy and IBM need to develop an information system plan which
indicates :
1. The direction of system development
• Overview of plant contents
• Current and future business organization
• Key biz process
• Management strategy
2. The rationale
• Current situation and current business organization
• Changing environment
• Major goals of the biz plan
• Firm’s strategic plan
Question 5 :
Describe the steps Austin Energy and IBM should have taken to better
manage this project.

11. 3. The current systems / situation
• Major system supporting biz function and process
• Current infrastructure capabilities
• Difficulties meeting business requirement
• Anticipated future demand
4. New developments to consider
• New system project
• New infrastructure capabilities required
5. The management strategy
• Acquisition plan
• Milestone and timing
• Organizational realignment
• Management control
CONT’S

12. 6. The implementation plan
• Anticipated difficulties in implementation
• Progress report
7. Budget requirement
• Requirement
• Potential saving
• Financing
• Acquisition cycle
CONT’S

13. Good project management is essential for ensuring that billing system
are delivered on time, on budget and provide business benefit. Risk
assessment are required in order to prevent any chances of failure
encountered without deep consideration and deliberations. Strategies
are vital to be implemented since it is useful for managing project risk
and system implementation.
Conclusion

14. THANK YOU