The Austin Energy billing system project, contracted to IBM in 2009, failed to launch on time in early 2011 due to software bugs. Over 65,000 customers did not receive bills and 35,000 received inaccurate bills, costing the city revenue. Both IBM and Austin Energy were at fault for poor project management, communications, and risk assessment. Key steps that should have been taken include more clearly defining scope, time, costs, quality, and risks, as well as selecting a system that properly integrates with Austin Energy's needs and technologies.

1. INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP
ASSIGNMENT 6 – CASE STUDY 3
TITLE: AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP
LECTURER: PROFESSOR DR. RUSLI ABDULLAH
(email: rusli@upm.edu.my)
GROUP 13 Matrix No:
1. Hj Nasseruddin Bin Hj Abdul Jabar - P13D142P
2. Hj Zulkifflee Bin Hj Sofee - P13D136P
3. Chong Min Fatt - P13D154P
Prepared by: Hj Zulkifflee
1

2. • Questions:-
• Question 1. Is the Austin Energy project a failure? Explain your answer.
• Question 2. Describe the business impact of the faltering Austin Energy
project.
• Question 3. To what degree was IBM responsible for the problems
countered by the Austin Energy billing project. Was Austin Energy at fault
for the problems? Explain your answer.
• Question 4. What were the specific organizational or technical factors as
well as management factors involved in this project failure?
• Question 5. Describe the steps Austin Energy and IBM should have
taken to better manage this project.
2
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

3. Background
Austin’s Energy is the 9th largest public power utility in the
United State providing low cost reliable power to the capital
city of Texas and metro area. Annual revenues over $1.3
billion servicing 400,000 premises representing around
43,000 businesses and 1 million consumers.Austin Energy
generation portfolio include nuclear, coal, gas, wind, solar,
and biomass. Austin Energy’s recognition are as follows:
i. An industry leader in conservation and renewable
energy offering the most comprehensive residential and
commercial energy efficiency programs in the nation.
3
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

4. Continue
ii. Leader in distributed generation by operating the first fuel in Texas tied
directly to the electric grid and the largest module combined heat and power
plant in the nation, and leader in using the best solutions for information
technology and telecommunications to deliver the first smart grid in the US
by early Summer of 2009.
Issues:
i.AE legacy billing system:-
a. did not integrate with smart meters and other newer technologies
b. system lacked newer customer assistance options
Modernize the billing system and bring the information systems up to date
with newer energy conservation method.
Contracted with IBM in 2009 for five years ; $55m( $38m for building and
installing + $17m for operating the system for 5yrs after completion)
4
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

5. Question 1: Is the Austin Energy project a failure? Explain your answer.
Yes, the project can be considered a failure for these reasons;
Supposed to go live in early 2011 but it is still not fully operational.
Software bugs have led to errors in bills which results over 65,000
customers never received a bill and another 35,000 received inaccurate
bill.
The company wall ill-prepared to handle the outpouring of customer
dissatisfaction with the new system and their customer service was in
danger of being over run.Due to the persistent system errors and lack of
ability to bill for utilities properly, the City of Austin was losing
revenue.Besides these there are also costs exceeded budgets, unexpected
time slippages,technical performance that was less than expected,failure
to obtain anticipated benefits and poor user interface
5
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

6. Question 2: Describe the business impact of the faltering Austin Energy
Project.
Software bugs have led to errors in thousand of customer billings. Over
65,000 customers have not received bills entirely, and another 35,000
have received inaccurate bills. One customer was billed $300,000 instead
of $3,000. The company was ill-prepared to deal with the outpouring of
customer dissatisfaction and the customer service department was in
danger of being overrun.
“Persistent system errors prevented the company from billing apartment
residents for water, balancing its books, and filing audit reports. Without
the ability to bill for utilities properly, the City of Austin was losing
revenue,: said Austin Energy manager, Larry Weiss.
6
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

7. • Question 3: To what degree was IBM responsible for the problems countered by
the Austin Energy billing project? Was Austin Energy at fault for the problems?
Explain your answer.
• IBM was repeating mistakes during the system implementation. Two separate
errors cost the project 37 hours of delay and one of the errors was the same type
the same team made earlier. The team seemingly used ad-hoc methods for
managing the project. The company replaced the lead manager twice.
• At this point, instead of blaming IBM alone, Austin Energy also at fault. They
engaged with the utilities that did not include strong enough penalties for vendor
non-performance, including the question of system availability in the contract. The
utility did not make provisions for back-up systems in case something went wrong
with the new system implementation, instead choosing to believe everything
would work smoothly.
•
7
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

8. • Question 4: What were the specific organizational or
technical factors as well as management factors involved
in this project failure?
• IBM’s lead manager on the project was replaced twice.
Problems with the system were not delegated to the right
person. IBM and Austin Energy executives failed early on to
identify gaps outside the project’s scope and recommend
solutions. IBM responses to the myriad of implementation
problems were too incremental.
8
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

9. • However, in the organizational perspective, poor
communications happen. This will led to business impact that
caused by known defects. Both IBM and Austin Energy failed
to insists or implement best practice processes to ensure
repeatable successes.
• Austin Energy did not manage its customer service
department very well to ensure that all customer complaints
were handled in a timely and proper manner. It did not plan
for back-up measure in case something bad happen.
9
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

10. • However, in the organizational perspective, poor communications
happen. This will led to business impact that caused by known defects.
Both IBM and Austin Energy failed to insists or implement best practice
processes to ensure repeatable successes. Austin Energy did not manage
its customer service department very well to ensure that all customer
complaints were handled in a timely and proper manner. It did not plan
for back-up measure in case something bad happen. Employees were
not properly trained and integrated well into the system
implementation.
• In the technical side, IBM failed to work closely with third party vendors
like Oracle to ensure all parts of the new system would interface with
each other correctly and easily. The new billing system is complex, with
73 different interfaces.
10
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

11. • Question 5: Describe the steps Austin Energy and IBM
should have taken to better manage this project.
• Both companies should have dealt better with five major
variables associated with any major project:
• Scope : Define what work is or is not included in a
project
• Time : Assess the amount of time required to
successfully complete the project, including all activities and
tasks.
11
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

12. • Cost: Determine the time to complete a project multiplied
by the cost of human resources required to complete the
project.
• Quality : Determine how well the end result of a
project satisfied the objectives specified by management.
• Risk : determine potential problems that threaten the
project’s success. Determine if the potential problems
prevent a project from achieving its objectives by
increasing time and cost, lowering the quality of project
outputs, or preventing the project from being completed
altogether.
12
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

13. • Steps that should be taken to have better
management in future;
• SELECTING PROJECT
– Choose the suitable Information System that will be
use suitable with the organization
– Choose correct Information System to link the
business plan because it will mirror organizational
changes
13
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

14. ESTABLISHING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
i. Engage with cost and benefits of the Information System
projects
ii. To calculate company performance
iii. Important in decision-making process and enhance
employee performance
14
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

15. MANAGING PROJECT RISK
i. Describing three dimensions of project risk: size,
structure, and experience with technology
ii. Monitor the effectiveness of communications to
make sure the project will run smoothly
iii. Effective control risk factor: using PERT and Gantt
Charts
15
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP

16. THANK YOU
• PREPARED BY GROUP 13:
HAJI ZULKIFFLEE BIN HAJI SOFEE - P13D136P
HAJI NASSERUDDIN BIN HAJI ABDUL JABAR - P13D142P
CHONG MIN FATT - P13D154P
INFORMATION SYSTEMS & ELECTRONIC COMMERCE – GST 5083
AUSTIN’S ENERGY’S BILLING SYSTEM CAN’T LIGHT UP
16