tab 1 – executive summary

Tab 1 – Executive Summary Tab 2 – Report Introduction Tab 3 – Summary Findings and Pain Points Tab 4 – Summary Recommendations Tab 5 – Un-prioritized Initiatives Tab 6 – Next Steps Tab A – Appendix: Project Approach Tab B – Appendix: Utility IT Systems Vision and Strategic Goals Tab C – Appendix: Utility IT Systems Strategic Objectives Tab D – Appendix: Summary CPAU ERP Findings Tab E – Appendix: CPAU Information Security Assessment

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CPAU Utility Information Systems Review Executive Summary

Prepared by

NexLevel Information Technology, Inc.August 13, 2014

Utility Information Technology

Systems ReviewFuture Needs Assessment

Executive Summary

LISTEN.PLAN.DELIVER 1 | P a g e


Introduction The City of Palo Alto Utilities Department (CPAU) engaged NexLevel Information Technology to conduct an Information Technology Systems Review (ITSR). The following were identified as key considerations for the project:

♦ Review present IT systems, use, and maintenance regiment, relative merits of existing systems ♦ Review future needs in the next 5-10 years – Palo Alto will provide desired ‘end state’ by 2020 ♦ Review IT planning and organizational needs to get to the 2020 goal ♦ Review other organizational structures and practices, and provide recommendation for Palo Alto

to meet 2020 goals ♦ Recommend systems implementation options and sequences where appropriate ♦ Develop a set of Enterprise Resource Planning (ERP) system requirements specific to CPAU

needs to be provided as an input to a separate ERP evaluation project. ♦ Develop a presentation for stakeholders and executives outlining findings and recommendations

This document serves as an executive summary of the project results and accompanies the final project presentation materials which provide additional detail regarding findings and recommendations.

Approach NexLevel focused on the involvement and interaction with the users of technology and those setting the business direction for CPAU. NexLevel incorporated input from all users and stakeholders, up to and including the utility Director and Assistant Directors.

As a part of developing the ITSR, the following key activities were completed:

Documentation Review – NexLevel requested, obtained, and reviewed CPAU IT documentation where available. NexLevel also utilized relevant research and deliverables associated with the 2011 Assessment of Smart Grid Applications by virtue of work completed in support of that project. IT Service Management Assessment - This review takes a comprehensive “best practices” view of essential IT delivery components. Business Technology Assessment – NexLevel facilitated an extensive series of on-site meetings with utility departments to identify the current technology environment within each organization, barriers to full utilizations of that technology, and planned uses and expansion of technology in the future.

Future State Definition – Where NexLevel facilitated CPAU leadership in the definition of strategic goals, objectives, and end states to guide system needs identification

Gap Analysis and Project Identification – Where NexLevel identified key projects or initiatives that are important to ensuring that CPAU can effectively achieve the desired end state.

Information Security Assessment – Where NexLevel worked closely with City Information Security leadership to assess and document the risks and status of Utility applications relative to established information security policies and practices

ERP Requirements Summary –NexLevel provided a set of ERP requirements specific to CPAU needs, in order to allow the City and the Utilities Department to determine a course of action for ERP investment.

Prioritization of identified initiatives was deferred for at least 6-12 months because CPAU has noted that a more detailed Utilities strategic business plan is necessary in order to set priorities and to understand the benefit of potential investments.



Key Findings The results of the IT Services Management Assessment and the Business Technology Assessment tasks provided detailed insights to challenges and needs associated with the IT systems utilized by CPAU. The following are pain points or findings of particular significance, meriting attention from CPAU leadership as broader Utilities Departmental priorities are resolved:

Finding Impact

Changes to the City ERP systems environment can be very difficult to execute, or may be

limited due to departmental interdependencies outside of Utilities’ control.

Palo Alto utilizes a complex systems integration model built around a core City ERP such that changes for one

department can drive unintended side effects for another. The monolithic and interdependent ERP structure does not easily serve the independent business needs of the City Utilities Department.

Business Intelligence capabilities are inadequate for Utilities’ needs.

Multiple Utilities business groups struggle with existing BI data extract and presentation capabilities. Data for decision making and operational oversight is difficult

to obtain relating to billing and customer data.

The information security compliance profile of utility systems is uncertain.

There is a risk of security breach including unauthorized access to sensitive applications and information. This poses a business continuity risk.

SAP seen as cumbersome and complex for business processes with limitations that

illustrate the need for best-fit tools in multiple functional areas

Resource Management, Compliance Tracking, Programs and Services, Marketing, Management, and

others are driven to create custom, limited functionality solutions or workarounds to utilize data or close functional gaps. The ERP can be expensive to

enhance.

The IT / Business Partnership is not fully defined and roles and responsibilities, as well

as Utilities’ staffing needs are uncertain.

Limited knowledge in IT to support Utility business needs and technology planning place a burden on the utility to address these needs without formal process or expertise. The relationship is in a transition phase.

Utility business groups have specific, unmet tool and support needs

Utility business groups are struggling to implement capabilities to meet evolving business needs in targeted functional areas. This stifles business

capabilities and elevates costs



Recommendations Summary Following from the identification of findings, a set of recommendations were developed and reviewed with CPAU leadership. These recommendations include a more detailed set of 40 un-prioritized initiatives, and a set of summary recommendations outlining broader directional efforts to be executed in order to better position CPAU with IT systems and support that will enable the achievement of future state objectives. The following are a subset of the summary recommendations deserving of special consideration:

♦ Establish a ‘carve out’ model to segregate utility specific ERP functionality from City ERP systems in order to implement best-fit capabilities

♦ Define and implement a utility specific BI capability for flexibility, ease of use, and broad data interrelationship including customer and usage information

♦ Assess the information security profile, including business continuity, of the utility systems environment and develop an application specific action plan to close risk gaps

♦ Define, prioritize, and implement business specific application enhancements including mobile tools, engineering and operational capabilities, billing and payment solutions, program administration, and resource management.

♦ Redesign the Utilities/IT Departmental relationship to better address current utility business needs for support and systems, and work within City IT department strategic guidelines and evolving organizational charter.

Next Steps As mentioned previously, CPAU has identified the need for a detailed Utilities Department Strategic Plan. Such a plan will provide direction and guidance for Utilities business plans, budgets, operations, projects, and staffing. In addition, such a plan will outline key requirements necessary to properly prioritize and address Utilities IT system needs. With these considerations in mind, the following are a brief set of high level next steps based upon the ITSR project:

♦ Complete the Information Security assessment for CPAU IT systems already in progress and prioritize resulting action plans.

♦ Provide CPAU ERP requirements to support the City-wide ERP evaluation and decision making process

♦ Formally address CPAU IT management needs for staffing, application support, infrastructure, and project support in consideration of City IT charters and objectives.

♦ Initiate an effort to develop a Utilities Department Strategic Business Plan for Palo Alto

♦ Complete a CPAU IT Strategic Plan based upon the ITSR which includes the prioritization of 40 identified initiatives according to CPAU business priorities.


Utility IT Systems Review charted with the following objectives:◦ Review present IT systems, use, and maintenance regiment, relative merits of

existing systems◦ Review future needs in the next 5-10 years – Palo Alto will provide desired

‘end state’ by 2020◦ Review IT planning and organizational needs to get to the 2020 goal◦ Review other organizational structures and practices, and provide

recommendation for Palo Alto to meet 2020 goals◦ Recommend systems implementation options and sequences where

appropriate◦ Develop a set of Enterprise Resource Planning (ERP) system requirements

specific to CPAU needs to be provided as an input to a separate ERP evaluation project.

◦ Develop a presentation for stakeholders and executives outlining findings and recommendations

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• Noted as a part of CPAU staff and workgroup interviews• Use of current technology, future needs, and support• Pertaining primarily to needs and challenges identified

CPAU Common Systems Pain PointsPain Point Impact

1

Changes to the City ERP systems environment can be very difficult to execute, or

may be limited due to departmental

interdependencies outside of Utilities’ control.

Palo Alto utilizes a complex systems integration model built around a core City ERP such that changes for one department can drive unintended side effects for another. The monolithic and interdependent ERP

structure does not easily serve the independent business needs of the City Utilities Department.

2Business Intelligence

capabilities are inadequate for Utilities’ needs.

Multiple Utilities business groups struggle with existing BI data extract and presentation capabilities. Data for decision making and operational oversight is

difficult to obtain relating to billing and customer data.

3The GIS Platform is limited in functionality, integration,

and support

Outdated GIS platform with limitations in automated data exchange with key applications, requirements for manual data entry and updates, and constrained resources that pose a business risk to the Utilities

Department

4Utility business groups have

specific, unmet tool and support needs

Utility business groups are struggling to implement capabilities to meet evolving business needs in targeted functional areas. This stifles business

capabilities and elevates costs 8


5There is a lack of field

tool strategy for hardware or applications

Proliferation of mobile tools present operational challenges, access issues, support concerns, and limit

the productivity of field staff

6

The information security compliance profile of

utility systems is uncertain.

There is a risk of security breach including unauthorized access to sensitive applications and information. This

poses a business continuity risk.

7 Limited telephony integration in call center

Calls are distributed but there is no interactive response technology, caller id, or other functions so customer

experience can be impacted based on how call routing menu fits their needs, and agent skills and staffing

levels are difficult to manage

8 IC Web is complex and inefficient to navigate

Many clicks required to accomplish tasks. There is a wish list of improvements to be implemented aimed at

improving agent productivity and customer service

9 A need for MUA 2.0 Completion

Clear need for MUA 2.0 in order to implement enhanced customer services with outages, mobility, smart meters,

service notifications, billing and payment

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SAP seen as cumbersome and complex for business processes with limitations that illustrate the need for best-fit tools in multiple

functional areas

Resource Management, Compliance Tracking, Programs and Services, Marketing, Management, and

others are driven to create custom, limited functionality solutions or workarounds to utilize data or close functional gaps. The ERP can be expensive to

enhance.

11 SAP Asset Management inadequate for utility needs

No true asset management capability to manage utility assets from purchase through retirement cause data management and duplication issues, compliance

concerns, maintenance issues, and manual effort

12 Inadequate Implementationof SAP rates and billing

Fiber billing, account needs tracking, and other gaps in billing process drive manual error and customer service challenges. High rates of billing exceptions

drive manual effort

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SAP document management

implementation inadequate for utility needs

Attaching letters, agreements, and other documents to accounts in SAP is not aligned or implemented effectively resulting in disconnected supporting applications, manual effort and customer service

challenges

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14 There are issues with IT Change Management

Environmental complexity and unclear change management processes make implementing

enhancements risky and costly

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The IT / Business Partnership is not fully defined and roles and responsibilities, as well as Utilities’ staffing needs

are uncertain.

Limited knowledge in IT to support Utility business needs and technology planning place a burden on the utility to address these needs without formal

process or expertise. The relationship is in a transition phase.

16 Lack of Clarity in IT Project Support

IT projects are defined and chartered within the business and receive limited or no guidance and support from the IT organization. This impacts

project cost and success.

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Unclear Roles and Responsibilities in IT

Operations and Administration

Business critical applications receive limited formal support outside of core infrastructure. This places

resource and expertise burdens on the Utility Department which are not formally addressed.

18 Need for Utilities focus in ITInfrastructure Management

IT administration and planning of core infrastructure is not always business focused such that important

utility applications are operating with risk and elevated costs

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• Actions and directional recommendations to address findings• Intended to guide more specific initiatives and projects

1. Establish a ‘carve out’ model to segregate utility specific ERP functionality from City ERP systems in order to implement best-fit capabilities

2. Assess and document detailed GIS business needs and evaluate current solution versus alternatives for best Utilities business fit and return on investment. Evaluation should include support resources, integration to other applications, operational model.

3. Define and implement a utility specific BI capability for flexibility, ease of use, and broad data interrelationship including customer and usage information 14

4. Assess the information security profile, including business continuity, of the utility systems environment and develop an application specific action plan to close risk gaps

5. Complete internally facing and externally facing web based service delivery enhancements.

6. Define, prioritize, and implement business specific application enhancements including mobile tools, engineering and operational capabilities, billing and payment solutions, program administration, and resource management.

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7. Continue pursuit of pilots per Smart Grid plan in order to be strategically prepared to address smart grid capabilities as drivers dictate. Follow with implementation strategies.

8. Redesign the Utilities/IT relationship to better address current utility business needs, resources, roles, responsibilities, and to work within City IT department strategic guidelines and evolving organizational charter.

9. Align all initiatives and recommendation responses to support Utility IT Systems Strategic Goals and Objectives. Establish processes to monitor and update strategic plan.

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• 40 Initiatives identified to meet recommendations• To be prioritized based upon business impact, cost, and effort• Prioritization dependent upon overall Utilities business strategies

• Utilities Department priorities noted as a part of systems review• Suggested next steps to move forward

1. Address information security gaps

2. Address ERP needs based upon CPAU findings and in cooperation with City IT led ERP evaluation

3. Build clarified, collaborative relationship with IT Department for IT Management practices and resourcing

4. Complete Smart Grid projects

5. Establish Strategic Business Plan for Utilities Department

6. Prioritize Utilities IT Initiatives into budgeted roadmap

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1. Complete Information Security assessment for CPAU IT systems Q3 CY 2014

2. Provide CPAU ERP requirements to support the City-wide ERP evaluation Q3 CY 2014

3. Formally address CPAU IT management needs for staffing, application support, infrastructure, and project support in consideration of City IT charters and objectives. Timing TBD

4. Initiate an effort to develop a Utilities Department Strategic Business Plan for Palo Alto Timing TBD

5. Prioritization of 40 identified initiatives according to CPAU business priorities. Timing TBD

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• A description of the approach used to develop this report• Examples of documentation reviewed• Examples of interviews conducted

Gather CPAU systems and plan documentation

Interview CPAU and City IT leadership

Interview CPAU work groups

Propose and ratify CPAU systems end state

Initiate CPAU systems security assessment

Present Findings & Recommendations & Projects

Prioritize Initiatives with steering group

UAC Presentation target Q4 if needed

DONE

Deferred to 2015

TBD

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Documentation Review – NexLevel requested, obtained, and reviewed CPAU IT documentation where available. Examples of documents reviewed include the following:◦ Utility Goals◦ Utility Strategic Business Plan, Budget, and CIP◦ Previous Related Assessments and Plans◦ List of utility solutions, software, databases and all associated resources◦ Current support plans and resources for all utility systems and solutions◦ Utility Organizational Chart and Contact Information◦ Technology Budgets and Capital Plans◦ Technology Governance Agendas and Minutes◦ In Process or Planned Technology Project Documentation◦ IT Inventory (e.g. desktop/laptop/tablet, applications, peripherals, servers, storage,

backup devices, applications, etc.)◦ IT Policies and Procedures◦ IT Disaster Recovery Plan◦ Network Architecture Documentation◦ Utility and IT Organizational Structure, Job Titles and Role Descriptions◦ IT Support and Administration policy and process documentation◦ IT Service Level Agreements◦ IT Performance statistics or activity reports◦ Technology Vendor Listing and Agreements

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NexLevel facilitated an extensive series of on-site meetings with utility departments to identify the current technology environment within each organization, barriers to full utilizations of that technology, and planned uses and expansion of technology in the future. The workshops were held for each department and attended by department managers and key staff as directed by CPAU. Examples of workshops completed include the following groups:◦ Utility Director and Senior Leadership◦ Utility Engineering◦ Utility Metering◦ Utility Billing and Administration◦ Utility Operations◦ Utility Customer Service◦ Utility Resource Management

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• Items describing the desired 5+ year future state for CPAU IT Systems

“Build and operate a utility systems environment that optimizes operations, enables employees, and delights customers”

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I. Enable Customer to Optimally use Utility Services and Communicate effectively with the City

II. Enable Workforce with IT tools to effectively perform on the job

III. Utility Technology Operational Optimization

IV. Effectively manage and maintain assets for the Electric, Gas, Water, Wastewater utilities

V. Effectively Manage Utility Financial/Supply Assets & Optimize the CIS/ERP Configuration to effectively serve customers

VI. Design and Manage Business Process Optimally

VII. Optimally manage Energy Efficiency and Conservation Programs; enable customers to reduce bills

VIII. Utility Systems and Solutions Governance Optimization

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• Items describing the desired 5+ year objectives for CPAU IT Systems

Systems Strategic Goal Systems End State Objective(CPAU Strategic Objectives)

I. Enable Customer to Optimally use Utility Services and

Communicate effectively with the City

A. Utility billing and payment systems are flexible, integrated, and available to customers and CPAU representatives

B. Outages are reported by customers to CPAU through a variety of means. Status of outage resolution is reported to customers in an accurate manner.

C. Residential and Commercial customers are empowered with capabilities for services and information via a comprehensive web portal and delivery across a variety of mobile platforms and channels including CoPA platforms

D. Customers have timely access to their utility usage and cost information.

E. CPAU systems provide information and functions in compliance with all legislative mandates

F. Customers are able to employ on-premise smart grid solutions to view and manage their utility services and to manage their costs.

G. Utility rates are implemented to empower customers with visibility and control over their costs.

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II. Enable Workforce with IT tools to effectively perform on

the job

A. Utility field staff utilize a unified suite of tools to allow them to access solutions related to their work.

B. Mobile workforce solutions employ real time connectivity to CPAU systems

III.Utility Technology Operational Optimization

A. CPAU utilizes best of breed solutions whenever feasible including “Cloud First” and “Software as a service” alternatives as appropriate and where possible, sharing of systems and capabilities between City departments is considered.

B. CPAU solutions are integrated for operational efficiency

C. Utility data are standardized for quality, availability, and change management

D. Utility reporting tools are flexible and accessible to CPAU Employees and information is available to enable data driven decision making at all levels of the organization 37


IV. Effectively manage and maintain assets for the

Electric, Gas, Water, Wastewater utilities

A. System modeling tools are carefully planned, procured, and implemented

B. System monitoring tools are carefully planned, procured, and implemented

C. GIS integration to system modeling and monitoring solutions is optimized

D. CPAU employs a best fit, integrated GIS tools to depict, record, and manage utility assets and attributes

E. CPAU maintains centralized asset related data for planning and operations according to industry best practices

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V. Effectively Manage Utility Financial/Supply Assets

&Optimize the CIS/ERP

Configuration to effectively serve customers

A. Utilize robust supply resource planning tools to minimize supply cost to customers

B. Utilize robust and integrated financial planning, settlements and retail rate making tools.

C. Utilities financial systems tightly integrated with City’s financials and ERP systems

D. CPAU employs a utility specific, best fit CIS system that interfaces to City ERP systems and is selected to deliver an optimal consolidation of utility business functions.

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VI. Design and Manage Business Process Optimally

A. CPAU employs best fit systems to meet identified business needs.

B. Systems are procured and implemented to avoid customization and business processes are adapted to meet system configuration constraints

C. CPAU maintains a repository of business process documentation that is reviewed and updated regularly

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VII. Optimally manage Energy Efficiency and Conservation Programs; enable customers

to reduce bills

A. Energy Efficiency and Conservation Programs are tracked and managed to meet stated objectives

B. Tracking systems enable reporting, reconciliation, and staff awareness for internal and external entities

C. Energy efficiency programs are designed and implemented to ensure an optimal customer experience

D. Marketing and customer engagement for Energy Efficiency programs is carefully planned and implemented

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VIII. Utility IT Systems and Solutions Governance

Optimization

A. CPAU systems and solutions are actively managed by the UTL Tech Committee and utility stakeholders according to an established set of practices

B. A Utility IT Systems Plan is continuously maintained to meet business needs.

C. Utility IT Systems improvement planning, procurement, and implementation are accomplished by skilled resources under the direction of the utility business units and the UTL Tech Committee, in partnership with City IT Department staff.

D. Utility IT Systems operations and maintenance are planned, resourced, and managed under the direction of the CPAU organization in partnership with City IT Department staff

E. Utility systems and processes are managed according to City Information Security policies and procedures and applications are accordingly secured in order to protect confidential and private information. 42

• Discussion of CPAU ERP needs• Intended to support CPAU ERP decision and City IT ERP Evaluation

City IT is sponsoring an evaluation of the ERP◦ Current effectiveness of SAP◦ Departmental needs◦ Considering modifying and extending SAP, or

possible alternative approaches

Specific SAP/ERP related items raised by CPAU◦ Each CPAU workgroup gave specific inputs◦ Common themes emerged◦ Overall perception by CPAU: SAP is not fully meeting

business needs as currently implemented

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SAP costly to maintain and align to CPAU needs

Centralized ERP for City presents a difficult equation to balance for best fit functionality on a departmental level. Some CPAU needs are not well understood by IT, and are difficult to meet without risk to functionality needed in other City departments

Certain CPAU applications and needs are not integrated to SAP resulting in ancillary tracking and manual effort

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Information access depends upon tribal knowledge in order to get data from BI. Accuracy is suspect in some cases

BI reports are not adequate in many instances. Extracting information is problematic where specialized data relationships and reporting needs are identified

BI is not an adequate analytics platform

Achieving new data alignments to improve customer service are proving difficult, for example smart meter usage data and customer data

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Utility customer service nimbleness is hampered by large, static ERP

Asset management is not implemented in SAP to meet CPAU needs

Project management for CPAU engineering is not implemented requiring manual job updates

Billing needs such as fiber and newer complex rates are not implemented

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Middleware support for CRM and SAP alignment are a concern when exceptions arise

SAP document management is inadequate for customer service needs and attaching customer records

Addressing legislative requirements and changes to the system for billing and meters is cumbersome and costly. Manual process becomes the fallback

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Aligning and modifying financial accounts for CPAU needs is not a simple matter.

Financial forecasting not adequately implemented

Changes to the bill print and XML print files would require changes and regression testing that would be significant and a potential concern to other functionality, other departments

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Smart Grid projects and systems will bring a new slate of data alignment, integration, reporting, and functional requirements to build into the ERP

Improved integration and functional requirements documented for call center and web based customer services. Implementing new (customer expected) service requirements will be ongoing driver of change

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• Description of Information Security Assessment of CPAU Applications• Intended to identify and address issues, and document risks

Information Security (IS) Framework Established◦ Business Impact and Vendor Assessments available◦ Policies Drafted for City

IS Status of 55+ Utilities Applications Unknown◦ Some newer solutions have been profiled◦ Perceived risk is high with certain applications

Recommendation to perform detailed review◦ All Utilities applications to be profiled◦ Use City IS assessment tools to id risk and impact◦ Supported by City IS Manager

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Training delivered to Utilities application owners◦ Business Impact Assessment◦ Vendor Information Security Assessment◦ Categories of risk and classification◦ Process to complete assessment and documentation

Application owners to complete assessment◦ Submit to City IS Manager for review◦ Jointly developed action plan and status to be recorded◦ Follow up to resolve IS findings will be app specific

Targeted completion in Q3 of CY 2014

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tab 1 – executive summary

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