VALUE ENGINEERINGINDUSTRY SOLUTIONS

EAM Roadmap to Value

Driving Value in the Real-Time Enterprise

EEI/AGA TAC Meeting, October 23, 2007

Henry Bailey, Vice President – Industry Solutions

US Utility Industry Drivers & Implications

Constrained Revenue GrowthDownward Margin Pressure

Shareholder Value ChallengeValidate EAM Strategy

Growth & Market Share

• Aging workers and assets• Slower growth rates• Higher growth expectations• Increasing M&A activity

Government Regulations

• Energy Policy Act• Sarbanes-Oxley• Deregulation• Emissions• FERC, NRC and NERC

High Capital Costs

• Infrastructure reliability• Management of emissions• Rising fuel costs

Changed Market Structure

• AMI Initiatives• Deregulation• Competition• Supply chain risks

Industry Value Network for Utilities Focus area: EAM

USA / Canada• Energy East• SCE• PG&E• Energen

Europe• EDF• E.ON• Electrabel

APJ• CLP• GNP• NCGC• Shanghai

• ASUG / DSUG• SAP Research

Where to focus?

Peer Group Average

Peer Worst Peer Best

Utility C10%-9%Utility ARevenue Growth 5%

Utility EUtility A

0.762.60

Operating Income Per Employee

1.76Utility C Utility BAsset

Utilization

82% 60%74% Utility DUtility B

Days Sales Outstanding

Utility A 65 days 21 days Utility C

0.05M 0.12M 0.2M

47 days

Every 1% increase in revenue growth = $1M in operating income

Every 1% improvement in CoO = $6M in operating income

Every 1% improvement in Asset Utilization = $13M in freed up capital

Every day of improvement in days sales outstanding = $2.1M in free cash flow

What Moving the Needle Could Meanto a $750M Revenue Electric Utility

CoO1 as a % of Revenue

EAM Benchmarking Survey

End-to-End Process Benchmarking

• Enterprise Asset Mgmt • Customer Care• Supply Chain Mgmt• Human Capital Mgmt• Financial Mgmt• Total Cost of Ownership• 10+ additional surveys

http://www.asug.com

Source: ASUG Utility Benchmarking

Schedule attainment 87% 34%

Correlation between Maintenance 41% 13% Program and Compliance performance

Enterprise Asset management – Value Discovery

High performers have a more productive

utilization of time across different functions

High performers have a more productive

utilization of time across different functions

Traveling

Planning & Scheduling

Reliability Functions

Repair & PreventiveMaintenance

Analyzing Readings

Troubleshooting

Looking for Materials

Reporting

48%

70%

KPIs

% allocation of time in maintenance function

Top Performer Asset Management Impact

Allows assets to be managed & replaced more efficiently

Improves business processes for asset management Analytics in scheduling

Notifications

Regulatory reporting

Maintenance costs reduced by 50% Procurement costs reduced by 30%

“Ranked #2 in top 40 Energy Companies”Utilities Fortnightly, 2007

Call to Action

Benchmark Current Performance1

Execute a Value-Based Deployment 3

Identify Value and Further Align IT with Business2

Measure Value Obtained and Market Success4