© 2008 Eventure Events. All rights reserved.

10 Years of Successes and Experiences with SAP at PSEG

Stephen RochePublic Service Enterprise Group

• Public Service Enterprise Group is a publicly traded energy and energy services company:

– PSEG Energy Holding

– PSEG Power

– PSEG Services Corporation

– PSE&G (Public Service Electric and Gas)

• Total assets: $28.9- billion

• Total revenues: $12.2 billion

• Ranked 178 on Fortune 500

• Ranked 249 on Forbes 400 Best Big Companies

• Employs nearly 10,000 people – 98% in New Jersey

PSEG – Corporate Overview

PSEG – Corporate Overview

Traditional T&D

Leveraged Leases

Domestic/Int’l Energy

Regional Wholesale Energy

2008E Operating Earnings: $1,420M - $1,560MAssets (as of 9/30/07): $28.9B

Market Capitalization (as of 2/6/08): $23.6B

PSEG Operating CompaniesPublic Service Enterprise Group (PSEG) is a publicly traded (NYSE:PEG), growing energy and energy servicescompany headquartered in New Jersey. Its main subsidiaries are: PSEG Power LLC, Public Service Electric and GasCompany (PSE&G) and PSEG Energy Holdings LLC

• Total assets: $29.8 billion

• Total revenues: $12.4 billion

• Employees: 10,500

In 2003, PSEG celebrated its 100th anniversary. PSEG has paid a dividend annually since 1907

PSEG is ranked 199 on the 2005 Fortune 500 list

PSEG Power LLC

• Owned Capacity: more than 14,636 MW

• Percent of PJM capacity: about 20%

• An integrated regional electric trading floor

Public Service Electric and GasCompany

• Electric customers: 2.1 million

• Gas customers: 1.7 million

• Service Territory: 2,600 sq. mi.

• Other products and services: appliance repair business, relocation assistance programs, and energy conservation programs

• Received the prestigious ReliabilityOne award for superior electric system reliability in mid-Atlantic region

PSEG Energy Holdings

• PSEG Global operates 25 generation plants primarily in North and South America

• Total assets: more than $7.0 billion

• Total Megawatts (MW) in operation: 3,000 MW net ownership

• Total service area of distribution companies: 155,000 square miles

PSE&G Delivery Territory

0 10ml1 2 3 4 5 6 7 8 9

War ren Co.

Hunterd on Co.

M orris Co.

Berge n Co.

Essex Co.

H udso n Co .

U nion Co.

Midd lese x Co.

M ercer Co.

M on mouth Co.

O cean Co.

Burlington Co.

Camden C o.

Sussex Co.

P assa ic Co.

Som m erset Co.

STATEN ISLAND

Glo uce ste r Co.

COMBINED ELECTRIC & GAS TERRITORIES

ELECTRIC TERRITORY

GAS TERRITORY

KEY:

N

EW

S

New JerseyPublic Service Electric and Gas Company is NJ’s oldest & largest regulated electric & gas delivery utility:•Traditional transmission and distribution utility•150,000 miles of wire•33,000 miles of pipe•2,600 sq miles of service territory• 3.6 million customers•2.1M electric customers•1.7M gas customers•2,600 sq miles in service territory (300 communities)•$7.6B in revenues•6,100 employees •Four major unions•24/7 operation

PSEG Power – Generating Assets

The bulk of PSEG Power’s generation fleet is positioned to serve the most populated markets during times of transmission constraints

Keystone

WEST VIRGINIA VIRGINIA

MARYLAND

DELAWARE

ConemaughPENNSYLVANIA

Peach Bottom

NEW YORK

CONNECTICUT

Yards Creek

Hope CreekSalem

National ParkBurlington

Mercer

HudsonKearny

BayonneLinden

Sewaren

Edison

Essex

Bergen

Albany

> 1,000 MW

500 - 1,000 MW

100 - 500 MW

<100 MW

MW Capacity

EASTERNINTERFACE

EASTERNINTERFACE

PJMPJM West

PSEG Power – Diversity and Scale

The majority of Power’s output is from low-cost nuclear and coal assets

43 %

35 % 22 %

18 %41 %

14 % 25 %

30 %12 %

57 %

13,751 MW Operating Portfolio

Market Segments

Peaking

Load Following

Baseload

Fuel Diversity

CoalGas

OilNuclear

PumpedStorage

2%

Energy Produced(MWs) (MWs) (GWhrs)

CoalGas & Oil

Nuclear

PumpedStorage

1 %

PSE&G 2006 Reliability One Award- PSE&G named America’s most reliable electric

utility for the second year in a row

Best Electric Reliability Mid-Atlantic Region - 2001-2007 Best Electric Reliability in the Nation - 2005 and 2006 BSC Hall of Fame Award - 2007

Power 2006 INPO CEO Conference- Most Improved Nuclear Plants Award 2005 World Record –Refueling Outage with Reactor Head Replacement

Duration 25 days 2006 Salem Unit 2 Best Ever Outage Duration 21 days

Recent Events, Awards and Records

• Phase 1 – Enterprise (PS, FICO) Completed 1/97• Phase 2 – Fossil Generation WM (PM) – Completed 1/98• Phase 3 – HR, MM – Completed 1/99

– Nuclear Work Mgt. – Completed 6/99

• Phase 4 – Transmission/Distribution Work Management (PSE&G)

– Electric and Gas Transmission and Fleet – Completed 12/99– Electric Distribution - Completed 9/02– Gas Distribution – Completed 3/03

• Phase 5 – Portal, SEM, BW (yyyy)• Phase 6 – GRC, xRPM, SSM, BPC

Corporate SAP Initiatives

PSEG SAP Business Integration Journey

1996 1997 1998 1999 200420012000 20032002 2005

ERP/EAM ERP EAMLegend

Nuclear Work Management

Enterprise Design

Albany Plant

Mid-West Plants

Fossil Work Management

Connecticut Plants

Utility Inside Plant Utility Delivery WM

Corporate Business Processes

CPI(SEM)

HR Decoupled

Go LiveExec Sponsor

COO - PSEG CFO - PSEG CIO – PSEG, Services Company

Business Integration Team SAP-COE SAP Program Mgmt

Support Org

ERP / ERM 3.1h

Landscape on hold due to pending Merger

EP 6.0, SEM 3.2, BW 3.01b

EAM 3.1h

ERP 4.6b

2006 2007 2008

EP,BI 7.0

Quarterly Released-Based Management Program

EAM 4.6 c

ERP 4.7

EAM ECC 6.0

ERP ECC 6.0

Utility CIS, CRM, Portal/UCES,

MAM/MAU

• Organizational Design• Production Support Methodology• Landscape and Transport Management• Product Management Process

How we “Run” our systems

Organizing IT for Results

Operational Excellence

Enabling Technologies

Business Solutions

Infrastructure and

Operations

Architecture, Engineering,

and Compliance

Run EnableImproveManage

VP IT / CIO

• Product Pricing

• Product Billing

• Strategy

• LCP’s

• Hosting

• Production Support

• Business Needs and Strategies

• SAP COE

• BI CC

• Integration / Portal CC

What ?? How !

Organizational – Learning’s• Best practice to have Business led implementations, but with IT

participation• The IT support and development resources need to learn on the

implementation• Seamless handover between project and support org is

essential….formal knowledge transfer• Keep the momentum that the project created in order to drive

increased usage in the long run, you cannot just go on to the next project

• Be clear and concise or resource roles between the business, IT, and vendors.

• If accountabilities for ongoing management are not in one organization, you still need single point of oversight and accountability to ensure tactical and strategic are balanced

Who do you want to be, an order taker, or a enabler of the future?

Production Support – Learning’s• Outsourcing both Hosting and Production Support has reduced our

TCO• Do not outsource your core skills (Business Process Knowledge)• SLA’s are key to a successful outsourcing• Manage outsourced resource turnover• Manage escalation from outsourced vendor to your internal staff

(clear roles and accountabilities)• Manage and understand impact of application scale-out and

additions upon your TCO• Manage “Changes” slipped in as “broke fix” to keep your cost low• Mine the help desk inventory for higher level process training

opportunities• Ensure your COE knows what your users are doing / not doing

Size for the core basics, outsource the peaks in the demand!

Landscape and Transport Management• As you add more current technology the more complex the

landscape will get. – 14 three tier systems (Enterprise ,HR, BW, SEM, EP (2), xRPM,

GRC, XI (2), SSM, BPC, CRM, MI– Do not underestimate the level of effort to keep in sync and at

compatible support pack levels– Moving to HA and 12 hr DR for core systems

• We use a dedicated landscape management team including transport oversight

• Beginning use of Solution Manger and the “CHARM” process for seamless transport approval and processing

• Routine schedule system maintenance window, max 8hr month. – Annually published schedule– key business stakeholder approval process for off normal

shutdowns

Stay Connected

Landscape and Transport Mgmt - Learnings• Monday Production Meeting (Hosting, Prod Support, COE)• Routine weekly transports

– Normal, Wednesday afternoon– Quiet Period, Friday afternoon– Emergencies as needed (minimize)

• Weekly integrated landscape management meeting– 12 week landscape look ahead– Spare / Sandbox instance request management– Development / Project status and landscape needs

• Pre-approved transport “types” that do not require full integration review

• Integrated Development / Broke Fix “Configuration Start” approval process

• Continuous Improvement Process utilizing SAP Quality Notifications

Be relentless and consistent….Do not compromise the process

Product Management Process • It is a balancing act to attain and maintain the lowest level

TCO, while deploying new technologies / assets• While budgeting is done is separate towers, OPS, Engr,

COE…..COE maintains overall cost picture• Product costs include

– Annual maintenance fees– Hosting and Production Support outsourcing fees– Internal labor billed to the product – Depreciation and interest for Capital Product improvements

• Billed to operating companies and Service Corp Practice areas using weighted average of HR Headcount and User ID Count

• Allocation includes application / Module usage

In order to keep costs low, you need to know all your costs!

• Governance Model• Architectural Strategies and Life Cycle Plans• Development Process• Foundational and Transformation Projects• New Technology Introductions• Reporting and Analytics

Improving the applications and Enabling Further Business Process Performance

Governance Process Decisions, based on business value, controlled by business leaders, will provide the foundation for sound investment decisions.

• IT Strategy & Roadmap• IT Service Offerings

IT Capital Investment Plan

LOB IT Capital Investments

Capital Review Committee

LOB Governance

Councils

ProgramManagement

Strategy

Investments to run, improve or enable the business

LifeCycle

PlanningEnterprise

Architecture

CIO

IT Governance Model

Investment Funding,Pricing & Cost Recovery

Investment Prioritization& Value Realization

Business-IT Principles

Investment Funding,Pricing & Cost Recovery

Investment Prioritization& Value Realization

Business-IT Principles

IT D

eman

d M

anag

emen

tIT

Sup

ply

Man

agem

ent

Decision ModelDecide how to fund investments, price services & recover their charges

Decide how much and where to invest and how to validate results

Describe role of IT and business uses of IT

Align information, technologies and IT services to business processes; optimize performances and capture synergies

Describe the approach for securing and expanding the enterprise foundation

Deploy the IT resource for supporting IT strategy

What

How

Business-IT governance involves six major decision types, divided across two high-level decision domains. Demand decisions are based on strategic business value while Supply decisions are guided by IT strategy and architecture that enables developing solutions the “Right Way”

Separate the what from the how !

Governance Process- Initiative Planning

Plan

Technology Councils

Supply Chain

Finance

HR

Power

Utility

Utility - Customer

Client Plan

New Initiative Engage Tech.

Council

Tech. Council Review

TechnologyGovernance

Approval

Schedule and budget identified

Governance Process- Technology Council

SPONSOR

Tier 1 – Steering Committee (Supply Lead Team)

Tier 2 – Technology Lead Team

Tier 3 – Subject Matter Experts/ Business Input

VP, SCM

Dir, Delivery Sourcing

Dir, Nuclear Sourcing

Dir, Strategic Sourcing

Mgr, Supply Excellence

Dir, SAP COE

Delivery Nuclear Strategic Sourcing Excellence IT Team

Lead

Delivery Nuclear Strategic Sourcing Excellence IT – SCM

Non-SCM personnel

Dir, Enabling Technologies

• Provides, at a high level, resources, and overall sponsorship and direction for Technology initiatives.

• Provides resources, and overall sponsorship and direction for Technology initiatives.

• Approve SCM Technology Strategic Plan.

• Develop and maintain SCM Technology Strategic Plan and prioritize business requirements that support the Business Outcome Model/ Roadmap.

• Prioritize Technology enhancement requests.

• Provide detailed business requirements and support testing for technology enhancements, day-to-day pain points and break-fix issues.

Responsibilities:

Mgr Integration

COE

IT Team Lead

IT –Integration

Team

Mgr Data & Business

Intelligence

IT Team Lead

IT – Data & BI Team

Virtual IT Team

Dir, Fossil Sourcing

Fossil

Fossil

Business Partner

SPONSOR

Tier 1 – Steering Committee (Supply Lead Team)

Tier 2 – Technology Lead Team

Tier 3 – Subject Matter Experts/ Business Input

VP, SCM

Dir, Delivery Sourcing

Dir, Nuclear Sourcing

Dir, Strategic Sourcing

Mgr, Supply Excellence

Dir, SAP COE

Delivery Nuclear Strategic Sourcing Excellence IT Team

Lead

Delivery Nuclear Strategic Sourcing Excellence IT – SCM

Non-SCM personnel

Dir, Enabling Technologies

• Provides, at a high level, resources, and overall sponsorship and direction for Technology initiatives.

• Provides resources, and overall sponsorship and direction for Technology initiatives.

• Approve SCM Technology Strategic Plan.

• Develop and maintain SCM Technology Strategic Plan and prioritize business requirements that support the Business Outcome Model/ Roadmap.

• Prioritize Technology enhancement requests.

• Provide detailed business requirements and support testing for technology enhancements, day-to-day pain points and break-fix issues.

Responsibilities:

Mgr Integration

COE

IT Team Lead

IT –Integration

Team

Mgr Data & Business

Intelligence

IT Team Lead

IT – Data & BI Team

Virtual IT Team

Dir, Fossil Sourcing

Fossil

Fossil

Business Partner

SCM Technology Council

Round them up routinely!

Architectural Strategies and Life Cycle Plans

• Domain based 5 year LCP’s for core systems• Include support pack, HW and Software upgrade

plans• Form the basis of the 5 year product price plan

from an architectural perspective• Revised annually to reflect changes in and

integrate with:– Changes in business direction, goals, and needs– Changes in developing, emerging, and maturing

technologies

Development Process• Bundle enhancements (<$100k) into Quarterly releases.

Presently on FR26– Allows for gating of requirements, prioritization, and realization 4

times a year– Multiple go live windows during quarter– Leverages integrated testing– Facilitates integration of support packs and system maintenance

needs– Levels work load

• 4th Quarter SOX applications / controls freeze• Limit transports / configuration changes (soft freeze) during

critical business periods (Nuclear Plant Refueling Outage)• Rigorous development and production acceptance process• KPI’s for “Right Work”, “Right Way”, and “Right Results”

Focus on the value provided beyond the original request

Foundational and Transformation Projects

• Utilize discovery period prior to formal project start to reduce risk and identify unanticipated basis / hardware needs

• If you have an older 3.x based security design, pay attention, test everything and be prepared for impact

• Avoid bundling work, split out (early) as much as possible to control the risk

– Gui upgrades– DB upgrades (Oracle)– HW upgrades

Break the effort into manageable pieces!

New Technology Introductions• Research and understand emerging technologies

– Understand SAP’s on-boarding plan for newly acquired assets– Leverage your existing licensed applications when purchasing the

targeted replacement platform with SAP– Do you want to be an early adopter / ramp-up customer or do you

wait until the kinks are worked out

• Be willing to us niche vendors to accelerate your implementation and knowledge transfer to your internal resources and support vendors

• Be careful not to oversell what you can deliver to your customers until you really know exactly how the application works. Make sure the business requirement are CLEAR!

• Will require additional PM oversight to ensure success

No pain, no gain….but be careful !

Reporting and Analytics• Determine what you client wants and give them

what they need….– Do they want a data mart to write their own reports?– Are there reports mature or dynamic?– Or do they want to automate what is routine to them?

• Limit your toolset to keep development and support costs low

• If you build it they will come….does not work!• Better user tools coming onboard …. BO, etc

allows usability beyond BEX• BW/BI requires significant attention / intefacing

with the ultimate end user to be successful

Listen, Listen, Listen………………..then start !

Summary & Questions

Listen, Listen, Listen………………..then start !

Who do you want to be, an order taker, or a enabler of the future?

Size for the core basics, outsource the peaks in the demand!

Be relentless and consistent….Do not compromise the process

In order to keep costs low, you need to know all your costs!

Separate the what from the how !

Round them up routinely!

Focus on the value provided beyond the original request

Break the effort into manageable pieces!

No pain, no gain….but be careful !

© 2008 Eventure Events. All rights reserved.

Stephen RochePublic Service Enterprise Group