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Baltimore Gas and Electric Company
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Posted: Wednesday, April 26, 2000
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Deregulation of energy utilities means that Baltimore Gas and Electric (BGE) must look for new ways to achieve operational excellence. To support its rapidly changing business goals, the company will upgrade to Microsoft® Windows® 2000 Server and Windows 2000 Professional. This move is expected to improve service to BGE business units through shorter product development cycles and more efficient information sharing, as well as reducing operations and management costs due to a less complex network infrastructure. A Rapid Economic Justification (REJ) analysis, audited by Giga Information Group, projects an improvement in operational efficiencies of $3.047 million per year over three years, including $2.22 million in real option benefits. If all potential benefits are exercised, BGE expects an Internal Rate of Return (IRR) of 125 percent.
Customer Profiles
Established in 1816 as the first gas provider in the United States and one of the earliest electric utilities, BGE has more than 6,500 employees and more than $7.3 billion in assets. The company serves more than 1.1 million business and residential gas and electric customers in metropolitan Baltimore and central Maryland.
BGE's 184-year tradition of superior, low-cost service and reliability will continue to serve it well as the company remakes itself to perform more efficiently in the highly aggressive deregulated energy environment. BGE’s executive management believes that the innovative use of information technology (IT) will better enable the company to support its business units, while also providing flexibility in building for the future.
Critical Success Factor |
Benefit
(In millions) |
Business Enabler |
Cost Management (includes optional value based on Distributed File System) |
+ $1.305 |
Improved communications and collaboration, and reduced operations and management costs |
Internal Customer Satisfaction (includes optional value based on COM+) |
+ $0.845 |
More flexible IT infrastructure, improved system development cycles, and improved adaptability |
Reliability and Public Safety (includes optional value based on Offline Files) |
+ $0.897 |
Improved quality of service |
Total Annual Benefit |
+ $3.047 |
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After reviewing the company’s business goals, BGE’s IT group determined that the solution was to implement a more integrated and reliable IT infrastructure. They felt this would simplify and accelerate the process of accessing data in multiple systems, and improve the company’s ability to quickly share information throughout all business units. To that end, the IT group recommended significant upgrades to the desktop and network infrastructure to control management and IT costs, improve value chain efficiencies, and provide collaborative and information-sharing capabilities to accelerate systems development cycles and enable business units to maximize customer service.
To achieve those goals, BGE chose the Windows 2000 Professional and Windows 2000 Server operating systems to meet the needs of its distributed computing infrastructure. "We are creating a rock-solid, yet flexible, infrastructure to accommodate new service offerings," says Ossie Tate, BGE manager of IT Operations and Technical Support.
To justify upgrading to Windows 2000 Professional and Windows 2000 Server, BGE used a Rapid Economic Justification (REJ) analysis, independently audited by Giga Information Group. "Once we determined that the Windows 2000 platform would best meet our IT needs, the REJ analysis showed that the earlier we began the migration, the sooner the company and our customers would benefit," Tate adds.
For the REJ analysis, BGE defined three critical business areas—improved customer satisfaction, cost management, and improved reliability and public safety—as critical to the successful transition of its Utility Operations Group (UOG) to a regulated energy distribution company. The REJ analysis verified that BGE could realize an Internal Rate of Return (IRR) of 125 percent based on an annualized three-year financial value of $3.047 million, which includes exercising the projected $2.219 million in optional benefits available through the flexibility of the Windows 2000 platform.
The net result is a more responsive, market-driven IT organization that is more closely tied to BGE’s Line of Business (LOB) organizations, which enables the LOBs to use IT more effectively in meeting their business goals.
BGE Builds Business Flexibility and Reduces IT Costs with Windows 2000 Platform
The REJ analysis verified BGE’s contention that migrating to a single, integrated network operating system and directory service with improved reliability and scalability, would help to reduce the complexity and diversity of its current computing environment and thus help to reduce BGE’s annual operations and administration costs. This is expected to support immediate improvements in manageability and cost control and provide system flexibility not possible with the company’s current desktop and network infrastructure.
BGE employees require a desktop and server platform that provides the flexibility and power to share information, collaborate on system development, and minimize overall technology diversity. The Windows 2000 platform will help reduce management and support costs through the following:
 | Reduced Complexity of Network Environment. Windows 2000 Server will replace multiple network operating systems and directories resulting in a less complex network that is easier to manage and costs less to operate, administer, and maintain. Improved scalability means that fewer servers will be required, and domain consolidation can help reduce administration costs. The Active Directory™ service also supports the development of robust directory-enabled applications that maximize reuse and improve business agility. |
| Reduced Management and Administration Costs. Asset consolidation will help to reduce hardware and software costs, and associated administrative costs. A single interface through the Microsoft Management Console can increase IT administrative productivity by reducing the learning curve and decreasing the need for IT support. The ability to manage and synchronize user objects, rights, and provisions centrally across multiple systems with meta directory services will help decrease valuable administration time. Network Load Balancing and support for higher capacity servers with greater throughput is expected to reduce the number of existing file and print servers by 25 percent. |
| Increased Reliability of Desktop and Server Computer Systems. The secure file system, self-healing applications, and centralized desktop policies provided by Windows 2000 will create a consistent, predictable environment to help eliminate user-created support scenarios and reduce the likelihood of permanent data loss. Increased system reliability will help decrease IT support requirements and will enable other productivity and operational improvements. BGE is projected to achieve additional annual savings through better alignment between its IT professionals and the services they provide. |
Because Windows 2000 is built on Internet standards and interoperates with legacy network operating systems, BGE will be able to take advantage of and extend its mainframe computer systems that currently provide complete customer records for all business units. With a common desktop standard and network infrastructure, IT assets and knowledge base will be easier to access throughout the enterprise.
The REJ analysis identified over $500,000 in cost containment due to savings in management and operations costs. The study identified an additional $600,000 per year in optional benefits resulting from the flexibility of the Windows 2000 platform and its ability to quickly adapt and respond as the energy business transforms to a deregulated marketplace.
Improved Ability to Save, Locate, and Share Information Projected to Save $802,000
The Distributed File System service in Windows 2000 Server enables BGE administrators to organize data on multiple servers into a single virtual structure that supports redundant data sources, thus reducing or eliminating the impact of a server failure. Indexing services enables users to locate information faster without having to know the exact storage location. The simplified ability to save, locate, and share information reliably helps reduce employee response time, resulting in improved customer satisfaction. Finally, enhanced information sharing and ubiquitous communications help to improve overall business intelligence. The Windows 2000 platform also supports BGE’s goal of sharing information across the enterprise and with external stakeholders such as customers, regulators, stockholders, and suppliers.
Improved Reliability Enhances BGE’s Customer Care Capability
The integrated desktop and server architecture of the Windows 2000 platform supports information sharing and collaboration at BGE. "We have a lot of knowledge capital, yet the question is how to best leverage it so that we maximize return on investment," notes Ken Allred, BGE’s manager of IT Application Delivery. "The collaborative features in the Windows 2000 platform should help us a lot in this area." Collaborative features are expected to enable IT to exchange information seamlessly for more efficient communication, which can help to reduce system development cycles and improve system reliability. Empowering BGE through a Windows 2000-based IT infrastructure is estimated to result in $3.047 million improvement in operational efficiencies. Windows 2000 platform enables the following:
| Updated Information All the Time. Efficient communication with field personnel is essential for providing superior customer service. For example, the offline file synchronization feature in Windows 2000 helps field forces visiting new building sites improve accuracy by keeping centralized data repositories updated with "as-built" information documented at the construction site. The ability to synchronize files remotely also saves the time of having to return to the office to update the system. The ability to update central data repositories from the field along with improved communications between engineering and construction personnel also helps improve service on future requests to locate underground pipes and wires precisely. |
| Decreased Project Delivery Time Helps Improve Productivity. The Windows 2000 Active Directory service enables easier, quicker, and more accurate deployment of the right tools to the right people at the right time. Improved system development cycles can help the IT group be more responsive to business unit demand for innovative applications that improve BGE’s efficiency and effectiveness, and which consequently help to reduce costs. Offline files enable BGE telecommuters and mobile workers to store network-based files, documents, and Web pages on their desktop or laptop PC and work offline with minimal or no disruption in continuity. The REJ analysis determined that BGE could achieve an annual savings of $822,000 by exercising this option. |
| Increased Uptime Means More Attention to the Consumer. Self-repairing applications and technologies in Windows 2000 enable BGE to complete routine tasks with less interruption, thereby allowing more time to focus on customer care. The Windows 2000 Active Directory service supports advanced, flexible network solutions with Quality of Service (QOS) and will work with advanced network devices to ensure consistency in network connectivity. This type of directory-enabled networking will enable the network infrastructure to deliver QOS to users and applications based on policies stored in Windows 2000 Active Directory. |
BGE Meets the Present and Prepares for the Future Using the Microsoft Windows 2000 Platform
With nearly two centuries of continuous community service and customer loyalty, BGE knew that increased agility and flexibility were necessary to succeed in a rapidly evolving business environment. It also realized that integration and interoperability with back-end legacy systems was mandatory to achieve the operational efficiencies and improved customer information systems required to maintain customer satisfaction. The REJ analysis showed BGE how the Windows 2000 operating system could support these requirements, and that the company could derive a financial benefit after deployment of $3.047 million per year for three years, including future options.
"This was not a question of if we would deploy Windows 2000, but when," says BGE’s Chief Information Officer Greg Martin. "If we delay action too long we run the risk of losing a competitive advantage or bypassing an important business opportunity. Windows 2000 will provide BGE with the opportunity to increase our business flexibility as the rules of deregulation are being written, and to conduct business at a cost lower than our present IT systems allow. At the same time it can help to reduce our time to market with new systems and services." The net result is that BGE will be poised to better serve its customers and reap the benefits of improved operational efficiencies provided by the Windows 2000 platform.
Software and Services
Active DirectoryTM service
Secure file system
Centralized desktop management
Self-healing applications
Offline files
Microsoft Management Console
COM+
For More Information
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About This Study
Giga Information Group has been retained by Microsoft to participate in and review the economic justification of Microsoft Windows 2000 Server and Microsoft Windows 2000 Professional with Baltimore Gas and Electric (BGE) to validate the linkage between investments in Microsoft Windows 2000 Server and Microsoft Windows 2000 Professional and quantifiable business benefits to the organization as a whole.
BGE, Giga, and Microsoft worked closely together over a period of six weeks to define and recognize the specific benefits that pertain to BGE’s unique circumstances (industry, size, geography, etc.), and then apply the Rapid Economic Justification methodology to these characteristics to derive an explicit statement of economic value for BGE when using Microsoft Windows 2000 Server and Microsoft Windows 2000 Professional.
While every organization has unique considerations for economic analysis, this study highlights key potential areas where economic value from Microsoft Windows 2000 Server and Microsoft Windows 2000 Professional can be realized by your organization. Giga advocates that all significant IT investments undergo a rigorous economic justification to comprehensively identify and realize the true business impact of those investments.
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Last Updated: Thursday, May 18, 2000
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