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									Computing Sciences BSc Computing/ BSc Business Information Systems/ BSc Computer Science. Final Year INFO3409 Strategic Information Systems Planning 2005 Answer all questions in Section A and TWO questions from Section B. Do not spend more than 1 hour on Section A. All questions in Section B carry equal marks. All questions refer to the Omaha Public Power District (OPPD) case study The Omaha Public Power District (OPPD) Case Study has already been given to you and is reproduced here in Appendix SECTION A Answer ALL questions in this section. Note: You should clearly state any assumptions you make. (a) Define IT alignment and explain why IT alignment is critical for OPPD. (6 marks) (b) Suggest THREE areas of concern that might be identified in the Energy Services IT Alignment Roadmap and identify required IT systems related to each area of concern. (9 marks) (c) Give TWO examples of data that might be collected as part of ISD’s IT alignment process. (4 marks) (d) Do you think the automation of data collection using groupware and spreadsheets is helpful to the IT strategy process? (4 marks) (e) Explain why deregulation may be considered a powerful motivator for transforming IT into a strategic role. (5 marks) (f) The preconditions for deregulation have been triggered and the State of Nebraska has passed the deregulation legislation. As IT manager, outline what actions you would take and what your priorities in terms of IT strategy revision and implementation would be. (10 marks) (g )In what way might the ideas of chaos theory support the above task? (5 marks) (h) For the Information Systems Department (ISD), identify the main thing, a critical success factor and a stretch goal (7 marks)

SECTION B Answer TWO questions from this section. B1 (a) Using examples, explain how you would go about characterising the organisational culture of OPPD. (6 marks) (b) Discuss how the culture of OPPD might affect IT strategy content and process.(6 marks) (c) Discuss the role of power in IT strategy development and give ONE positive and ONE negative way in which power might influence the IT strategy.( 9 marks) (d) In what ways might power issue be significant in the OPPD in relation to the IT strategy? (4 marks)

B2 (a) Using a deregulated OPPD as an example, develop a five forces model and explain how it might be used to develop IT strategy (10 marks) (b) Develop a Value chain model for OPPD and, with examples, demonstrate how it support the development of an IT portfolio.( 10 marks) (c) Both the five forces and value chain model were designed from the point of view of a manufacturing organisation. How might their use in deriving IT strategy differ for a service organisation? (5 marks) B3. Construct an e-commerce strategy for OPPD. This should address B2C,B2B and B2E issue and comment on systems integration. You should apply at least ONE framework or strategic tool of your choice. (25 marks)

B4 (a) Explain how the application portfolio may help in the development of an Information Systems strategy. (5 marks) (b) Based in the information provided concerning OPPD system, develop an application portfolio and identify TWO gaps in the portfolio. (8 marks) (c ) Generate TWO ideas for Strategic information systems for OPPD and propose some criteria on which you would evaluate your ideas. (8 marks) (d) How would you assure that your proposed ideas generated sustainable competitive advantage? (4 marks)

B5. (a) Critically appraise the following definition of Strategic Information Systems Planning: SISP involves the continuous review of computer technology, applications and management structure to ensure that the current and anticipated information and process needs of the organisation are met in a way that provides an acceptable return on investment, is sensitive to the dynamic politics and culture of the organisation and is aware of the sociological environment within which the organisation exists. (McBride, 1998) (6 marks) (b) Describe an approach to SISP which would be in line with this definition. (8 marks) (c ) Suggest whether the SISP approach described in (b) would be suitable for use at OPPD? (4 marks) (d ) In the classical approach to IS planning, planning is separated from implementation, it assumes that it is a logical process requiring the application of rational analysis, and it is driven from the top and requires commitment from the top. Briefly discuss the advantages and disadvantages of each of these THREE characteristics. (7 marks) B6 (a) In what way might the new coal fired plant, the methane gas plant and the upgrade of the nuclear plant affect IT strategy at OPPD? (5 marks) (b) Define what is meant be a resource-based view of the firm and explain the role of such a view in developing IS/IT strategy. (10 marks) (c) Briefly compare the content of a classical IT strategy document with the content of an IT service strategy document and outline the process by which a IT service strategy might be derived. (10 marks)

Case Study: Omaha Public Power District (OPPD) Introduction The Omaha Public Power District is one of the largest publicly owned electric utilities in the United States, serving more than 300,000 customers in 13 southeast Nebraska counties. It was organized as a political subdivision of the State of Nebraska in 1946. Policies and rates are set by an eight-member Board of Directors elected by the people in the areas served. Hence it is owned by its customers as a state enterprise. OPPD generates revenue from a mix of retail sales, off-system sales and sales of various other products and services. The corporate headquarters is located in Omaha, Nebraska, with generating plants, service centers and customer service locations strategically located throughout the service territory. OPPD receives no tax support of any kind. It has both nuclear and fossil fuel generating plants, a transmission and distribution infrastructure and marketing and service units. The number of customers served has more than tripled since 1947, OPPD's first full year of operation. The average annual kilowatt-hour usage by OPPD residential customers has increased by more than seven times since that first year. In 2003, the average cost of electricity for the utility's residential customers was 6.77 cents per kilowatt-hour, which compares favorably with the national average. Market Environment: Deregulation The US electric utility industry, directed by UK federal legislation is changing from a regional, regulated environment to a national, competitive one where retail customers choose their supplier. Deregulation is occurring on a state-by state basis. Large customers are pushing for deregulation because of high charges. Non-utility generators will be able to sell electricity in the wholesale power market, but physical transmission and distribution will remain state-regulated and non-competitive. In Nebraska, it has been decided that a set of pre-specified market conditions will trigger deregulation. Principally, the wholesale market price of electricity must fall below or match the Nebraska utility price for a specified period. Deregulation occurs after infrastructure has been built and opens up protected markets to the forces of competition. The new entrants to the market seed new technologies and develop innovations with the aid of large customers who benefit from the drop in price. For the utilities, deregulation will always mean unbundling of service and content. In the electric industry, this means splitting the generation of electricity from the distribution facilities. Trends and future developments in a deregulated electrical industry include: the two existing sectors of the industry (generation and distribution) will split and a third sector, retail market, will develop; the generation sector will become a commodity, while the wires, which are the distribution facilities, will remain regulated; the retail market will be purely competitive and how it will be segmented is unknown; as the existing market degenerates, then bundling services will take its place, marketing efforts will decrease price and usage will increase; today, large customers are subsidizing small customers, but tomorrow, large customers will be the major innovators and the biggest winners of price reductions; new technologies and new

markets must develop, such as a clearing house of monitoring electrical production and an electrical spot market for distribution. New Power Plant Based on ongoing negotiations, the Omaha Public Power District now projects construction costs for its first large baseload plant in thirty years will fall well below estimates, which will mean substantial savings for the District's customer-owners and the other participants in the project. The plant, Nebraska City 2, will be built next to OPPDs current coal-fired plant south of Nebraska City. Based on similar projects around the country, OPPD initially estimated it would cost around $1,130 per kilowatt of capacity to engineer, procure all the equipment and build Nebraska City 2. However, as the negotiations have progressed, OPPD says it is optimistic it will be able to award the contract for under $950 per kilowatt, a savings of about 16 percent. OPPD managers today selected one consortium of contractors to continue negotiations on the contract; Nebraska City Power Partners (NCPP). The plant will provide power to OPPD and seven other public power entities who are participating in the project. Methane Gas Power Plant OPPD has, in the last year, entered the renewable energy market with a 660-kilowatt wind turbine generator, located at Valmont Industries Inc. in Valley, and a $4 million landfill gas-to-energy plant, at the Douglas County Recycling and Disposal Facility near 216th Street and Highway 36. The power produced from these two energy sources, 27.1 million kilowatt-hours, is now available for purchase by OPPD customer-owners. Subscribers to the rate sign up for a minimum of one year. Residential customers can participate at four levels, ranging from an additional cost of $4.50 per month to $30.00 per month. Commercial customers also will be able to purchase Green Power at an additional cost of about 3 cents per kwh. Nuclear Power Plant Upgrade OPPD has, recently began implementing a comprehensive plant upgrade to support a 20-year operating license extension for the Fort Calhoun nuclear power plant. Specific upgrade project objectives include:      Replace obsolete control systems to further improve plant reliability and performance Reduce operations and maintenance costs Improve generating efficiency Utilize technology that can be easily upgraded over time to remain viable over the extended life of plant Maintain a competitive edge over other forms of electrical power generation

Risk Management Practices Negotiating power marketing and fuel purchase activities are within the normal course of OPPD’s business. Risks associated with these activities need to be quantified and managed within a risk management control framework. Fuel expense represents a significant portion of OPPDs generation costs and affects its ability to market competitively priced power. Energy market prices may fluctuate substantially over a short period of time due to changes in the demand and supply of electricity. Recent Contracts issued by OPPD  A contract with Siemens Power Transmission & Distribution Inc. in the amount of $4,745,033 to replace the district’s energy management system (EMS). Two contracts with CRC Contractors, Inc. of Omaha. One contract in the amount of $615,255 is to install underground facilities in new developments in the Omaha metropolitan area. The other contract for $259,378 is to construct an underground ductline system in Sarpy County south of Gretna, Nebraska. A contract with Altec Industries of St. Joseph, Missouri, and Badger Body & Truck Equipment of Omaha in the amount of $1,238,918 to purchase line construction equipment for ten replacement and three additional medium-duty trucks. A contract with Pirelli Power Cables & Systems North America of Columbia, South Carolina, in the amount of $455,490 for the purchase of 90,000 feet of 15-kV power cable. Procurement of a spare control element drive mechanism for Fort Calhoun Station at a cost of $253,000. Forty new railroad cars to be used for coal delivery. The new rail cars will replace those either damaged or destroyed in accidents during the last three years, including a derailment last November which affected 29 cars. OPPD maintains a total fleet of 790 rail cars, including spares, to operate six 125-car trains for coal delivery




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Examples of Current and Planned Information Systems Data Mining. Utility customer data has in the past been used solely to collect payments. OPPD is expanding its use of customer data in order to improve customer relations. OPPD has created a customer data mart to improve its customer insights. In doing so it has moved from a focus solely on transaction data to an approach which creates more customer value. The resulting customer marketing information is now available to OPPD end users on an Intranet. Geographical Information Systems (GIS). Information systems that provide land data are of importance to OPPD and OPPD is represented on the Nebraska GIS steering committee. New GIS needs cost benefit justification. This is done by comparing predicted business growth with and without GISs.

Performance Measurement Software. Used to monitor key performance indicators. Syntellect speech enabled software. Used to complement the web-based and callcentred based customer care services, providing self-service telephone access to services so that customer can get account information and make payments or request services. Customer Information System. Customer support service representatives in the call centres are supported by the CIS PLUS customer information system which puts a large amount of customer information directly on-screen for the customer representatives. Enterprise Resource Planning. OPPD use an extensive implementation of the SAP ERP within its head office with implementations in all power stations. Distributed Control and Data Acquisition System. Used to help ensure reliable operation and improve generating efficiency at OPPD’s 500-megawatt Fort Calhoun Nuclear Power Station. This includes:  Plant Data Network to provide the system backbone for high-speed, highreliability communications among the various control and data acquisition functions Data Acquisition System to provide process information to the plant computer Secondary Control Element Assembly Position Indication System to monitor and manage the critical control rod functions Feed Water Control System utilizing enhanced single-element control mode for low load operations and three-element control mode for normal operation Feed Water Heater Control System utilizing advanced regulatory control to minimize the propagation of disturbances

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Information Needs at OPPD The following areas have information needs which are provided to varying extents by IT systems.         Operations Performance Operations – plant and electric systems Safety Work management Customer service and commitment Equipment maintenance Analytical, trending, forecasting. Work scheduling

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Employee’s skill assessment and training Performance measurement and continuous improvement Employee motivation, satisfaction, retention Financial management Productivity tracking Technology support information’ Information integration and automation’ Selection and support information on proven technology

IT Strategy History In 1998 the Information Technology Division (ITD) created an IT alignment model with their Energy Services Unit. The model was used to create an Energy Services IT Alignment Roadmap which identified areas of concern and resulted in plans for required IT systems and related products. The alignment roadmap served as a pilot for a corporate-wide IT alignment planning process. In 2000, the process was revised to make it more efficient. Data collection was automated with electronic group meeting software and spreadsheets were designed to analyse the data. This has subsequently been revised. Every year the company goes through a strategic planning process in order to determine that the activities and resources were focused on corporate goals and measures. At a corporate level the strategy indicated: Main Thing. Highest level purpose of the organization. Critical Success Factor. Key operational or cultural indicator of success. Stretch goal. An ambitious, highly targeted opportunity for breakthrough improvement. This approach was a top-down, goal-oriented approach which measured performance against budget and drove the budgeting process. Omaha Public Power District;

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