SETTING THE STAGE: EP S STRUCTURE, CULTURE AND INFORMATION SYSTEMS

SETTING THE STAGE: EP'S STRUCTURE, CULTURE AND INFORMATION SYSTEMS

Upon its formation EP started by having a hierarchical organizational structure. During 1992–1993, a decision was made in favor of devolving the business activities to power stations and giving them the authority to operate as independent business units with minimal centralized control. All business units across the five main divisions (see Figure 2) were given almost total autonomy. This move was an effort to increase the overall flexibility and competitiveness of the company by enabling decisions to be made closer to the operational level. However, a lack of experience and knowledge with respect to certain business functions such as planning had delayed the introduction of formal mechanisms. Thus, numerous critical functions were performed on an ad hoc basis. Additionally, various change initiatives had attempted to make EP a project and process-oriented organization as opposed to structure-based by trying to assign groups of people assembled from a number of different business units to the various development efforts. This ‘project-oriented’ attitude seemed to work, providing the company with a level of flexibility at the unit level, but at the same time this very flexibility was constrained by senior managers and executives.

Figure 2: The Organizational Structure of Electric Power PLC

These disparities at the unit and organizational levels were related to EP's culture: receptive and open to changes at one end, but at the same time a great lack of trust and territorialism at the other end. When a change occurred, for example, there was an aggressive/ defensive stand rather than a co-operative one—exactly when co-operation was most needed. CEGB, from which EP came into being, was a hierarchical organization. Teamwork did not happen at all and managers referred to it as a ‘patch-protected’ organization, where in a sense no one was allowed to infringe on what you did. The culture promoted in the new organization was a strikingly different one. Innovation was encouraged, and so was individuality and devolution of responsibilities, resulting in intense competition at the individual and business unit levels. The coexistence of these two opposite cultural dimensions had given rise to a deadlock situation that seemed to plague the organization. On the one end, there was almost total autonomy and freedom with respect to performing any task or activities one saw fit with the prospect of adding value to the company. At the other end, the culture brought by the same people based on the history of the CEGB made them unwilling to take a macro view past the boundaries of their own business units.

As far as information technology was concerned, the company was a ‘green field’ upon its establishment in 1990. A major consulting firm who adopted the classic ‘big-bang’ approach for their development undertook the task of putting the information systems in place. At the same time, the company had the opportunity to invest in an infrastructure— an organization-wide network that aimed to streamline communications between the various geographically dispersed locations facilitating faster decision-making, providing immediate access to key and up-to-date information and improving the quality of power station operations. One of the past main objectives, namely to produce electricity cheaply, had been in a way reflected by the information systems in the company which were developed to serve this objective faithfully, and be as rigid and dependable as possible. The main information systems in the company were the following:

• Plant Reliability—Integrated System for Management (PRISM): In broad terms, this was a work management system monitoring and reporting on parts that were required for scheduled works on the various power stations. PRISM directly interfaced with the financial systems.

• Integrated Labor Management/Electronic Dispatch Line (ILM/EDL): This system was fundamental to the company on a day-to-day basis. EP was required by the NG to generate a particular electricity profile. For example, a profile might to start generation at 6:00 a.m. producing 200 MW, rising to 540 MW by 12:00 a.m., running at that level until 4:00 p.m. and dropping down to 300 MW by 6:00 p.m. There were rules around that profile by which the company was penalized if it failed to deliver according to the rules. What ILM/EDL did was to put some parameter boundaries around this, which allowed the operator to see what this output was doing. A whole list of other parameters was also provided by the system that could be manipulated and controlled to alter this output. ILM/EDL provided an electronic link to the NG, and interfaced with the Energy Management Center systems.

• The Energy Management Center Systems (EMC): The EMC systems were built for decision support and the analysis section of the EMC, responsible for satisfying MIS-type requirements, led the initiative. The business issue behind the development of the EMC systems was quite simply the vast amounts of data the company was receiving from the NG. The unit was finding it too difficult or almost impossible to query the data which was needed for many purposes—for example, to answer the questions that the industry regulator would ask concerning price or volume variations from month to month, or from year to year. The EMC systems were thus vital to the company as they provided the link to the outside world; communicating on a daily basis with the NG and trying to optimize the company's trading position.

• Finance Systems: This pool of systems was centered around a software package called Walker, which catered for the General Ledger, Procurement, Accounts Payable, Accounts Receivable, etc. The finance systems had become very sophisticated with lots of interfaces to every other system that was in operation. The EMC systems, the applications at the Sales and Marketing unit (S&M), PRISM—all took financial information and statistics from the finance systems, processed it and then threw it back again.