Defining Project Objectives and Scope

Linkage of the ABC, Finance, and Project Visions ABC Vision As a customer-driven enterprise, we will consistently create superior value for all of our stakeholders through successful partnerships with them. We will be a preferred, full-service provider of energy and other related products and services in a variety of chosen markets. We will profitably grow to many times our current size and capabilities. Our stakeholders include our customers, shareholders, employees, joint-ventures/strategic alliances participants, suppliers, government and the public-at-large Finance Vision Finance will collaborate with line management in business decision-making Finance must undertake value-added business analysis that will help operating managers understand the financial consequences of their strategies and decisions Finance cannot assume rate cases will solve future problems with cost structure Finance will provide critical information on a more timely basis Finance should design the long-term flexibility to enable activity-based management and costing Finance will evaluate and measure how efficiently capital dollars are being spent Finance will play a greater role in evaluating new business opportunities and the associated risks Finance will provide new information to support decision-making Finance will drive down the cost per transaction by doing more with the same amount of resources Project Vision Project should fully utilize best practices in developing new processes and methodologies to aide in decision-making Project must identify opportunities to reduce cost through reduction and/or elimination of non- value added activities Project must develop streamlined processes that create more value for the company Project must result in the attainment of new competencies that enable value-added business analysis and the delivery of relevant and timely information Project must enable timely user access to key financial information without intervention

What Finance Will and Will Not Do Through the visioning process and in initial meetings with senior management, specific roles that finance will or will not play have emerged. We will continue to enhance this list as the project evolves. Finance Will Not: Finance Will, However: Own and maintain non-finance related data Support duplicative reporting codes At the transaction level: - manually edit transactions - correct errors initiated by users Enforce departmental budgets Capture non-finance related data as necessary and as available for management reporting purposes Make reporting codes easy to understand and use Monitor at a process level for errors and correct through policy and procedure changes Send errors back to users for correction In a business partnering role, monitor and report results

Benefits of Achieving the Vision As a result of achieving the Vision for Finance, ABC will realize the following benefits: ABC Finance will achieve the following: Provide customers with competitive advantage Provide flexible, quality services in a timely manner Provide expertise needed whenever and wherever the business needs it Assist management in making better decisions Improve profitability through better understanding of financial implications Better understanding of business risks and necessary mitigating control Information and expertise will be aligned to support strategic objectives Provide flexible people, processes and technology in order to respond to changes in customer needs Employee skills will be broader and more transferable Provide information and insight into profitability, productivity, and efficiency across the business and by various attributes Provide increased access to information in a user friendly format

Critical Success Factors Key Performance Measures Project Critical Success Factors and Performance Measures Project Vision Critical Success Factors Key Performance Measures Project should fully utilize best practices in developing new processes and methodologies to aide in decision-making Project must identify opportunities to reduce cost through reduction and/or elimination of non-value added activities Project must develop streamlined processes that create more value for the company Project must result in the attainment of new competencies that enable value- added business analysis and the delivery of relevant and timely information Project must enable timely user access to key financial information without intervention Streamlined processes that create more value for the company Fully utilized PeopleSoft Best Practices and limited modifications Increased value, timeliness, relevance, and consistency of financial information Effectively managed team dynamics (team includes core team and company) Support the vision, mission and values of ABC Project Overall Performance Linkage Resources Reduction in days, hours to complete process Reduction in $ to complete process Reduction in time to provide key information Reduction in non-value added reporting Value Number of users with on line access to information vs. goal Reduction in time to provide key information % of non-value added activities New competencies developed Number of unique pieces of value-added decision support information or analysis provided Number of new best practice methodologies implemented vs. target Finance cost as a % of margin Total Finance FTE’s Internal Customer Satisfaction Profit % of FTE’s involved in decision-support vs. transaction processing

Scope Processes Included Processes Excluded The following list clearly illustrates the processes that are within the scope of the project and those that are not. We will, however, address key linkage points with the excluded processes in order to ensure improvements are realized on in scope processes. Processes Included Processes Excluded Close the Books/General Ledger Manage Fixed Assets Account for Capital & Non-Capital Projects Provide Financial Information Create Budgets Process Accounts Payable Process Payroll Process Accounts Receivable; Credit and Collections Produce & Deliver Products & Services Invoice & Service Customers Purchase Materials & Supplies Warehouse or Store Product Manage Inventories Develop an Executive Information System

Scope The following information highlights the gaps that exist between the Finance Vision and the currently defined Project objectives Outside the Scope of Project but Critical to Success 1. Development of competencies within the Finance function that enable business partnering and business risk management 2. Design of new methodologies and tools (other than PeopleSoft) to support strategic and new business opportunity investment planning and prioritization 3. Development of the systems to fully realize activity-based costing and/or budgeting 4. Development of the systems to fully realize performance management objectives GAP Finance Vision Finance will collaborate with line management in business decision-making Finance must undertake value-added business analysis that will help operating managers understand the financial consequences of their strategies and decisions Finance can not assume rate cases will solve future problems with cost structure Finance will provide critical information on a more timely basis Finance should design the long-term flexibility to enable activity-based management and costing Finance will evaluate and measure how efficiently capital dollars are being spent Finance will play a greater role in evaluating new business opportunities and the associated risks Finance will provide new information to support decision-making Finance will drive down the cost per transaction by doing more with the same amount of resources Project Vision Projectshould fully utilize best practices in developing new processes and methodologies to aide in decision-making Project must identify opportunities to reduce cost through resolution and/or elimination of non- value added activities Project must develop streamlined processes that create more value for the company Project must result in the attainment of new competencies that enable value-added business analysis and the delivery of relevant and timely information Project must enable timely user access to key financial information without intervention IN SCOPE Fully within Project Scope 1. Development of PeopleSoft and project management competencies within the 4 modules and associated processes 2. Designing the long-term flexibility to accommodate activity-based costing and/or budgeting as well as performance management objectives

Senior Management and Sponsor Expectations How will we know if we are successful? “The system is running, stable, on time and under budget” “Better decisions are being made because people are educated on financial implications of decisions” “Scope creep was managed very carefully” “Modifications are kept as close to zero as possible” “Information can be obtained from the system by users without having to make phone calls and wait” “Financial reports and supporting processes are seen as less of a mystery” “Processes are changed to take full advantage of the software… We don’t change the software to accommodate our processes” “Communication and involvement are timely and appropriate” “Savings are realized from the system…Cost per transaction is reduced” “Eliminate peaks in expense activity which coincides with period-end…instead expenses are recorded as incurred” “Effectively set objectives, defined accountability and developed accurate measurements”

Project Performance Measures Current Baseline Target Modules Impacted 1. Number of users with on-line access to financial information 0* 175-200 Projects G/L Assets Budgets 2. Number of days required to close the books each month 10-15 5 or less Projects G/L Assets Budgets 3. Number of days required to create a budget 90-120 60 Projects G/L Assets Budgets 4. Number of days to complete unitization 29 weeks (manual) 2 days Projects G/L Assets Budgets 5. Time spent on manual journal entries each month 75 hours 8 hours Projects G/L Assets Budgets 6. Customer satisfaction with the information and services provided by the Finance Function 30% excellent 60% excellent Projects G/L Assets Budgets * not including users with access to electronic copy of budget/actual file

Project Performance Measures Current Baseline Target Modules Impacted 7. Number of changes after design freeze N/A Projects G/L Assets Budgets 8. Deviation from budget (time and $) N/A Projects G/L Assets Budgets 9. Timeliness of expense information 2 weeks after month end Daily/next day where applicable Projects G/L Assets Budgets

Sample Project Charter See attachment