Published: 09 May 2001
Analyst(s): Allison Bacon
Peace Software and IBM have entered a five-year multi-million dollar contract to implement the Energy Suite for Xcel Energy. Energy will support all of Xcel's 3.5 million regulated and deregulated customers. At a time when most utility companies are choosing to extend or use middleware to connect their legacy Customer Information Systems (CIS), Xcel has gone against the grain and elected to completely replace a mainframe and client/server legacy system. Its reasons are threefold:Merger and acquisition: Xcel, formed from the merger between Northern States Power and New Century Energy, is expected to show $1.1B in synergy savings over a 10-year period. Approximately, 30% of those savings are expected to come from IT (see the November 2000 Report article entitled, "Mergers and Acquisitions: Can IT Deliver for Utilities?"). A large portion of IT synergy savings come from the consolidation or replacement of disparate CIS.Deregulation: Xcel is entering the deregulated market in Texas on June 1, 2001. Its CIS needs to be able to handle a competitive market. Northern States Power's and New Century Energies' existing CIS were heavily customized. To serve the competitive Texas market, those systems needed to be extended, upgraded, or replaced.Outsourcing: An outsourcing deal with IBM Global Services eased the way for Xcel to make the hard choice. Xcel's outsourcing contract with IBM is expected to achieve some IT synergy savings for the newly merged company with more efficient cost of development and deployment of new systems. IBM will take pressure off Xcel by handling the implementation.
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