Project One Energy and Utilities - Change and Transformation

PROJECT ONE - energy and utilities change and transformation

contents What’s driving change in Energy & Utilities?

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How can Project One help with delivering change in Energy & Utilities?

Who we are

What we do

What is the value in change assurance for Energy & Utilities?

How our assurance services can help you

Our approach to programme assurance

We can also help with regulatory and consumer pressure on sustainability

How we can help you with your climate change journey

CASE STUDIES Nuclear Power Station Transformation Spotlight On: Governance & Control

Energy ERP Transformation Spotlight On: Programme Assurance, Stabilisation and Delivery

Water Business Transformation Spotlight On: Programme Delivery

Energy ERP Transformation Spotlight On: Programme Assurance & Reset

Energy IT Transformation Spotlight On: Programme Delivery

FTSE100 Global Net Zero Transformation Programme Spotlight On: Programme Mobilisation and Delivery

Water Programme Assurance Spotlight On: Programme Assurance

Energy IT Leadership Spotlight On: Change & Leadership Capability Water Asset Management Transformation Spotlight On: Target Operating Model

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real change • real difference

What’s driving change in Energy & Utilities?

How can Project One help with delivering change in Energy & Utilities?

The Energy & Utilities industry is facing a significant number of challenges; we’re experiencing an ‘Energy Crisis’, with companies being placed under increased scrutiny and pressure from the government and regulators; enhanced focus on consumer duty; and adjusting to increased pressures of climate change and focus on sustainability.

External Factors

Internal Implications

Challenge

How we can help

Unprecedented increases in costs resulting in a volatile price regulation environment Increased regulatory focus, particularly consumer duty

This will drive down margins and have a significant impact on profits, in turn placing transformation programmes under

Applying vast experience of delivering regulatory change Translation of regulation into manageable action Strong stakeholder management capability Expertise in effective ‘Right to Left’ change planning and programme delivery to fixed regulatory deadlines Proactive independent Programme Assurance that adds real value Mobilising and leading new innovative business models/ digital propositions Experienced in mapping operating model impacts across entire organisations Complex programme delivery utilising agile/iterative methods Digital transformation capability – alignment of process design with digital transformation Strong Business Change expertise; defining and driving towards a clear vision and engaging the wider business Leveraging experience of working in other organisations and sectors to define ESG (Environmental Social Governance) and NZC (Net Zero Carbon) strategies Focus on ESG and NZC business outcomes and the journey required Ensure your business can land a sustainable solution covering the relevant scope areas (direct and indirect emissions) Strengthen in-house knowledge and capability

Price increases and increased regulatory focus

increased pressure to deliver sustainable cost reductions

Customer behaviour and retention; Utilities are currently collectively losing c.2m customers per annum SMART metering enabling customers to switch more easily

Legacy of complex processes and organisational structures, impacting overall agility and effectiveness Need to transform customer operations, focusing on customer centricity, debt management and utilisation of technology, in turn reducing operational costs Asset utilisation

Complex operational processes, lack of agility and performance analytics

Regulatory performance and potential impacts on brand reputation

Increased expectation and regulation around implementing carbon and sustainability targets in the ambition to Net Zero Reliable supply in a more erratic climate

Increased frequency and severity of exceptional weather events requires greater attention to resilience and managing associated customer needs and expectations

Adjusting to climate change, sustainability and biodiversity

real change • real difference

Who we are

What we do

We are an award winning, leading, independent consulting business specialising in change: We are experts having led and supported change across a wide geography, most primary business functions and in any industry We are change experts; we make the complex simple We are recognised in the market as a leading management consultancy, a great place to work and a top consultancy ranking #2 out of 1,200 firms for Project and Programme Management We specialise in mobilising and reshaping highly complex change programmes and portfolios of all scales Our team comprises 100 experienced change leaders – with extensive experience of compliance driven regulatory programmes and bring cross-sector insight We work in close partnership with our customers, focusing on clear outcomes and look to build your in-house capability We have been members of the Business in the Community (BiTC) NZC Taskforce and Technical Advisory Group for three years, engaging their membership in climate change commitments, alongside delivering our own strategy, including our Race to Zero pledge (only one of 1,800 SMEs globally).

We help ambitious organisations to achieve sustainable change.

As specialists in change, we offer an end-to-end service, working alongside you at every stage of your change journey.

• Shaping Change: ensuring strategic ambitions are translated into clear, actionable and achievable change • Delivering Change: ensuring change is set-up for success and remains on track, delivering the required business outcomes • Enabling Change: improving your own organisation’s change capability • Digital Change: delivering the foundations that will drive your digital strategy.

real change • real difference

What is the value in change assurance for Energy & Utilities?

How our assurance services can help you

Project One knows how to drive successful change across the Energy & Utilities industry. We have worked extensively with many organisations within this sector and one of the most frequent requests that we receive from our customers is to support with programme assurance. We are trusted by our customers to provide objective, customer-

Assurance is an important part of an organisation’s transformation capability, increasing the likelihood of achieving the target outcomes of your transformation activities.

Does the programme have sound footing? 1

Vision and key objectives defined Clear accountability Stakeholders supportive

Typical Assurance Approach Management or Sponsor triggered Undertaken in a rapid timeframe with regular interim reporting Focus on root cause and impact analysis Identified key mitigating actions and plans Programmes/projects selected for assurance on basis of delivery risk or outcome criticality Assurance is deployed at key stage gates to influence

Trigger

Benefits

Rapid assessment of issues and risks Remedial and mitigating actions identified before they become critical Limited additional effort required resolving early rather than later

sit within context? 2

Does the programme

intervention Facts or instinct are indicating there are problems

side programme assurance oversight, and delivering

Prioritisation Clear roadmap Operational impacts understood

transparent, honest and evidence- based insight that ensures delivery stays on track and delivers the outcomes and benefits expected. With the transformation activity going on in Energy & Utilities, including the energy transition, decarbonisation, digitisation, smart metering and increased focus from all stakeholders such as regulators and customers, it has never been more important to make sure your change activity is properly planned, resourced and managed One way of supporting successful programme delivery, and increasing the likelihood of meeting your milestones, is to build in some programme assurance activity By engaging an independent party to provide change assurance, it gives an informed viewpoint and perspective that could deliver the valuable insight required to successfully move into the next phase, or engage a wider stakeholder group and enhance the value of the initiative.

Collaboration between assurance team and programme/project team on next stage plan Sponsors involved through gate process

Are the delivery mechanics in place? 3

investment Gates The programme warrants a review at this point

Effective delivery team Suitable governance Delivery at pace

plans for next stage Timeboxed reviews

Focus on mitigating risk and increasing delivery likelihood in complex or sensitive change initiatives Ensuring governance is fit for purpose Increase change capability through coaching key delivery resources

Everyone is focussed on making a success of the higher risk changes The organisation improves and learns, reducing risk and cost of delivery Focus is on success not resolving issues

Regularly Scheduled Assurance We have a propensity to mess up this kind of change

Are impacted areas ready for the change? 4

Accountability for benefits Employees bought into change Positive customer impact

real change • real difference

We also support regulatory and consumer pressure on sustainability

Our approach to programme assurance

Organisations are expected to have ESG (Environmental Social Governance) & NZC (Net Zero Carbon) strategies and must act now to reduce carbon emissions, demonstrating commitment to combating climate change. We have developed sustainability transformation expertise to help your business achieve its objectives.

Our approach to assurance is based on four key stages with a duration of six weeks depending on complexity.

Current risk status: a rating of the health check and remediation approach Programme assessment heatmap summary: categorised across the key themes of; 1) business leadership; 2) strategy implementation; 3) delivery; and 4) ownership Programme symptoms and implications Recommendations for delivery: immediate recommended action required. You will receive a comprehensive programme quality assurance report, containing:

We work with our customers to infuse a deep level of delivery skill and sustainability experience to:

Carbon Emissions Baseline Utilise existing data where possible to baseline your current carbon emissions status. Build on existing support and understanding ESG and NZC Vision and Strategy Define the vision and strategy aligned to business strategy and secure senior commitment. Be clear and realistic on timescales with a strategy that is achievable Enterprise-wide Scope Extensive enterprise-wide coverage is important covering operations, travel, fleet and production. Engage employees

Stakeholder Expectations Understand internal and external stakeholder perspectives. Engaged and interested stakeholders will include investors, employees, customers and the supply chain Engage the Supply Chain Define the vision and strategy aligned to business strategy and secure senior commitment. Be clear and realistic on timescales with a strategy that is achievable Programme Delivery Mobilise a capable team with adequate levels or resource. Produce a detailed plan aligned with the vision, strategy and scope. Assess the risks and establish an effective reporting mechanism.

Bolster in-house capability and drive with pace and clarity Mitigate the key risks Focus on the ESG & NZC business outcomes and the journey required Enable effective decisions Ensure your business can land a sustainable solution covering the relevant scope areas (direct and indirect emissions)

in the vision and treat as a transformation programme

We follow four key stages:

Confirm brief: clarity on objectives, scope and outcomes Evidence gathering: early validation of issues and required action Validate recommendations: develop recommendations, stakeholder alignment on issues and remedial actions agreed Agree next steps: stakeholder acceptance of recommendations and associated action plan.

real change • real difference

How we can help you with your climate change journey

Our industry experience, built on our own climate change journey, combined with our programme delivery expertise, will help you achieve your sustainability objectives.

Change expertise

Genuine independence

Bespoke solutions

Whole-team knowledge

Define the steps required to reduce carbon emissions

Tailor the approach to your specific situation

Call on a huge depth of ESG & NZC experience

Call out the right thing to do

Results focus

Hybrid working

Capability uplift

Collaborative assurance Work by your side to deliver sustainability outcomes

Drive towards the sustainability outcomes

Bring your team along the climate change journey

Lead on-site and virtual teams

real change • real difference

case studies With over twenty years’ global experience, Project One has led change across the Energy & Utilities industry, working with a vast number of household names, forging long-term, trusted partnerships. We work shoulder-to-shoulder with our customers to deliver their most complex change. Here are a few customer highlights….

Nuclear Power Station Transformation Spotlight On: Governance & Control

“Project One has done a great job in defining and bringing to life our lifetime extension planning work. They have also helped me to learn so much more about my management team in a very short space of time – this was an unwritten requirement but provided real value. The whole team have enjoyed working with you. Thank you again.” Power Station Director Leading Global Energy Provider

Challenge: Our customer needed to improve business performance in a heavily regulated, highly technical, unionised and highly safety conscious environment

Approach: Project One worked with the customer to define a clear shared vision and collated and challenged their existing ideas into a coherent set of improvement objectives An integrated plan of activity was generated, encompassing existing projects and newly identified initiatives, ready for delivery To enable effective implementation, Project One defined and created a programme governance framework, underpinned by comprehensive business engagement and communication plans

Outcomes: Our customer had a clear understanding of the strategic business issues, a shared vision for the future and a clearly defined, viable, programme of work, enabled by an established delivery structure and assured through appropriate governance, facilitating effective delivery.

real change • real difference

Energy ERP Transformation Spotlight On: Programme Assurance, Stabilisation & Delivery

Water Business Transformation Spotlight On: Programme Delivery

Challenge: Our customer needed to replace and standardise core processes, that were inhibiting their operational performance, resulting in efficiencies across the business Our customer initiated a programme to transition their core ERP system from SAP ECC6 to SAP 2/4 HANA, however, this had not delivered the anticipated improvements and there were several outstanding concerns about the programme Approach: Project One completed an independent assurance review of the programme, providing recommendations, which were then implemented via a 10-week reset process Project One worked closely with the internal team, providing a small team of senior change consultants to undertake key programme roles, including IT Programme Director and Business Change Leads Additional support was also provided in other areas such as User Acceptance Testing and Design & Planning for the final programme release, ensuring a successful migration to the new ERP platform

Challenge: Our customer, a leading water utility company, was seeking to re-define its future operating strategy in the face of potential market reforms, in order to drive enhanced customer service and improve operational efficiency Following a business strategy review, a transformation programme was launched Approach: Project One were engaged to lead the business transformation, which encompassed definition of the change portfolio, transformation mobilisation, design and Board approval of the proposed business operating model and strategy, and a programme PMO with associated governance and controls required for effective programme management Additionally, to support the organisation with ongoing change management, Project One established a business change capability function, providing sponsorship coaching sessions for the leadership team

“We have been on a rapid journey to build change capability over the last 12 months. Project One has provided the right emphasis between support and challenge, and helped us to develop our capability and become more self-sufficient.” CEO Designate

“I’d just like to say a big thank you to the team from Project One who helped reset our SAP S4/HANA programme. The team has worked collaboratively across the rest of the internal team and provided support for the IT Programme Director role and the Business Change work. They’ve done a great job.” UK CFO FTSE 100 Energy Company Outcomes: Project One’s support provided our customer with an injection of external ERP programme expertise, and senior level change and transformation experience to supplement their internal team, ensuring successful programme delivery.

Outcomes: Outcomes achieved included a

reduced expenditure on asset repair and maintenance, improved planning of clear water production processes, the generation of renewable energy from wastewater treatment plants and optimised work schedules for Field Teams There was also an uplift in change capability, ensuring sustainable change beyond the end of the programme.

real change • real difference

Energy ERP Transformation

Spotlight On: Programme Assurance & Reset

“I wanted to express our appreciation for the tremendous contribution which Project One colleagues are making, and have made to the programme. The team are very valued and trusted by stakeholders - their calibre, approach, dedication and professionalism is outstanding. We are therefore very pleased with the quality of resources that Project One are providing us. Thank you.” Programme Director FTSE 100 Energy company

Challenge: This FTSE 100 company was in the process of changing their core ERP system from SAP ECC6 to SAP S/4 HANA and enhancing processes covering Procurement, HR, Finance and Project and Asset Management systems The business case for the programme was based on the replacement and standardisation of core processes that inhibited operational performance and resulted in inefficiencies across the business The programme had delivered an initial release of core functionality to support the legal separation of part of the business, however this had not delivered the anticipated improvements and the customer had several areas of concern about the programme Project One was commissioned by the UK CFO to undertake an independent assurance review of the programme and make recommendations to improve the organisation and ways of working

Approach: Following the review, we supported a 10-week reset process, working closely with the internal team and other external advisors With the programme stabilised and re-set, we provided a small team of senior change consultants to undertake key roles within the programme, including the IT Programme Director and Business Change Lead roles for the second release. This release covered core Finance Project and Asset Management systems capability and the migration of the rest of the company onto the S/4 HANA platform During the past 15 months, we have continued to support the programme in these roles and provided additional support in other areas including User Acceptance Testing and the Design and Planning work for the final release comprising enhanced Project and Asset Management systems and Reporting capability

Outcomes: Whilst the programme is still in-flight and continues to work towards the implementation of the next release, our support has provided our customer with an injection of external expertise around major ERP programmes, specifically SAP S/4 HANA, and senior level change and transformation experience to supplement their internal team and ensure successful programme delivery.

real change • real difference

Energy IT Transformation Spotlight On: Programme Delivery

FTSE100 Global Net Zero Transformation Programme Spotlight On: Programme Mobilisation and Delivery

Challenge: We all know that any large-scale

Challenge: Our customer, a global FTSE100 organization, had made a number of carbon reductions commitments, aligned to the Race to Zero pledge and developed a cross-enterprise carbon and Greenhouse Gas emissions reduction strategy, engaging all areas of the business and led by the Corporate Centre The customer now wanted to ‘bring the programme to life’ by mobilising the activity into workstreams, implementing governance and control processes to create momentum and structure, and developing clear and consistent monitoring and reporting processes to ensure progress was tracked and the outcomes delivered Approach: Project One were engaged to lead the definition and development of the programme organisation structure and governance, central programme office team, operating processes and reporting mechanism and ensure that the programme was mobilised in order to start delivering the outcomes of the carbon and GHG emissions reduction strategy In addition, Project One was asked to coach the workstream leads in best practice programme governance and delivery activity to help build enduring programme delivery capability

Outcomes: The programme was mobilised with effective governance and control processes including a meeting and reporting cadence, Level 0, 1 and 2 programme and workstream plans, regular reports up to Board level Workstream Leads improved their knowledge and capability in programme management and delivery.

transformation is challenging. But when you’re implementing a technology-enabled transformation, in an organisation owned by its customers, operating the world’s largest single marketplace in a heavily regulated industry, serving 24 million consumers, then ‘challenging’ becomes the new norm Our customer was undertaking the largest SAP IS-U implementation in the world and about to launch a three-year programme when he reached out to Project One for help pulling it all together Approach: The company had to deliver a new central gas settlement system as part of the UK Link Replacement Programme (UKLP), centred around SAP Utilities The programme was also a key enabler for the GB Smart Metering Implementation Programme, providing improved capability to process the increased volumes of meter reads that will be generated by mass smart meter roll-out The programme involved extensive participation from Gas Shippers, Gas Transporters and the whole company. The regulator Ofgem, had an end-to-end sponsorship role given the risks to consumers of a failed implementation A major +£100m IT re-platforming programme was mobilised in 2014, with Project One joining Q4 2015 to stabilise the programme, then re- plan and drive delivery

“It is about bringing in knowledge and experience to add to your own knowledge and experience. Through passing that knowledge and experience on, our people are richer at the end than they were at the start. With the knowledge and experience that the Project One team has, it is important that they don’t just come and only do a job but they help to enrich the ability of our company and its people.” Chief Information Officer Central Data Service provider

Outcomes: The programme successfully went live in June 2016.

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Water Programme Assurance

Spotlight On: Programme Assurance

Challenge: A UK water company had embarked on a Smart Metering Programme to fit Smart Water Meters in their customers’ homes in order to help track water usage and manage the water supply and network’s operations more effectively The company was looking for a Programme Assurance partner to assess the current status of the programme, review the organisation, structure, resourcing, technology and plans, in order to review the level of maturity and readiness for successful delivery

Approach: Project One were engaged to deliver a full programme health check, covering all areas of the programme We reviewed the governance, structure, leadership, plans, feasibility of delivery, and readiness to move into the next phase Interviews were conducted with key stakeholders and programme resources at all levels and a comprehensive review of the programme information was conducted The output from these was documented and analysed to produce a picture of the programme status and health, and a detailed set of recommendations was delivered with a top 10 list of priorities highlighted

Outcomes: The programme health check report and set of recommendations was presented to the programme board and very well received The immediate priorities were mobilised into urgent programme activities and the programme has moved into the next phase in very good health with a clear vision, delivery team and operating model.

“We have engaged Project one on two assignments so far supporting the company’s Smart Programme. On both occasions they have provided significant value through bringing together the right senior practitioners with a wealth of experience in the areas required to deliver at pace and quality against the brief. The team take the time to understand the business and the problem in depth to ensure that the solution and proposals are the right fit. The team have created a collaborate environment from day 1, putting the those engaged at ease and helping enhance our complex change programme of activity.”

Programme Director UK Water Company

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Energy IT Leadership Spotlight On: Change & Leadership Capability

Water Asset Management Transformation Spotlight On: Target Operating Model

Challenge: This FTSE 100 energy company operated a federated model across its IT function with dedicated functional teams within each of its seven business units, supported by a Group IT function responsible for Group-wide strategy, policy, and architecture Within its Customer division the company needed an interim IT Director to lead the team following the departure of the incumbent. Project One was asked to provide a high calibre individual with the relevant experience to provide stable leadership for the IT team whilst a permanent replacement was recruited Approach: Project One provided an interim IT Director for the Customer business for nine months to act as a member of the Group IT Leadership team and take end-to-end accountability for all IT delivery to the MD of the Customer business We led the Customer business unit IT team throughout the interim period to ensure that the operational IT provision supported the business needs In addition, we provided leadership to three key IT transformation programmes within the business unit covering Core Platform Replacement, Smart Metering and Faster Switching

Challenge: Our customer is an asset intensive business – they need a good understanding of what’s happening both underground and above ground with their pipes, pumps and sewage works With dated systems, they were facing some issues around understanding the health of their assets and receiving high-quality, accurate data In order to maintain high levels of service to customers, they embarked upon a major programme to transform their Asset Management activities Approach: Project One helped to develop a target operating model, which enabled the customer to understand the capabilities required as an organisation, take advantage of investment in technology, clarify accountabilities, improve customer service and reduce operating costs Project One led the customer’s leadership team through a disciplined process over a three- month period, at which point, Project One facilitated agreement across the business on the target operating model to implement

“It was really important for myself and my team, to have the right people helping us, and after interviewing a number of different parties, we got a really good feel for working with Project One from the initial discovery day we were very much aligned on what we wanted to achieve. The methodology that Project One brought was the type of process we would be comfortable with and wanted to follow. They were not consultants who knew the answer already and imposed their views – they worked through a process to help us identify where we wanted to be, not where they thought we should be.” What’s really important to us as an organisation is trust, and we want to work with partners who we can trust. From the one piece of work we’ve done together, I would trust Project One to work on future projects with us.” Head of Asset Management Transformation

Outcomes: Our interim support ensured stability for the Customer business unit IT function during a period of leadership change and enabled their key change programmes to remain on track for delivery We ensured there was a smooth transition and handover to new IT Director following their appointment to the business.

Outcomes: The new target operating model was developed and approved in 12 weeks It covered all activity from strategic planning, through to asset delivery and operation, to maintenance and repair The programme overall will help the customer deliver sustained and improved levels of customer service Our customer is also now able to manage the service more efficiently, by better managing their asset base, avoiding unplanned interruptions or major outages.

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