Pacific Gas & Electric

Effecting change in a large organization is, so they say, a lot like turning around a battleship: painfully slow. But some organizations disprove that old saw. Take Pacific Gas & Electric (PG&E).

The method to track measures had been employed for over a decade, but the business performance reporting (BPR) team realized they needed a more efficient and powerful system.

Previously, it took the team an entire month to pull together a monthly report as they fought version control issues on SharePoint, formatting problems, and data aggregation errors. Leaders who relied on the information still had to wade through reams of paper, without the ability to get a reliable high level purview or quickly drill down.

New Process, New Platform

Something had to change. The company wanted the data presented in a high-level view, with the ability to drill down, as well as synthesize, compare, and assess trends.

PG&E considered several reporting applications, but saw ClearPoint as the most flexible. The team liked how ClearPoint was web-based, could take all the data they wanted and show it accurately, was easy for reporters to work with, and could meet all their security concerns.

ClearPoint worked with PG&E to customize the application with the company's branding and they designed the scorecard pages to allow period comparisons. Each page includes current results, year-to-date and end-of-year data, along with forecast targets.

Pacific Gas and Electric: Transforming Management Reporting

In 2013, San Francisco-based PG&E, the nearly $15.6 billion a year utility that powers the northern half of California, replaced its ponderous, spreadsheet-based performance measurement and reporting system - in one quarter.

Redesigning the process took several months of research, feedback-gathering, and planning. But the technology implementation, including customization, was accomplished within three months.

For any major organization, such a timetable is almost unheard of. For a public utility (a highly regulated enterprise where risk management takes precedence), and for this utility in particular (with 11 lines of business and around 20,000 employees), it is nothing less than remarkable. But adapting to change is hard-wired into PG&E. Within one decade of its founding in 1905, the company had catapulted to the position of being the largest integrated utility system on the West Coast - despite the vast reconstruction needed following the devastating 1906 earthquake.

In the first years of the new millennium, the electricity crisis triggered by industry deregulation pushed PG&E into bankruptcy. By 2004, PG&E emerged from bankruptcy with a new focus on centralized performance measurement that continues to this day. This process included target setting and strategic planning with regular reviews of performance against expectations.

Instilling a New Culture, Outgrowing a System

In 2011, Tony Earley joined PG&E as CEO. Right away, he began shaping the company's overall Integrated Planning Process in place today - a year-long planning cycle that incorporates enterprise risk assessment, a five-year strategic plan, leadership planning, and planning for strategy execution over the subsequent two years. Business performance reporting (BPR) supported integrated planning, although it was not yet formally part of the overall process. For more than a decade, PG&E had been using Excel spreadsheets to track and report on scorecard measures.

But as far back as 2006, the BPR team and leaders realized they needed a more efficient and powerful system. For one thing, as the centralized management and performance culture had taken root at PG&E, the number of metrics PG&E tracked ballooned. Spreadsheets offered no version control and lacked adequate safeguards. Each line of business (LOB) had its own spreadsheet (all were located on a SharePoint site) and achieving formatting consistency required a dedicated team and long nights of work. A single LOB had to go to multiple places to enter the same information, which introduced the potential for error. After reporters entered data, the BPR team had to go in and create a master file to aggregate the data manually. Links would often break.

The BPR team decided to implement an offering that was part of an enterprise resource planning application. But the effort was abandoned in relatively short order: it was expensive, time-consuming, and too inflexible. Reluctantly, PG&E switched back to Excel spreadsheets. The switch, while technologically uncomplicated, was clearly no long-term solution. It was inefficient, unwieldy, and unbearably time-consuming. More important, it did not serve the organization's larger goals.

Over time, the system's shortcomings had also become exacerbated by the absence of a strong governance system that had the backing of senior leadership. The performance team lacked the authority to strictly enforce deadlines, and LOBs routinely submitted data late or updated results after the deadline. Sometimes LOBs changed the metrics used to track performance. Says Pat Hennigan, business analyst, "We had to meet with each LOB every month [just] to get all of their changes."

The upshot: it took a team of people the entire month to pull together a monthly report which took up a thick binder. Leaders who relied on the information it contained had to wade through reams of paper, without the ability to get a reliable high-level purview or quickly drill down.

"The effort required to produce the original BPR was tremendous," says Portia Meneau, enterprise planning, and governance manager. "The team did a great job of tracking thousands of data points in Excel - which isn't the greatest database substitute - and managing hundreds of handoffs and touch points. Officers were preparing for a thousand potential conversations instead of focusing on critical decisions and key issues."

Adds Ryan Cheney, director, enterprise planning and governance: "We overwhelmed ourselves. Over time, we shifted from a decentralized organization, reviewing only a handful of measures together across the company, to looking at hundreds of metrics together each month."

Finding a New Platform

Things changed in early 2013, when PG&E President Chris Johns launched a targeted Continuous Improvement (CI) initiative to redesign the company's performance management process. As the owner of the BPR process, the president convenes the monthly meeting with his direct reports to discuss progress in their strategic plans. Johns was well aware of the need to introduce efficiency and improvements to the reporting process. He enlisted the CI team, headed by Susan Merino (the company's benchmarking leader), to redesign the entire performance measurement and reporting process.

A big part of the CI team's effort involved examining the monthly data-gathering process: Who did the reporting? How much did they have to do? How much pain did they endure? As a part of the Integrated Planning Process, the team also asked: What are the right metrics we should look at monthly? How can we ensure the data is accurate?

Meanwhile, another team was organized to research performance reporting applications. PG&E knew its requirements: first of all, it wanted a one-stop shop for metrics. In addition, as Cheney notes, "PG&E works with a lot of data, and we needed a way to organize and visualize data quickly at multiple levels." The company wanted the data presented in a way that would help guide monthly performance meetings - a high-level view, with the ability to drill down, as well as synthesize, compare, and assess trends. It was also "paramount to the effort and to winning buy-in" that the new solution had PG&E's look and feel.

The company considered several vendors. ClearPoint, they decided, was "the most flexible," according to Cheney. The team liked the fact that it was web-based, could take all the data they wanted and show it accurately, and was easy for reporters to work with.

Brand PG&E: Customizing the System

ClearPoint worked with PG&E to customize the application. Beyond just incorporating the company's logo, typefaces, and colors, it designed the scorecard pages to allow period comparisons. Each page includes current results, year-to-date and end-of-year data, along with forecast targets. Shown with each target are the result and the red-amber-green (RAG) status.

CI leader Susan Merino prepared a 40-page guidance document outlining everyone's role, the reporting calendar, the role of technology, and how everything would integrate. There was an overall kick-off meeting, as well as one-on-one meetings with each line of business to walk people through the new tool. Implementation began in early November, with a go-live deadline of February 1 that enabled the new system to start with January's reporting. Rather than pilot the system, PG&E opted for a Big-Bang launch, so the whole company could start afresh. The ClearPoint team trained PG&E how to tweak the layouts themselves if they needed to make changes.

"It was a very busy few months, but it all came together because of the careful planning and the team's understanding of technology and process," says Cheney. The coordination and communication between the CI team and the BPR team and LOB reporters made all the difference. "By the time the solution came together, users were already bought into it - because they had designed it together with us," Cheney notes.

Surmounting The Permissions Hurdle

ClearPoint's ability to handle permissions and meet PG&E's security concerns was also a big factor in its adoption. "Given the nature of our business, our IT department has stringent security requirements that have to be addressed when adopting a new application quickly," says Cheney. Then there are the many levels of confidentiality that different scorecard information is assigned. Some individual permissions are fairly complicated. As a result, permissions segmentation is a complex process.

To illustrate, there are roughly 75 users, between the LOBs and the executive team. One user in an LOB unit may not have access to confidential information, but may need to be able to browse other LOB pages to update specific areas. Another user may have a different set of specific access needs. So a single user may have as many as 150 rules that apply to his or her permission set.

With Better Governance, Greater Discipline

The BPR's successful transformation was also possible because of improved governance. Making BPR part of the Integrated Planning Process was the first step. Previously, the team lacked the authority to instill discipline in the reporting process. By default, the LOBs self-governed the often changing metrics and making updates that put the BPR team at their mercy.

Today, PG&E's top leadership plays a larger role in the governance of the overall performance management process. A governance committee, made up of the president, VP of Finance Jason Wells, and VP of Corporate Strategy Deborah Affonsa, was established in 2014. Now, there is a monthly data lock-down period - after which no data can be changed or added. Refinements are still being instituted, and policies are still evolving.

For example, any metrics changes must now pass muster with the governance committee. "Putting in a new metric you never used before is like putting a high school player in the major leagues," says Cheney. "So we're asking LOBs to first test a new metric, to socialize it with other LOB officers, to get comfortable with collecting data and reporting on it. Only after it passes muster does it graduate to the company-level BPR." This litmus test contributes to the added consistency and reliability of the data.

The newfound reporting discipline, and the way the data is presented, has had a major effect on monthly performance meetings, according to Cheney. "At times, [important] issues got lost [in the shuffle]. Now, meetings are more focused: more concise, limited to the data on the page, which links directly to our strategic plans." No longer are any and all issues up for grabs.

The discipline of governance, as well as a robust system, has helped PG&E think through and refine its whole metrics strategy - to the ordering and drill-down of metrics, from high-level strategic ones (such as total cost) to the high-level operational measures (such as overall outage time) and one of its short-term components (such as the amount of time it takes to get to an outage).

From Data Distribution to Value Add

The BPR team is still working on ways to improve functionality and use of the reporting tool: for example, how best to cascade it down to the lines of business. The team is also still exploring new ways to use the data in analysis. But the difference it has brought to performance measurement and management in the first year of use is dramatic. "We now have a more focused and accurated book of record, visible to leadership across the company." Cheney continues, saying, "with greater trust in the data the focus is now on improving performance, meeting our goals, and driving customer satisfaction."

Long-sought-after efficiencies have already been realized. "In the past," says Meneau, "we spent 100% of our time producing the BPR - just collecting and distributing numbers." Today, those tasks take up a small portion of the team's time. "A majority of our time now is spent on value-add work: analyzing performance, providing insights, and highlighting overarching trends and emerging issues. Whether the information is going to Finance, investors, employees, surveys (like the Dow Jones Sustainability Index), now we have time to do deeper analysis - not just what happens month to month, but over, say, a two-year time period." Adds Cheney: "Now that the data is more trusted, more people are asking for it."

ClearPoint is now the accountability tool for all the planning PG&E does. As it becomes more ingrained in the management process, the BPR team expects it will become more foundational within each LOB.

The ClearPoint Team: A Partner in PG&E's Success

The team at ClearPoint is focused on the process of structuring and presenting measurement data to help managers make better decisions. Founders Ted Jackson and Dylan Miyake together have more than 30 years' experience working with management gurus like Robert Kaplan and David Norton - experience that gives them a unique perspective on performance measurement and management.

As Ryan Cheney, PG&E's director of enterprise planning and governance, observes, "There's an evolving science to performance measurement that we're continually learning. By science, I mean there are right ways and wrong ways to structure performance information. If we'd set up the new performance information system without the guidance of ClearPoint, we could have ended up with something that looks a lot like our old binder."

He adds, "The ClearPoint team acted as our architect, just as we were the data architects for our executive team. When we were setting up the system, nine out of 10 times, they'd agree with our objectives and tell us how to accomplish them, but they were also clear when they didn't agree. ClearPoint would say, 'This is nuts. You'd be kicking yourself if you did it this way.' They helped us avoid pitfalls."