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Enron Mail |
Realistically, only the trading support provided for straight-forward gas a=
nd power trading makes sense to consider in a cost per transaction mode. I= would say that the only part of IT Development costs that could be conside= red in that would be the system maintenance costs and maybe the licensing f= ees. Capital projects don't make sense on a cost per transaction basis - s= hould be looked at as individual discreet costs that the business unit spon= sor and ENW agree upon. =20 While we could come up with a methodology for cost per transaction, I still= have concerns about this on a lot of levels. Frankly, the relationship be= tween the book administrators and traders is just as collaborative as the E= OL relationship. If we are boxed into a cost per transaction, then wheneve= r John Lavorato or the traders ask for a different view of data or an ad ho= c analysis of P&L, we would need to discuss this as a change order and pric= e accordingly. Practically speaking, there is not one of the ad hoc trader= requests that isn't needed yesterday, and stopping to negotiate whether th= e request is in or out of scope and additional pricing would probably get m= e and my risk team fired! I also have a big concern over pushing the envel= ope on an arms length service arrangement. I will have trouble recruiting = and retaining the best people. The guys on my operations team honestly wor= k every day with the business goals of EA in mind. They work hard to insu= re success for EA. That is what John and Louise should want. Push us back= too far and no one will like the results if we don't have people fully ded= icated to and feeling a part of the business to which they provide support.= It is kind of ironic. I think that Enron is pleased with how I've manage= d operations, and one of my goals when I took the role a few years back was= to create a true team between commerical and my operations team to make su= re that this works for Enron. I have some really good people who are very = motivated, and a big part of that is my commitment to have operations viewe= d as an integral part of the team at EA, EGM, EIM, etc. We had to work har= d to achieve that, but we've gotten there for the most part. So how odd it= is to me that now some people want to undo what has been a major contribut= or to the success that we have had. EES is reeling right now partly becaus= e they have never recognized the value of creating a good operations team, = nor did they approach operations as an integral part of managing their busi= ness in full. And now I have been asked to help correct that. Makes you k= ind of wonder...=20 I am fully supportive of running operations (and ENW) like a business, with= a critical eye toward delivering value effectively. When I first took thi= s role I told my team that at that time we were the service provider of cir= cumstance and that the goal was to move to a feeling that we were the servi= ce provider of choice. A component of this is definitely striving for lowe= r costs and higher value delivered. We can continue to improve on this, bu= t going too far may produce the wrong answer for Enron. --Sally=20 -----Original Message----- From: =09Piper, Greg =20 Sent:=09Wednesday, September 26, 2001 2:36 PM To:=09Beck, Sally; Pickering, Mark Subject:=09RE: Regrouping of ENW Budget Discussions - Per transaction thoug= hts=20 I have been thinking alot about this per transaction thing. =20 ENW provides three very different types of services to Enron. The first, E= nronOnline, is very collaborative and is very much an application building = and operating situation. No one at Enron is looking to outsource EOL funct= ionality. Creativity in that application is driven by the desks and ENW in= a marriage every hour of every day. If it goes down for a minute, trader= s are panicked and the news wires start pumping out that it is down. I am = not in favor of any relationship on EOL that would drive any kind of arms l= ength wedge between us and any other group. If my revenue is not large eno= ugh on EOL, do I let service slip? What is a new function and feature requ= est that fits in the contract? Do I do change orders? What is an EOL chan= ge order? I think EOL is an allocation relationship. IT infrastructure is something that could be outsourced. It was once and i= t didn't work very well and we pulled it back in. If we outsourced it, how= would EDS or IBM or someone like that price that service to us? By a per = transaction charge? Not likely. On this one, we can charge exactly like i= t was outsourced to them by charging per desk top, putting depreciation in = a $/month charge, having them select their level of service on controllable= , etc. That would be up to Mark and Jenny. So let's get down to what really is a service related to transactions and t= hat is fulfillment and the operations and IT associated with that. Let's s= ay we went per transaction on that in some fixed and variable form. Once a= gain, the pain will come around negotiating levels of service and eliminati= ng the flexibility for them to change quickly. We will also have issues s= ince we have shared systems and EIM and EGM may not want to pay per transac= tion. I am against per transaction for EOL, I am OK pricing something like any ot= her service company would price on IT infrastructure, but I think we should= only consider per transaction on the fulfillment portion. Your thoughts? GP -----Original Message----- From: =09Beck, Sally =20 Sent:=09Wednesday, September 26, 2001 10:19 AM To:=09Kitchen, Louise Cc:=09Piper, Greg; Pickering, Mark; Colwell, Wes Subject:=09RE: Regrouping of ENW Budget Discussions=20 Wes and team had preset the meeting schedule and topics to be covered in ea= ch. The outline that I sent you with the changes for the remainder of this= week is simply our best attempt at fitting coordinating topics around peop= le availability and the meeting schedule that had already been set. The sc= hedule that we have been working with that Wes provided did not allocate tw= o hours for the Friday meeting. If you had set aside two hours, that had n= ot been communicated to us. There were only two one-hour meeting slots on = that schedule. One for ENW from 1-2 and one for Research from 3-4. I have= a major conflict on Friday - I committed months ago to attend a meeting th= at Ken Lay asked to be involved in that is in the Woodlands that runs throu= gh the evening hours.. Only because Beth Perlman is out on Thursday for a = religious holiday, I decided to "skip out" from this meeting to be here on = Friday afternoon to discuss the Operations and IT Development budgets toget= her. In order to minimize my time away from the Woodlands meeting, I orche= strated the time swap with Vince Kaminiski so that we could have our ENW me= eting at 3:00. I will talk with you later today and fill you in on the com= mitment for Ken Lay. Maybe we can work together for a scheduling solution = that works for both of us. I would appreciate your help on that, Louise.= =20 Scheduling issues aside, Wes suggested that we also review with you the EES= budget that ENW has prepared. Our approach so far has been to determine t= he appropriate and necessary spend for 2002 for expense and capital for all= of the services that ENW provides to support the EES business. We have do= ne this without regard to who will cover which expenses - EES or EA. That = is a separate issue from understanding the services that need to be provide= d and our best estimate at costs. We are prepared, however, with a suggest= ed split on the costs for discussion purposes. I have assumed that the dec= ision on cost sharing or allocation would be made between the offices of th= e chair for EES and ENW. If you would like to cover all of ENW's budgets t= ogether, both for EES and EA, then it would make more sense to set a longer= block of time (maybe 3 hours?). I will bring my schedule to our meeting a= t 11:00 today to cover the Canadian budget and we can work out a schedule t= hat works for both of us. =20 We will be prepared to discuss pricing per transaction, but will hold that = until the end of our meetings when we have been able to review with you the= components of costs and the detail of capital projects. Our review of cos= ts and projects in effect will serve as our "scope of engagement" discussio= n. A service provider would never quote a firm price until agreement had b= een reached on the scope of the engagement. We will have a straw man for d= iscussion on that. --Sally=20 -----Original Message----- From: =09Kitchen, Louise =20 Sent:=09Wednesday, September 26, 2001 8:23 AM To:=09Beck, Sally Cc:=09Piper, Greg; Pickering, Mark; Colwell, Wes; Killen, Faith; Roper, Ker= ry; Schoppe, Tammie; Valdez, Christina Subject:=09RE: Regrouping of ENW Budget Discussions=20 I am expecting an all in cost for this service - what do we achieve in sepa= ration. I had allocated two hours on Friday to do this from 1pm until 3pm.= Are you not intending an all in cost (per transaction) of IT and Operati= ons? If you believe that the outline below works then go ahead, do we just= have the total number debate on Fridy - if so let's start at 2pm. Thanks Louise -----Original Message----- From: =09Beck, Sally =20 Sent:=09Tuesday, September 25, 2001 7:36 PM To:=09Kitchen, Louise Cc:=09Piper, Greg; Pickering, Mark; Colwell, Wes; Killen, Faith; Roper, Ker= ry; Schoppe, Tammie; Valdez, Christina Subject:=09Regrouping of ENW Budget Discussions=20 Louise, To make our ENW budget discussions most meaningful, we felt that coupling d= iscussions of the Operations and IT Development budgets will make the most = sense. To insure that we have the appropriate attendees in our ENW 2002 p= lan meetings and to schedule these meetings around Thursday as a religious = holiday, I have worked with Wes Colwell and made a trade with Vince Kaminsk= i to make all of this happen. There is no change to your calendar in terms= of date, time or location of meetings. We have simply realigned topics an= d attendees as follows:=20 Date=09=09=09Time=09=09Location=09Revised Group=09=09=09Revised Attendees= =20 Wed, 9/26=09=0911 - Noon=09EB3314=09=09Canada Support (unchanged)=09Wes Col= well, Faith Killen, Louise =09=09=09=09=09=09=09=09=09=09=09Kitchen, Sally Beck, Rob Milnthrop, =09=09=09=09=09=09=09=09=09=09=09Bob Hall (added-responsible for EA =09=09=09=09=09=09=09=09=09=09=09Operations, including Calgary) =09 Thurs, 9/27=09=091:30 -2:30=09EB3316=09=09ENW: EOL & Infrastructure=09Wes C= olwell.Faith Killen,Louise =09=09=09=09=09=09=09=09=09=09=09Kitchen, Sally Beck,Mark Pickering, =09=09=09=09=09=09=09=09=09=09=09Jenny Rub, Greg Piper, Kerry Roper,=09=09= =09=09=09=09=09=09=09=09=09Brad Richter (added-EOL), Jay =09=09=09=09=09=09= =09=09=09=09=09=09Webb (added-EOL) Fri, 9/28=09=091 - 2pm=09=09EB3316=09=09Research=09=09=09Wes Colwell, Faith= Killen, Louise =09=09=09=09=09=09=09=09=09=09=09Kitchen,Vince Kaminiski (no =09=09=09=09= =09=09=09=09=09=09=09=09changes) =09=09=093 - 4pm=09=09EB3314=09=09ENW: Operations & IT Dev.=09Wes Colwell,F= aith Killen, Louise=20 =09=09=09=09=09=09=09=09=09=09=09Kitchen,Sally Beck, Beth Perlman, =09=09=09=09=09=09=09=09=09=09=09Mark Pickering, Greg Piper, Kerry =09=09=09=09=09=09=09=09=09=09=09Roper, Bob Hall (added-EA =09=09=09=09=09= =09=09=09=09=09=09=09Operations)=20 I look forward to reviewing details with you in each of these meetings. --= Sally
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