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Enron Mail |
I guess I would only request that we get some review put in front of ETS' new
Risk Management Officer and his crew, Jerry Peters. I also understand that this is a part of the Revenue Management project. Lisa Sawyer 12/08/2000 12:55 PM To: Rod Hayslett/FGT/Enron@ENRON cc: Steve Hotte/Corp/Enron@ENRON, Caroline Barnes/FGT/Enron@ENRON, Lee Ferrell/ET&S/Enron@Enron Subject: ETS Risk System Rod, Caroline forwarded me your questions regarding the Risk System so I wanted to go ahead and respond since Steve is out this week. I don't think Philippe requires the level of due diligence that we performed, but we were getting questioned on buying a 3rd party product vs. using an Enron Risk System. We did more research and got the other groups involved so that they would understand our decision. I believe everyone is now comfortable with our purchase decision. In our analysis of systems, we selected the Caminus product in part because we had several individual references from Arthur Andersen, Deliotte &Touche and Ernst & Young. These organizations, especially Arthur Andersen, have audited this application and have actually participated in numerous implementations. Ernst & Young recently selected Caminus for Equitable Resources. Arthur Anderson implemented the application for Conoco and 5 or 6 other companies, and Deloitte Touche recently selected the product for Tractabel. After talking with individuals from these accounting firms, we felt very confident that the product was sound, and we should not have audit concerns. Obviously, we have a lot of business procedures that have to be established, and there is time in the work plan to do that work, but a lot of those decisions drive how the application is configured so we need to get the product purchased work through the details of how we implement the new business procedures since the system does drive a lot of processes. Regarding costs, we have an approved work order for $650,000 which covers all the initial hardware, software, implementation costs and first year maintenance. This cost does represent a very limited implementation with only 10 concurrent users, no customization except a few reports, and no electronic interfaces or data conversion. The assumption is that initially the volume would be so low that an automated interface may not be cost justified, and the data would manually be loaded since it was low volume as well. The on-going costs are estimated at approximately $100,000/year. We did not perform a separate cost/benefit analysis as this was in the original cost of the Revenue Management RAROC. Let me know if you have any other questions or there are open issues that we need to address prior to completing the contract. We are hoping to get this signed and the project underway next week. Thanks.
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