Duke Energy emerges from 'dark period' with PeopleSoft 8.9 upgrade

Scared to touch a fresh PeopleSoft upgrade for years, Duke Energy finally bit the bullet and moved to 8.9. A new financial data hub helped ease the transition.

While the recent flap over software maintenance has some enterprises considering dropping maintenance and support and going it alone, one PeopleSoft customer found that wasn't such a good idea.

Duke Energy, a Charlotte, N.C.-based electric and retail gas utility company, found out that forgoing maintenance created some serious compliance issues, and catching up to the latest release was not an easy task.

"We made the mistake of thinking, ‘Maybe we don't need the vendor to maintain things or give us patches. We can do it ourselves,’" said Richard Koch, manager of financial applications integration for Duke Energy. "That really didn't turn out too well."

The company installed PeopleSoft HR 6.0 in the late '90s, adding the financials module a year later. It implemented PeopleSoft Travel and Expense 7.5 in 2000, upgrading to 8.0, and added PeopleSoft supply chain module two years later. At that point, the company effectively stopped rolling out new modules and stopped upgrading the existing applications. In fact, the years from 2003 to 2007 are referred to by IT at Duke Energy as "the dark period."

"We had a really tough implementation of the supply chain piece of PeopleSoft 8.0 in 2002 and 2003," Koch said at a session at the Collaborate conference in Las Vegas last week. "We got it to where it was working and we didn't want to touch it. We were scared, I guess."

But it wasn't just IT worried about difficult implementations and upgrades. Management was reluctant to spend on maintenance and support – and went off Oracle maintenance and support altogether.

The result was that the implementation became more and more heavily customized, which led to implementation failures, Koch said. There were literally hundreds of thousands of customizations -- he estimates the system was 85% customized.

"We got to the point where we weren't sure how it worked because the code was all customization for the most part," he said.

In fact, the company went two years without applying a maintenance pack or PeopleSoft Tools upgrade. When they finally did, the Service pack 3 took about nine months to apply because there were so many customizations.

"The compare reports were a real headache," Koch said. "You can imagine 100,000 customized objects."

Further complicating Duke Energy's decision-making process was Oracle's $10.3 billion takeover of PeopleSoft. Oracle's message about Fusion Applications, combining the best functionality of its many application acquisitions, only served to convince Duke Energy to stay on the existing system.


Merger proves the catalyst for a PeopleSoft upgrade

But the tipping point came in 2006, when Duke merged with Cincinnati-based Cinergy, combining Duke's business in the southeast with Cinergy's business in the Midwest -- as well as the underlying systems. The merger -- and escalating audit concerns -- forced Duke Energy to take a long-term view of its ERP system.

"There were a lot of problems with separation of duties in SOX," Koch said. "Everyone seemed to have access to do anything they wanted to. Plus, the financial close was taking upwards of 12 to 14 business days. You're in close the majority of the month and you never want to make changes during close."

Duke Energy also found itself confronting conflicting reports, an absence of reporting standards and serious issues about scalability, Koch said.

The merger led to more plans for growth as well. Duke Energy came to the conclusion that it needed to get back on Oracle's support schedule.

"We wanted to get a supportable system," Koch said. "We were in the dark ages where we were. I wouldn't say we were supporting our systems. It was more that we were letting it sit there and rot because we didn't want to touch it. We realized it was cheaper to stay current and up to date in the long term than to sit there and not do anything."

Duke Energy undertook what it called internally the Financial Reengineering (FREE) project. That meant upgrading PeopleSoft from 8.0 to 8.9, migrating the system from IBM's DB2 on a mainframe to an Oracle database platform, and upgrading Hyperion Enterprise to HFM System 9.

"We really knew we were behind the times, so we said we [wanted] to be on the best of the best," Koch said. "That means the best people and the best toolsets. We wanted to have no audit concerns at all."

That also meant constructing a financial data hub so reports were no longer going off the operational data store and slowing it down. Reports are now run out of a data warehouse. In addition, Koch said, all integration flows through the hub. As a result, Duke Energy reduced the number of point-to-point interfaces hitting the system. As larger projects associated with larger systems are undertaken, Duke Energy doesn't have to go and re-test all of those interfaces.

"It gave us a single source for management and regulatory reporting," he said. "Before, PeopleSoft was our single source. Now, the system of record may be PeopleSoft, but the system of reference is the hub."

Operational reporting still runs off PeopleSoft, but management reporting runs off the hub, which is updated twice a day.

The hub implementation also had benefits outside of reporting.

"The implementation for this hub really helped us with PeopleSoft maintenance," said Keith Jenkins, manager of environments and finance projects. "It freed us up to do PeopleSoft maintenance and upgrades on a more frequent basis."

However, it was neither a quick nor an easy process. Updating all the systems and eliminating the custom code took two years. Koch estimates that the PeopleSoft implementation is now only 2% custom code.

"We brought in Accenture to show us how we run a program," he said. "We said any future projects are going to use this methodology to put in projects."

Any new project needs requirements gathering, testing and documentation, and it's all put on a roadmap demonstrating how it affects the financial systems.

"That means we don’t have systems going up at random times and bringing down production," Koch said. "We really stressed the business-IT relationship as well. A lot of times we weren't on the same page. IT was doing initiatives, and business didn't know about it until the user testing phase. Now we make an effort to get business involved at the beginning. It limits the amount of rework."

Duke Energy is currently running 14 instances of PeopleSoft -- three demo environments, three development, three testing, one quality assurance, one performance testing, one training, one production support and one production instance. It's running Oracle 10g on AIX and on Windows 2003 servers.

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