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Austin Energy says it needs more time, money for IBM contract

Wednesday, April 20, 2011 by Bill McCann

The city is going to have to wait a little longer – and pay more – for its long-awaited new utility billing system for its 420,000 customers.


At Thursday’s meeting, the City Council is scheduled to consider adding $4.6 million to a contract between the city and IBM Corp. for the Customer Care & Billing system, putting the total cost of the eight-year project at $57.3 million. The additional funds are needed to cover a six-month delay in getting the billing system up and running.


During Tuesday’s City Council work session, City Manager Marc Ott explained, “It’s just some of the discrepancy that always exists in terms of these kinds of projects, even if you’re purchasing a product off the shelf. And in your case you are doing that and also some customization that you are bringing to this because of the unique nature of what you do at Austin Energy… It’s always difficult to anticipate everything associated with that kind of implementation.”


The Electric Utility Commission, which advises Council on utility matters, voted 6-1 Monday to recommend approval of the contract amendment.


When the contract was signed in May 2009, the billing system was scheduled to go into operation this month. Officials of Austin Energy, which is managing and funding the project, are now projecting that it will go live in October.


In their defense, project officials point out that projects of this complexity and size can expect unforeseen issues that could add 10 percent to the cost, based on industry experience.


“When we set up the original go-live date of April 2011, we knew we were on a very, very tight schedule in getting the software, doing the testing and getting the project to run,” Austin Energy Deputy General Manager Kerry Overton told In Fact Daily.  “This is a complex system – more so than most other cities because instead of having one or two services on a bill there are six. There are over 2,000 requirements that the system has to deal with to get data and generate a bill.”  


As might be expected on such a complex project, technical problems have arisen in changing over from the old system, and in developing and testing software and hardware, Overton said.


 “Both IBM and the city have taken mutual responsibility and have resolved the issues and are moving forward,” he said. “We are confident in the new schedule and are comfortable in the direction we are heading.”


The delay and added cost have not come as a big surprise. City documents show that the project was running into technical and staff workload problems a year ago. City auditors told the Council’s Audit and Finance Committee in February that the project had fallen behind schedule. Auditors attributed problems in part to failure of the project to follow best management practices, such as contingency planning and independent quality assurance assessments.


The current billing system was installed in 1999 and has become outdated from both a cost and technological standpoint, according to city officials. The new system, like the existing one, will provide a single bill for electricity, water and wastewater, trash and recycling pickup, and other fees. The new system is expected to improve customer service including providing more detailed billing information. It also is supposed to cut the cost of preparing a bill from $1.29 per printed bill to about 69 cents.


The contract with IBM calls for developing the billing system and putting it into operation over the first two years. IBM is to provide hardware, software and technical support and will host the system from its facilities for the remaining six years of the contract.

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