Gestalt Owen Murphy, 215-564-3200x 15 omurphy@braithwaitepr.com

Commissioner Brownell calls report "required reading" for board members, stakeholders and management

Gestalt, a business and information technology services firm providing strategic consulting and decision support technologies to the defense and energy and utilities industries, today announced that, at the request of the Federal Energy Regulatory Commission (FERC), it presented a report on Information Technology Guidelines for Power System Operators. FERC commissioned Gestalt to prepare the report because it "has been concerned about reports of IT project cost overruns as well as reports of excessive or inadequate system investments," said Joseph McClelland, Director, Division of Reliability for FERC.

"This report, I hope for many years to come, will be a good touchstone for what the industry needs to look at while implementing new technology," said FERC Chairman Pat Wood, III.

In the past decade, the utility industry has been plagued by IT cost overruns and excessive or inadequate system investments. Further demonstrating this point, Gestalt's report indicates that in 2004 only 34% of IT solutions succeeded. The remaining projects either failed completely (15%) or failed substantially (51%), meaning they failed to meet schedule, budget or functionality commitments.

"The statistics revealed are quite telling. I had no idea that the failure rate of IT systems was so high," said Commissioner Suedeen G. Kelly. "I think it explains, in large part, why we have some of the problems that we have here..."

The report's goal was to explore the IT needs of the transmission owners and operators, investigate recent IT projects to determine elements of success and failure, and form recommendations to improve new IT projects. The report met with very positive feedback from those in attendance and was lauded as "required reading for Board members, for stakeholders, as well as the management..." by Commissioner Nora Mead Brownell.

Gestalt's Sr. Vice President of Energy & Utility Product and Service Development, David Turner, presented the report findings to FERC at its open meeting on April 13, 2005. In his presentation, Turner outlined newly developed information technology guidelines for power system operators. He also outlined the report's recommendations for ensuring future IT projects are justified, well- managed, and implemented more efficiently and cost-effectively. Gestalt's key findings focus on a lack of formal processes around governance, project portfolio management, and project management. Other issues addressed include the cost and functionality impacts associated with fast-tracking technology development without fully developed business rules and functional requirements, the need to architect open systems based upon non-proprietary, vendor-neutral technologies, and the need to develop and adhere to industry standards.

"When we talk about project management, technology development, vendor management, and cost control, we recommend establishing and rigorously following standard business management processes that are common to any technology-dependent industry," said Turner. "We need to make sure that the individuals involved in these processes have the tools necessary to track success and failure and evaluate performance."

The Blackout of 2003 uncovered three core areas that need to be addressed in order to prevent future blackouts: Tools, training and trees. Gestalt's report addresses the Tools component, specifically the role IT systems can play in correcting utility industry deficiencies.

"Based on what we saw in the Northeast blackout it's clear that the industry's vendor community is having difficulty responding rapidly enough with solutions to address the reliability needs of today's system operators," said Bill Loftus, President and CEO of Gestalt. "However, the industry recognizes the problem and we think this report is a step in the right direction toward finding better technology solutions to address this issue. We're excited to help lead the charge on reliability going forward."

A full copy of the report is available at FERC's website at: http://fer c.gov/industries/electric/indus-act/reliability.asp

About Gestalt

Gestalt is a business and information technology consulting and services firm that helps decision makers in the defense and energy and utility industries increase their return through the pragmatic application of state-of-the-art technologies to real business problems. Gestalt's Energy and Utility Practice provides strategic business consulting and technology services both domestically and internationally. Gestalt's strategic services include business process analysis, market design and implementation, regulatory and litigation support, and international restructuring. Gestalt's technology services include technology assessments and IT strategy development, solutions architecture and design, advanced integration services, and custom application development.

Gestalt has offices in Camden, NJ, King of Prussia, PA, Orlando, FL, Marlborough, MA, Washington, DC, Hampton, VA, Jacksonville, FL, Joplin, MO, and Toronto, Canada. For additional information please visit www.gestalt- llc.com.

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