Pinnacle West

Creating a Process Oriented Enterprise at Pinnacle West

T. S. Raghu

W. P. Carey School of Business

Arizona State University

Tempe, AZ 85287

Version: 6-8-2009

1. Introduction

As the 2008 holiday season approached, Denny Brown, Vice President and CIO of Pinnacle West, wondered how he would navigate his organization through a tumultuous economy in the coming year. The year had begun very well for Pinnacle West Capital Corporation (PNW), a company that provides energy and energy- related products throughout Arizona. One of the largest affiliates of Pinnacle West, Arizona Public Service (APS) was named the top energy utility for Information Technology (IT) innovation by Information Week. They were also listed among the top 10 U. S. companies in the InformationWeek 500. APS also received the prestigious Edison Award by the Edison Electric Institute for developing the Transformer Oil Analysis and Notification (TOAN) System. TOAN monitors transformers on a near real-time basis for anomalies in power transmission. Denny firmly believes a CIO’s mission is to transform the business. Thus, he began to accelerate the transformation processes set in motion over three years ago. Clearly, the coming decade would be pivotal to the energy industry.

During the 1990s, Denny left APS to pursue a career at IBM for nearly a decade. When he returned to APS in 2000, he reacted to pressure from his customers to produce more services and products at a lower delivery cost. However, when he pushed for “more” from his own Information Services organization, he quickly realized that his organization lacked formal processes and was highly dependent on people knowing who to contact to get work done. Denny began to institute a process discipline within the IT organization.

Soon after, Denny began to realize if the Information Services organization could embrace a process oriented approach, other business units in APS should be able to do so as well. To help achieve this, he created a...