IP: Anderson Consulting was the key technical and marketing enabler for Enron bandwidth trading

[David Farber <dave () farber net>]

> X-Sender: cook () pop3 netaxs com
> Date: Thu, 10 Jan 2002 21:53:30 -0500
> To: dave () farber net
> From: Gordon Cook <cook () cookreport com>
> Subject: Anderson Consulting was the key technical and marketing enabler
>  for Enron bandwidth trading
>
> Hello Dave,  For your IP list.
>
> Here is an Enron  angle that I haven't seen anyone pick up on.  While 
> Anderson was the  auditor for Enron's bandwidth business, Anderson 
> consulting was also one of the major enablers of the Enron bandwidth 
> business that blew up in everyone's face.    Lin Franks, energy market 
> commodization expert, went to work for Anderson to sell what she had 
> created at Enron.  While I claim no knowledge of any specific wrong doing, 
> hindsight certainly says that Anderson was way too cozy with Enron.  Being 
> possibly Anderson Consultings largest customer, Anderson certainly should 
> also not have been its auditor.
>
> Headline page 13 June 2000 cook report
>
> BRINGING RISK MANAGEMENT TO THE INTERNET
>
> LIN FRANKS EXPLAINS ISSUES INVOLVED IN COMMODITZATION
> DESCRIBES HER EVANGELIST ROLE IN MANAGEMENT AND TRAINING ISSUES INHERENT 
> IN TRADING BANDWIDTH
>
> Editor's Note: Lin Franks is a Senior Manager in Andersen Consulting's 
> Energy Practice where she helps clients develop points of view and 
> strategies around the converging communications and energy markets. She is 
> a contributing author to The US Power Market, a 1997 book published by 
> Risk Publications, and the forthcoming publication, The Telecommunications 
> Revolution. Her previous position was Director Commodity Market 
> Development, Enron Communications. We interviewed Lin on March 15, 2000. 
> (Published in the June 2000 COOK Report on about April 15, 2000.) [snip]
>
> COOK Report: If a big carrier is going to buy and sell bandwidth in a 
> commodities market, somebody in that carrier has to be trained in what 
> way? To do what?
>
> Franks: There you go. That's why we have put together a comprehensive 
> training program to meet this need. You've got to be there when your 
> customers believe they need it and these things do take time to develop. 
> Companies, even those who are on the edge of this market like Enron, as 
> talented as they are in risk management trading, and as obviously 
> competent in the area of communications as they are, are still faced with 
> the same issues in staffing that others are. In this situation, they may 
> bring people in from their own energy risk management trading organization 
> and, indeed, have done so. They're also going to hire or bring in people 
> with the fundamental knowledge of how bandwidth is actually bought and 
> sold today, traditionally. But they're also going to hire bright young 
> minds, bright young MBA's.
>
> In this sense Enron is no different. This is what everyone is going to 
> have to do, they're going to have to mix it up. When you bring in a group 
> like that and you're hiring and staffing and need to train with the 
> perception that this market is going to be quite active by the end of the 
> year, then you've got to lean on people like those at Andersen consulting 
> to assist you in your training program.
>
> ======
> And in the exec summary to the Franks interview:
>
> In the mid 90s she went to work for Portland General Electric.  When Enron 
> acquired Portland in early 1998 she met Stan Hanks.  The interview 
> recounts how she worked with Hanks to learn the technology issues for 
> trading bandwidth while techning the internet technical people what skills 
> were necessary to successful commodities trading.
>
>  For the past year Franks has been working with Andersen consulting in 
> developing a training program that will acquit executives at the large 
> carriers with the issues behind bandwidth commoditization, make certain 
> that they understand the staffing that must be done to get their 
> companies  ready to participate in bandwidth trading, to help them form 
> an industry group that can agree on a benchmark and standard contract and 
> to coach them through the process of carrying out the first trades. She 
> notes that a nascent industry trading association had its first meeting 
> in Washington, DC on March 23.
>
>
> and in the May 2000 cook report I interviewed Stan Hanks who by then was 
> no longer with Enron on what Enron had done and was doing.  Stan 
> said:  Your overiding goals as a trader in a commodities market are to 
> make your risks as low as possible and, if you can manage it, to make some 
> money at the same time.
>
> This is one of the reasons that you should talk to Lin Franks. She is an 
> associate partner at Anderson Consulting who has a background in commodity 
> market creation that goes back to before the time when oil was something 
> that was traded. She was involved in the oil, natural gas, electricity 
> markets and was instrumental in actually making the electricity market 
> happen. At Andersen Consulting she is putting together a team who are 
> going to help a lot of industry folks figure out how to deal with all this.
>
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