Andrew Strachan

Industry Principle

SAP

What is the core business driver of a What is the core business driver of a Utility ?Utility ?

Delivery of a high quality cost effective but yet affordable

(set of) reliable service(s) to their customers / consumers /

citizens

Challenges / Business Drivers in UtilitiesChallenges / Business Drivers in Utilities

� Strategies for cutting costs� Lack of “Best Practices”� Revenue Assurance� Flexible corporate-wide infrastructure for

business process integration across customer-facing and asset-facing disciplines

Profitability

� Cost reduction and control� Streamlining processes � Asset and Network Reliability

Service Delivery

� Transparency for regulatory compliance (including environmental, safety)

� Creating a Proactive vs Reactive environment� Customers for life vs Rate Payers� Local Acts – PFMA, GAMAP, MFMA� Tariffs

Regulatory

Where are Organisations today ?Where are Organisations today ?

Most IT

systems

are aligned

by function

and by

department

Utility CompanyUtility Company

HRHR PurchasingPurchasing OperationsOperations Billing Billing & CRM& CRM MaintenanceMaintenance FinanceFinance

Where does this leave

the organisation ?

– Lack of data and process integration– No single view of the data– Lack of data integrity– Multiple Vendors– High Support Cost– Support Availability– Duplicated Efforts– Current Technology Adoption Levels– Upgrade Strategies– Platform Strategies– Scalability

Some key issues :

The Typical IT Landscape: The Typical IT Landscape: Multiple Disparate SystemsMultiple Disparate Systems

High TCOHigh TCO

The need for Integration : An Energy UtilityThe need for Integration : An Energy UtilityBilling ExampleBilling Example

Connection Request

Connection Request

MeterReading

MeterReading

PaymentCollection

PaymentCollection

Device Management

DisconnectionMove In

Move Out

- Customer Services- Billing and Invoicing- Revenue & Credit Control- Device Management- Other Systems

• Only a result of an elaborate process• Dependencies on other processes GISGIS Work

Management

Work Management

Mobile Devices

Mobile Devices

Print ShopPrint Shop

LegalLegal

CRMCRM

Billing andInvoicing

Billing andInvoicingEnquiries /

Complaints

Enquiries / Complaints

DeviceInstallation

DeviceInstallation

Data and ProcessesData and Processesneed to be sharedneed to be shared

The TOTAL costThe TOTAL costof ownership =of ownership =

Cost of

external

platforms

Cost of

applications

+

+Cost of

integrating

applications

and platforms

Co

re A

pp

licat

ion

s The Complete TCO PictureThe Complete TCO PictureSome typical applicationsSome typical applications

SelfService

SelfService

Route ReadingManagement

Route ReadingManagement

MeterReadingMeter

Reading

GISGIS ….….LandInformation

LandInformation

HRHRFinanceFinance

PurchasingPurchasing

BillingBilling PayrollPayroll

........AssetMaintenance

AssetMaintenance

Ext

ern

alA

pp

licat

ion

s

One single end to endintegrated solutionis needed to minimise theTotal Cost of Ownership

It is clear that these applications need to be integ rated: BUT It is clear that these applications need to be integ rated: BUT HOW ?HOW ?

© SAP 2011 – SAP @ WAPIC

What is ERP ?What is ERP ?

Enterprise resource planning (ERP) is the planning of how business resources (materials, employees, customers etc.) are acquired and moved from one state to another.

An ERP system supports the business system that maintains in a single system the data needed for a variety of business functions such as Manufacturing, Supply Chain Management, Financials, Projects,Human Resources and Customer Relationship Management.

An ERP system is based on a common database and a modular software design. The common database can allow every department of a business to store and retrieve information in real-time.

The ERP modular software design should mean a business can select the modules they need, to improve business performance.

Source : Wikipedia

ERP aligns organisations around ERP aligns organisations around core business processescore business processes

Order Processing

Stores andProcurement

Customer Services

FinancialReporting

Etc…

Most IT systems are aligned by function and by department

ERP works across these traditional barriers...

ERP is a single, integrated business solution that works across your entire organisation

ERP is a single, integrated business solution that works across ERP is a single, integrated business solution that works across your entire organisationyour entire organisation

Utility CompanyUtility Company

HRHR PurchasingPurchasing OperationsOperations Billing &Billing &CRMCRM MaintenanceMaintenance FinanceFinance

... and aligns your internal processes

... and uses common data

What Is the Effect of Using Integrated Technology?What Is the Effect of Using Integrated Technology?Reduce Cost of Reduce Cost of OpsOps Enabling Innovation AgainEnabling Innovation Again

TCO utilising integrated solutions

40%

20 - 25%

35 - 40%

CONSOLIDATION

10%10%

30%30%

60%60%

TCO today

INNOVATION

OPERATION

� In most enterprises up to 75% are personnel or services costs

� Hardware, software and infrastructure only 25 %

� Cost drivers:� custom code � interfaces � number of

(integrated) systems

� testing� end user

training

© SAP 2011 – SAP @ WAPIC

Cost effective affordable service delivery

Goal

Minimizing of billing errors

Optimise meter reading & management process

Optimization of the payment process

Critical success factors

OK

Not OK

OK

OK

Not OK

Not OK

Result

% Fully paid bills

KPI

% Returns per reason

# Readings per employee

% correct data received

Time betw. reading & paymt.

% billing errors

97%

< 2%

10 days

>98%

100

< 3%

Benchmark

ItIt ’’s not only about TCO! How do you measure s not only about TCO! How do you measure efficiency ? Coping with KPIs and Benchmarks efficiency ? Coping with KPIs and Benchmarks

Application Software Requirements:• Integrated solution from back office to meter management to revenue collection• Single view of the customer• Common data set• Real Time processing

Application Software Requirements:Application Software Requirements:• Integrated solution from back office to meter management to revenue collection• Single view of the customer• Common data set• Real Time processing

What does a typicalWhat does a typicalWhat does a typicalWhat does a typical

ERP for a Utility Look LikeERP for a Utility Look LikeERP for a Utility Look LikeERP for a Utility Look Like

????

© SAP 2011 – SAP @ WAPIC

HR Purchasing Operations Sales / Distribution Maintenance Finance

ERP allows the achievement of business strategies i n an ERP allows the achievement of business strategies i n an integrated but open and extendable architectureintegrated but open and extendable architecture

AnalyticsStrategic Enterprise Management

Financial Analytics Operations Analytics Workforce Analytics

FinancialsFinancial Supply Chain Management

Financial Accounting Management Accounting Corporate Governance

Human Capital Management

Talent ManagementWorkforce Process Management Workforce Deployment

Procurement and Logistics Execution

ProcurementInventory and Warehouse Management

Inbound and Outbound Logistics

Transportation Management

Product Development and Manufacturing

Production Planning Manufacturing Execution Product Development Life-Cycle Data Management

Corporate ServicesReal Estate Management

Enterprise Asset Management

Project and Portfolio Management

Travel Management

Environmental Compliance Management

Quality Management

Global Trade Services

Billing and CustomerService

Meter Reading Billing & Invoicing Call Centre & Customer ServiceDebtors Management& Collections

ThusThus ……. ERP Delivers :. ERP Delivers :

An integrated (ERP) solution delivers all An integrated (ERP) solution delivers all

of the requirements to run an effective of the requirements to run an effective

and efficient organisationand efficient organisation…………..

…….whilst reducing the ongoing .whilst reducing the ongoing

operational costsoperational costs……....

And delivering a single, consistent, And delivering a single, consistent,

accurate view of the organisation !accurate view of the organisation !

– SILOS’s– Lack of data and process integration– No single view of the data– Lack of data integrity– Multiple Vendors– High Support Cost– Support Availability– Duplicated Efforts– Current Technology Adoption Levels– Upgrade Strategies– Platform Strategies– Scalability

Some key issues :

In Summary ERP Eliminates : In Summary ERP Eliminates :

High TCOHigh TCO

Maintain legacy andmodify as required

Custom build anintegratedsolution

Do nothing

Implement anoff-the-shelf integrated

solution

Although tempting to the IT fraternity this is not a viable option.

Business requirements were not being met and the problem is increasing with time, significantly impacting the City’s ability to deliver services.

A proven solution with global best practices

• Contrary to “buy vs build”principle

• Achieving integration with existing systems had proven to be expensive

• Operating cost and dependency on a few individuals with specialised skills resulted in the organisation being held to ransom.

An IntegratedEnd to End

solutionis the only

viable solution

What can be done?What can be done?How do you go about selecting an integrated solutio n ?How do you go about selecting an integrated solutio n ?

Nirvesh Sooful Nirvesh Sooful –– CIO City of Cape TownCIO City of Cape TownPublic Sector IT Solutions Conference

““ Billing of our top 10,000 customers has been taken Billing of our top 10,000 customers has been taken over by the company and over by the company and they are benefiting from the integrated SAP Billing , they are benefiting from the integrated SAP Billing , Finance and Customer Care SolutionFinance and Customer Care Solution ””

““ We have increased our payment level to a consistent We have increased our payment level to a consistent 98% (from less than 70% in the past)98% (from less than 70% in the past)and have also recovered R100M of payment arrears.and have also recovered R100M of payment arrears. ””

CEO City PowerCEO City Power

EndEnd

“Insanity is doing the same

thing over and over again and expecting different

results…”Albert Einstein

Thank youAndrew StrachanIndustry Principle : UtilitiesSAP Africa

SAP Africa Region T +27-11 319 7439F +27-11 235 6201M +27-83-235-0152E andrew.strachan@sap.com

The Value of Integrated Back Office and Billing applications for an unbundled

utility

Andrew Strachan

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