Ugandan Electricity Distributor Achieves Business Transformation With SAP

Umeme enhances supply chain, financial processes with award-winning SAP deployment.

Serving 1.3 million customers in one of East Africa’s key economic hubs, Ugandan electricity distribution company, Umeme, plays a vital role in enabling the government’s Electricity Connections Policy that aims to increase electricity penetration rates. But outdated systems were causing inefficiencies, leaving decision-makers without the agility and accurate data needed to make effective decisions. The answer: a business transformation process on the latest SAP technologies that, thanks to a strict and well-orchestrated implementation process, was delivered ahead of schedule.

According to Roger Bentley, Chief Information Officer at Umeme, the project was rooted in delivering business value against very specific requirements. “We needed an ERP system that would provide us with a stable financial platform and give us the ability to consolidate and retire disparate standalone systems. Through three-way matching, we wanted to improve our financial controls and make financial statements available at district level to improve accountability. We also identified an opportunity to automate business processes as some existing manual processes were prone to human error.”

In 2005, Umeme received a 20-year concession from the Ugandan government for the distribution electricity to customers. The company’s mandate includes the operation, maintenance and upgrade of electricity distribution infrastructure, electricity retail and provision of related services.

Bentley and his team engaged with SAP partner SEAL Infotech with a brief to address the business challenges by using only standard SAP functionality – without customization – as far as was possible. “It was vital to us to produce rapid time to value and reduce the total cost of ownership, which required us to eliminate customization of the SAP system,” explains Bentley. “To bring the point home, all members of the implementation team received a tub of vanilla ice cream as a reminder to stick with ‘vanilla’ SAP.”

The project scope consisted of an SAP S/4HANA on-premise deployment with Financial & Controlling, Materials Management, and selected SAP Fiori functionality to ensure a positive user experience. This covered multiple processes including general ledger accounting, accounts payable and receivable, bank accounting, asset accounting, tax, closing operations, cost centre and profit centre accounting, and materials and services procurement.

“We used a hybrid approach consisting of some elements of SAP Activate and some elements of PRINCE2,” says Bentley. “We carefully controlled time, budget and scope against our plan by holding weekly project team meetings, monthly steering committee meetings and ad hoc meetings for any immediate priorities. Requests for deviations were discouraged and we ensured consultants understood that there was a fixed cost for the project. The combination of strict controls, an expert team, and great partners enabled us to deliver the entire project within budget and one month early.”

All business objectives originally set were achieved, including the ability to operate and report in multiple currencies, improving financial controls, clearly documenting the procure-to-pay process, making financial statements available at district level and tracking the status of purchase requisitions. “We implemented the new system for 200 users, with another 540 users expected to be added in future. To date, we have reduced stores issues and improved the visibility of our procurement processes, which has saved us US$500 000 in the first 6 months of operation.”

According to Pedro Guerreiro, Managing Director: Central Africa at SAP, organisations across Africa are increasingly seeing the benefits of building Intelligent Enterprise capabilities as they seek greater efficiency and competitiveness. “The Umeme team has highlighted the power of deploying the latest intelligent enterprise technologies to solve business critical challenges. By firmly rooting their project in business value and strictly adhering to timelines and processes, the team has accomplished the seemingly impossible: a business transformation that is delivered ahead of schedule and generates positive ROI within the first few months. It’s no wonder that Umeme was recognised for excellence in the Fast Delivery category at SAP Africa’s recent Quality Awards.”