By the end of the Nineties, the managers at the Hannover public utility company had realized that a fundamental rethink was needed in their billing system. This was caused by the new single market guideline of the European Union (EU) and the resulting association agreements VVI, VVII and VVII-plus, which were replaced by an amendment to the German Energy Industry Act in 2005. Previously, the energy supply companies had based their billing procedures on premises and meters. The customer associated with the premises and the other services this customer took advantage of were not the primary interest, as the utility companies’ monopoly meant that the users of premises were necessarily customers.
In the deregulated market, on the other hand, customers can choose whichever energy supplier they like. As a result, the customer is now the focus of all sales activities, and it is now important for the energy supply companies to know what revenues the individual customers generate in the various lines of business. As a result, customers now need to be defined by more than just their premises. The host-based legacy system at the Hannover public utilities company was not able to meet this requirement, which directly impacts the IT systems. The company needed to find a solution that consistently views the customer as the central unit and makes it possible to orientate the company processes – marketing and sales, billing and payment management, meter logistics and measurement data – to customer needs in the most effective way.
The company came down in favor of the SAP R/3 IS-U/CCS industry solution, today known as SAP for Utilities. This choice meant the systematic adoption of the SAP R/3 platform strategy. With SAP’s industry solution for utilities, the company is able to leverage synergies, for example through integration in the existing classical SAP R/3 system or via a connection to the SAP Business Information Warehouse (SAP BW). In addition, from enercity’s point of view, the SAP industry solution had become the “de facto” standard in the utilities industry.
Key to success: the right project organization
In the fall of 2001, enercity launched the largest IT project in the company for 15 years, and commissioned business consultants bicon Unternehmensberatung GmbH from Hamburg as its implementation partner. At peak times, up to 120 employees from 18 departments were involved in preparing for the change-over to the new billing system. The functions of the core processes for customer contact, settlement with customer management, energy data service, and meter management had to be changed over to the SAP industry solution for a total of around 650 users.
With a project structure divided into processes and services, the Hannover public utilities company and bicon avoided the problem of disordered data. “We wanted to keep the adverse effects for our customers as low as possible and provide our colleagues in the billing and customer contact departments with good IT tools for their day-to-day work as quickly as possible,” states Jörg Gondermann, project manager at enercity. The company therefore selected a project organization that took equal account of the implementation of the business processes on the one hand, and the introduction of the IT infrastructure on the other. The two main elements of the project here were divided into two categories of subprojects. In the process-oriented subprojects, functions and business processes were developed and implemented that are particularly geared towards the new needs of the deregulated market. The service-oriented subprojects were responsible for creating the necessary IT resources such as workflows, form programs, and interfaces. Training of the end users and communication and cooperation with the works council were the direct responsibility of the project managers.
By splitting the project up into these subprojects, enercity benefited from the experience that bicon has gained through its involvement in numerous implementations of the SAP industry solution for energy supply companies. The project was driven by the process-oriented subprojects for logistics (device management and meter reading), billing, energy data management, and accounts receivable accounting. In these subprojects, the organizational aspects, that is to say the functions and processes, were modeled and configured. This included the basic processes for meter assembly and reading or the configuration of payment and receivables management. The service-oriented subprojects for migration, CIC/workflow, forms, the installed base, SAP BW, and authorizations acted as internal service providers for the process-oriented subprojects and provided the necessary IT resources. Thus the service-oriented “Forms” project developed the invoice forms based on the specifications that the process-oriented “Billing” subproject had previously drawn up, for example.
Configuration of the industry solution
During the system configuration, which lasted until March 2004, numerous additional customer-specific developments and interfaces for the connection of more than 50 subsystems needed to be developed. This included the definition and programming of workflows, for example, which enable users in customer services to manage their processes more efficiently. It was also necessary to connect a local order processing system, used for the optimum controlling of work orders for meter reading, device assembly, and collection activities. One particular challenge facing the company was the development of functions for the automatic exchange of invoice and consumption data with large customers.
The project was accompanied by constantly changing legal requirements, and had to reevaluate and redefine certain project goals repeatedly as a result of the new “unbundling” regulations. This relates to the separation of grid and energy services as per the amendment to the Energy Industry Act (EnWG) in Germany. In addition to the separation of companies in legal terms, the amendment requires the separation of data and functions in the various software solutions. “Basically, data and functions in the “Grid” and “Sales” areas must be separated, to ensure that full service providers do not gain an unlawful competitive advantage in the related field of supply,” explains Gondermann. As a result, the Hannover public utilities company’s energy sales division must not be able to obtain consumption information about customers who fall within the utility company’s grid area, but are supplied by other energy providers.
Integration with SAP Business Information Warehouse and EDM
In parallel with the SAP industry solution, the Hannover public utility company also implemented SAP Business Information Warehouse and parts of SAP Energy Data Management (SAP EDM).
A further advantage of choosing to implement SAP BW rather than the UIS (Utility Information System) solution integrated in IS-U is that the statistical evaluations and reporting do not put an additional burden on the company’s dialog system, as these functions run on a separate BW platform. In addition, numerous data structures (“info cubes”) and reports are provided in SAP BW thanks to the preconfigured “Business-Content Utilities”, and were easily adapted to the specific requirements at enercity.
SAP EDM was initially implemented so that important information relating to the deregulated market is now processed centrally in IS-U/EDM. This includes the points of delivery, load profiles, and service providers, for example.
Quality of data transfer as factor for success
As expected, one critical factor for success proved to be the data transfer carried out by the “Migration” subproject. There was the danger that because of the huge volume of data so common among energy supply companies, excessively high error rates would lead to complex and time-consuming manual correction work. enercity wanted to avoid this – particularly in view of the downtime expected as a result of going live and the subsequently larger amount of backlog processing work that needed to be completed quickly after migration to restore the usual billing cycle.
“In the project, three production test starts were simulated. In each case, the project team extracted the complete data from the legacy system, transformed this where necessary, and transferred it to IS-U,” explains Gondermann. This procedure plus additional extensive check and test routines for ensuring data consistency were the reason for the very low error rate of 0.016 percent during the actual migration in June 2004. As a result, processing of the backlog could start immediately after the three-week downtime. In view of the amount of data involved, this downtime was extremely short – the machine runtime for unloading, converting, and reloading the data objects alone took around two weeks. In the third week, various check and correction routines were first run before intensive batch activities began in order to import and post the payments received on enercity’s bank accounts. Two months later, the backlogs for all periodic processes relating to meter reading, billing, and invoicing had been completely eliminated.
All in all, the Hannover public utilities company is extremely satisfied with the way the project went. “The duration of 30 months in all may look comparatively long at first,” says project manager Gondermann, “but on the other hand, we made full use of this time to make sure we had the optimum solution, to carefully prepare for the system switch, and ultimately to make the changeover as non-intrusive and smooth as possible for the customers.”
Well equipped for future legislation
As far as they can be implemented today, the regulations relating to unbundling have been taken into consideration. Thus in the key areas of rates, posting, and statistics, the data and functions of “Grid” and “Sales” have been separated, or can be separated in future. As a result of this generic configuration, enercity will be able to modify the systems and processes to meet new legislation at a later date without excessive disruption – and the company is thus well equipped for future legislation. One interesting fact is that the Hannover public utility company chose to use a one-contract model, in which IS-U billing differentiates between services for “Grid” and “Sales,” but processes these in a single contract. The advantage of this over the two-contract method is that processing is much more efficient. According to Jörg Gondermann, the annual savings in the realm of processing are euro amounts running well into seven figures.