Knowing and Retaining Customers

October 27, 2003 by admin

Several automobile manufacturers have assembly plants in the municipality of Homburg/Saar. This situation affects the services and customer structure of Homburg’s municipal utility. About 60% of its sales volume comes from special contract customers. But deregulation of the energy market has led to intense competition for precisely this group of customers. That’s why it’s important for the utility to have up-to-date information on the usage patterns of its customers. That’s the only way it can develop effective operating and pricing strategies along with methods to retain customers. The ability to have consistent data in real time is also important for producing statements quickly.

Three Steps into the Future

Before it decided to adopt SAP in 1998, Homburg’s municipal utility used software from an industry specialist. “After 20 years, the application had reached the end of its life cycle,” reports Hans Albrech, director of the data and systems technology department, which includes IT, computer process control, and graphical data technology. The company had also enhanced the solution with its own developments. Overall, applications that ran in isolation characterized the system landscape.
That’s why the company developed a three-stage plan for an IT landscape that could meet its future needs. The first step converted accounting to SAP R/3 in July 2001. The second step implemented SAP for Utilities in January 2002. In the third and current step, the company worked with ScaleOn, an IT consulting firm of the Bayer Group, to realize a data warehouse based upon mySAP Business Intelligence.

Inadequate Reporting

Along with the decision to implement SAP for Utilities, the municipal utility also faced the question of reporting: management and sales require up-to-date data, and the company had to fulfill reporting requirements with agencies and associations. It needed a data warehouse. Previously, several departments provided business data to controlling. “It was pure manual input, nothing was combined automatically,” reports Christian Sefrin, deputy director of IT. When the data arrived depended to a great extent upon the person involved. “We could produce meaningful information on the business for a particular month only at the end of the following month. That was too late,” recalls Sefrin.
SAP BW was convincing because of its user-friendly reporting, the concept of InfoCubes, and, above all, because of the data flow from SAP R/3 and SAP for Utilities applications into the data warehouse. “ScaleOn used a live demo to show us that we would always have up-to-date information,” says Hans Albrech. A reference visit to the municipal utility in Lüdenscheid and the user friendliness of the system contributed to the decision-making process. “Anyone who’s familiar with drag and drop and Microsoft Excel can work with SAP BW easily,” says Albrech.

Advantage: Business Content

The business content within SAP BW proved to be a big plus during the project. “Regarding asset and transaction statistics, we’re happy that SAP thought things through ahead of us,” says Sefrin. “We could count on predefined interfaces and profited from an easily understood data model.” The municipal utility took some elements from the predefined data model so that the company-specific data model could be created within two weeks. “That cut the project time by more than half,” says Markus Indetzki of ScaleOn. He adds, “No other software manufacturer delivers that kind of qualified business content. Midsize utilities thus have an option to implement SAP BW. If the project runs for six weeks or six months does make a difference.” The project began in September 2002, and the go-live occurred shortly before Christmas.
The solution currently contains about 3.5 million data records with a volume of some 90 GB. Aggregation of the data is hardly possible given the level of detail in the required analyses. “Performance does suffer as a result. But the knowledge gained justifies short wait times,” reports Sefrin. The six users of SAP BW come from accounting, controlling, and sales (two of whom are power users). Reports are sent electronically to management, external entities, and, upon request, to customers.

Manifold Improvements

The Homburg utility has replaced its existing reports 1:1 with SAP BW. Users can create reports for agencies and associations at any time with the touch of a button. That alone met important goals of the project. But SAP BW is also linked to additional strategic advantages:

  • <sum> With SAP BW, master data reporting has been moved to the contract area of business partners. This reporting system allows user-friendly analysis of all relevant and contract-specific data on business partners and the ability to present the results in lists. It also stores general information on rates, the results of individual meter readings, and special agreements on contracts.
  • With SAP BW, the Homburg utility can prorate acquisition costs among customers. Together with the revenue information from sales statistics, this feature supports the accounting of marginal income.
  • Special contract customers can be analyzed according to sales, contract validity dates, cancellation periods, and initial costs. Whether or not the customer contributes to the company’s return is clear before a contract is renewed.

In sales with large-volume customers, the utility also profits from detailed and flexible reports on the acceptance of energy and services. “Today we can meet the demands of our customers for a transparent business relationship. As part of energy management, we’re able to highlight opportunities for optimization. This ability contributes to customer retention,” says sales representative Jörn Buchheister. Because SAP BW always provides up-to-date numbers on a customer’s usage, the utility is also well-equipped for last-call contract awards. “Today we know exactly whether or not we have wiggle room with prices”, says Buchheister. As a power user of SAP BW, he creates reports with various levels of detail.
And Sefrin adds, “Our numbers are water-tight today. Decisions are not made by gut instinct, but on the basis of documented data. In this manner we can prove the profitability of individual customers, and we know in real time how revenues and sales develop. We run marginal income computations at the customer level every month, so we can identify customers who are especially important.”
Contract sums that have not yet been invoiced are taken into account in quarterly reports for special contract and regular customers. This process simplifies a preview of the entire year. “We have new ideas every day, and SAP BW is so flexible that we can convert the ideas in reports ourselves,” summarizes Sefrin on the advantages of SAP BW.

All Expectations Fulfilled

SAP BW has already amortized itself: better access to information critical to success has paid for itself. The utility assumes that the contribution of SAP BW to the company’s success will continue to grow. “The project fulfilled expectations in every consideration – not the least because of the experience of ScaleOn with the solution and the industry and its expert project management,” says Albrech.
The next step will use the advantages of SAP BW in controlling in profit center accounting. SAP BW will also play a rule in the utility’s enhancement of its customer orientation with the assistance of analytical customer relationship management (CRM). “SAP BW has contributed to more customer orientation because it has already laid the analytical foundation,” says Sefrin. “In the future, we’ll be able to improve our ability to look at our customers from various perspectives.”
With its three-stage SAP project and particularly with SAP BW, the IT department at the Homburg utility has gained multifaceted knowledge of SAP solutions, knowledge that it will offer other municipal utilities in the future.

Udo Kessler

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