More than £500m is expected to be invested in enterprise resource planning (ERP) services in the UK utilities industry over the next two years, looking at only those organisations operating on or moving to the SAP platform, says Deloitte Consulting's Mark Edwards. Set against a backdrop of industry consolidation, many European utility parent companies are looking to standardise processes, improve customer experience and reduce the total cost of IT ownership.
Most utility companies have already embarked on an ERP journey. Typically, this has meant implementing general ledger and procurement systems at the beginning, but many are now looking to extend ERP into new areas, such as customer relationship management, customer billing, asset management, and the integration of new metering technologies.
Standardising corporate processes through ERP technology, when implemented well, can bring various benefits. Whether it is faster and more effective integration following merger or acquisition, an ability to move to shared service centres, or improved business decision-making through supplying transparent and accurate business data, it will drive utilities to improve their overall performance by encouraging best practice in their front and back offices.
Utility companies have benefited from a more commoditised ERP industry, where skilled resources are easier to come by and less expensive than before. Near-shore and off-shore arrangements can also reduce the cost of implementing and then running these systems. But the risk of business disruption often associated with these projects calls for some caution - large, ambitious projects often come with increased risk and have more damaging consequences if they fail.
Critical success factors include companies treating ERP as a business-led initiative rather than just another, albeit large, IT project. It is also imperative to define a robust business case upfront and then ensure, through strong governance, that the project is managed against this throughout its lifecycle. Too often, the goal at the coalface of a project becomes one of simply "going live" rather than focusing on the underlying business rationale. There are many international examples of successful implementations that UK utilities can look to and learn from when implementing these modern business solutions.