Severn Trent Water cuts costs with total asset management solution from SAP and IBM

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1 we know they know Severn Trent Water cuts costs with total asset management solution from SAP and IBM Overview The Challenge Severn Trent Water is determined to improve quality and enhance services while keeping customers bills low. To make this possible, it is running a 2.45 billion asset investment program over five years, designed to cut operational expenditure, provide an integrated view of the business, and reduce support and maintenance costs. The operational efficiencies required across the business were being constrained by inflexible systems. The Solution Severn Trent Water eliminated more than 120 separate asset management applications and databases by migrating to SAP ERP solutions, a strategy that will ultimately cover all business operations. The initial components include financials, controlling, procurement, asset management, SAP Employee Self Service, SAP Manager Self Service and SAP ERP Human Capital Management, with SAP NetWeaver Portal providing browser-based access from virtualized and remote desktops. SAP NetWeaver Business Warehouse has also been implemented to deliver operational and capital program visibility and extend management control. The Benefits The combination of the asset management and human resources capabilities provided by the SAP applications allows Severn Trent Water to integrate information sources. This helps it to predict, plan and schedule maintenance and allocate correctly skilled work crews with the right spare parts for each specific task. This approach increases first-time resolution rates, which results in lower operational costs and increased service availability. Use of SAP Resource and Portfolio Management is estimated to improve capital efficiency by 20 percent. On-site updates of asset condition and work completed enables automated replenishment of parts used. Remote working allows staff to update hours worked and confirm days off, which in turn feeds the work planning system, determining when and to whom the next jobs are allocated. The large capital program can be managed with greater visibility and control, enabling Severn Trent Water to deliver planned infrastructure changes and maintenance at a lower cost, with endto-end asset management that helps to reduce the total cost of ownership of assets. Ultimately this delivers improved services to its customer base. Key Solution Components Industry: Utilities Applications: SAP ERP 6.0 components, including financials, controlling, procurement, supply chain management, asset lifecycle management, project management, planned maintenance, SAP ERP Human Capital Management, SAP Employee Self Service, SAP Manager Self Service, SAP NetWeaver Portal, SAP NetWeaver Business Warehouse, SAP Supplier Relationship Management, SAP Customer Relationship Management, SAP Resource and Portfolio Management, ClickSoftware ClickScheduler Workforce Management Services: IBM Global Business Services

2 IBM Global Business Services presented a clear budget based on an agreed and comprehensive business case, and was able to bring process accelerators, the right kind of people and a progressive culture that would drive the program. provides high-quality drinking water to 7.4 million people and sewerage services to 8.5 million people in the UK. The company achieved revenues of more than 1.3 billion and profits of over 280 million in 2009, and employed 5,624 people. Water and sewerage services in the UK are regulated by Ofwat, which sets demanding targets for customer service, prices, quality and many other Key Performance Indicators (KPIs). Within the framework set by Ofwat, Severn Trent Water realized that it needed to have a strategy for business transformation in order to achieve its three business goals of delivering the lowest charges, providing great service, and attracting and retaining the best people to do the job., Chief Information Officer at Severn Trent Water, explains: Wrapped around those three goals we recognized that we had to redesign our business processes, train our people, and deploy new technology to enable that to happen. Severn Trent Water reviewed key operational areas in three work streams: processes, locations and infrastructure. For example, lessons from the automotive industry showed the benefits of creating systems that present complex management information in a graphical manner. Alongside the lean-thinking techniques and a culture of continuous improvement, we saw how we could dramatically improve our business processes. Fresh thinking about locations revealed that a new central office with increased mobile working and collaboration in agile teams would create a more responsive organization, says. For Severn Trent Water, with thousands of miles of pipe, pumping stations, treatment works and buildings to repair, maintain and renew, asset management is one of the largest cost centers in the business. This functional area is the focus of a 2.45 billion, fiveyear project. Enabling this truly enterprise-wide approach to asset management would require suitable infrastructure. We wanted to standardize onto a single ERP solution and adopt best practices, remove more than 100 legacy applications and interfaces, and subsequently remove the operational support and maintenance costs. This meant streamlining the business processes, simplifying the

3 architecture, and enabling consistent reporting to identify and drive efficiencies. Moving to centralized ERP Severn Trent Water considered purchasing a series of best-of-breed applications with suitable integration middleware, but concluded that this approach would generate considerable implementation costs, and that operational expenses from multiple vendors would be hard to control. An ERP-based approach would cure information integration issues, meet Severn Trent Water s standardization objectives, and enable business process optimization. Due to the scale and scope of the project, Severn Trent Water was legally obliged to request tenders through the Official Journal of the European Union for the ERP applications and the implementation partner and systems integrator role. comments: Following the detailed tender process, a key factor was evidence that SAP has a track record of successful deployments into water utilities in the UK. For Severn Trent Water, SAP offered the best back-office fit, covering areas such as procurement, human resources and finance, as well as the key resource planning management and asset management applications. Additionally, to complete the workforce planning and management component, we selected ClickScheduler Workforce Management from ClickSoftware, an SAP partner, which is closely integrated with the SAP applications. To select a systems integrator, Severn Trent Water focused on evidence of capability both in SAP software deployment and in the water utilities sector. IBM demonstrated recent success from a similar SAP deployment at a UK water utility. IBM Global Business Services was able to show that it would work with us to ensure that we maintained forward momentum and completed the project on time, says. We were very concerned that projects such as this can drag on and run into cost overshoots. IBM Global Business Services presented a clear budget based on an agreed and comprehensive business case, and was able to bring process accelerators, the right kind of people and a progressive culture that would drive the program. Industry-specific expertise Working in most cases at the same locations, IBM applied its Component Business Modeling (CBM) technique, tailored to the UK water industry, to understand and analyze the processes and technology being used in different areas. This unique IBM approach enabled both Severn Trent Water and IBM to identify areas of improvement, standardize and streamline operational processes, and establish self-service techniques and tools for employees and managers across the organization. IBM Global Business Services assisted with the blueprinting, detailed design and build of the entire SAP application solution. This touched every area of configuration, including enhancements to meet specific SAP Resource and Portfolio Management will directly assist in meeting capital efficiency KPIs, with an efficiency improvement of around 20 percent. Increased speed of response to customer calls and faster infrastructure repairs will contribute to reducing customer complaints. SOLUTION LANDSCAPE Software: SAP ERP 6.0 components, including financials, controlling, procurement, supply chain management, asset lifecycle management, project management, planned maintenance, SAP Human Capital Management, SAP Employee Self Service, SAP Manager Self Service, SAP NetWeaver Portal, SAP NetWeaver Business Warehouse, SAP Supplier Relationship Management, SAP Customer Relationship Management, SAP Resource and Portfolio Management. Microsoft SQL Server, Microsoft SharePoint. Users: Full user base 5,800

4 needs of the UK water industry. In addition, IBM assisted with the training, change management, communications, organization and project management of the program. The program is still ongoing, but so far it seems to have been a success. Severn Trent Water and IBM Global Business Services worked very effectively together. We were highly focused in our drive towards the end date to deliver a high quality solution and start enjoying the business benefits, says. Benefit-focused management meant that we started to reap the benefits of SAP even before implementation, as we were able to halt investment into systems that were planned to be decommissioned. The step change in process improvement, brought about through the new technology, directly helps us to repair leaks more quickly, contributing to an improvement in our leakage KPI. SAP Resource and Portfolio Management will directly assist in meeting capital efficiency KPIs, with an efficiency improvement of around 20 percent. Increased speed of response to customer calls and faster infrastructure repairs will contribute to reducing customer complaints. Severn Trent Water implemented a single central SAP ERP instance. The core applications include financials, controlling, procurement, supply chain management, asset lifecycle management, project management, planned maintenance, SAP ERP Human Capital Management, SAP Employee Self Service and SAP Manager Self Service. SAP NetWeaver Portal allows staff on the move between offices or on the road to access key SAP applications, such as SAP NetWeaver Business Warehouse, SAP Supplier Relationship Management, SAP Customer Relationship Management, and SAP Resource and Portfolio Management (SAP RPM). SAP RPM replaces a raft of small applications that manage our five-year infrastructure investment program, says Myron Hyrcyk. The application s integration of project planning, resource management and cost analysis allows us to drive out cost efficiency for our capital program essential to meet the targets our business plan and regulator demand. Integrated service management To address its asset management challenge, which is a critical component in meeting its strategic business objectives, Severn Trent Water combines the functionality of the SAP asset management and human resources applications to provide integrated service management. For example, the thousands of miles of pipe, pumping stations, treatment works and buildings all require repair, maintenance and renewal. Work crews with specific skill sets, tools and spare parts must be allocated in the most efficient manner possible, both to maximize the utilization of existing assets and to ensure maximum possible service to customers. In the past, with asset data stored and managed on more than 100 separate systems, the maintenance program was largely responsive, with no overall Without the SAP applications, Severn Trent Water would not be able to meet its business challenges or meet the demanding standards set by the regulator.

5 view of asset condition, work planning, resources or teams required. Using the integrated SAP applications, Severn Trent Water is now able to predict, plan and schedule maintenance for all its assets from a single system, preparing a single task list. With this data, managers allocate correctly skilled work crews to each task, equipped with the right tools and spare parts. This integrated approach increases first-time resolution rates, with fewer return journeys for missing equipment or parts. Asset utilization has risen, and operational costs have decreased, with increased service availability. Workers use laptops to access a predictive work list looking forwards eight hours, including integrated mapping to guide them to the correct location. Staff can also reach the employee self-service portal, removing the need for trips to the office, for example to book time off, update personal details, and confirm training attendance. This in turn ensures that the work scheduling system only allocates staff on the days they are actually available, and selects appropriately trained personnel for each task. service response for example, fixing leaks and burst mains. Workforces out on site can be located and re-routed to reach urgent tasks more efficiently, with full visibility of the crew, its equipment and skills to ensure that the team dispatched will have the ability to deal with the issue. Meeting KPI targets Severn Trent Water monitors and reports on its key performance indicators to Ofwat. Critical factors include water quality, reducing leaks, service availability, environmental impacts, customer service, and pricing among others. Without the SAP applications, Severn Trent Water would not be able to meet its business challenges or meet the demanding standards set by the regulator, says. Working closely with IBM Global Business Services, Severn Trent Water has deployed an integrated business solution that controls every aspect of operations, right through to finance and human resources, which helps us to achieve our business goals and move onwards to the next phase of lower cost operations. Working closely with IBM Global Business Services, Severn Trent Water has deployed an integrated business solution that controls every aspect of operations, right through to finance and human resources, which helps us to achieve our business goals and move onwards to the next phase of lower cost operations. Completing the loop, crews send on-site updates of asset condition, parts used and work completed, and back-office systems enable automated replenishment of inventory to avoid stock-outs, again helping to maximize first time resolution of issues. The same solution applies to unplanned maintenance, where dynamic rescheduling during the day optimizes workforce efficiency and

6 IBM Deutschland GmbH D Stuttgart ibm.com/solutions/sap IBM, the IBM logo, and ibm.com are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of other IBM trademarks is available on the Web at Copyright and trademark information at copytrade.shtml Intel, the Intel logo, Intel Xeon and the Intel Xeon logo are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries. UNIX is a registered trademark of The Open Group in the United States and other countries. Linux is a trademark of Linus Torvalds in the United States, other countries, or both. Microsoft, Windows, Windows NT, and the Windows logo are trademarks of Microsoft Corporation in the United States, other countries, or both. Other company, product or service names may be trademarks, or service marks of others. This case study illustrates how one IBM customer uses IBM and/or IBM Business Partner technologies/services. Many factors have contributed to the results and benefits described. IBM does not guarantee comparable results. All information contained herein was provided by the featured customer and/or IBM Business Partner. IBM does not attest to its accuracy. All customer examples cited represent how some customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics will vary depending on individual customer configurations and conditions. This publication is for general guidance only. Photographs may show design models. Copyright IBM Corp All rights reserved. Copyright 2010 SAP AG SAP AG Dietmar-Hopp-Allee 16 D Walldorf SAP, the SAP logo, SAP and all other SAP products and services mentioned herein are trademarks or registered trademarks of SAP AG in Germany and several other countries. SPC03264-GBEN-00 (June 2010)

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