S/4HANA. Transform Utilities with SAP S/4HANA SAP SE or an SAP affiliate company. All rights reserved. Public

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1 S/4HANA Transform Utilities with SAP S/4HANA 1

2 AGENDA Utilities on SAP S/4HANA Capability and Value Proposition Overview 3 Customer Engagement, Billing, and Revenue Management Deep-Dive 6 Operational Excellence for Plants and Grids Deep-Dive 8 Financial Control Deep-Dive 10 SAP S/4HANA Solution Portfolio for Utilities 11 Value Proposition 14 Customer References

3 UTILITIES ON SAP S/4HANA OVERVIEW Transform your Firm s Digital Core with SAP S/4HANA Today s digital economy, there is immense pressure on utilities to do more for less. Utilities are facing new price pressures and competitive threats. New entrants into the marketplace have changed the way utilities deliver services, forcing them to adopt new approaches or face stagnant or declining revenue growth and margins. Digitalization of three fundamental elements customer engagement, asset management, and financial optimization is forcing utilities to rethink their business models and focus on how to drive revenue growth without corresponding growth in their employee base or, in other words, drive nonlinear growth. This new digital reality has a complex impact on utilities. On the one hand, digitalization drives a great deal of transparency and increasingly demystifies service offerings. It also fundamentally lowers the barriers to entry for a new breed of competitors. On the other hand, digitalization provides utilities with the perfect opportunity to leverage the digital energy network and rethink their interactions with customers. It allows them to scale their businesses in ways they could never imagine. It is important to recognize that, at the heart of all the threats, lies opportunities and digitalization is the best way to seize these opportunities, as it will allow utilities to serve their customers better than ever before. To succeed, firms will need to put in place a coherent digital vision with clearly articulated offensive and defensive strategies. In particular, they will need to address emerging business models, such as driving new energy services, providing utility-as-a-service, and managing distributed energy sources. To execute on this, utilities will not only need to reengineer their business processes, but they will also have to evaluate if they have the right technology platform that can deliver on that vision. This platform requires an IT architecture that provides both stability and long-term reliability for core enterprise processes and where change is happening on a constant basis we call this a bi-modal architecture. The digital core is the foundation for the core processes that need to run consistently and flexibly. It provides uninterrupted, realtime transactions and analytics, the ability to work with Big Data, and connectivity to line-of-business (LoB) extensions that enable supporting processes such as advanced customer engagement and enhanced energy services. SAP S/4HANA was specifically developed to represent the digital core in this bi-modal IT architecture. It provides utilities with a proven framework to adopt industry best practices while attaining operational excellence specifically across core customer engagement, asset management, and financial processes. Farys invested in SAP S/4 HANA to turn the complexity of its new multicompany existence into a straightforward way for nontechnical end users to access the information they needed. CILE SAP S/4HANA Finance offers CILE greater flexibility with the general ledger, simplicity of controls, support of outcome-based business models, and a correct overview of its inventory at all times

4 UTILITIES ON SAP S/4HANA OVERVIEW SAP S/4HANA Sources of Value The value from SAP S/4HANA comes through simplification of the user experience, architecture, and process. Simplified User Experience: Across all Devices SAP S/4HANA empowers call-center agents and field workers with an end-user centric, consumer-grade experience because, for utilities, it s the call-center agents that add value to customer engagement and field workers delivering operational excellence. SAP is driving simplification and innovation in how business users work with a role-based, consistent user experience available on any device. Simplified Architecture: No Aggregates, No Redundancies SAP S/4HANA s simplified data model provides an advanced digital data architecture that provides, in real time, a single source of the truth for both transactions and analytics. This enables extensive flexibility to adapt to changing business models for example, simulating the impact of business reorganizations in minutes rather than days. Simplified Processes: Key SAP S/4HANA Capabilities for the Utilities Industry Customer Engagement, Billing and Revenue Management Marketing, sales, and service management Omnichannel customer interaction Meter and grid operations Billing of energy and nonenergy services Comprehensive credit and collections Operational Excellence for Plants and Grids Bid and proposal management Project management Time and expense management Resource management Collaboration and knowledge management Finance Accounting and financial close Accounts payables and invoice management Cash and liquidity management Enterprise risk and compliance management Real estate and treasury management Finance integration and audit support Contract to cash *This is a subset of the complete industry portfolio shown later in the SAP S/4HANA Solution Portfolio for Utilities section. Helping ensure complete data across the general ledger, sub-ledgers, and logistics - 4-4

5 UTILITIES ON SAP S/4HANA OVERVIEW EXAMPLE: User Experience Simplification SAP S/4HANA enables an anywhere, any-device, mobile-first, role-based user experience that simplifies and enhances employee engagement and productivity, transforming the way customer engagement, billing, and revenue management gets done. SAP S/4HANA for Use in Customer Engagement, Billing, and Revenue Management Traditional ERP Multiple island solutions for products, marketing, sales, and services Lack of granularity for billing, invoicing, and collection process Loosely integrated self-service Reporting built per application area, not across it Product definition Marketing programs Self-service Sales Billing Invoicing Collections Extract to warehouse Sales reporting Billing reporting Cost/revenue reporting Cross-product and cross-service reporting SAP S/4HANA An intuitive user experience on any device, providing a single consolidated source of truth for all customerrelated information at the lowest level of granularity Fully integrated end-customer engagement for all channels Joined invoicing for all products and services Faster and better processing through enhanced capabilities of SAP S/4HANA More than smarter and faster reimagining work 2% 5% increase Customer satisfaction Significant increase New products and services One single point of entry 50% reduction Self-service complexity Master project Complete business partner transactional details End-to-end billing, invoicing, and collection Cross-product and cross-services analytics 5

6 CUSTOMER ENGAGEMENT, BILLING, AND REVENUE MANAGEMENT Typical Challenges Traditional ERP SAP S/4HANA Enhancements Benefits Difficulty in getting customer history information, which could lead to customer churn and a subsequent loss of revenue Inability to consolidate customer information and ensure accurate, up-to-date customer data Provides single, consolidated view of customer information through integration with the SAP Hybris Marketing solution Improved customer service Multiple, disparate front-end solutions with incomplete integrations lead to organization, not meeting its full revenue potential Using multiple or different transactions and systems Provides an anywhere, any-device, mobile-first, role-based user experience that simplifies and enhances employee engagement and productivity Increased user productivity Reduced time to propose Difficult to capture and utilize detailed measurement data from devices in the home or offices of the customer, like thermostats or other sensors, smart switches, and so on Inability to process large amounts of timeseries data for real-time business decisions Relevant data is often distributed over multiple or different backend solutions. Ability to store, access, and analyze structured and unstructured data in real time to drive decisions on the spot Increased detailed understanding of customer Limited ability to analyze and understand which products and services are profitable and which products and services are not Difficult to report profitability easily across all services due to information held in different reports and/or lack of reporting attributes Provides easy analysis of all services and identification of profitable service lines and customers with flexible reporting attributes Increased profitability Difficult to provide customers the ability for self-service with a consistent view of their information across all channels, including the call center communication channel with latencies for data updates Only providing a limited number of processes per channel Provides one source for all channels, allowing real-time updates to be visible immediately to all parties Provides all end-customer relevant processes to all channels Increased end-customer satisfaction by providing effective self-service - 6-6

7 UTILITIES ON SAP S/4HANA OVERVIEW EXAMPLE: SAP Predictive Maintenance and Service The SAP Predictive Maintenance and Service solution provides real-time health information of assets based on critical values and trends, thus allowing the most efficient asset maintenance strategies for better managing cost, risk, and performance. SAP S/4HANA and SAP Predictive Maintenance and Service Provide Operational Excellence for Plants and Grids Traditional ERP Time- and/or condition-based inspection and maintenance Real-time risk of failure and performance not known No optimization of cost, risk, and performance Time-based inspection planning Inspection Inspection triggers maintenance Maintenance SAP S/4HANA and SAP Predictive Maintenance and Service SAP Predictive Maintenance and Service allows for real-time monitoring of asset health and predicting failure before it happens. Maintenance orders are triggered just in time, avoiding unnecessary inspections and decreasing cost and risk of unplanned failure. More than smarter and faster reimagining work Asset health monitor Maintenance schedule based on real-time asset health status and failure prediction Maintenance -44% Lower unplanned downtime* -17% Lower annual service and maintenance costs* Higher return +28% on assets* *Benefits are based on early adopters of SAP S/4HANA or conservative outside-in benefits due to moving from a traditional ERP system to enhanced SAP S/4HANA + LoB/cloud capabilities. As each enterprise is at a different level of maturity, our recommendation is to work with you to determine the value proposition for your enterprise

8 OPERATIONAL EXCELLENCE FOR PLANTS AND GRIDS Typical challenges Traditional ERP SAP S/4HANA Enhancements Benefits* Lack of real-time view into maintenance activities, asset performance indicators, and health and safety information, which hinders timely decision-making Limited ability to analyze data by machines and sensors Inability to proactively plan maintenance activities and predict asset failure and spare parts requirements Inability to develop proactive safety measures Multitiered landscape consisting of the SAP ERP application, additional ERP extensions, and business-intelligence solution makes it challenging to obtain real-time view of maintenance activities as well as health and safety information Analysis of asset performance and EH&S information is based on past performance, lagging indicators, which increases the time to identify potential activities that can improve asset performance or reduce health and safety risks Maintenance of assets is scheduled based on asset conditions captured through asset inspections Sophisticated analytics are disconnected from real-time operational data, preventing a proactive maintenance strategy Real-time view for planners into ongoing maintenance activities with the ability to reschedule multiple times a day in order to better plan and schedule maintenance activities and achieve higher efficiency Improved performance of many transactions, such as scheduling of maintenance plans and material requirements Native integration of incident management and health and safety management with role-based intuitive user interface as well as embedded analytics SAP S/4HANA integrated with the SAP Predictive Maintenance and Service solution as well as SAP Asset Intelligence Network Increased return on assets Decreased unplanned asset downtime or outages Improvements in operational efficiency Reduced service and maintenance cost Increased first-time fix rate Reduced warranty cost Reduced EH&S management costs to share and learn best practices on installation, usage, and performance of equipment between various stakeholders Information sharing of asset information is only possible via direct interfaces, making it difficult to achieve effective collaboration among the stakeholders SAP Predictive Maintenance and Service enabling understanding of real-time health status of assets based on critical values and trends in order to predict upcoming problems, allowing implementation of the most efficient maintenance strategies Reduced accident and incident rate Increased EH&S compliance Reduced penalties and fines *Benefits are based on early adopters of SAP S/4HANA or conservative outside-in benefits due to moving from a traditional ERP system to enhanced SAP S/4HANA + LoB/cloud capabilities. As each enterprise is at a different level of maturity, our recommendation is to work with you to determine the value proposition for your enterprise

9 UTILITIES ON SAP S/4HANA OVERVIEW EXAMPLE: Process Simplification SAP S/4HANA provides reengineered and simplified business processes that can yield significant benefits, transforming the execution from multistep, batch-driven processes with latency in terms of key performance indicators to real-time processes with actionable insights to accelerate invoice processing, increase cash flow, and protect revenue assurance. SAP S/4HANA Revenue Assurance for Account Payables and Receivables Managers Traditional ERP Multiple batch processes and manual worklist creation Manager initiates report to analyze overdue invoices and write-offs Create list Manager prioritizes critical invoices for further processing Create manual worklist Business user processes clarification of invoice SAP S/4HANA Analysis available anytime in real time with lowest level of detail More than smarter and faster reimagining work Analyze and prioritize overdue items and write-offs and create worklists in one step Business user processes clarification of open items 5% 10% increase End-to-end process efficiency 20% 40% increase User productivity 40% 50% reduction Days sales outstanding - 9-9

10 FINANCE Typical challenges Traditional ERP SAP S/4HANA Enhancements Benefits* Delayed close activities do not begin until period end. Effort-intensive reconciliations and eliminations are performed, preventing an accurate intra-period depiction of the organization s performance. Multiple batch-run dependencies cause bottlenecks that delay downstream activities. Visibility into reporting is delayed as data is stored across multiple ledgers. Accounts payable and receivable managers need immediate and current overview of overdue items, write-offs and processing locks as basis for efficient clearing of critical items. The consequent monitoring of the collection success requires the consistent analysis of dunning processes based on most current data. Manual inconsistent processes are used for billing business solutions comprising services, products, and projects. High effort is needed to bring all data into one invoice Flexibility for adjusting invoice to client expectations is lacking. Periodic batch processes are required to provide realized revenue and margin reporting and not provided at detailed level. Multiple ledgers and subledgers are utilized that require time- consuming and error-prone reconciliations. Frequent delays in batch processing and postclose activities create protracted cycle times. Disparate ledgers without integration create accounting blind spots. Accounts payable and receivable managers have to initiate various batch reports to prioritize items and to create worklists for the further processing of critical items. Managers have to manually monitor the progress of the created worklists. Accounts payable and receivable managers lack consolidated overviews of the current success rate of dunning notes and effective follow-up tools. Adjustment and correction of invoices require the cancellation of the legal invoice and creating another billing run. Batch-driven billing processes directly invoice billable data available at a given time. Foundation for soft close for example, realtime derivation of profitability characteristics, single source of the truth, extension ledger Foundation for soft close for example, realtime derivation of profitability characteristics, single source of the truth, extension ledger Real-time processes such as revenue recognition, profitability analysis, cash allocation, and working capital analysis Predefined reports and configurable reporting tools to leverage general ledger, subledgers, and consolidation apps central finance function that integrates all ledgers and subledgers into one source of the truth Specific SAP Fiori app that enables real-time analysis of critical open items and write-offs and processing locks, which allows immediate creation of worklists for further processing a specific app allows continuous monitoring of these worklist items in real time Specific SAP Fiori app that provides an overview of the collection success (in percentage) within a certain time frame or related to a various dunning procedures and dunning levels Combination of different billable data into one preinvoice in an automated way 20% 40% reduction in audit cost* 40% 50% reduction in days to close annual books* 20% 40% reduction in general ledger and financial closing costs* 5% 10% reduction in business and operations analysis and reporting costs* *Benefits are based on early adopters of SAP S/4HANA or conservative outside-in benefits due to moving from a traditional ERP system to enhanced SAP S/4HANA + LoB/cloud capabilities. As each enterprise is at a different level of maturity, our recommendation is to work with you to determine the value proposition for your enterprise

11 SAP S/4HANA SOLUTION PORTFOLIO FOR UTILITIES In addition to customer engagement, asset lifecycle management, and financial control benefits provided by SAP S/4HANA, the digital core also provides native pre-built integration to allow firms to leverage SAP s complete portfolio of solutions to comprehensively address their needs demanded by today s digital economy. Processes are designed from the outset to flow end to end across the cloud-based solution extensions, listed in the white bands, and are fully integrated to the SAP S/4HANA Enterprise Management solution and are optionally deployed to address business needs. The solution capabilities in the dark blue band, the digital core, are delivered as part of SAP S/4HANA Enterprise Management. The lighter blue band, also in the digital core, are part of SAP S/4HANA Enterprise Management but added on as needed. Suite Energy Supply optimization Fuel management Scheduling and load management Sustainability Operational Efficiency for plants and Grids Mobile asset management Predictive maintenance and service Asset information collaboration Metering Meter lifecycle management Meter data management and operations Customer Engagement Cloud for marketing Cloud for sales SAP S/4HANA SALES Billing and Revenue Management Bill to cash for energy and water Bill to cash for energy services Omnichannel commerce and subscription billing Products Digital Core Products Sustainability management Accounting and closing operations Accounting Cost management and profitability analysis Financial planning and analysis Accounting and financial close Treasury management Receivables management Invoice management and accounts payable Environment, health, and safety Asset operations and maintenance Maintenance management Enterprise Management Operational purchasing Collaborative sourcing and contract management Invoice and payables management Supplier management Procurement analytics Meter administration and operations Energy data management Time recording Meter to cash for energy and water Nonenergy billing (SAP Hybris Billing) Order and contract management Bill to cash Customize applications Integrate apps, data, and processes Build new apps SAP HANA Cloud Platform Suite Governance, risk, and compliance for finance SAP S/4HANA sales Supplier collaboration Business network Guided end-user buying External workforce management SAP S/4HANA sourcing AND procurement Core human resources and payroll Talent management Time and attendance management Human capital analytics SAP S/4HANA human resources

12 SAP S/4HANA SOLUTION PORTFOLIO FOR UTILITIES An End-to-End Solution for Utilities Utilities need to manage the end-to-end lifecycle of service delivery. Engaging with customers continues to be important and challenging for both regulated and deregulated utilities. The challenge is twofold requirements change quickly, and it can be difficult to continue matching them to the possibilities provided by IT. E-commerce, social media, and omnichannel are terms that are becoming more and more relevant for utilities. Demand Customer Engagement Management Include External Data Any channel 360-degree view, profile Integrating IoT data from metering devices and other external sources All channels supported to view data and transact as appropriate Sensor data, and so on Consumption data Call center, interactive voice response, and self-service all access the same data Leverage 360- degree customer profile for next best action, recommendations, and so on Product and services Billingrelevant data Product Time-series configuration or discrete for billing data needed for billing Commercial data Contract, financial details, and so on Billing Invoicing Collection Billing for all products and services Convergent invoicing for one invoice to the customer Flexible, customerspecific credit, payment, and collections processes Develop talent based upon needed skills Historic consumption data and realtime view Sales and Service, Customer Profile, Next-Best Action Enterprise Management Digital core Internet of Things (IoT)

13 SAP S/4HANA SOLUTION PORTFOLIO FOR UTILITIES An End-to-End Solution for Utilities Utilities need to manage the end-to-end asset lifecycle, from building the assets to meeting energy demands, while efficiently and safely operating these assets through end of life. The business capabilities delivered with SAP S/4HANA, along with prebuilt native integration with LoB solutions, help ensure the process runs smoothly and efficiently across the end-to-end, total asset lifecycle management. SAP S/4HANA allows utilities to balance supply and demand, incorporate predictive maintenance analytics and drive sustainable revenue growth while maintaining profitability. Build Operational Excellences for Plants and Grids Maintain Opportunity and risk insight Cost management Opportunity integrated with bid in SAP S/4HANA Predictive maintenance and service utilities add-on integrated into SAP S/4HANA process Predictive maintenance and service Third-party labor Manage opportunity and risks while gaining a 360-degree asset view Track real-time costs vs. budget Plan and design Analyzing bids and contractor engagements Procure and build Project and systems management Commission Operate Maintain Decommission Starting up and manage the as-built configuration Delivering operational excellence and safety Real-time IoT predictive maintenance End of life Deliver IoT-based predictive analytics Leverage talent networks for planned outage and special skills Business Development Enterprise Management Digital core Supply Chain

14 SAP S/4HANA UTILITIES VALUE PROPOSITION SAP S/4HANA provides utilities a proven framework to adopt industry best practices while attaining operational excellence across customer engagement management, asset lifecycle management, and financial processes. Strategy Enablement Obtain a 360-degree view of the customer Accelerate creation of new business models Enter new energy markets and services Accelerate M&A synergy Run live (SAP Digital Boardroom) Achieve greater speed and agility Run Simple (master complexity) Manage risk and help ensure compliance Optimize energy consumption Empowered Employees Establish finance as a partner for strategic decisions instead of just for collecting numbers Increase in billing and revenue management productivity and faster adoption through user-tailored UIs enabled by SAP Fiori Strategy enablement Empowered employees Business benefits IT benefits and total cost of ownership Business Benefits* ROI in the first year through cost avoidance and productivity improvements Convergent billing and invoicing unifies billing for any kind of commodities and services Up to 10% increased project manager productivity 25% 50% increase in utility field worker productivity Single, real-time view of plant and business performance with real-time analysis of asset performance 5% 10% reduction in business and operations analysis and reporting costs 40% 50% reduction in days to close annual books 20% 40% reduction in general ledger and financial-closing costs 20% 40% reduction in audit costs IT Benefits and Total Cost of Ownership Reduced data footprint Merging of online analytical processing and online transaction processing Elimination of many desktop clients Lower testing costs Simplified landscapes Native integration *Benefits are based on early adopters of SAP S/4HANA or conservative outside-in benefits due to moving from a traditional ERP system to enhanced SAP S/4HANA + LoB/cloud capabilities. As each enterprise is at a different level of maturity, our recommendation is to work with you to determine the value proposition for your enterprise

15 CUSTOMERS ARE ACHIEVING VALUE FROM SAP S/4HANA Farys Farys is going through a big digital transformation in its growing and complex water business: SAP Business Suite powered by SAP HANA and SAP S/4HANA Finance are Farys new platform and foundation for long-term performance. Farys needed to leverage some of the new capabilities offered by SAP S/4HANA Finance notably asset accounting and new general ledger capabilities that can be turned on for live postings in real time. CILE In order to maintain compliance with international quality standards, to respond to the geographic expansion of the company, and to increase and improve the mutual coordination of all the processes it uses, CILE had to thoroughly overhaul its IT environment. A key driver to move to SAP S/4HANA is the need to support new business models and a correct overview of their inventory at all times. SAP S/4HANA Finance offers CILE greater flexibility with the general ledger, simplicity of controls, and support of outcome-based business models. Company Farys Industry Utilities SAP solutions SAP S/4HANA Finance SAP Fiori UX Customer Web site Click here for the source reference Company CILE Industry Utilities SAP solutions SAP S/4HANA Finance Customer Web site Click here for the source reference

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