Snags delay Contact Energy's SAP CRM rollout

Snags delay Contact Energy's SAP CRM rollout

Summary: Electricity and gas utility Contact Energy seeks a "consistent customer experience" from new CRM and billing system.


Contact Energy has been forced to delay the rollout of its retail SAP CRM and billing system after the final stages of project testing indicated improvement was needed.

The SAP system was due to go live by the end of 2013 but has been postponed to later in the first half of 2014.

"During the final stages of project testing we identified areas where we wanted to improve things further to ensure a consistent customer experience – something that’s vitally important to us," a spokesman said.

Contact Energy has been seeking to simplify its technology environment by deploying SAP and rationalising legacy systems.

"The project, which is expected to take three years to complete, aims to reduce technology costs by
approximately NZ$5.5 million per annum," the company told shareholders in its 2013 annual report.

"Once our new customer service system is completed late in 2013, our core SAP asset will completely replace 35 legacy applications."

The new customer system in Contact's retail business was expected to help cut customer churn and complement earlier SAP implementations in finance and operations. SAP's asset management module was also implemented in in 2012.

The exact cost of the multi-year overhaul is not known, but one news report in 2010 speculated it was over NZ$100 million. That report also said Contact Energy's board was understood to have approved NZ$60 million in spending to replace its core systems, plus NZ$20 million to cover overruns.

After reporting a 5% increase in after tax profit to NZ$199 million last year, Contact's CEO Dennis Barnes told Radio New Zealand the company was working hard to keep retail customers.

Despite the strong bottom line result, customer numbers fell 1% to and retail sales dropped 3%.

Discounts and the new IT system were key to improving that performance.

"We've churn levels at 20%. That means we lose 100,000 customers a year and have to gain 100,000 customers a year. That's a lot of transactions and that's a lot of cost," Barnes said.

2013 also saw Contact Energy compllete what it described as a substantial upgrade of its infrastructure.

"This upgrade will enable us to take advantage of modern technology options and assist with the simplification of our technology environment," the company said.

"The focus on core assets will also bring improved technology and data integration across our business and enable us to address current and future business needs."

Contact Energy operates 11 power stations and has net assets of NZ$3.2 billion. Contact Energy is 52% owned by Australia's Origin Energy.

Topics: Enterprise Software, SAP, New Zealand

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  • Contact Energy's SAP CRM rollout

    Three years is a long time for any SAP project. My understanding was the initial go-live was planned for end of 2012 and it was delayed until end of 2013 for the same reasons. I remember there was an initial reaction from local IT companies when the prime contract was awarded to Wipro an Indian based company, especially when there was good local and expat SAP utilities talent available in NZ. But I believe this was also influenced from Australia's Origin Energy. Perhaps this current practice of outsourcing to cheap offshore resources is not as smart as the overpaid executive management believe it is. Any argument about no talent available onshore is rubbish. Anyhow, I'm sure management will get a bonus and pat on the back for job well done when it finally goes live.