AGL chief information officer Owen Coppage has led the organisation’s technology framework through
an extraordinary transformation over the last seven years, with the company becoming a leading global example of what the utilities industry can achieve using SAP and tapping into the increasing tsunami
of data. He shared the journey with Freya Purnell.
AGL’s transformative journey with SAP began back in 2007, when the company commenced a program to consolidate all its customer information into a single SAP environment. The four-year Project Phoenix saw three million customer accounts transferred from legacy systems to the SAP system, which included CRM IS-U as the billing engine, XI and BW on a Microsoft platform. At the time, it was – and still is – the largest utility billing system in SAP on Microsoft.
Project Phoenix resulted in considerable operating expense savings, including a reduction in the ratio of bad debts to revenue by a third over the period 2009 to 2012, and a reduction in its number of overdue invoices. However, most importantly it positioned AGL for the future.
“We were looking to the future of being a very capable competitor in the energy market. We wanted to be in the top quartile of the competition, and SAP was a very important component of that,” Coppage says.
AGL completed this consolidation phase in 2010, and since then, has focused on maturing its SAP capability and fine-tuning processes.
“That was the simple things like getting bills out on time, making sure that we are delivering on the promise that we make to our customers, and to have that SAP environment operating at what I consider to be a world-class level of performance,” Coppage says. “We have certainly achieved that.”
Having reached the point where AGL’s SAP environment and competitiveness were meeting market expectations, it was time to move to the next level. Project Spectrum, completed in 2012, involved moving 22,000 commercial and industrial (C&I) customer accounts onto the same SAP instance as its consumer market. It was a unique move in the utilities market.
“It simply recognises the convergence of our processes and that the data you’re dealing with in the consumer and the C&I market is just getting a little closer, as a result of smart meters being introduced into the consumer market,” Coppage says.
Project Spectrum resulted in a reduction in the time required to bill all C&I customers from 10 days to a single day. “So it’s quite a step change in capability and how we can better engage with our market,” Coppage says.
Betting on HANA
The rapidly increasing number of smart meters in Victoria and South Australia meant that AGL was being inundated with more data, which needed to be more effectively analysed, in the most part to provide better information to its trading and forecasting business.
The obvious SAP solution for this challenge was in-memory platform HANA, but it was still quite early days for the technology. Having completed a proof of concept to determine whether it could deliver value and set some benchmarks, AGL purchased HANA, and together with SAP and partner Tata Consultancy Services (TCS), implemented the platform over a 14-month period using an Agile methodology.
“From our merchant energy business, we identified approximately 92 use cases, and broke that up into 14 sprints and delivered these over time,” Coppage says.
One of the issues was the shifting sands of the HANA platform itself – still at that point undergoing regular revisions.
“It would be fair to say it was quite challenging – it was new technology, not a whole lot of resource available that understood that technology, so the partnership and way that we worked with TCS, SAP and our internal business people from merchant energy really made that successful.”
The Agile approach has also become a standard choice within AGL’s delivery methodologies, and employed for other projects.
“Of course, Agile isn’t necessarily any cheaper, and it’s tougher on the organisation as a whole, because there’s no real contingency within the schedule, you’re doing things at a much faster pace, and it requires usually the best people from the business to be involved through those sprints,” Coppage says.
Data driving utilities further
The utilities sector is often highlighted as a prime beneficiary for the benefits of merging and analysing different data domains. AGL is not only using big data to inform its forecasting business, but to help customers better manage their energy usage.
HANA was implemented at AGL as part of an overall data intelligence program, which included smart metering analytics and the development of My AGL IQ, a consumer-facing energy usage benchmarking tool.
AGL had to decide whether to buy or build this capability, but the option closest to the company’s requirements would only cater for customers with a certain type of meter.
“When you’re dealing with the consumer market, it was really important to us that AGL was seen to be providing a competitive experience that covered the whole market,” he says.
Together with Accenture and using SAP technology, AGL developed My AGL IQ, which caters for gas, electricity and solar customers across all states. Combining existing AGL customer data with information provided by the customer though an online Home Profile, My AGL IQ places customers into a cohort of similar households within a defined geographic region. The application also brings in weather data from Weatherzone to overlay on the customer’s profile.
Having the tool run on an in-memory platform means customers can not only compare their usage with similar consumers, but can also look at how they have used their energy over different time periods, from 24 hours up to a year. Combined with the weather data, consumers can see how temperature fluctuations and seasonal changes affect their energy demand profile.
Coppage says HANA has been a critical piece of technology within AGL’s suite.
“We might not have used it in a way that everybody thought we should use it, but we’ve used it in a way that creates a competitive advantage for us. We want to improve productivity, drive out cost, and create new capability that we can apply to other parts of our business – that’s all part of the HANA story.
“You always face the choice about buying or building, and this is one of those things where you should build. The analytics capability needs to sit within our business, to support our understanding of how we operate in this market against our other competitors.”
Next on the agenda for AGL’s SAP program are projects for the merchant energy business, looking at how to bring to market new services, and expose more data and information for better and faster decision-making.
“Each one of those things is probably not big in its own right, but they’re incremental and they add to our competitive posture in the market,” Coppage says.
An example is the introduction of flexible billing, which would enable customers to move to monthly billing and choose online the due date for their bill.
Sticking close to SAP
Throughout this journey, AGL has fostered its relationshipwith SAP by being part of the Global SAP Customer Advisory Council for Utilities, for which it holds the position of co-chair.
As a major player in a highly competitive deregulated energy market, AGL can help to set the future agenda and influence SAP’s solutions on utilities on a global scale. This close relationship has allowed them to stay ahead of the market in implementing new technologies, such as NetWeaver Gateway, which is playing a key role in AGL’s newly implemented digital channel platform.
“That’s a relatively new piece of technology, and we are using Gateway in a way that SAP hasn’t quite thought about. Their original reference architecture for our whole digital channel platform came out of a piece of work that we did within the Customer Advisory Council and alongside the key
SAP architects,” Coppage says.
As well as the relationship with SAP, internal relationships have also been key to Coppage’s success as CIO of AGL. In particular, he works closely with the group general managers of the retail and merchant energy businesses.
“I need to be absolutely alongside [the head of retail], because all of the things he wants to do invariably need to be delivered using some form of the technology that we already have. He’s not really successful without me, I’m not really successful without him,” Coppage says.
“The merchant energy side of our business is just as important but in a slightly different way. The other important element is the relationship with the head of people and culture – that goes to the internal capability of our business, and IT as a function working hand in glove with the people function.”
Having achieved a leading position through its business transformation program, Coppage says AGL’s guiding principle for application decisions is starting from a ‘why not SAP?’ standpoint.
“We’ve really followed a pragmatic approach and that’s about simplification and reuse,” he says. “We’re always, as part of our discovery phase through building up a scope of design, looking to reuse what we already have in the SAP environment.”
And this approach has certainly paid off.
“I’d be quite comfortable in saying we are two years ahead of our competitors in that market,” Coppage says. “When I sit on that customer council, on which there are 20 members from across the world, and we’re sharing ideas and plans about what we have completed and what we’re doing, it’s clear to me that we are well-positioned.”
This article was first published in the Inside SAP Yearbook 2014.
