The chief information officer of TGC-7 about implementation of mySAP ERP and SAP BI

TAdviser: JSC Volga TGC, as well as many other energy companies of Russia, was created by a join path of less large companies – combined heat and power plant, thermal networks, etc. Many of them had the automation systems covering either all cycle of management, or separate blocks. What systems you considered optimal to save what to replace? Why?

Dmitry Sergienko: Yes, it is valid, assets of power supply systems of the Samara, Saratov and Ulyanovsk regions, as DZO - JSC Orenburgskoy TGC were a part of JSC Volga TGC. Undoubtedly, "scrappy automation" took place. If to speak about an accounting and inventory control, then in the Samara region CIS of "IKAR" (developer - Comsoft, Togliatti), in Saratov – the AIS Integrator and the systems of own development, in Ulyanovsk – Parus was used. Regarding planning and the cost accounting on repair other software packages integrated with the accounting systems only in an insignificant part were used. Therefore it was not necessary to speak about automation of all cycle of management.

At that stage the decision in target model full automation of financial and economic activity was made to implement based on the uniform software product of the class ERP. From the old systems it was decided to leave only a billing system Energoofis (developer - Infopro, Samara) and a number of industry software products which implementation of functions in an ERP system we considered inexpedient.

TAdviser: What served as an incentive to start "a new round" of automation – implementation of uniform complex ERP? Who was an initiator, the business customer?

Dmitry Sergienko: First of all, requirement dictated the new terms of business after reforming of the industry. JSC Volga TGC was faced the need of centralization of a number of functions and gains of control of processes of the branches. For this purpose adjacent works on a unifitsikation of business processes and optimization of organization structures were necessary. As the customer the CEO – Vasily Nikonov acted. Support of the first person of the company also allowed to implement all drawn-up plans.

TAdviser: How the ERP system choice was performed? What systems were considered in the beginning what remained in short-list? What criteria were the main when choosing the solution? Assessment was how exactly performed (expert evaluation, data on functionality and performance, test runs and measurements provided by the customer on real data)?

Dmitry Sergienko: There were several criteria. Main — complexity of the solution, a possibility of automation of all processes in interrelation with each other. The following criterion — reflection of industry specifics in a system, experience of successful projects on its implementation in the industry. In this part also market situation of professional consulting services on system implementation is important.

Such criteria as extent of support of requirements of the Russian legislation, quality of the provided service for support of changes in this direction and, naturally, cost as projects on implementation of the systems of the class ERP are large in terms of necessary investments are also very relevant for the western systems.

A system began to be selected from JSC Samaraenergo in 2005, understanding that in the near future branches in three areas will be a part of new TGC. Different options, including based on SAP ERP, by Oracle Business Suite and Microsoft Axapta were considered. The solution for benefit of the choice of the SAP ERP system was made on the basis of integrated assessment of each of systems by commission of experts of the company.

TAdviser: Whether reorganization of business processes as one of main objectives of implementation was put? Whether large-scale changes were required? Whether ERP systems it was used as a standard, or it was modified and configured under requirements of the customer?

Dmitry Sergienko: As it was already told, unification of business processes – a necessary condition at implementation of the ERP system in such scales. We conducted works on the analysis and business process optimization in parallel with development of the outline sketch on the ERP system.

At a development stage of technical specifications (the conceptual project) all key business processes of the company uniform for all branches were described. They also underwent further implementation in a system. Of course, at a replication stage some changes considering specifics of specific branch had to be considered.

During the project the level of literacy of staff of the company significantly grew that allowed to carry out as a result reorganization of the company, unification of organization structures of branches. At the same time requirements of the operated ERP system had significant effect.

TAdviser: How the choice of integrator was performed? What difficulties in communication with the company contractor in implementation process of the project were? Whether it was possible to avoid problems, and how exactly?

Dmitry Sergienko: The choice of the contractor was performed by holding an open competitive procedure. At the same time were formulated, including, and such requirements to the contractor as knowledge of specifics of the industry and experience of maintaining projects in power. In relationship with the contractor we had no difficulties as such, the combined project team resolved all issues and solves routinely.

TAdviser: What functionality was implemented (large blocks) and in what sequence? According to our data, you did not use an opportunity industry solution of SAP for Utilities, and were limited to standard SAP ERP. Why?

Dmitry Sergienko: All project was separated into three subprojects: transaction system, analytical and works on the normative reference information (NRI). An analytical system was introduced after transactional. Works on NSI were conducted throughout all project.

A transaction system covers all main modules and automates accounting, tax, financial accounting, budget management, the cost accounting, agreements, sale, logistics, investments, maintenance and repair of the equipment, property management, accounting of personnel and payroll. Payroll was entered after end users mastered the main functionality. In an analytical system the summary reporting and also the system of budget management is implemented.

Yes, it is valid, possibilities of industry solution of SAP for Utilities were not used in the project. Such decision was made from the very beginning for the purpose of risk reduction. Billing was not included into project scope in view of short terms therefore it was inexpedient to activate in the accounting system all functionality of a billing system. The decision as necessary of implementation of this module will be made in addition.

TAdviser: 24 branches are a part of VoTGC. How process of their interaction is organized - it is uniform ERP or separate information bases for each of branches with a replicaiton engine? How system implementation was performed – whether one of branches was selected from quality pilot or a system was implemented at the same time into all? Whether there are essential differences in work of separate branches whether these differences in the ERP solution how are considered?

Dmitry Sergienko: In our project there were two pilot groups of branches: one for conceptual design, another for implementation. The first pilot group included five branches from different areas, with different structure of the equipment: the generating stations, the enterprise of thermal networks and a motor depot. It allowed to consider as much as possible differences in branches and territorial specifics. For implementation as pilot group four stations were selected: CHPP VAZ, Tolyatti combined heat and power plant, Saratov CHPP-5 and Balakovo CHPP-4. Other branches and Executive directorate are separated into several groups for replication of the solution.

At the same time the system - centralized with the single database. Such decision was made from the very beginning. It allows to increase control over a business protsesssami in branches and also to reduce costs for maintenance of a system. As it was already told, the specifics of branches were generalized and unified twice: at a stage of outline and conceptual design, and, later when end users already actively worked in a system, at a stage of optimization of organization structures. Work directly in a system helped to rise competently and adequately to reorganization of structures of branches.

TAdviser: At what stage it became clear that functioning of a system requires creation of the new selected DPC? It was planned from the very beginning and considered in the total cost of the project, or it became clear already in the course of input of a system in operation? Whether the possibility of outsourcing was considered?

Dmitry Sergienko: Initially, since the end of 2005 when only preparation for the project was conducted, it was already clear that such project on SAP implementation of ERP will demand upgrade of IT infrastructure. It not only creation of the Data Processing Center (DPC) and also upgrade of communication channels, local computer networks and workstations of end users. All these works were planned and included in the total cost of the project.

Different approaches to the DPC organization were considered, the option of construction of own DPC was selected, at the same time service is in the most part on outsourcing.

TAdviser: According to project participants, creation of special division - Development center and implementation which part representatives of the implementation company and the customer's specialists were became an important factor of success of the project. How did such center function? Whether there will be it after project completion? What benefits did existence of such center bring the companies?

Dmitry Sergienko: Really, at a stage of conceptual design as a part of Executive directorate the permanent structure – Development center and implementations (TsRV) was formed. The staff of Executive directorate and branches, as a rule, heads and deputy managers of divisions were its part.

In fact, TsRV is the body which is responsible for the project in general. His employees are methodologists in all directions. The main tasks of TsRV is an adoption of all solutions on the project, the organization of interaction of the contractor, project teams and business experts, the centralized maintaining NSI.

Now the number of TsRV is 17 people. It is permanent "frame" of a project team from the Customer. Management of TsRV is performed by the head of the center. In general the Director of strategic development – the project manager is responsible for project board.

After project completion need for TsRV remains, at the same time focus from system implementation to methodological issues of its development is shifted. In general, the TsRV organization allowed us to organize the correct management and project management and a large number of people who are anyway involved in it. The staff of TsRV of 100% of time is engaged in the project that is a big rarity for such projects.

TAdviser: How a system was apprehended by the staff of the company – ordinary specialists, middle managers? Whether some special measures were required to convince or force employees to work with new ERP? <p> Dmitry Sergienko: Actually, reaction was various. From misunderstanding and unwillingness to work in a system before absolutely adequate and positive perception. It was necessary to carry out explanatory work at all stages of the project – to tell about the system implementation purposes, about advantages which it gives to both employees, and the company.

As efficient mechanisms conference calls, internal meetings with personnel of stations, the system of encouragement were applied. Now all end users understand and accept a system. As for managers, they had a possibility of obtaining any information directly from a system.

TAdviser: Whether you are happy with the course and project deliverables? What mistakes were made how it was possible to avoid them? What "finds" were made in the project progress which you can recommend to those energy companies which start or only plan the ERP project?

Dmitry Sergienko: If in general to characterize the project, then it is possible to tell that it is executed on assessment "well". Says the fact that we practically did not make change to the schedule and functional volume which were made in 2006 about it. It became possible by harmonious work of the combined project team from more than 200 people. At the same time now in a system nearly 3,000 users work.

As positive effect there is a wish to note that the level of literacy of all project participants including end users, significantly grew. Implementation of the ERP system allowed to understand more deeply joint participation and the impact at each other business processes of the company, to make business processes more optimal.

Appreciable errors were not, but there is an understanding that it is better to carry out business process optimization and unification of organization structures to automation that significantly affects terms and costs for the project. Anyway, when planning such projects, in addition, it is necessary to carry out serious methodological study, to select from the Customer for 100% personnel which will be engaged only in the project.

State-of-the-art review: ERP in power 2008