Yorkshire Water's ERP cuts £12m per year off IT bill

Yorkshire Water has slashed £12m per year off its IT bill after undergoing a major business transformation project and standardising on an SAP-based enterprise resource planning (ERP) platform.

The ERP system was implemented in response to Yorkshire Water's troubles in the mid-1990s when a drought in the summer combined with the utility being ranked bottom of water industry regulator Ofwat's performance rankings.

Alan Harrison, CIO of Yorkshire Water, said at an SAP customer event this week: "We were faced with a bit of a cliff. We decided to do some fundamental re-engineering."

Yorkshire Water invested £30m on the project to introduce SAP for its finance, supply chain, human resources and payroll back-office functions back in 2000, and Harrison said this has now led to annual savings of between £11.5m and £12m.

But while saving money was a key driver for the project, Harrison said the system was also designed to realise improvements in customer service.

He said: "In our business the only way of making money is taking cost out. The only way we can give a better return to our shareholders is by becoming more efficient. But we felt giving better customer services was important as well."

But large-scale ERP rollouts rarely go smoothly and Harrison urged companies to invest time and resources in the business process changes and to stop other parts of the business adding in requirements as the project progresses.

He said: "It takes a while to implement the business changes. The business managers are leading the implementation. They are the people who can actually deliver business change. Scope creep is also something you have to sit on. "