Eskom: Corporate Strategy

Eskom tasked Accenture with determining whether Eskom's financial and materials management systems and processes could support the company's vision of lowest-cost electricity to ensure the growth and prosperity of all South Africans. Since completion of the highly complex SAP R/3 implementation in May 1999, Eskom has positioned itself to meet the challenges of a changing local and global electricity supply industry.

Eskom, the South African Government's electricity utility, is the seventh largest in the world in terms of generating capacity and sales. It provides more than 98 percent of South Africa's electrical requirements and more than 50 percent of the electricity produced in Africa.

It comprises 24 power stations, a transmission grid of 27,026 km of line, 3,1 million customers, and 32,000 employees.

In 1994 Accenture, because of its international utilities and financial management expertise, was tasked with determining whether Eskom's financial and materials management systems and processes could support the Eskom vision of lowest-cost electricity to ensure the growth and prosperity of all South Africans. Partnering with Accenture, Eskom found that:

• Financial and materials processes and "legacy" financial systems did not support best practices or the decision-making processes of the organisation;
• Existing processes were heavily orientated towards transaction processing and did not supply the necessary management information to manage Eskom's projected R5 billion annual asset expenditure improved infrastructure;
• Existing systems were unable to handle the Year 2000 date conversion issue; and
• Additional change management initiatives were required to support Eskom's commitment to equip previously disadvantaged people with modern technological skills.

From 1997 to 1999, partnering with Eskom, Accenture assisted in the design, development and implementation of the Finesse Programme. The scope of the Finesse Programme was to implement new processes and technology in support of international best practice in financial and materials management. In addition, there was a significant focus on equipping Eskom employees with the right skills, knowledge and ability.

This involved:

• Implementing SAP R/3's financial, management accounting and material management modules across all the Eskom Groups;
• Implementing new processes and technology for 6 000 people and educating them by means of 65 courses, requiring more than 40 000 training days in 35 venues;
• Rolling out software to 300 sites and developing architecture for 70 legacy interfaces; and
• Programme management of 300 project personnel across the business divisions.

Since completion of the highly complex SAP R/3 implementation in May 1999, Eskom has positioned itself to meet the challenges of a changing local and global electricity supply industry.

Benefits derived from the implementation of the Finesse Programme include:

• The largest installation of SAP R/3 in South Africa and one of the largest in the world.
• A programme team of 300 people meeting the Generation, Distribution, Transmission, Corporate and Services implementation goals on time and within budget, and below the Business Case cost.
• Implementation of financial and materials management best practices enabled through new or enhanced process designs and the functionality of SAP R/3.
• The human capacity development of more than 6 000 Eskom employees as a result of new training methods and performance support tools. Many of these employees are from previously disadvantaged backgrounds.
• World-class hardware performance with sub-one second response times.
• World benchmark programming estimates beaten by Eskom programming staff.
• New concepts in programme management, including modern IT project control techniques, earned value analysis, comprehensive progress reporting, knowledge transfer measurement and trade union involvement.

The Programme has been featured in Financial Mail, a premier South African business journal, and has been awarded Laureate status for innovative use of technology in the Computerworld Smithsonian Award Scheme in Washington DC. The project was audited and approved as ISO 9001-compliant by the British Standards Institute. In addition, the Finesse Programme was awarded the Eskom Chairman's award for people development in 1999 and was a finalist for the South African Institute for Management Consultants Project of the Year.

The implementation of the Finesse Solution was, at the time, one of the major SAP implementations in South Africa, and also one of the major implementations in the world. The Finesse Solution has provided Eskom with the skills and management tools to bring about continuous improvement and benefit realisation, thereby helping to reduce the real cost of electricity. Moreover, the Finesse Solution has provided Eskom with the business process and system foundation to become an eminent African energy and related services business of global stature.