Change management issues derail Northern Gas Networks' S/4HANA migration

Gas distributor Northern Gas Networks has had to delay a planned migration to SAP's next generation enterprise resource planning (ERP) system S/4HANA once it realised that its employees weren't ready for the change.

Speaking to Computerworld UK at SAP's Sapphire conference in Orlando last week, Tom Pollock, head of information management at Northern Gas Networks said: "If I could go back and do anything differently then I would take six months to a year focusing on business change before I even think about the technology."

This follows on from a conversation we had with Pollock this time last year regarding some of the areas S/4HANA could help the business once it goes live in April this year.

"So let's address the elephant in the room: we will go live with S/4 in October of this year," he admitted. "What happened was we could have gone live, technology-wise it was there, it was built. It’s still built now. But what we had underestimated was the scale of the business change."

The moment Pollock realised that the business wasn't ready for the proposed April changeover from SAP ECC to S/4HANA came down to a simple question: "We asked certain business areas how they are going to use [S/4HANA] and how does your process now work in S/4, and they couldn't answer that," he said.

Read next: Northern Gas Networks migrates to S/4HANA to lay the foundations for IoT

Northern Gas Networks has been an SAP shop since its inception in 2005, when the National Grid sold off the 37,000 kilometres of pipe north of Sheffield. It now serves gas to more than 6 million customers.

Pollock alluded to these kinds of workplace culture issues last year: "We are asking people who are very used to doing things one way to change that and work in a different way and that is unsettling, it can be quite worrying.

"People immediately think about job security. So that is a challenge because yes there are efficiencies that we have to make and that will be around process efficiencies, but what we are looking at is the value-add. Getting people out of the drudgery of data wrangling as they are now and more towards data analytics and using our data to move the business forward."

One year on Pollock feels the business made the right call in delaying the implementation: "We underestimated the actual potential of what we were doing and the potential we wouldn't have achieved if we had gone live in April, so that was a real lesson to us.

"I truly believe we made the right decision because it is better to get to right than to rush it in and have something that is not being utilised properly, or worst-case scenario, people just ignore it and go back to their spreadsheets."

Change management

Pollock and his team embarked on a wide-ranging education initiative across the business ahead of its new go-live date in October.

"Not everyone knows what an ERP is, which surprised me, and what surprised me more is not everyone is excited about what an SAP ERP is," he said. "So it was education and getting back to basics to get colleagues to understand how our business works in the black box that is SAP and making that a clear box, and getting that understanding and knowledge."

This new timeline has also given the company more room for testing before going live.

This starts with some systems integration testing, which consists of "building the pipes and making sure they work".

"So making sure SAP talks to other systems," he added. "Data migration, and ensuring all the process orchestration works, ensuring that SAP is still talking to the Highways Authority, the national call centre for our emergency work and so on."

Next was what Pollock calls user acceptance testing "where ordinary users get their hands on it, play with it, run our processes as we would and sign off to say 'yes, it does what we want it to do'. That starts in July and goes through into August."

Finally, Northern Gas Networks will run 'business simulation cycle testing'.

"[This is where] we do a parallel run, so run our business on our existing ECC system and also the S/4 system to ensure that at the end of that month everything works and everything tallies," Pollock said.

What next?

Once S/4 is in, Pollock envisions plenty of opportunities to take the business forward on the new ERP system.

"There are a load of things going live that will move our business forward so much," he said. "The logistics side of the business, all material masters, stuff that we weren't really using to that extend and will have fully mapped processes and one constant process for project work and one for unplanned work."

S/4 will also enable Northern Gas Networks to move away from lots of manual business processes.

"A big improvement for us is a lot of our projects are back built into SAP, after they happened, so guys in the field filling our paper packs sent into the back office and keyed into SAP retrospectively," Pollock said. "One of the big changes in S/4 will be to properly plan and design our projects, hang our forecast materials off those projects and be able to cost manage them as they happen so we can properly forecast and see actuals as it happens."

These projects could be a new gas connection at a home up to larger mains replacement, or big construction projects to replace above-ground pipes.

The business will also build all of its regulatory reporting with Ofgem in S/4, which should enable more real time regulatory reporting.

Finally, when it comes to SAP's latest product offering C/4HANA Pollock said: "We have our own CRM system that we have built so the application of front office, I think, will be my next thinking point. The great thing about S/4 is the foundation of that allows us to think about the best way to serve our customers."

Read next: Everything you need to know about SAP's new CRM product: C/4HANA

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