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SAP pilot to serve utilities

The German software giant looks to expand its vertical market strategy with new business applications to help utilities run their complex, large-volume businesses.

SAP is looking to expand its vertical market strategy with new business applications to help electric companies and other utilities run their complex, large-volume businesses.

The German software giant launched a pilot program today for new customer service system components, which combine call center, service, and demand management features. One component, the Customer Care and Service module, is Internet-savvy and integrates with SAP's flagship R/3 so that system information can be accessed across enterprises.

The software lets customer service representatives pull up customer information while they are talking to the customer on the phone. It is designed to help utilities cope with increasing competition by better marketing their services, according to the company. However, it is not scheduled for commercial rollout until September of 1998, McClelland noted.

Another component in the strategy is already shipping. The company said several utilities are already using the new FERC reporting system module, designed to help them meet the industry-specific general ledger reporting requirements imposed by the Federal Energy Regulatory Commission.

More modules for public utilities such as electricity, power, gas and waste management companies, will be introduced during the next 18 months, the company said.

"These are just the first two of a series of components for the utilities marketplace that we are developing," said SAP spokesman James McClelland. He said the next module to be announced before year's end will be Real Estate software. The application is designed to track land prices and help companies determine the best time and locations for expanding their infrastructure.

The two modules mark SAP's first R/3 offerings into the lucrative, yet enormously complex utility market niche. The company has built the component modules from scratch after scrapping software for the utilities industry that had worked with R/2, the predecessor to the company's R/3. The earlier initiative, known to SAP customers as RIVA, included customer information and billing software, according to Joel Serface, an analyst with Advanced Manufacturing Research.

After initially shelving the apps, SAP is now getting around to building new ones for this vertical market that work with R/3, Serface said.

While SAP will have to prove that it can handle the enormous billing and consumer service demands of the industry, Serface noted that the software maker is virtually alone in a market segment that includes some 80 U.S. utility companies, each with annual revenues of more than $1 billion.

"It could potentially be a huge market," Serface said, since most billion-dollar companies spend upwards of $2 million when they overhaul corporate computer systems. "If Oracle and Baan don't step up to the plate, this could be an important niche for SAP," Serface said, referring to two of the company's chief competitors.

SAP already has 350 customers among utilities companies around the globe, McClelland said. He added that the market segment contributed 13 percent to SAP's total corporate revenues last year.

McClelland said the modules work in heterogeneous computing environments that are commonplace at utility companies. That means the software can interact with data stored both on legacy mainframes and operating systems such as Windows NT and Unix.

The company is also partnering with a number of developers in this market space. Partners include Honeywell; Hewlett Packard and Intergraph, McClelland said.