SALACA Management Services

Exceptional exception Management:

What every Utility running SAP
needs to know

Real-world experience that will improve

billing, customer service and profit
Prepared by: Wayne Johncock, Member of the Independent Executive Advisory Council (IEAC) for SAP

SALACA

Management Services

CONTENTS
Executive summary
What is an exception?
Manage exceptions
for exceptional
performance
The benefit of hindsight
big pains you will
experience
The silver bullet:
achieving a single
customer view
Real-life successes
If you only do one
thing
About the author

EXECUTIVE SUMMARY
From experience, there are always issues following an SAP
implementation; business, technical, predicted and unexpected.
Some are worse than others, but nonetheless, they always
exist. Obviously, the unpredicted issues are the ones that keep
us awake at night and cause the most impact on business
performance. Whether they relate to migration, business
processes, training or transformation, there will always be
something that will require attention and warrant some manual
intervention.
In my experience, SAP implementations at utilities companies
experience very similar problems, and at the core are business
exceptions and technical exceptions. The impact of these can
be widespread: customer accounts get stuck in a process which
in turn, has a major impact on financials. Many companies dont
realise they have issues immediately, and once they do, they are
faced with the inevitable task of minimising customer and staff
churn, getting to grips with spiralling unpaid bills and tackling
diminishing revenues.
Often the way an SAP solution is implemented prevents
the organisation from building an end-to-end view of each
customer and inadvertently allows a multitude of exceptions to
be created which proliferate at an alarming rate. Vast amounts
of money can be spent trying to address these exceptions, but
without an ability to prioritise which to action first and swiftly
get to the root of the problem.
Successful companies recognise that a single view of each
customer is the key to business success, and superior exception
management. In this paper we will look at some of the common
pains experienced by utilities companies when managing
exceptions, and explore the considerations and steps to take
to unblock billing problems, improve customer satisfaction,
optimise business performance and unleash trapped revenue in
the meter-to-cash cycle.

Exceptional Exception Management: What every Utility running SAP needs to know | Wayne Johncock

SALACA

Management Services

WHAT IS AN EXCEPTION?

MANAGE EXCEPTIONS
FOR EXCEPTIONAL
PERFORMANCE

If you run SAP for Utilities including IS-U,

CRM, middleware and interfaces youll
definitely know about exceptions and you
will likely be having an all-too-familiar daily
battle to manage them. Any new billing system
is designed to operate using a high level of
accurate automated processes which require
minimal manual intervention. Where manual
intervention is necessitated, the business terms
this as an exception. Exceptions are the errors
that prevent critical business processes from
completing.

The significant cost impact of unmanaged

exceptions may be well documented, but what
about the complexity of managing them?
This often requires specialist resource and
substantial time to work through the spiralling
volume of exceptions, identify the right ones,
and get each one fixed.
Exceptions are difficult to prioritise. An agent
will typically focus on work thats easy to solve
to keep clearance rates high, but your business
and customers have different priorities. If you
cant synchronise your work allocation process
with your business priorities, you can only
expect poor performance. And at the same
time, customer satisfaction is being impacted
and profit falls.

SAP does provide some solutions to manage

exceptions including Business Process
Exception Management (BPEM) and Enhanced
Message Management Analysis (EMMA).
However, these tools only address specific
elements of the SAP solution and not the entire
SAP landscape. The result? Exceptions are still
consistently missed.

As a worst case scenario, high levels of

exceptions create an increase in imbalance.
Imbalance occurs when there is a difference
between the amount energy purchased from
the market and hence needs to be paid for
and the amount delivered to the customer,
and paid for by them. Incorrect reporting
at this level can be extremely serious and
becomes a regulatory issue, as it not only
impacts forecasting but also national energy
consumption requirements.

Why is this important? Utilities companies

that run SAP typically end up with thousands
or even millions of exceptions in their SAP
environment which trip up and slow down
important business processes like billing.
Every exception in an SAP system is therefore
a cost. They cost time and effort to investigate
and, left unresolved, impact your customer
experience and revenue recovery.

But what would happen if you could

address exception management head-on?
Your business would not only see tangible
improvement in operational efficiency, but
customer experience would improve and you
would vitally unlock trapped revenue in the
meter to cash cycle.

Exceptional Exception Management: What every Utility running SAP needs to know | Wayne Johncock

SALACA

Management Services

THE BENEFIT OF HINDSIGHT

BIG PAINS YOU WILL
EXPERIENCE

Inability to bill

Whilst some exceptions are necessary

for the proper operation of automated
processes within a billing system for
example manual intervention may be required
to sign up a new customer an appropriately
designed system should not generate a
significant volume of unnecessary exceptions,
which serve no useful purpose, but instead
disrupt the billing process. In these instances,
unbilled revenue can increase beyond the
levels experienced in your legacy systems and
accounts that are stuck in a process will begin
to cause revenue loss.

In all utilities companies, there are some

common signs that indicate the business
has underlying issues with the SAP Utilities
implementation:
n Accounts are not able to bill
n Agents cant answer customer queries
n Back office cant deal with backlogs

n You cant identify root causes of issues

These signs are the tangible evidence of larger

issues that are happening under the surface in
your business.

Critical advice for transformation of SAP

utility environments
Exceptions directly affect profitability. Investment is
required for specialist resource to fix the problems
and while you are wading through the complexity to
find the critical exceptions that are impacting your
prominent billing processes, you are losing money.
Having worked with many utility companies who were
experiencing high levels of exceptions, I identified a
common problem across them all: Not one company
could generate a single view of all exceptions
against a customer account.
Obtaining a 360-degree view of each customer is the
key to exceptional exception management and that
helps your business operate more efficiently, improve
customer satisfaction and ultimately, increase company
and shareholder value.

Exception breeding

Breeding is the term used to

describe how exceptions can quickly
proliferate. When one exception
prevents a subsequent process from executing
correctly, that subsequent process will
generate one or more additional exceptions,
and so on. Often this means each customer
account can quickly become riddled with a
myriad of exceptions. Time and again I have
witnessed high profile companies struggle
to diagnose the cause of an account billing
issue, often initially deeming it a system
performance problem, and consequently an
agent productivity issue. However, it eventually
becomes clear that the complexity of
exceptions brought about through breeding
on each account was the underlying issue.

Scarce expert resource

It is often the case that there are

too few solution experts, with both
business and IT knowledge, within
the business who can effectively establish
the root of what is going wrong. In larger
implementations, with more than 3 million
customers, problems are often masked through
continuous migrations and volumes. Only once
a certain threshold is reached, the problems
become glaringly obvious, and only then

Exceptional Exception Management: What every Utility running SAP needs to know | Wayne Johncock

SALACA

Management Services

will there be enough management pain and

attention to really do something about it. In
smaller implementations, the problems will
exist but may not become evident for longer
periods of time which in some ways is even
more worrying.

exceptions need to be cleared immediately and

which ones do not. Exceptions that prevent
billing must definitely be first on the action list.

It is at this point where agent

competency becomes rather critical.
After initial SAP training, an agent is
40% productive; after 9 weeks of using the new
system, they will be 95% productive. These are
important statistics in understanding your post
go-live clearance rates.

Misaligned metrics

During the system roll-out phase,

SAP performance metrics are
often produced, which encompass
exception management, but they are typically
high level metrics concentrated on major endto-end processes such as acquisitions, billing
and disputed reads rather than on individual
exception types. When results are therefore
reviewed at management meetings, does the
underlying health of the billing system ever
really get reported? Or are you just fooling
yourself that everything is fine.

Back-office competency

While a back-office agent may appear to be

working productively on managing exceptions,
they will often not be working on the one that
is the root cause of the problem. Their time is
therefore ineffective, and whilst the business
will feel confident on clearance rates, those
same exceptions will still exist on the account
and swiftly reappear in the future.

Flawed delivery mechanisms

To really start shifting the dial, businesses
should focus on identifying large numbers of
unnecessary exceptions that can be deleted,
but also find the underlying system faults and
prioritise their resolution.

There are several ways that an

exception can be routed to a work
agent:

n Via an workflow inbox (work item)

n Via an EMMA inbox (from an overnight

batch run)

Customer churn

The inevitable impact on customer

experience and satisfaction is clear.
Where exceptions start to run out
of control, customer service is swiftly affected
and businesses will start to see a demonstrable
increase in churn rates. The added risk is when
issues become newsworthy, leak into the public
domain and then the impact is no longer just
on revenue and reporting, but also with the
reputation of the company itself.

n Via a list from a report to work (run on an ad

hoc basis in the system).

If there are any flaws in these delivery
mechanisms for example a work case is sent
to the wrong inbox these work items cannot
be retrieved to be actioned. Consequently,
the exception backlog increases and agent
productivity decreases. Regular and on-going
reporting on the raise versus clearance rate
is a worthy exercise. However, a business also
needs to understand and prioritise which

Exceptional Exception Management: What every Utility running SAP needs to know | Wayne Johncock

SALACA

Management Services

SILVER BULLET: ACHIEVING A

CUSTOMER CENTRIC VIEW

Exceptions that drive complaints and

escalations are perhaps the most critical
instances for any business to focus on, as they
typically directly relate to shifts in customer
behaviour patterns. Harnessing customer
escalations is critical for a utility company,
as unhappy customers can drive media
attention, which in turn damages the corporate
reputation, and impacts retention and
acquisition rates.

The control that utilities achieve by having one

consistent view of exceptions on a customer
account, cannot be under-estimated. It is only
when you can see exceptions and work items
from a customer account perspective, that you
really start to understand what is going on.
From this position, each agent can sensibly
and swiftly identify root cause exceptions, or
the most severe exceptions, on each and every
customer account that are preventing billing
and work can be prioritised accordingly.

From a proactive standpoint, the intelligence

gained from having a single customer view
plays an important role in how the business
looks to extend exception management in the
future. It supports enhanced trend analysis and
greater operational understanding so that new,
automated solutions to technical and nontechnical problems can be delivered.

Large quantities of unnecessary and duplicate

exceptions can be deleted, improving clearance
rates and giving the business renewed
confidence that headway is being made into
the overall problem. Prioritisation of exceptions
becomes much simpler, and agents can quickly
identify and address those exceptions that cause
the most severe impact to the business, such as:

REAL-LIFE SUCCESSES
A major UK utilities company, with whom
I worked for many years, was experiencing
significant billing and revenue challenges due
to increasing SAP exceptions. They didnt know
whether a fix should be developed to stop the
problem of breeding, and all the associated
issues that situation creates which would
require costly analysis, design and testing or
whether they should focus on clearing the
sizeable exception backlog.

n High value exceptions with a significant

revenue imbalance that are causing

unbilled accounts
n Exceptions adversely impacting customer

experience, driving complaints and

lowering brand image
n Exceptions that are breeding additional

exceptions

In fact, each of these two routes would have

had an adverse effect on the other. With the
first, the backlog number would not have
decreased; it could have even possibly become
larger, albeit at a smaller rate depending on
the success of the fix. The second would have
cleared the backlog but wouldnt have stopped
new exceptions coming in.

High-impact business benefits of a

360-degree customer-centric view:
n Better understanding of customer behaviour
n Faster access and analysis of centralised data
n More accurate business decision-making
n Improved business operations

In the end, this utility company built and

implemented its own customer centric
solution to provide a 360-degree view of
each and every customer, enabling them to

n Increased profit
n Increased return to shareholders

Exceptional Exception Management: What every Utility running SAP needs to know | Wayne Johncock

SALACA

Management Services

therefore address all their operational issues.

The approach was a pivotal turning point. It
provided a critical focus on business process
improvement, as well as clearing the backlog
of exceptions and prioritising relevant items to
work on.

the entire SAP landscape to present a single

customer view and integrate seamlessly with
your existing SAP environment to become an
integral part of your day-to-day operation. Very
quickly, you can transform your operations to
include:

The overall benefits this business experienced

were sizeable, including:

n Identification and prioritisation of the

exceptions currently on an account

n Immediate visibility of all issues relating to

n 50% drop in the Average Handling Time

a customer

(AHT) of inbound calls

n Intelligence around the routing of

n 54% improvement in the Average Speed to

exceptions to the subsequent inboxes of

agents

Answer (ASA)
n 42% increase in the right first time

n More precise reporting on late billing status

resolution

n Highly detailed analysis and reporting at

n 77% decrease in the number of escalations

each stage of the meter to cash report

and complaints

n Accurate management reporting

n Increased job satisfaction across call centre

staff through better call routing to experts

and more training (churn rate fell from 49%
to 27%)

This allows agents to deal with customer issues

faster potentially saving up to 60% time
and helps your business improve customer
satisfaction, boost operational efficiency and
unblock trapped revenue in the meter to
cash cycle. With tools that create that single
customer view, your SAP implementation will
deliver a much faster return-on-investment
possibly less than three years.

Plus, the savings in the back office resulted in a

decrease of 16% of operational expenditure and
a reduction of 23% in back office head count.

IF YOU ONLY DO ONE

THING

From my own experience, investment in a

business data exception management tool is an
essential part of any IS-U implementation if you
are to realise your expected benefits.

Today, utilities do not have to build their own

bespoke customer centric solutions to achieve
a single customer view that enables them to
manage exceptions in a way that fuels positive
business performance.

If youd like to discuss this or other topics in

greater detail, please contact me.

There are a number of cost-effective thirdparty SAP add-on tools readily available on the
market one of which one will even analyse

Exceptional Exception Management: What every Utility running SAP needs to know | Wayne Johncock

SALACA Management Services

ABOUT THE AUTHOR

Wayne Johncock, SALACA Management Services
Wayne Johncock was born in Tasmania, Australia and is a
naturalised Brit. He has worked in 9 countries implementing and
directing large business transformation programmes in utility
companies, many of them based around SAP ERP.
Wayne has represented Centrica on the ACCU (Advisory
Customer Council Utilities) a council for CIOs and COOs from
the 20 largest utilities using SAP globally, which was responsible
for defining the strategy and 3 year roadmap for SAP product
development and innovation. He chaired specific workgroups on
Big Data, High Volume Performance and Exception Management.
Wayne is business focused, driven and has the ability to translate
business needs into technological requirements, and equally,
translate IT speak into simple, easy to understand business
visions. These skills allowed Wayne to work with the business
and IT leaders at British Gas to design a solution for exception
resolution that was ultimately able save tens of millions of
pounds, and equally, dramatically improve customer experience.
In mid-2012, Wayne was invited to join the SAP IEAC
(Independent Executive Advisory Council) a small but
significant group of CXOs who have the experience and
knowledge of strategic transformation, bringing vision and
strategy to reality at an enterprise level, and drive benefit out of
the SAP relationship.

Contact
M: +44 (0) 7795 958 852
E: wayne.johncock@salaca.co.uk
In: http://uk.linkedin.com/in/wjohncock

Text copyright Wayne Johncock, 2013. All rights reserved. SAP is a registered trademark of SAP AG.
All other trademarks are the property of their respective owners. This document is non-contractual.