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How to Overcome 3 Major Challenges of SAP ERP Integration for Utilities

image credit: Greenbird Integration Technology

There’s no doubt SAP is one of the most powerful enterprise resource planning (ERP) systems.

SAP’s market dominance can be attributed to its impressive list of benefits to utilities’ ERP systems, ranging from seamlessly managing vital data to enabling the most complex business logic operations.

SAP’s massive reach extends to over 190 countries and at least 2,450 energy companies. 45 of the top 50 utilities use SAP as their ERP provider, further establishing its foothold in the energy industry.

The market share of SAP in the utilities ERP market (Image Source:

There is, however, a major drawback with SAP—and that is in integrating it with external tools and applications. We’ll take a quick look at this, and related challenges, and then explore how utilities can overcome them.

The Challenge with Enterprise SAP Integrations

SAP’s ecosystem is unnecessarily complex due to the use of disparate systems and technologies to provide its products and services. This includes legacy on-premises ERPs, various solutions and technologies that the company has acquired over the years, as well as multiple integration tools to help navigate and make sense of the sprawling SAP landscape.

Its proprietary development language, application logic, and processes that do not work well outside of the SAP ecosystem have led to the company’s infamy for being hard to deal with integration-wise—a fact even SAP themselves have acknowledged.

Problems may also arise as a result of the SAP ERP holding and managing most of the utility's data and transactions. When external business tools are involved, a company may not be able to access important customer and operational information in SAP easily, which hinders work productivity and business performance.

Working with organizations across the globe has taught us about three challenges utilities often encounter when integrating SAP into third-party systems and applications:

  • Third-party applications do not integrate well with SAP
  • There are a lot of complex integration processes
  • Specialized skills required by SAP developers slow down project delivery

Let’s dive deeper into these integration challenges.

1. Third-Party Applications Do Not Integrate Well with SAP

SAP does provide several integration features for third-party applications to utilize its data. However, these integration features do not work as well as they could, since SAP is set on using its own offerings (e.g. ABAP, SAP BAPIs) rather than adopting industry standards.

For instance, consider the fact that organizations must factor in over 600 types of IDOCs just to launch an integration project in SAP. The company’s codebase is also comprised of languages that are outdated by today’s standards. For example, SAP’s proprietary ABAP language has minimal use outside of the company’s products.

All these integration challenges culminate in band-aid solutions in order to extend SAP functionalities to third-party apps, preventing utilities from building a seamless enterprise IT environment, which negatively affects innovation efforts.

2. Needlessly Complex Integration Processes

SAP’s biggest advantage is its flexibility in meeting business needs for a variety of unique use cases. Unfortunately, this benefit comes with a hidden downside: Increased customizability also increases the complexity of integration, making projects more expensive and time-consuming.

Let’s take an example of a multinational firm with headquarters across the globe. The office in Asia will require different SAP configurations compared to its European headquarters, and so on. To manage and integrate data across every location is already a tough challenge on its own, let alone having to deal with the integration challenges of SAP.

The complexity curve spikes significantly higher when third-party applications are involved in the process. More third-party applications lead to more complicated integration projects, which are tough to manage even for the most well-equipped of utilities.

SAP also promotes low-code configuration features to users since most of its products can be managed through visual interfaces. This causes an issue with non-programmers as they may unknowingly produce needlessly complex interfaces, further aggravating the problem of managing complexity.

3. Slow Project Delivery

SAP consultants are in high demand, as they help organizations navigate the ups and downs of customization projects. This by itself is not a problem, but concerns arise when consultants or system integrators (SI) over customize SAP features.

When consultants put too much business logic in SAP, utilities encounter bottlenecks as new features or upgrades are forced to go through the company’s lengthy processes during implementation.

SAP projects take a few months on average to complete—half of those projects don’t even succeed in the end. Consequently, vital software changes and upgrades are pushed back to accommodate for slow project deliveries. This negatively impacts organizations, preventing them from reacting fast enough to customer needs and requests, leading to decreased revenue and poor user engagement.

So, what’s the solution to this over-reliance on SAP?

Instead of doing everything on SAP, utilities can (and should) use other systems like a Geographic Information System (GIS) or meter data management (MDM) tool to carry out specific tasks without any efficiency loss.

Ideally, SAP should be utilized to handle non-utility related capabilities (e.g. HR tools, employee attendance) while vital OSS/BSS processes are managed by best-of-breed software.

This way, utilities can spread the workload of IT processes across other tools and applications rather than relying solely on SAP to get all the things done, overcoming the issue of slow project deliveries.

Regardless of whether utilities decide to migrate to SAP HANA or utilize best-of-breed solutions, a smart utility integration platform helps immensely in easing SAP integrations and driving innovation. By making SAP integration a painless process, utilities can focus more on digital transformation and delivering top-notch experiences to customers.

Frederik ten Sythoff's picture

Thank Frederik for the Post!

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Matt Chester's picture
Matt Chester on Dec 4, 2019 1:03 pm GMT

Instead of doing everything on SAP, utilities can (and should) use other systems like a Geographic Information System (GIS) or meter data management (MDM) tool to carry out specific tasks without any efficiency loss.

Ideally, SAP should be utilized to handle non-utility related capabilities (e.g. HR tools, employee attendance) while vital OSS/BSS processes are managed by best-of-breed software.

What's the reason that utilities try to over rely on SAP in this way? Does that happen in other industries with a comparable solution there, or is this unique to the power industry and its specific digital needs?

Thorsten Heller's picture
Thorsten Heller on Dec 4, 2019 3:27 pm GMT

I think utilities quite often over time have developed a "Purchasing DNA" or habit I'd like to call "One-Stop-Big-Shop"-Purchase strategy.

Why? Because there have not been that many alternatives for the utilities for a long time. And technology to integrate best-of-breed solutions has not been that mature. 

But nowadays, there are alternatives and there are modern integration and information management platforms. And even more important: Things have changed. Utilities have to digitize and automate all operational process and the entire value chain. Utilities must handle vast amount of machine data from sensors, smart devices or meters. They have to deliver a digital user experience. They are challenged to deliver and operate solutions faster, more agile, less costly.

Utilities just have the rethink their "One-Stop" strategy!?

Matt Chester's picture
Matt Chester on Dec 4, 2019 5:14 pm GMT

Thanks for the insights, Thorsten. I hadn't considered much how the changing and digitizing nature of the utility industry today would mean that those who kept their old vendor-shopping habits would be missing out, but that makes perfect sense

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