RWE chief executive points to SAP billing system as cause of npower losses

German energy company RWE has pointed to an SAP billing system implemented by IBM for the current business woes besetting its UK unit npower.

Peter Terium, chief executive of RWE, told a press conference today (8 March 2016) that the billing system at npower had been a “disaster” but, as reported by the Financial Times, the company “hopes to be out of the valley of tears in the UK by 2018”.

In its official statement to investors, however, the company said “RWE expects further burdens in this area [the UK] in 2016”, despite a restructuring of its supply business here.

UK gas and electricity provider npower plans to cut 2,400 jobs from its workforce of 11,500 on the back of losses of €137m. Parent company RWE said the main reason for the 2015 loss, which compares with a profit of €227 in 2014, was “serious process and system-related problems in residential customer billing”.

As reported by Computer Weekly in November 2013, the company transferred a tranche of customer account details to an SAP billing system, but was compelled to apologise to customers for account statements not going out on time, incorrectly set up direct debits and new accounts not being set up properly.

At that time, SAP said: “RWE npower has been and is continuing to make improvements to its customer services processes as part of an IT system transformation programme.”

One year on, in December 2015, Ofgem fined the energy provider £26m for failing to treat customers fairly. None of the other five big energy companies has been fined as much.

The regulator traced the company’s financial difficulties back to the installation of the SAP billing system by IBM that started in 2011. Npower had issued half a million late bills between September 2013 and December 2014.

The regulator’s report noted: “Npower also failed to deal with complaints effectively because of failures with its IT system. For several years, npower has recorded a significant number of complaints incorrectly, leading to unresolved complaints being logged as resolved and multiple records created for one issue.”

Commenting on the projected job losses, general secretary of Unison Dave Prentis said: “Npower has been in trouble for some time thanks to poor decision-making at the very top, and workers are now paying the price. The company’s failure to invest properly in new systems has left it with one of the worst customer service records in the business.

“Today’s news suggests that npower’s German owner isn’t terribly committed to its UK operations. Cutting a fifth of the workforce will leave the already struggling business in an even worse state. Now months of uncertainly lie ahead for a workforce whose morale is already at rock bottom.”

SAP has restated its understanding that “RWE npower has been and is continuing to make improvements to its customer services processes as part of an IT system transformation programme”.

It said, in a statement to Computer Weekly: “We are in communication with RWE npower and continue to support [it] and its implementation partners when requested in order to help resolve the difficulties they are facing with this programme. We are currently awaiting guidance from RWE npower on how they would like SAP involved in the next phase of the project and we look forward to continuing to provide support and assistance”.