There’s an ebb and flow to the busi­ness and tech­nol­o­gy ini­tia­tives led by Whit­ney Kel­lett — and not just because she’s charged with IT and busi­ness trans­for­ma­tion at one of the largest pub­licly trad­ed water, waste­water, and nat­ur­al gas providers in the coun­try. The ebb-and-flow is sim­ply an every­day real­i­ty for lead­ers in mod­ern util­i­ties that grow by merg­ers and acqui­si­tions, have sub­stan­tial resources com­mit­ted to busi­ness trans­for­ma­tion, and must con­tin­u­ous­ly improve care for cus­tomers, nat­ur­al resources, and the environment.

Kel­lett is the Senior Vice Pres­i­dent of Busi­ness Trans­for­ma­tion at Essen­tial Util­i­ties Inc., the Bryn Mawr, PA-based com­pa­ny with 3,200 employ­ees serv­ing 5.5 mil­lion cus­tomers in 10 states. She joined the com­pa­ny in 2016, four years before it became Essen­tial in 2020, through acquir­ing Peo­ples Nat­ur­al Gas by Aqua.

Ear­li­er this year, Essen­tial announced Kel­lett would lead a $143 mil­lion ser­vice improve­ment project across admin­is­tra­tion and oper­a­tions. In 2023, she will add chief admin­is­tra­tive offi­cer duties to her plate. And she won 2022 Philadel­phia CIO of the Year hon­ors in the Enter­prise cat­e­go­ry just last month.

In an ASUG inter­view fol­low­ing her par­tic­i­pa­tion at the 2022 ASUG Best Prac­tices: SAP for Util­i­ties con­fer­ence, Kel­lett talked of progress, chal­lenges, ​“hero­ics,” and lessons learned in Essential’s fol­low­ing SAP S/4HANA projects. She empha­sized how Essen­tial lever­ages peer con­ver­sa­tions and that she will increas­ing­ly tap ASUG resources to help her keep con­nect­ed to the util­i­ties’ com­mu­ni­ty and tech­nol­o­gy and inno­va­tion options.

This is an edit­ed ver­sion of the entire conversation.

Ques­tion: What has been your orga­ni­za­tion’s back­ground and use of SAP tech­nol­o­gy to date?

Answer: The par­ent com­pa­ny is called Essen­tial Util­i­ties. And we have two pri­ma­ry sub­sidiaries. The water-waste­water busi­ness is under the brand Aqua, and our nat­ur­al gas busi­ness is under the brand Peo­ples Nat­ur­al Gas. In 2010, a pri­vate equi­ty firm called Steel­Riv­er pur­chased Peo­ples Nat­ur­al Gas and assets from Domin­ion Gas, and, at that point, Peo­ples Nat­ur­al Gas start­ed an SAP jour­ney. From 2010 to 2011, Peo­ples Nat­ur­al Gas imple­ment­ed SAP ECC across the gas busi­ness, which includ­ed finan­cials, gen­er­al ledger (GL), accounts receiv­able (AR), and accounts payable (AP). It includ­ed HR, inte­gra­tions to link project con­struc­tion costs, and project man­age­ment, as well as inte­gra­tions to a non-SAP work man­age­ment sys­tem and GIS.

The gas busi­ness start­ed on the jour­ney and went live in 2011 and then made sev­er­al acqui­si­tions over the next cou­ple of years to bring more cus­tomers onto the plat­form. In 2019, Peo­ples Gas upgrad­ed to SAP S/4HANA. Peo­ples was the first North Amer­i­can util­i­ty to upgrade to S/4HANA, which was a big suc­cess. It was a year-long project and most­ly a tech­ni­cal upgrade. We did not imple­ment many func­tion­al changes; we focused on the tech­no­log­i­cal archi­tec­ture change with the upgrade.

In 2020, Essen­tial was found­ed and the water and the gas busi­ness­es came togeth­er. In Jan­u­ary 2022, we con­vert­ed the water and waste­water busi­ness­es to the SAP S/4HANA plat­form for finan­cials, plant main­te­nance, sup­ply chain, HR, and BW. Now our whole com­pa­ny is run­ning on SAP for finan­cials. The next major project is to com­plete the SAP CR&B imple­men­ta­tion for the water-waste­water side, and we will do that at a lat­er date.

Q: What lessons learned from the first tran­si­tion were applied with the upgrade and the adop­tion of the water business?

A: Peo­ples Gas imple­ment­ed SAP in incre­ments, mean­ing when they did the first imple­men­ta­tion, there were 300,000 cus­tomers. With the next acqui­si­tion, that added anoth­er 150,000 cus­tomers, and then the next acqui­si­tion, anoth­er 250,000 cus­tomers. It’s been an incre­men­tal journey. 

We did­n’t have that lux­u­ry on the water-waste­water side. We had to go ​‘big bang’ and bring our entire water-waste­water busi­ness onto SAP. We debat­ed whether we could go state-by-state and take a phased-in approach. That intro­duced a lot of com­plex­i­ty in our finan­cial report­ing and some of our busi­ness process­es to simul­ta­ne­ous­ly have two dif­fer­ent finan­cial sys­tems in place.

I think what we learned from the gas imple­men­ta­tions is we spent a lot of time clean­ing data before we cut over to SAP. We did­n’t want to put in bad data — bad data in, bad data out. We want­ed to avoid that. That’s some­thing that Peo­ples Gas did.

We also spent a lot of time com­mu­ni­cat­ing and talk­ing to our users about the change com­ing – prepar­ing them. I don’t think you can ever do enough on the change man­age­ment side to get peo­ple ready for a big plat­form change.

Q: You’re not the first per­son who’s said that.

A: Some­times, I wish we’d done more because change man­age­ment and the human ele­ment are vital to the project’s suc­cess. If you don’t get it right, it doesn’t mat­ter what the sys­tem can do, how auto­mat­ed it is, and how spec­tac­u­lar the ana­lyt­ics are. If the human com­po­nent using the tools to run the busi­ness isn’t ready and com­fort­able, it just won’t work.

We also learned from our gas imple­men­ta­tion the impor­tance of hav­ing strong tech­ni­cal part­ners on the team. We had a com­pet­i­tive RFP process and looked at out­side tech­ni­cal inte­gra­tors who had expe­ri­ence putting large util­i­ties on SAP, espe­cial­ly mul­ti-util­i­ties, gas and water, gas and elec­tric, elec­tric and water, and so on.

We did a lot of ref­er­ence checks. We talked to many dif­fer­ent cus­tomers of these tech­ni­cal inte­gra­tors to under­stand which projects had gone well, what they’d done well, what they had­n’t done well, and what we could learn. Peo­ples Gas used the same approach of doing a com­pet­i­tive RFP and scor­ing and doing ref­er­ence checks to find the right project part­ner. Some of the peo­ple who worked on the orig­i­nal Peo­ples Gas project, some of the tech­ni­cal resources that worked on that project back in 2010 and 2011, were sub­ject mat­ter experts for us in 2021 when we did our implementation.

Q: Who end­ed up being the tech­ni­cal part­ner integrator?

A: We part­nered with Infos­ys and SAP to do the tech­ni­cal work and with Grant Thorn­ton to do the orga­ni­za­tion­al change man­age­ment work.

Q: As you look back, can you artic­u­late the key busi­ness dri­vers for change spe­cif­ic to the most recent S/4HANA imple­men­ta­tion for the water and waste­water and the tech­nol­o­gy drivers? 

A: Before SAP, our busi­ness users were using mul­ti­ple, best-of-breed tech­nol­o­gy plat­forms and had busi­ness process­es that were very depen­dent on the sys­tems talk­ing to each oth­er. They were required to work with a cou­ple of dif­fer­ent appli­ca­tions and then have report­ing tools to bring data togeth­er across those appli­ca­tions. It was a lit­tle bit of a spi­der web. We had a finan­cial sys­tem, a sep­a­rate cus­tomer sys­tem, a sep­a­rate plant main­te­nance sys­tem, and a sep­a­rate asset account­ing sys­tem. They all had inte­gra­tions. But if the busi­ness want­ed to look at a holis­tic view, they had to find the data in dif­fer­ent places from the cus­tomer’s van­tage point or the asset’s van­tage point.

From a busi­ness stand­point, our data is nat­u­ral­ly inte­grat­ed by cen­tral­iz­ing on SAP. It’s much eas­i­er to get at that cross-func­tion­al data to do the ana­lyt­ics we were look­ing to do. 

Anoth­er exam­ple is Fior­i’s capa­bil­i­ties and abil­i­ty to devel­op Fiori screens that sit on top of SAP to deliv­er the user expe­ri­ence we want. With our old­er appli­ca­tions, we had lim­it­ed abil­i­ty work­ing with the front end. So, as we bring new hires into the orga­ni­za­tion, they look at some of our old­er appli­ca­tions and say, ​“Oh, this is cum­ber­some to use. It’s a lot of clicks. The user inter­face is old. It’s not intuitive.” 

We’ve done some devel­op­ment in Fiori now that we’re on SAP. Instead of using mul­ti­ple native SAP screens, we’ve built one to two core screens with all the data our users need to do their jobs. It’s visu­al­ly appeal­ing and easy to get. It helps reduce those clicks. It helps reduce the new hire train­ing process and onboard­ing process. 

From a tech­nol­o­gy per­spec­tive, we did have some old­er appli­ca­tions that, while still sup­port­ed, were not going to have prod­uct invest­ment from the man­u­fac­tur­er. Those apps were going to be sun­set at some point, and cer­tain­ly, SAP has a long, healthy, active prod­uct roadmap.

That tech­ni­cal debt was a con­cern for us. We want­ed to get out of that sit­u­a­tion where we had some appli­ca­tions requir­ing a unique skill set. It took a lot of work to find tech­nol­o­gists who knew the appli­ca­tion, the code, the mid­dle­ware, the data­base struc­tures, and how that appli­ca­tion worked. SAP skills are a pre­mi­um, but many pro­fes­sion­als know SAP and plen­ty work in our indus­try. Hav­ing a much more exten­sive inven­to­ry of pro­fes­sion­als that we could tap into, to join our team or con­sult with us, to share best prac­tices, to help us con­tin­u­ous­ly improve was cer­tain­ly anoth­er dri­ver to go to SAP.

Q: Did you lead an effort to write a busi­ness case for the exten­sion of S/4HANA?

A: We did. We wrote the busi­ness case from the con­text of bring­ing togeth­er our two com­pa­nies. We had two of every­thing when we closed on the acqui­si­tion in 2020. We had two finan­cial sys­tems, two HR sys­tems, two cus­tomer sys­tems, and so on. To build the busi­ness case, IT and busi­ness lead­ers embarked on a nine-month effort to review and ratio­nal­ize every enter­prise sys­tem, ser­vice, and capa­bil­i­ty. We picked the best of the best across our foot­print and wrote a busi­ness case to embark on a four-year tech­nol­o­gy roadmap.

SAP was undoubt­ed­ly a major part of that. But we had to decide what to do with email, phone sys­tems, remote desk­top, HR, and so on. The busi­ness case was not sin­gu­lar­ly focused on SAP and whether to go to SAP or not. It was more about: we have all these sys­tems; which ones do we want to use going for­ward? We then put togeth­er the rea­son­ing and the ratio­nale for mak­ing those choic­es and all the val­ue it would dri­ve from a busi­ness and tech­nol­o­gy stand­point and pre­sent­ed it to our board.

Q: What types of val­ue dri­vers or val­ue out­comes were envi­sioned in that busi­ness case?

A: There were quan­ti­ta­tive and qual­i­ta­tive dri­vers. For some of the quan­ti­ta­tive dri­vers, we looked very hard at our cap­i­tal plans and invest­ments in tech­nol­o­gy. As a util­i­ty, both com­pa­nies had five-year cap­i­tal plans for how they would invest in new plat­forms. We looked at those plans and we were able to cut out a slew of projects that ini­tia­tives in our new roadmap would replace.

Also, quan­ti­ta­tive­ly, we looked at our oper­at­ing costs, espe­cial­ly our enter­prise con­tracts for tech­nol­o­gy ser­vices. We could say, ​“If we con­sol­i­date on this plat­form, we’re going to be able to cut our over­all oper­at­ing expense in this area by X per­cent,” or hard dol­lar sav­ings. Those met­rics were in our busi­ness case.

From a qual­i­ta­tive stand­point, we talked about how it’s a bet­ter expe­ri­ence for our employ­ees if there’s one help desk to call instead of two, and it’s more effi­cient to have one back­up sys­tem than hav­ing two. So, the speed of response from IT in answer­ing ques­tions from our employ­ees would be bet­ter. With com­mon plat­forms, our field ser­vices employ­ees and call cen­ter rep­re­sen­ta­tives can share best prac­tices across water and gas. Our strate­gic plat­forms also allowed us to cre­ate stan­dard report­ing for the whole com­pa­ny instead of water-spe­cif­ic or gas-spe­cif­ic reporting.

We talked about the effi­cien­cies you gain from hav­ing only one set of tools and how you can cross-train. Some­body on the gas side could do the job on the water side because they’re using the same tools and process­es, or you could merge depart­ments, which is what we did for a lot of func­tion­al areas. We brought them togeth­er and said, ​“Now it’s one team, and here are the com­mon tools we’re using.” So cross-train­ing is much eas­i­er to do because every­body’s using the same plat­forms. Those are some of the things that we iden­ti­fied in our busi­ness case.

Q: In the sec­ond tran­si­tion or track­ing back to the first, were there par­tic­u­lar chal­lenges — tech­ni­cal chal­lenges, inte­gra­tion chal­lenges, change man­age­ment chal­lenges? And how were they overcome?

A: I’ll speak to our most recent project because it’s the fresh­est and cer­tain­ly the largest in mag­ni­tude. We got the approval for our busi­ness case to begin our jour­ney in Decem­ber 2019. We com­menced the jour­ney in Jan­u­ary 2020, and COVID hit two months lat­er. We had to decide on whether we would con­tin­ue with our project and our roadmap as aggres­sive­ly as we had planned or whether we would slow things down or even pause. We made the strate­gic deci­sion that we could do it vir­tu­al­ly. We did not slow down. We did not stop. We pressed on dur­ing COVID and did every work­shop, design dis­cus­sion, and sign-off remote­ly. I would say every­body involved per­formed hero­ics to do their job. But I would be lying if I said that it was easy to run the project online.

There were a lot of dis­cus­sions we wish we could have had in-per­son, where we could put intel­li­gent peo­ple in a room and talk some­thing through instead of nav­i­gat­ing the mute but­ton and the dis­con­nec­tions and con­stant Zoom calls when you’re not get­ting the best of every­body. There was an over­hang on the project; we all worked remotely. 

We could come back in per­son as we got into test­ing and then into train­ing and deploy­ment, which was great. But it took a while to make deci­sions, final­ize designs, work through issues, and work through unex­pect­ed chal­lenges. That was hard­er to do remotely. 

When you have a project of this size, the resourc­ing of the project is para­mount. And we are firm believ­ers now that when you need busi­ness exper­tise, you go and find the peo­ple in your busi­ness that you want to work on the project, and you pull them out of the busi­ness and put them on the project. Peo­ple can only suc­cess­ful­ly do one job.

Q: Peo­ple who are 100% on the project?

A: That is our pre­ferred approach. Time and again, I come back in my career when we can pull the peo­ple we need and put them in a room and say, ​“You’re the project team. Go fig­ure it out.” You back­fill and allow the busi­ness to con­tin­ue run­ning day-to-day oper­a­tions, and there’s com­mu­ni­ca­tion between the two. It is hard to share resources between project work and pro­duc­tion sup­port in any dis­ci­pline. It takes a lot of work to ask the human mind to move between those two roles quick­ly and effectively.

Q: Any­thing else in terms of par­tic­u­lar challenges?

A: As I shared ear­li­er, change man­age­ment is huge­ly impor­tant. When peo­ple have been work­ing with tools, process­es, and poli­cies for 15 to 20 years, it’s just habit for them. Break­ing that and ask­ing them to do it a dif­fer­ent way is entire­ly fea­si­ble, but you must under­stand the psy­chol­o­gy of each per­son and fig­ure out how best to get them through that tran­si­tion. One size does­n’t fit all. As much as we’d like to think it can, it doesn’t. 

This is not nec­es­sar­i­ly a gen­er­a­tional thing. We’ve had expert pow­er users who are in the lat­er stages of their careers, and we’ve had pow­er users who are in the entry stage of their careers. We’ve had skit­tish users in their careers’ ear­ly and late stages. I would­n’t draw a gen­er­a­tional divide or stereo­type there. Each user has a thresh­old for how they man­age change. It’s para­mount to focus on that, under­stand it, and plan the train­ing and com­mu­ni­ca­tion, and readi­ness around those groups of people.

Q: Look­ing at the hall­mark results or out­comes, so far, what is top of mind?

A: We’re not even a year into our jour­ney with SAP as our sys­tem of record, and we are look­ing for­ward to tak­ing advan­tage of a lot of automa­tion and addi­tion­al work­flow. I would say we’ve built the foun­da­tion of the house, which is very sol­id. Now we are inside the house, using the kitchen and liv­ing spaces, and learn­ing and improv­ing dai­ly. We must keep our expec­ta­tions in check and keep our per­spec­tive that the way we’re using SAP right now is a big step for­ward, and we’ll con­tin­ue to build on that.

We haven’t cap­tured all the ben­e­fits that will come with it. We’re on an indus­try-lead­ing ERP plat­form that hun­dreds of oth­er util­i­ties use and have a long run­way of capa­bil­i­ties to use. I love that there are providers out there, pre­mi­um plat­inum providers, that inte­grate well, so there’s a lot of extend­ed func­tion­al­i­ty that we can lever­age. I love that there are providers out there, pre­mi­um plat­inum providers, that inte­grate well, so there’s a lot of extend­ed func­tion­al­i­ty that we can lever­age. We’re on our jour­ney, and I think a lot of val­ue is com­ing. We’re tak­ing the foun­da­tion­al steps, and there’s much more to come.

Q: What’s at the top of the list for 2023 in terms of improve­ments and automation?

A: One area of focus will be on accounts payable and ven­dor man­age­ment, and we’d like to get our ven­dors much more auto­mat­ed. We want them to use a por­tal and sub­mit invoic­es to us through that, allow­ing for some automa­tion and work­flow so that our accounts payable group is work­ing more than the aver­age trans­ac­tion­al volume.

We’ll con­tin­ue to inte­grate oth­er appli­ca­tions. We’re on ver­sion 1809 of HANA and need to upgrade to ver­sion 21 or 22. I think 22 just came out, so we’ve got to look at that, but we will need to do an in-place HANA upgrade over the next year.

Q: What resources have you used across the indus­try in addi­tion to your part­ners? Have you con­tact­ed peers? Do you have a kitchen cab­i­net of advisors?

A: I fre­quent­ly net­work with oth­er com­pa­nies, whether water and waste­water com­pa­nies or broad­er util­i­ty com­pa­nies that use SAP. I have called many glob­al CIOs and spo­ken with them about their SAP jour­ney and how far along they are. I’ve called on some and said, ​“I know you use SAP and sys­tem X. We have ques­tions about that inte­gra­tion. Can we talk?” We’ve got the tech­ni­cal teams on the phone to talk through it. I think we’ve got a healthy dia­logue going. Our finance, CFO, chief account­ing offi­cer, and con­trollers are in touch with peers at oth­er util­i­ties who use SAP to talk about report­ing, con­sol­i­da­tions, month-end close, or accounts payable to share and gain insights. Cer­tain­ly, at the SAP for Util­i­ties [con­fer­ence], we spent a lot of time get­ting con­tacts and talk­ing with oth­er com­pa­nies about their usage. I think we can learn from them, and they can learn from us.

Q: There were com­ments at the con­fer­ence that the util­i­ties’ indus­try cul­ture is one of com­mu­ni­ty and not nec­es­sar­i­ly one of com­pe­ti­tion. Has that been your experience?

A: I would say yes. Util­i­ties, by their nature, are a monop­oly. Our cus­tomers only have a choice, unless they’re real­ly unhap­py and want to sell their home and move or switch apart­ments. We have a dif­fer­ent rela­tion­ship with our cus­tomers. There­fore, the con­cept of com­pe­ti­tion, the way you might see it in retail, man­u­fac­tur­ing, or con­sumer goods, is entire­ly dif­fer­ent. I know I can pick up the phone and call any CIO at any util­i­ty and have a con­ver­sa­tion or at least start the dia­logue and have a con­ver­sa­tion. I’ve been on the receiv­ing end of many calls and am hap­py to share infor­ma­tion. We are a com­mu­ni­ty geared towards help­ing each oth­er. Every con­ver­sa­tion leads to at least one, if not mul­ti­ple, learn­ing points, which then lead to addi­tion­al dis­cus­sion and more learn­ing. I want us all to be suc­cess­ful. We’ve invest­ed a lot in these plat­forms, and our busi­ness­es can’t run with­out them. Coop­er­a­tion, part­ner­ship, and will­ing­ness to share are dif­fer­en­tia­tors to mak­ing work­ing in the util­i­ty space attractive.

Q: The ASUG mis­sion is to help our mem­bers and cus­tomers get the best val­ue from their invest­ments in SAP tech­nol­o­gy. How are we doing that for you?

A: We’re at the begin­ning of our jour­ney with ASUG. At least, I am, hav­ing come into SAP only in the last two years. I don’t have a lot of expo­sure and expe­ri­ence with ASUG yet. I’m look­ing for­ward to build­ing that, at least for me personally. 

I had a chance to talk with a num­ber of mem­bers and a num­ber of folks from SAP in San Diego. One of the things we were kick­ing around was a new fea­ture in the inno­va­tion hall. At the con­fer­ence in the inno­va­tion hall, many SAP part­ner ven­dors were there. I offered that it would be extreme­ly valu­able for part of the inno­va­tion hall to be ded­i­cat­ed to util­i­ty rep­re­sen­ta­tives and have util­i­ties set up with tables with experts from the com­pa­ny. You could even have dis­plays that say, ​“Hey, we just com­plet­ed our HANA jour­ney. Come talk to us,” or ​“Hey, we just imple­ment­ed BPC, come talk to us if you’re doing that.” There’s so much pow­er in the mem­ber­ship, talk­ing to each oth­er and exchang­ing ideas, but find­ing those peo­ple with the cur­rent lay­out is chal­leng­ing. We were kick­ing that around, and I’d like that idea to get some legs and poten­tial­ly be incor­po­rat­ed at SAP for Util­i­ties next year.