Severn Trent has started phase two of its SAP implementation after achieving cost savings of around £5 million this year from restructuring its support functions.
“We’re realising the benefits of the first phase of our SAP deployment, with the majority of the 275 role reduction [in support functions] already completed, with around £5 million saving this year and £10 million next,” the company said in its latest results for the six months to 30 September 2010.
These savings are part of the £22.2 million cost savings that the company said last November it was “on track” to deliver by improving business processes, introducing a lean management structure and moving to a central office in Coventry.
The ‘role reduction’ includes job cuts in the company’s back office functions, including IT, administration, finance and HR.
“[The job cuts] came about as a result of our combined investment in new processes, new systems, notably SAP, and the continued development of our people through training and up skilling. To us this is what “continuous improvement” means,” Severn Trent said.
The water company is now rolling out SAP to employees in the field, which forms phase two of the implementation programme.
It said: “In time [this] will improve productivity, maintenance and scheduling.”
The company said that during the period its ongoing efficiency programmes cost £6.2 million, which includes the costs related to the second phase of the SAP rollout, and the move to the new Severn Trent Centre in Coventry, where 1,200 employees are now based.
In spite of its efficiency projects, Severn Trent recorded a 51.4 percent fall in pre-tax profits from £208.2 million in the six months to 30 September 2009, to £101.1 million this year.
However, the group’s turnover had increased by 1.9 percent from last year, from £852.1 million to £867.9 million, and chief executive Tony Wray said: “We are pleased to report that despite challenging markets, Severn Trent Services has returned to growth, as expected.”