Generational renewal of the ČEZ Group's procurement system

The ČEZ Group, one of the largest companies in the Czech Republic and one of the leading energy groups operating in Europe, has decided to implement a generational renewal of its existing procurement system in view of the approaching end of support for the system, and has invited con4PAS, a leading provider of consulting services in the field of procurement processes, to undertake this challenging project.

June 10, 2024

After the implementation of the new procurement solution and more than five months since its launch and its use by approximately 9,000 employees, it is a good time to evaluate the changes that have taken place. But before focusing on evaluation, let’s look back at the evolution of the procurement processes’ digitisation.

Procurement digitisation history:

The ČEZ Group used the SAP SRM unified procurement system since 2008. The system covered both strategic procurement (P2S – procure to source) and operational procurement processes (P2P – procure to pay), including electronic communication with suppliers.

In 2013, the procurement departments of the individual subsidiaries were merged into the Procurement division of the parent company ČEZ, a. s.The Procurement department, as a centre of excellence, began to provide procurement services to 16 companies of the ČEZ Group and later also to 4 companies belonging to the Severočeské doly Group. Over the years, the system evolved and the digitisation journey was in full swing.

Below is an overview of the most important milestones in the digital transformation.

The ČEZ Group’s Procurement department also involves the Process and Methodological Support team, which significantly contributes to smooth and efficient operation of the entire procurement system and also provides support to users and suppliers.

How to change an entire information system with flying colours.

On its digital journey, the ČEZ Group has gained a lot of experience in the area of system implementation by deploying and rolling out new functionalities as well as by developing electronic communication with suppliers. As part of evaluation of the experience, it has started a new phase of generational renewal, incorporating lessons learned from previous years.

Project preparation:

The ČEZ Group decided to choose a solution from the SAP family again for its overall Generational System Renewal strategy. In the case of the procurement system, it was decided to replace the SAP SRM solution with the SAP S/4 HANA for Central Procurement solution – the latest solution supporting centralised management within the following scenarios:

central requisitioning;
central purchasing;
central contract management;
central selection of suppliers.

The SAP Ariba solution was selected for electronic communication with suppliers:

SAP Ariba Guided Sourcing (publishing RFx and auctions requiring electronic submission of supplier bids).
SAP Ariba Supplier Lifecycle and Performance (tools for easy and fast supplier registration and subsequent management in the cloud).
SAP Ariba Network (electronic exchange of documents with suppliers).

Project implementation:

Replacement of the SAP SRM procurement system was carried out within two parallel projects:

The first project focused on implementation of a central procurement system (SAP S/4 HANA for Central Procurement (9/2022–1/2024) with integration into 4 connected SAP ERPs and 1 connected SAP S/4 HANA system);
The second project (3/2023–1/2024) focused on electronic communication with suppliers through the SAP Ariba solution.

To ensure the success of the procurement projects, a strategy was built on the following pillars, which have already proved their worth in previous projects:

I. Internal communication has been an important factor from the beginning. Key purchasers from specialist departments were involved in the project. From the first project meeting, there was very strong and clear support from the top management, which had a motivating effect on all members of the project team.

II. Gradual implementation – the transfer of functionalities for testing was carried out continuously by means of “functional packages” (comprehensive functionalities) so that there was enough time to ensure expert departments’ professional capacities to verify them.

Aleš Skřítecký, head of the department Procurement of Services for the AK, AO, AS Logical Units, evaluates the involvement of procurement departments in projects as follows:

“Co-operation of procurement departments to verify the system according to real procedures, which was very time-consuming in view of the large number of test scenarios, as well as the possibility of substantive discussion leading to adaptation of the entire system to the actual procurement activities and processes carried out in the ČEZ Group, was very beneficial as it minimised problems related to the continuous transition and allowed successful implementing of the new purchasing system. At the same time, this co-operation enabled more effective transfer of information, working procedures and experience to other purchasers during individual trainings, which also contributed to eliminating downtime in procurement activities and successful transition to the new procurement system.”

III. Continuous testing and quality control – Test scenarios for each functional package were distributed among the team members. Error records, including up-to-date statistics, were available at all times to project managers and top management. At the same time, the quality of the setup and customer development were continuously checked.

Petra Terbrová, a supplier’s project manager, describes her experience with testing the entire project such as:

“The ČEZ Group had a unique, helpful, expert implementation team, which made working on the project a pleasure. All team members kept a positive mindset even in difficult moments. The deployment of the systems itself was destined to be a success, despite the pitfalls that arose during the process, which is inevitable even with the most successful projects.”

IV. Involvement of users (employees) – an information campaign was created throughout the project to keep employees informed of the planned changes. At the end of 2023, intensive training sessions were held for six weeks at all sites so that purchasers could get familiar with the new systems well in advance. Two training sessions were held in parallel, with 25 purchasers trained per session. Detailed user documentation was also prepared.

Andrea Hesová Dubská, Head of the Process and Methodological Support department, says of the hectic pre-Christmas time associated with the training of all ČEZ Group purchasers in retrospect:

“Our colleagues from Procurement were very intensively involved in the training, they actively managed working with the new systems and their proactive approach was a nice cherry on top of the implementation phase and a pleasant early Christmas present for all members of the project team. This was actually the first feedback showing that the work of the project team was well done.”

V. Supplier engagement – in late 2023 and early 2024, supplier summits were held to inform suppliers about the new solution functionalities and the terms of use. Within a very short period of time, i.e. less than two months, the first wave of suppliers was registered, comprising more than 1,500 suppliers. The fact that registration is completely free and the process of its completion is very simple contributed to the large number.

The solution itself is intuitive and easy to grasp for suppliers. A great added value is that suppliers do not need to invest in their infrastructure and integration.

New procurement systems in action:

The range of products purchased in the ČEZ Group varies enormously, from fuel for nuclear reactors, through maintenance of existing production sources, construction of new production sources, data centre HW to protective equipment (PPE) and common office equipment. In short, the ČEZ Group purchases “everything”. The annual statistics of purchase receipts are never-ending.

In preparation for productive operation, active documents were migrated to the new procurement system. The migration involved tens of millions of records, including related attachments, which was also a difficult and time-consuming task.

The procurement process was launched in January 2024. From the first moment, the whole P2P process was fully operational. Of course, there were some shortcomings, especially in the cloud environment of the SAP Ariba Guided Sourcing system, as RFx and auctions publishing was not quite ready for the Czech environment and the volume of transactions. However, those problems were managed and the solution could be fully exploited.

The first months of operation of the new systems were busy for everyone, for the Procurement departments, colleagues from the Process and Methodological Support Unit, as well as colleagues from the ČEZ ICT Unit including the supplier con4PAS. Although the systems were stable, the transition period was challenging for all staff. Overcoming the fear of change and getting used to something new brings concerns and nervousness in itself, and when the change affects 9,000 users, it is clear that it is a kind of “procurement revolution”.

The following statement summarises the evaluation of the changes from the perspective of the Procurement Director Barbora Dvořáková very succinctly and is a conclusion to the almost two-year effort of the entire project team:

“The project team worked at full speed, the supplier con4PAS was a reliable partner throughout the implementation; I gratefully acknowledge its friendly and flexible approach, which we appreciated especially after the launch of the systems, when it was able to support our colleagues in the procurement process, as well as in technical and integration issues. Colleagues from Procurement quickly adjusted to the new environment and the procurement processes have already got back on track. We built the original procurement support system gradually over 16 years, and now we have reached a similar level of functional scope. In a very short period of time, we managed to establish electronic communication with almost 2 thousand suppliers within the SAP Ariba solution and we are planning to connect other groups of suppliers. We are now focusing on further development, which should in particular support even greater process automation and paperless communication.”