Economic growth is on the move in Mexico – and with it a jump in the demand for electricity. From new business growth in the region to a steady rise in private consumption, Mexico’s appetite for power is expected to increase over the next decade, prompting The Comisión Federal De Electricidad (CFE), Mexico’s publicly owned power utility, to boost production – as much as 35% in 10 years.

To succeed, management realized that it would have to draw heavily upon all of the company’s resources – and extend CFE’s footprint well beyond its original charter. Founded in 1937 to generate the power needed to stimulate Mexico’s economic growth, CFE has traditionally provided electricity for the country’s residential and business customers. The utility became publicly owned in 1960 to speed up electrification of the country beyond Mexico City. But in 1992, CFE’s competitive landscape changed. The Mexican Congress changed the law to allow independent power producers to produce energy.

CFE’s business processes were transformed with a fresh set of new opportunities. And SAP was the partner of choice to build the IT infrastructure needed to realize that vision,

Seizing opportunities

As an SAP customer since 1998, CFE had already implemented many best-practice processes for greater efficiency and cost savings. But as the utility’s production costs began to soar, CFE fell under growing pressure to rebalance its rising fuel costs with personnel costs. And the lack of centralized procurement processes meant that CFE was unable to fully leverage its purchasing power.

After senior management reviewed the solutions of several software companies, CFE chose to upgrade its current SAP software to SAP ERP through the SAP MaxAttention support option. A team of dedicated SAP technical account managers, specialists, and developers helped CFE implement SAP ERP on time and on budget, providing the company with a new set of solutions to achieve its ambitious goals.

The solution has allowed CFE to integrate the organization’s financials, purchasing, plant maintenance, and logistics processes according to best practices, resulting in significant savings in hardware and total cost of ownership. It has also given CFE complete transparency across its operations, enabling senior management to make business decisions based on real-time data. The procurement monitoring functionality of SAP ERP Operations, for example, gives CFE a much greater control over supply costs. Managers can now monitor and analyze purchasing activities throughout the company to keep a tighter lid on spending. And the enhanced ability to control inventory has greatly increased efficiency.

“SAP ERP has improved system performance dramatically,” says Francisco Santoyo, CFO of CFE. “It has allowed us to reduce the maintenance periods in the generating centrals and to drive greater performance in the emergency assistance program.”