Kathy Gibson is at Saphila Transcend in Sun City – Collecting revenue from electricity users is vital for the City of Tshwane’s financial health, but outdated and inefficient systems have been playing havoc with its ability to do so efficiently.
The city, which serves around 4-million citizens, had to come up with revenue strategies against a backdrop of numerous challenges.
Mpho Molefe, chief solutions architect at Zimele Technologies, explains that Tshwane recognised that there were a few ways it could improve revenue collection.
The first of these strategies was the Tshwane yaTina campaign that focused on disconnecting non-paying users.
It also realised that installing prepaid meters for indebted consumers could help to lower non-payment, along with other interventions such as implementing debit orders or negotiating payment plans.
Large power users (LPUs) like factories or malls are the biggest consumers, so connecting them to a pre-payment platform would make a big difference.
Simplifying payment platforms for all users would go hand-in-hand with outreach programmes to engage with customers who might not be able to reach the city with queries or payments.
Meter reading was identified as a key step in completing the meter to cash lifecycle.
Electricity makes up a big portion of the city’s service charges, which include water and sanitation. For a few years, revenue was growing well, then fell off by almost R5-billion in the 2022/2023 financial year – probably as the effects from Covid-19 came through the system.
In the 2023/2024 period, the revenue collected rose again, by almost R5-billion.
To reverse the negative trend and get revenue moving in the right direction, Molefe explains that the City of Tshwane leveraged a number of digital technologies to enhance service delivery and increase payments.
Musa Khumalo PhD, group head: shared services at the City of Tshwane, points out that revenue and customer engagement both suffered during the Covid period.
“But revenue management is one of the biggest causes of financial distress for local governments, and it affects the social sustainability of municipalities.”
Revenue collection was experiencing a number of challenges associated with delays in manual meter reading, as well as theft, tampering, and faulty meters.
This resulted in revenue leakages – while under-collection became a problem due to longer meter reading and billing cycles, and inaccurate meter readings and estimation.
Compounding the challenges were fragmented and non-integrated systems coupled with inaccurate customer information and insufficient customer channels.
“The range of challenges extended beyond these,” Khumalo adds. “But the biggest challenge was in billing – if you can’t do this correctly, you have a problem. And you can’t do credit control on wrong billing, because the customer will simply reject any action.
“The second part of the problem was collections. Now that you have billed, you have to collect.
“And, finally, we needed a way to interact with customers receiving the service and recognising that there are different types of customers: those that pay happily, those that pay grudgingly, those that battle to pay or pay late – possibly because they are distressed – and those who simply never pay.”
The city turned to a public-private partnership (PPP) engagement model to help solve its many issues.
Khumalo explains that in 2019 Tshwane transitioned away from a single SAP support partner by enabling a panel of service providers to provide support, enhancement, and implementation of SAP-related solutions. This led to the appointment of three service providers, with Zimele responsible for SAP Utilities and CRM.
“They were mandated to assess and understand the current setup, and identify a digital transformation roadmap.”
Zimele proposed a solution in three phases.
Short-term wins would empower meter readers, giving them the tools to be effective. This phase would see the implementation of an advanced metering infrastructure with MDMS for LPUs, and the implementation of SAP-based meter reading applications.
The medium-term is about empowering users, with wins enabled by the implementation of SAP-based financial management with a credit control application, and the implementation of the SAP Smart Payment (wallet) solution for LPUs.
In the long-term, the plan is to implement the Sinch Contact Centre with omnichannel and extensions, and the implementation of the RPS solution for debt management.
“The long-term wins aim to build long-term relationships with our customers,” Khumalo says. “So, we will be able to tailor the message to the customer.
“Part of the what the roadmap looked at was to not simply throw technology and tools at the problems,” says Khumalo. “This is what usually happens: people panic and think about what they can buy.”
But the City of Tshwane was also in the middle of a move to SAP S/4 HANA so it needed to think holistically about people, technology, tools, and processes.
The city’s implementation strategy started with understanding the environment, while also looking to the future.
Khumalo explains that this involved also understanding the audit environment, including assessment and due diligence. A surprising initial finding was that 200 large users were not actually being billed at all.
The project roadmap involved implementing smart meter integration components in the first phases, digital mobile applications in the second phase, and customer engagement in the third phase.
Among the benefits that the city has already seen are seamless and direct integration to the core billing systems and a faster revenue collection cycle.
In addition, reporting is now in one system, a lot of manual work has been automated, and the city is getting an omnichannel and 360-degree view of the customer.
“We have solved not just finance problems, but also financial management,” Khumalo says.
Molefe explains that when Zimele got involved, Tshwane’s meter reading accuracy was just 27%. The new solutions were able to quickly move this to over 80%, and not long after, well into the 90% and above range.
Initially, the city was running an SAP system for billing, but the meters were not integrated. They had been sourced from a number of different vendors, with some being prepaid, some smart, and some traditional meters.
“We had to identify where the savings were to be had,” Molefe says. “We realised that 80% of the revenue sits with LPUs and that showed us where our focus needed to be.”
Zimele quickly realised that Tshwane had AMI licences that were not being used, so these were quickly activated.
“We converted the PI to PO, and now we had an integrated platform.”
The next step was to install the MDMS, which had to be meter agnostic because of the wide range of meter types out in the field.
The city already had a communication network which was activated so smart meters can talk seamlessly into the ISU. This also allows meters to be managed from the system.
“So we were live on AMI and MDMS, but some customers still had communication issues,” Khumalo explains. “So we brought in a meter-reading app that also integrates seamlessly into ISU.
“The ISU can now send instructions to readers about where they must read meters, and those readings are synched immediately. This means the back-office can start doing validations.”
Traditionally, the meter reading cycle is five days, which means there is no time to resolve issues. And the importation of flat files means the city can’t identify issues as they occur.
“By synching reading automatically, you can pick up issues and send people out to resolve them,’ Molefe says. “You can also measure the performance of the reader, check they went to the right properties, and that they did the readings.”
Field service management used to be an issue. When meters are replaced, there is a process within ISU to create a new meter in SAP. This can take about 15 minutes per meter.
“So we wrote a meter replacement program that captures details of what’s happening in realtime; and an engine in the system does the replacement within seconds.”
A similar system takes care of disconnections.
One of the biggest benefits of the new system is in converting LPUs from post-paid to prepaid.
“Once AMI was stabilised, we activated prepayment,” Molefe says. “A typical cycle would have been to receive payment 60 to 90 days after the power was consumed. Now, they pay before they consume. This has had a positive spin-off for the city.”
When thinking about customer engagement, Tshwane had to recognise that not every citizen has a smartphone. “But people may want to pay their accounts or submit readings, so we instituted a USSD solution. Now users don’t need a fancy phone to engage – and as many consumers as possible are included.”
Looking ahead, the City of Tshwane aims to expand its smart services and increase citizen engagement. It will improve financial transparency, increase revenue channels, and start enjoying AI-driven efficiency.
All services will be available in a municipal digital marketplace.
Finally, the city is engaged in ensuring that its people are empowered. “You can build the best system, but if people do not understand how to use it, you end up with a white elephant,” says Molefe.
“People need to be enabled, so change management and training are key.”