Madrileña Red de Gas, a regulated distributor of natural gas in Madrid, was established in 2010 after being divested from the gas distribution firm Nedgia. Despite having an established network and customer base, the company lacked any IT infrastructure. This prompted a temporary agreement with the distribution company to provide IT services, creating a strong business incentive to implement an IT system at Madrileña Red de Gas swiftly.
Glen Lancastle began his tenure as the chief information officer (CIO) in 2010. However, as the company began to engage in more customer-oriented activities, the need arose to leverage IT to enhance customer value. Consequently, he assumed a dual role as both CIO and chief operations officer.
With prior experience at IBM implementing SAP IS-U Meter-to-Cash solutions for utilities across Spain, Ireland, the UK, and Greece, Lancastle opted for a standard deployment of the core SAP Enterprise Core Components (ECC) along with the IS-U module. This was fully operational within six months. Reflecting on the initial SAP deployment, Lancastle explains, “My philosophy, shared by our CEO, who has an IT background, was to implement the software as designed, with minimal customization.” While this approach initially resulted in challenges related to change management, over the past decade, increased customization has become necessary.
Despite SAP IS-U’s advancements over time, Lancastle questioned the value of aligning the implementation at Madrileña Red de Gas with the latest SAP releases. “While SAP has evolved, its architectural approach has lagged, causing gas distribution firms to remain stagnant instead of progressing with new versions,” he comments. He also expresses skepticism about SAP’s clarity in its strategic roadmap, pointing out the shift from the Hana database to S/4Hana and the transition to cloud services and SAP Rise, which lacked a clear relational narrative.
Lancastle perceives SAP as prioritizing revenue sustainability, which complicates relationships for companies like Madrileña Red de Gas that do not need the latest versions. He cites SAP’s software audit of Diageo, which resulted in £54 million in license fees for indirect access, as a source of distrust among customers, leading Madrileña Red de Gas to cease communication with SAP due to the absence of a key account manager and support contract.
As a gas distribution entity, Lancastle emphasizes the importance of operational efficiency. “We cannot significantly grow our business; thus, efficiency extends to our IT operations. We implemented SAP and aimed to avoid purchasing additional licenses.” When SAP announced the end-of-support for ECC, justifying a transition became increasingly challenging, resulting in uncertainty and frustration among customers.
“A key strength of ours is risk assessment,” Lancastle observes. They acquired application support from a provider, while SAP’s license support model merely allowed access to a maintenance platform, which proved inadequate over time. “Despite heavy SAP usage, we found our engagement with SAP support minimal.”
After deciding against continuing with SAP support, Madrileña Red de Gas opted to use Spinnaker for third-party support to serve as a safety net. “It’s essentially just an insurance policy, which I hope remains unused,” Lancastle notes, adding that it’s crucial to have capable support ready if needed.
Despite a broad IT infrastructure, the operation is managed by only three individuals, with all other services outsourced. “We focus on service management, valuing our relationships with third-party providers while avoiding unnecessary bureaucracy,” he explains.
Lancastle views the partnership with Spinnaker as a logical choice. “The discussions were straightforward; they appreciated that my intent was not to heavily rely on their services but rather utilize them as a precautionary measure.” He underscores the distinction between businesses that routinely depend on third-party support and those that do so infrequently. “As a CIO, having that safety net is important, and I believe Spinnaker grasps this necessity.”
The impending discontinuation of ECC support in 2027 has been a key topic in discussions with Spinnaker during contract renegotiations. “They provided valuable insights, connecting me with team members who share our perspective—that there’s no pressing need to abandon ECC until we choose to, even demonstrating their capacity to maintain older SAP and Oracle systems that are two decades old,” he explains.
For Lancastle, the ability to continue utilizing ECC beyond its official end-of-support date allows the company valuable time to strategize for replacing its aging IT system. Additionally, knowing that Spinnaker also supports other clients making similar assessments instills confidence that he is not navigating this landscape alone.