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Realtime Reporting_WEC Success Story_FINAL

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Realtime Reporting_WEC Success Story_FINAL

  1. 1. www.pwc.com We Energies’ Success Story Real-Time FERC reporting, budget monitoring & management decisions Speaker Saugata Ghosh, PwC, Director - SAP Advisory
  2. 2. PwC WEC’s Success Story An introduction • Wisconsin Energy Corp. (WEC) operates under the name We Energies and owns electric and gas utilities in Wisconsin and Michigan. • Previously, WEC used SAP’s traditional FERC solution for regulatory reporting. Beginning with 2014, WEC converted to a ‘Real-Time FERC’ solution, leveraging functionality introduced with the latest version of SAP’s General Ledger. • ‘Real-Time FERC’ has allowed WEC to overcome significant challenges associated with increasing demands on speed to information and increasing demands for reporting transparency. 2
  3. 3. PwC Business Requirements Stemming from challenges with traditional FERC Solution Regulatory Reporting: • Prepare FERC financial statements by legal entities, utility (i.e., electric, gas, and steam) and jurisdiction (states) • Simplify cost trace • Eliminate manual reconciliation as well as need for re-processing • Accelerate period close • Simplify reporting and enhance user experience • Address audit questions in timely and efficient manner 3 Management Reporting & Decisions: • Compare ‘actual’ against ‘plan’ and ‘forecast’ by FERC on a real-time basis, instead of month-end. • Support management decisions with real-time information.
  4. 4. PwC FERC Account Utility Code Tax Jurisdiction Commission Approved Rules Regulatory Attributes 4 • Regulatory attributes being derived real-time • Natural and FERC accounts being captured in same transaction lines • Derivation strategy based on nature of accounts and cost objects Account Relationship • Balance Sheet and Revenue: • Natural accounts to be directly mapped to FERC accounts (one to one or many to one) • Expenses: • Cost Objects to have FERC attributes. • Common costs (e.g., O&M) to be allocated based on business rules. Real-time FERC with SAP New GL Solution Overview Regulatory Attributes
  5. 5. PwC Example with Direct Mapping Classic FERC vs. Real-time FERC documents 5 D/C Natural A/c A/c Name USD Cost Obj. Dr. 232001 Accounts Payable 1,00 0 Cr. 131310 Bank 1,00 0 Classic FERC Document # xxxxxxxxxx, Posting Date = 01/10/XX D/C FERC A/c A/c Name USD Cost Obj. Dr. 232.00 Accounts Payable 1,00 0 Cr. 131.00 Bank 1,00 0 Document # xxxxxxxxxx, Posting Date = 01/31/XX D/C Natural A/c A/c Name USD Cost Obj. FERC Account Utility Code Jurisdiction Allocation Rule Dr. 232001 Accounts Payable 1,00 0 232.00 00 00 000 Cr. 131310 Bank 1,00 0 131.00 00 00 000 Document # xxxxxxxxxx, Posting Date = 01/10/XX Real-time FERC Single Source of Truth Real-time No Tracing Back and Forth Simplified Reporting Month-end
  6. 6. PwC • Migrated from Classic GL to New GL • Extended accounting data structure to capture regulatory attributes in FI and CO transactions • Re-designed I/S Chart of Accounts (Natural) and Cost Elements in line with FERC • Added regulatory attributes in GL Master • Added regulatory attributes to Cost Objects (i.e., Cost Centers, PM Orders, Internal Orders, and WBS Elements) • Defined new ‘Financial Statement’ version and Cost Element hierarchy (“single source of truth). • Developed enhancements for deriving regulatory attributes while posting transactions. • Derivation strategies based on type of Accounts. - Revenue and B/S based on GL master; Expenses based on Cost Objects - Leveraged custom table for special FERC derivation rules (e.g., sender for benefits overhead) • Modified cost allocation models, select processes moved from month-end to daily run. • Activated real-time CO-FI integration for keeping General Ledger and Controlling in sync • Developed new reports and modified old ones using Regulatory attributes 6 Regulatory Attributes: • FERC Account • Utility Code (e.g. Electric, Gas) • Tax Jurisdiction (States) Real-time FERC Design Elements in SAP ERP Further improvements in subsequent Phase: • Standardized the use of Cost Objects (using WBS hierarchy) across BU’s. • Re-designed PowerPlan system to align with new cost models and allocations in ECC.
  7. 7. PwC • Modified BW data architecture and extractors. • Implemented utility and tax jurisdiction level allocations within BW • Designed BEx/BOBJ reports for simplifying and enhancing user experience • Key reports: - Management Actual vs. Budget vs. Forecast - SEC financial statements - FERC financial statements - FERC income statement by Utilities (electric, gas, steam). - FERC income statement by Tax Jurisdiction (states). 7 Real-time FERC Design Elements in SAP BW Regulatory Attributes: • FERC Account • Utility Code (e.g. Electric, Gas) • Tax Jurisdiction (States)
  8. 8. PwC 8 Benefits of Real-time FERC Helping in transforming Finance organization ‘Real-Time FERC’ has allowed WEC to overcome significant challenges associated with increasing demands on speed to information and increasing demands for reporting transparency • Regulatory reporting parameters derived real-time. • No need to wait for month-end FERC processing. Real Time • Single source of truth for financial, regulatory, and management reporting. • All transaction lines have both Natural and FERC account information. Single Source of Truth • No tracing back and forth between Natural and FERC accounts. • Easy drill-down to details for source of transactions (PO number, Employee, etc.). Easy Audit Trace • Improved management and operational decisions with real-time information.Value of Time • Less efforts during month-end close due to elimination and reduction of many month-end processing and re- processing activities. Faster Close • Simplified multi-dimensional reporting.Easier Reporting • No need to maintain two separate sets of GL accounts in your Chart - Natural & FERC. • More flexibility in how you design and execute the cost models. Master Data • Better integration with other key Finance systems. System Integration • Minimal change for the operational business users.Easy Transition
  9. 9. PwC • Not ‘out-of-the-box’ standard solution. Requires user-defined enhancements based on specific business requirements. However, same statement is true for traditional FERC as well. • To achieve 100% real-time and eliminate dependency on ‘month-end’, various allocations (like overhead, settlement) can be run on a more frequent basis. However, you should consider volume and performance impact. • For retaining source information (like PO number, material, employee Id, etc.), the common costs can be allocated using FI allocation instead of CO settlement. However, you should consider volume increase, performance and also impact on reports currently being used. • Consider limited re-design of COA (Natural Accounts) in line with FERC, as appropriate. • Consider fiscal calendar and budget cycle for determining the timing for the transition. • Plan for adequate training and change management within the Finance organization. 9 Implementing Real-time FERC Key Considerations
  10. 10. PwC • Consider re-designing cost objects and allocation models to better align with real-time FERC. • Consider impact on other systems interfacing / exchanging financial data with ECC and BW. • Leverage BI and BPC reporting tools for improved user experience. • Explore other improvement opportunities with o Functionalities like Segment reporting, Real-time Overhead, New GL allocation. o SAP HANA and future finance solutions like Simple Finance.  Real-time FERC solution is built on SAP New GL and hence better aligned with SAP's future roadmap of Finance solutions. 10 Implementing Real-time FERC Additional Considerations
  11. 11. PwC For more information, please contact… 11 Saugata Ghosh, Director, PwC SAP Advisory 408 623 9572 saugata.ghosh@us.pwc.com
  12. 12. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2015 PricewaterhouseCoopers LLP. All rights reserved. PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.