Thursday, September 26, 2019

Case Study: Optimizing FERC Accounting for Utilities on SAP

In anticipation of its migration to SAP S/4HANA in 2023, Salt River Project engaged HPC America to evaluate its current SAP Financials processes and results, and to identify areas for improvement that would not only deliver immediate benefits, but also streamline the utility’s eventual transition to S/4HANA.
Hear SRP speak about its FERC optimization project at the 2019 SAP for Utilities conference
One particular area for improvement the team identified was around SRP’s FERC data: it was hard to understand and tie back to participation billing, and did not fully support audit and pricing processes. The data required for external audiences did not reconcile to the operational data used to create internal financial statements, and, as experienced by many utilities running the standard FERC module, the differences were difficult, if not impossible, to explain.

After the assessment, SRP engaged HPC to optimize its FERC model with HPC Utility Financials Accelerator (UFA) add-on software. HPC UFA eliminates the FERC module’s limitations, and runs on both SAP ECC and SAP S/4HANA. Five months later, SRP was ready to go live with its new FERC design. The project achieved all intended objectives and more: SRP’s balances by FERC account now match exactly—to the penny—its reports by order number, WBS element, cost element, and cost center, thereby making functionalized data far more intuitive for users to analyze.

Download the full SRP case study, hear SRP speak at the 2019 SAP for Utilities conference, and learn more about HPC America's accounting solutions for utilities on SAP.

Friday, September 20, 2019

Continuous Accounting for Utilities on SAP S/4HANA

For too long, utilities have been beholden to batch accounting processes that delay financial analysis, obscure timely visibility into job spend, and hinder proactive mitigation of variances. The “monthly close” is such a foundational element of the business that it’s hard to imagine not relying on it. 

It doesn’t have to be this way, however, and HPC America’s vision for the future is decidedly different. When utilities move to SAP S/4HANA, they have a tremendous opportunity to get more timely, actionable financial information without waiting for period-end, by taking concrete steps towards “continuous accounting.”
Get the Continuous Accounting white paper (PDF)
Why Continuous Accounting Matters
At HPC, we think of “continuous accounting” as embedded, real-time, or otherwise automated processes that replace traditional period-end batch processes. Continuous accounting processes generate valuable financial data on a more regular and frequent basis than the monthly close alone. A utility with a continuous accounting model would enable its analysts and managers to evaluate and take action on operational performance, spend variances, and other business metrics without having to wait for a period-end report.

For example, collecting functionalized cost data in real time would allow analysts to identify and correct mischarged postings before month-end, thereby making the actual closing process less error-prone. Likewise, loading overheads more often than monthly would provide project managers with fully loaded cost views of their projects mid-month, which would in turn enable them to adjust resources proactively in the current period instead of reacting after the period has been closed.

Six Ways to Continuous Accounting on SAP S/4HANA

(1) Functionalize costs at the point of data entry instead of in a batch process at month-end.
Replace the derivation-based FERC solution that’s delivered with S/4HANA with a real time, line item design. There are a number of ways to do this, depending on how much flexibility and control your utility needs. One is to use HPC’s latest add-on software for utility financials on S/4HANA, HPC DECIPHER, which is certified by SAP as integrated with SAP S/4HANA, and eliminates the FERC module that we created 25 years ago.

(2) Minimize cost flow streams...
by reducing (or eliminating) allocations and settlements that only serve to functionalize costs. Streamlining cost flows is an underappreciated but valuable effort, and every utility moving to S/4HANA should consider it carefully. We have great experience and can help.

(3) Activate Functional Areas...
to leverage the Universal Journal’s power to record and report generation, transmission, and distribution costs right from the general ledger (not just from Controlling or the FERC module). We first did this for We Energies in 2012, then again for Cleco on S/4HANA in 2018, and we’ve just started a new Functional Area project for another utility

(4) Collect job costs daily, if not more frequently.
As mobile devices become ubiquitous throughout the enterprise, labor entry should occur in real time when technicians complete their Plant Maintenance tasks, even before they leave a job site.

(5) Run overheads after every pay period, or even more frequently.
In conjunction with more timely direct labor entry, apply your indirect labor and overheads more often, perhaps even weekly. This will fully load costs for job managers, project managers, and program managers to gain insights into total spend much earlier than waiting for the month-end close.  

(6) Modernize the availability and presentation of financial data.
Use Fiori apps to access a P&L statement at any time of the month, from any device, and use nested, real-time drill-down reports to show how job order costs roll up to the income statement. Get multi-dimensional data on the fly in S/4HANA without the need for ETL processes customary with separate OLAP servers like BW or BOBJ.

How to Get Started
To learn more about how your utility can best get closer to continuous accounting—say, starting with a functionalized income statement mid-month—contact HPC for a discussion, or meet us at the 2019 SAP for Utilities conference in San Diego on October 21-23.

Wednesday, September 18, 2019

2019 SAP for Utilities Conference - Meet HPC America


Meet HPC America at this October's SAP for Utilities conference to learn more about two key subjects for utility company IT, Customer Service, and Finance leaders:
  1. Lessons learned from managing the first-ever—and only in-production instance of—SAP C/4HANA Service Cloud (aka, C4C) integrated with on-premises IS-U Billing.

  2. FAQ about FERC reporting on SAP S/4HANA. We've got detailed pros and cons of four different options for regulatory accounting on S/4: the delivered FERC module, an optimized FERC module, a basic line item (real-time) model, and an advanced line item model.  


We're also going to walk conference attendees through the benefits of our latest regulatory financials solution, HPC DECIPHER, which is certified by SAP as integrated with SAP S/4HANA and helps utilities fully leverage the Universal Journal's capacity for continuous accounting.

Contact HPC America in advance to schedule an appointment with our utility industry experts and SAP solution architects. 


Tuesday, July 16, 2019

Utilities on SAP: Four Best Practices for Asset Accounting on SAP S/4HANA

During the last 25 years of advising utilities, it was around 2013 that we started to hear customers vent about asset accounting. Some of them used quite strong language, while others were more politic. Over time, we realized that the utilities experiencing the greatest frustration were those that had moved key elements of their financial process outside of their ERP. For them, optimizing SAP Financials to meet today’s more stringent regulatory environment — for example, streamlining their cost flow to improve transparency — was much more challenging because it would entail unwinding complex integration between SAP and another solution. 

Looking ahead, we see at least four best practices around asset accounting that will help utilities get the most out of their investment in SAP S/4HANA by configuring it correctly from the start:

(1) Focus PowerPlan on taxes and retirement unit calculations.
These specialized functions warrant a dedicated tool, and the utilities we’ve worked with largely acknowledge that PowerPlan is a capable one.

(2) Use SAP Controlling (CO) for allocations.
Retaining this function in SAP increases visibility into true costs for comparing job estimates to actuals. The CO module can apply overheads more efficiently than just once a month, even daily if desired. As utilities move towards continuous accounting in the coming years — enabled through mobile devices in the field that capture the cost of work performed — there will be less of need for fully loaded rates. Utilities we’ve worked with that move allocations and settlements outside the ERP often come to regret it because of the added complexity and latency between when direct costs were incurred and when overheads were applied. In contrast, in S/4HANA which brings OLAP and OLTP together, CO can provide more timely and granular data that makes Board reports more meaningful. Utilities will be able to see and correct spending variances earlier.

(3) Use SAP Project Systems and WBS elements for AFUDC.
Utilities turn on interest charges when capital work is in progress, and then turn them off when work is technically complete. Using WBS elements integrated with SAP EAM enables you to see immediately when work status has changed, therefore resulting in a more timely and accurate posting of AFUDC. Calculating AFUDC outside the ERP can often lead to adjustments that would otherwise have been unnecessary, and complicates the process of getting the right charges into the rate base. 

(4) Get visibility into Plant Accounts in your Universal Journal.
Instead of summarizing Plant Account costs to one account - 101, Plant in Service — utilities on SAP S/4HANA have a tremendous opportunity to post all of the rich, line item detail in the Universal Journal. On SAP ECC, this level of detail would be invisible to the FERC module. But on S/4HANA with HPC DECIPHER, our latest add-on solution that is certified by SAP as integrated with S/4HANA, the entire contents of the fixed asset sub-ledger can be laid out as line items in the Universal Journal. DECIPHER will translate your 300-series plant accounts for each capital transaction as PIS to FERC account 101 in the same level of detail as in your fixed asset sub-ledger. DECIPHER can also split plant accounts based on predefined percentages, and then present the data in a separate FERC ledger. As a result, detailed capital costs will be in the same table (ACDOCA) as detailed plant transactions, and they can all be analyzed using the same tool, such as the SAP Analytics Cloud.   

When your utility is evaluating plans for asset accounting on SAP S/4HANA, contact HPC America to talk about strategy for SAP Financials and Work Management for utilities on SAP.

Thursday, June 27, 2019

Innovation for Utilities on SAP Since 1994

Big news: 2019 marks HPC America’s 25th anniversary. We first got our start in the United States in 1994, after a decade of success in Germany, when SAP's Hasso Plattner asked HPC AG’s founder, Josef Heck, to assist with the SAP ERP implementation at Pacific Gas & Electric. HPC America’s primary contribution was the creation of the first regulatory accounting solution for utilities on SAP — the “FERC module” that is still delivered with SAP S/4HANA to this very day (not that we’d recommend you continue to use it alone - but more on that later).

Since that time, HPC has demonstrated an unmatched track record of pragmatic consulting services and innovative add-on software solutions for utility companies on SAP. For utilities large and small, public and investor-owned, we’ve optimized accounting processes, streamlined cost models, made functionalized financial data more meaningful, and, ultimately, helped our amazing customers get more out of their investments in SAP.


Most recently, we led the first-ever integration of SAP C/4HANA Cloud for Customer with on-prem IS-U billing, establishing a powerful, flexible CRM system for NTUA that leverages their existing SAP ECC without further taxing their lean IT department. And our latest add-on solution, HPC DECIPHER, is certified by SAP as integrated with SAP S/4HANA and enables utilities to replace old FERC batch processes with a modern, line item model that generates better data, much faster.

Credit for HPC’s endurance over the last 25 years must go to our incredible team of people. Their functional and technical SAP skills are strong, and they continue to learn more as the technology has evolved. They bring years of utility industry knowledge, many having been former utility company employees, and that first-hand understanding of the business of a utility resonates deeply with our customers. Guys, your competency is tremendous, and we wouldn’t be here without you.

To see how HPC’s 25 years of dedication to utilities on SAP can benefit your company, meet us in two weeks at SAPPHIRE 2019 at Booth 346A. We can share insights on how SAP C/4HANA works in the real world, walk you through a demo of HPC DECIPHER, or talk about anything else on your mind about SAP Financials, Work Management, Billing, and CRM for utilities on SAP. Contact us to schedule an appointment in advance.

Saturday, May 4, 2019

Salt River Project Simplifies FERC on SAP ECC and Improves Readiness for SAP S/4HANA

Salt River Project (SRP) is a community-based not-for-profit utility that provides reliable, affordable water and power to more than two million people in central Arizona. SRP has provided these essential resources for more than a century to meet the needs of customers and help the region grow. SRP has been on SAP since 2013, and currently runs SAP ECC 6.0 on Suite on HANA and BW on HANA.

In anticipation of its migration to SAP S/4HANA in 2023, Salt River Project engaged HPC America in to evaluate its current SAP Financials processes and results, and to identify areas for improvement that would not only deliver immediate benefits, but also streamline the utility’s eventual transition to S/4HANA.

After the assessment, SRP engaged HPC to optimize its FERC model with HPC Utility Financials Accelerator (UFA) add-on software. HPC UFA eliminates the FERC module’s limitations, and runs on both SAP ECC and SAP S/4HANA.

Five months later, SRP was ready to go live with its new FERC design. The project achieved all intended objectives and more: SRP’s balances by FERC account now match exactly—to the penny—its reports by order number, WBS element, cost element, and cost center, thereby making functionalized data far more intuitive for users to analyze.

Download the full case study to read all the benefits SRP now enjoys.


Tuesday, October 9, 2018

Case study: SAP C/4HANA Service Cloud Integration with IS-U Billing

One week from today, on October 16, 2018, at the SAP for Utilities conference in San Antonio, TX, the Navajo Tribal Utility Authority and HPC America will present NTUA's case study on SAP C/4HANA Service Cloud integration with the IS-U billing module.



This is the first-ever such integration, and showcases how utilities running on-premises ECC 6.0 can take full advantage of SAP's latest HANA and Cloud technology prior to upgrading their core ERP to S/4HANA. NTUA's Deputy CFO, Gerard Curley, and HPC's CEO, Jerry Cavalieri, will lead the presentation and share their SAP C/4HANA project leadership experience. Learn more about the C/4HANA case study and about HPC's services for implementing C/4HANA.

Contact HPC America with questions about C/4HANA integration with the IS-U, and to schedule a demonstration of SAP C/4HANA Service Cloud at the 2018 SAP for Utilities conference.