Why Migrate to the SAP New GL?

When SAP promotes a new solution, it is usually about something we haven't seen before. So when the New General Ledger solution was announced, we thought, "What could be new about something as basic as the general ledger?" Well, a lot actually. Expanding on our prior posts about the benefits of the New GL and SAP Migration Scenario 1, today we'll explore a few key reasons why a utility already running SAP would consider migrating to the New General Ledger.

First, let's be clear, if you're running the classic SAP FI-GL, you don't have to migrate to the New GL when you upgrade. SAP has made the election to migrate a separate project from an upgrade. If you're getting what you need today from Classic GL, then you can stay put. But before you jump to the conclusion that you just don't need it, here are a few observations and suggestions to consider.

If you've been running SAP for a few years, you probably already know that the Controlling module works together with the General Ledger. In some cases it doesn't. We're referring to the differences between primary and secondary cost elements. CO is used for cost accounting. In the New GL, parts of CO are resident in the New GL. For example, the functional area, profit center and segment are part of the new general ledger table now called FAGLFLEXT instead of the familiar GLT0. Why add these fields to the General Ledger? Well, with the coming of more regulation around the use of International Financial Reporting Standards (IFRS), companies will need base financials on a segment of the business to comply with SEC requirements. A segment can be shown directly in the New General Ledger.

What we really find intriguing is the melding of the traditional Controlling module with the traditionally separated FI-GL. Rather than relegate the FI-GL to merely tracking account balances with links to the CO documents, SAP put CO objects alongside FI-GL accounts in the same table. The result: no reconciliation differences between CO and FI. This in turn speeds-up monthly closing, and makes segment reporting much more streamlined.

Utilities running the IS-U/FERC module can continue to use it with the New GL. FERC will still use CO tables to run the flow of costs trace, trace post, and direct post. The FERC drilldown will continue to store source and final objects in FERC_D1 to support the FERC balances in the new FIGLFLEXT table. But with the New GL, utilities have yet another option: to use the New GL to derive functional areas equivalent to the operations, maintenance, administration and general, and customer accounts expenses to stay in compliance—for example, with Title 18 of the Code of Federal Regulation (CFR) Part 101 for electric utilities.

So what are the advantages to utilities? Well, the New GL offers a way to provide line item FERC accounting for every transaction. Rather than derive FERC at the close of each month, utilities can consider FERC derivation in real time at the point of document entry. Such real time posting to FERC is possible by linking the CO object to a functional area. When charged, the CO object (e.g., internal order, PM order, cost center, or WBS element) will assign the functional area linked to the CO object to a field on the new GL table FAGLFLEXT.

We were skeptical of this approach due to the fact that secondary costs aren't posted to the New GL. Well, indeed they can be, but not as you might expect. Since secondary cost elements result in a net zero impact to the FI-GL (with the one exception of capital orders settling externally) secondary costs can be mapped to a General Ledger account via the CO transaction code. That means that assessments, overheads, and settlement cost elements can be mapped to the New GL. This is important because the CO objects charged with a secondary cost element are assigned a functional area needed for FERC reporting. The functional area from the CO object is thus updated in the New GL.

SAP New GL Migration via SAP Scenario 1: Merging FI Ledgers

A couple weeks ago we wrote about the benefits of migrating to the SAP New General Ledger for utilities on SAP. SAP best practices outline five different General Ledger migration scenarios that offer increasing amounts of functionality—and corresponding complexity. For utilities looking for an efficient approach, we recommend the least costly and complex, "Scenario 1: Merging of FI Ledgers."

In this scenario, the classic General Ledger (Ledger 0) is migrated. Table GLT3 of the consolidation preparation (Ledger 09) is migrated as well if it's in use. When we work with clients on SAP New General Ledger migrations, we evaluate whether to assign profit and loss accounts from the 8A ledger or to form Ledger 0.

Depending on the utility's financials, we may recommend an "accounts approach," taking all accounts from Ledger 0. In our experience, profit center accounting (PCA) will not, nor should not, drive the migration project. Rather, PCA is planned during blueprint. Configuration changes are made as required, and then PCA is re-introduced to PRD in the new year. What we mean by "re-introduced" is a new way of tagging the PCA to the CO object using the FMDERIVER.

This approach allows our customers the most flexibility to change the PC assignment to the internal order later on. This is especially helpful to utilities that also use SAP Funds Management (FM) since the fund assignment can be updated in the FMDERIVER as well. Our latest solution, HPC Utility Financials Accelerator, automates these updates with an Excel upload program to make maintenance incredibly simple, even on a very large scale.

While there are other, more complex migration scenarios that involve segment reporting and some form of document splitting to parse the balance sheet line items to enable business area financials at a line item level, we don't often recommend them to our customers who are already running HPC Utility Financials Accelerator. For those utilities, business area reporting by balance sheet can be accomplished for all company codes using UFA's expanded functionality. Once migrated, the FERC drill-down feature in UFA is updated to source the FERC account balances from the new FAGLFLEXT table in the SAP New GL.

2011 SAP for Utilities Conference

HPC America will be attending the 2011 SAP for Utilities conference in San Antonio, Texas on September 18-20. If you'd like to meet with us to discuss implementation and enhancement of your SAP IS-U/FERC module or any other issue concerning SAP for utilities, please give us a call to set up an appointment.

We'll also have some updated information to share about our latest solution for utilities on SAP, HPC Utility Financials Accelerator, which goes beyond the capabilities of the FERC module that we originally created, which SAP acquired from us in 1996. HPC UFA is in production at four utilities across the U.S., and was certified by SAP in 2010 as powered by the NetWeaver technology platform.

Learn more about our development of the SAP IS-U/FERC module and HPC Utility Financials Accelerator.