We recently heard from two utility companies that HPC has been advising on SAP regulatory reporting enhancements. One will be making HPC Utility Financials Accelerator a regular part of the monthly closing cycle, utilizing UFA's real-time reporting features with December 2012 results. The utility expects that this improved reporting process will free up extra time that the accounting department can use work on other projects.
Another customer just went live with SAP FERC configuration improvements we've made to their classic FERC module, including the implementation of some UFA functionality. Before, this utility only generated regulatory reports once a year, due to complex, time-consuming processes outside of SAP. Now, they can easily run FERC reports monthly, shortly after each month-end close. Everything stays in SAP, and the finance team can drill-down through many levels of each transaction. As part of this project, the utility modified its business process to require that all charges be applied to internal or PM orders, instead of cost centers. In a future blog post, we'll look into the organizational change management that facilitated this significant transition.
What's noteworthy about both of these customers is their shared commitment to getting the most out of the FERC module and legacy General Ledger. Neither is planning an SAP New GL migration at the moment. While we certainly recognize the New GL's benefits (and recently announced a real-time FERC solution for it), HPC strives to be as solution-agnostic as possible. Classic FERC, no FERC, new or old GL, it's all good in our books.
Showing posts with label new gl migration. Show all posts
Showing posts with label new gl migration. Show all posts
Wednesday, January 9, 2013
ShareThisTuesday, January 8, 2013
Case Study: HPC Real-Time FERC Solution at We Energies
 We Energies (WE) provides electric service to 2.2 million customers in portions of Wisconsin and Michigan's Upper Peninsula, and maintains more than 45 thousand miles of electric distribution lines and over 350 substations.
In 2012, WE wanted improve its regulatory reporting processes in order to satisfy regulators more easily, and to facilitate its eventual migration to the SAP New General Ledger. WE selected HPC America's Real-Time FERC Solution for the SAP New GL, which enables utilities running the New GL to generate real-time regulatory reporting data without using the "classic" FERC module.Read the complete case study to learn more about the benefits WE gained from HPC's latest groundbreaking FERC solution for utilities on SAP. |
Tuesday, February 14, 2012
Announcing HPC's Rapid Prototype Service for SAP New GL Migration
How will the SAP New General Ledger impact your financials?
Find out before committing to a costly, time-consuming migration through HPC's exclusive prototyping methodology and regulatory reporting solution.
| The HPC Rapid Prototype Service is a fixed-price consultation that simulates the SAP New General Ledger. It shows how migration will affect your natural and regulatory accounts by modeling your existing FERC configuration. The Rapid Prototype Service is based on HPC America's 15+ years of experience with utilities, and our software solution HPC Utility Financials Accelerator, certified by SAP as powered by the NetWeaver® technology platform. It's cost effective, efficient, and utterly transparent. For utilities seriously considering migration, there is no better way to make an informed decision about the New GL. |  |
Learn more online or download the data sheet. To discuss your plans for SAP New GL migration, please contact us for a consultation.
Wednesday, October 26, 2011
SAP New GL and Cost Models
We've commented before about the increasing interest we're seeing from utilities in migrating to the SAP New General Ledger. In the context of SAP's recent announcement that ECC 6.0 will be supported until 2020, we expect to see even more interest—and action—since utilities are under no immediate pressure to upgrade. Instead, they can focus on a New GL migration independent of future upgrade plans.
That said, we also notice that some utilities are focusing almost exclusively on the migration itself, and not enough on their underlying cost model. Some aren't thinking about it at all, while others separate, uncoordinated initiatives in the works. This is a serious mistake. Not to discount the care with which a New GL migration must be undertaken, but it's essentially a technical procedure that can be handled smoothly with proper preparation and coordination with SAP. In contrast, there is far greater benefit potential from reassessing the cost model and transitioning from a cost center-centric to order-centric model—in other words, abandoning the approach adopted during 1990's deregulation, and going back to what most utilities did in the 70s and 80s (when they had no choice and regulation was the only business model). Here are a few quick reasons why this makes so much sense:
- Cost-centric models are ideal for what we think of as the trifecta of utility financials: budgeting, regulatory reporting, and possibly in the near future, IFRS.
- Using the order as the central point means evaluating activity type pricing and unbundling rates, such that the cost of labor going into each order is very close to the actual rate of pay.
- By documenting secondary costs in each order, they'll be fully supported and enable easier cost recovery. They will, as we like to say, provide one version of the truth.
We'll revisit this topic in November to discuss some realistic approaches to a managing a cost model project in conjunction with a New GL migration.
Monday, October 10, 2011
Mapping SAP New GL for FERC
Expanding on our post last month about the New GL and FERC data, today we're going to look at mapping the New GL for FERC, a serious consideration for utilities that are evaluating an SAP New GL migration. One immediate challenge is that all CO transaction codes for secondary movements have a single general ledger account assignment in the New GL. That would seem to be a limitation at first. Rather than focus on the GL account, however, a utility could use a pass-through GL account assigned to all secondary CO transactions, and then use SAP's functional areas to map to specific, four-digit FERC chart of account values.
Here's a practical example. Let's say an internal order has primary costs of $100 and secondary costs of $30. Both the primary and secondary costs are assigned the functional area of "583.0 Distribution Operations-Overhead Lines Expense." This could be shown (in an abbreviated way) as functional area "583.0 DM-Lines." We would then use a BAdI to add a long description through the New GL's extensibility features. The result of this functional area assignment is the posting to the correct FERC account via the CO object mapping. What's more, should the utility want to override the assigned functional area, it could simply change it during document entry. This flexibility would give corporate accounting the option to assign any natural account to any FERC account—with appropriate authorization and controls, of course.
Utilities looking to separate the core functions of supply, generation, transmission, and distribution into segments should also consider activating profit center accounting and segmentation. Since most utilities running FERC have already assigned regulatory indicators to CO objects such as PM and internal orders, these existing assignments could be used to load the initial functional areas using our FERC conversion BAdI described above. In some cases, there might be thousands of CO objects to be mapped to functional areas. Leveraging the existing regulatory indicators would make the conversion effort far less daunting a task than mapping each one individually.
Since segments are derived from profit centers, and profit centers are derived from CO objects, the building blocks would already exist to determine the correct segments. For a utility wanting to convert to IFRS, we could consider segments to be equivalent to traditional lines of business. The CO design in place may already use assessments or settlements to determine the line of business. Given that, it would be important not to start from scratch, but rather to build on the current design and leverage the links already developed in the cost flow model in CO.
Here's a practical example. Let's say an internal order has primary costs of $100 and secondary costs of $30. Both the primary and secondary costs are assigned the functional area of "583.0 Distribution Operations-Overhead Lines Expense." This could be shown (in an abbreviated way) as functional area "583.0 DM-Lines." We would then use a BAdI to add a long description through the New GL's extensibility features. The result of this functional area assignment is the posting to the correct FERC account via the CO object mapping. What's more, should the utility want to override the assigned functional area, it could simply change it during document entry. This flexibility would give corporate accounting the option to assign any natural account to any FERC account—with appropriate authorization and controls, of course.
Utilities looking to separate the core functions of supply, generation, transmission, and distribution into segments should also consider activating profit center accounting and segmentation. Since most utilities running FERC have already assigned regulatory indicators to CO objects such as PM and internal orders, these existing assignments could be used to load the initial functional areas using our FERC conversion BAdI described above. In some cases, there might be thousands of CO objects to be mapped to functional areas. Leveraging the existing regulatory indicators would make the conversion effort far less daunting a task than mapping each one individually.
Since segments are derived from profit centers, and profit centers are derived from CO objects, the building blocks would already exist to determine the correct segments. For a utility wanting to convert to IFRS, we could consider segments to be equivalent to traditional lines of business. The CO design in place may already use assessments or settlements to determine the line of business. Given that, it would be important not to start from scratch, but rather to build on the current design and leverage the links already developed in the cost flow model in CO.
Wednesday, September 7, 2011
SAP New GL and FERC Data
We're on an SAP New General Ledger roll. Expanding on our prior posts (1, 2, and 3), we had some further thoughts about New GL migration strategy and FERC data. For utilities that have been on the Classic GL and IS-U/FERC module for many years, a New GL migration will certainly not be undertaken without careful consideration and risk management. We recently put together some top-level deployment scenarios that mitigate risk and provide a utility with different options before committing to a specific one for production.
This SAP New GL migration approach retains the existing FERC module, while concurrently developing a prototype of the New GL that shows FERC accounts posted to GL in real-time. We would show finance stakeholders how to render the FERC account assignments to actual New GL line items in the FAGLFLEXT (totals) and FAGLFLXA (transaction) tables. Based on our combined knowledge of the New GL and the existing IS-U/FERC module, we would build a model that shows the actual FERC accounts in the Functional Area field of the New GL. In addition, based on the utility's assignment of regulatory indicators to both internal and PM orders, we could use the actual CO object assignments to regulatory indicators to create a Business Add-In to populate the Functional Areas in the New GL for both primary and secondary cost element assignments. In cases where full FERC_C3 (Trace table rules) apply for assignment of A&G (e.g. account 923 Outside Services), we would deploy substitution rules to assign the correct functional area.
As a result of this prototype, the utility would see a direct integration of CO to FERC for all activity type charges, assessments, and overheads (all CO module allocations) to each FERC account. The utility would gain real-time FERC derivation at the point of document entry. We would also demonstrate how users could overwrite the FERC assignments (a feature some accountants may find useful) during document simulation prior to posting (e.g., transactions FB50N/FB50L).
But that's not all: we could also link all secondary costs to the New GL such that any transaction posted in CO would update the Functional Area postings to capture cost movements between CO objects that affect FERC account assignments in the Functional Area.
Through this migration approach, the utility would have the choice of maintaining its existing FERC module or deploying the real-time, fully integrated New GL solution by reviewing real-world test data before making a decision on which method to use in production. With our prototype, financial stakeholders would see how to present FERC account information as each source document is entered, thereby eliminating a month-end close process to run the FERC trace and drilldown. In addition, the accounting department would be able to override FERC derivation on the fly during document entry and simulation, a feature not available with the classic FERC module.
This SAP New GL migration approach retains the existing FERC module, while concurrently developing a prototype of the New GL that shows FERC accounts posted to GL in real-time. We would show finance stakeholders how to render the FERC account assignments to actual New GL line items in the FAGLFLEXT (totals) and FAGLFLXA (transaction) tables. Based on our combined knowledge of the New GL and the existing IS-U/FERC module, we would build a model that shows the actual FERC accounts in the Functional Area field of the New GL. In addition, based on the utility's assignment of regulatory indicators to both internal and PM orders, we could use the actual CO object assignments to regulatory indicators to create a Business Add-In to populate the Functional Areas in the New GL for both primary and secondary cost element assignments. In cases where full FERC_C3 (Trace table rules) apply for assignment of A&G (e.g. account 923 Outside Services), we would deploy substitution rules to assign the correct functional area.
As a result of this prototype, the utility would see a direct integration of CO to FERC for all activity type charges, assessments, and overheads (all CO module allocations) to each FERC account. The utility would gain real-time FERC derivation at the point of document entry. We would also demonstrate how users could overwrite the FERC assignments (a feature some accountants may find useful) during document simulation prior to posting (e.g., transactions FB50N/FB50L).
But that's not all: we could also link all secondary costs to the New GL such that any transaction posted in CO would update the Functional Area postings to capture cost movements between CO objects that affect FERC account assignments in the Functional Area.
Through this migration approach, the utility would have the choice of maintaining its existing FERC module or deploying the real-time, fully integrated New GL solution by reviewing real-world test data before making a decision on which method to use in production. With our prototype, financial stakeholders would see how to present FERC account information as each source document is entered, thereby eliminating a month-end close process to run the FERC trace and drilldown. In addition, the accounting department would be able to override FERC derivation on the fly during document entry and simulation, a feature not available with the classic FERC module.
Monday, August 29, 2011
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.
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.
Friday, July 29, 2011
SAP New GL Migration Benefits
HPC has implemented SAP's New General Ledger—a.k.a., the SAP New GL—at several utility companies, and we've noticed that it's under even greater consideration these days, as utilities seek to eliminate the reconciliation steps necessary under the Classic GL.
In our experience, the SAP New GL offers terrific benefits for utilities running the IS-U/FERC module and IS-Public Sector (PS-FM) in the same ECC 6.0 client—two modules common to the public power industry. Implemented properly, the SAP New GL can dramatically shorten the processing time for the month-end allocations such as distributions, assessments, and overheads
In many cases, existing SAP customers on the FERC module can migrate to the New GL with the delivered leading ledger (OL) by SAP without having to create a new parallel ledger. This process works because the FERC module is an FI-GL solution, as opposed to a special ledger solution as some other industry-specific solutions have been designed.
We also have good experience combining non-FERC company codes with FERC-relevant company codes to consolidate reporting for profit and loss (P&L) statements and balance sheets.
While some utilities are driven to migrate to the New GL because it speeds up month-end closing by reducing the number of updates required to keep FI and CO in sync, there are other reasons to undertake a New GL migration. Implementing the New GL with the FERC module is ideal, as it provides access to FERC data in real time; what you see in your orders will also appear in your FERC regulatory reports. You get "one version of the truth" as we like to say, with the same codes and no special month-end processes required.
In our experience, the SAP New GL offers terrific benefits for utilities running the IS-U/FERC module and IS-Public Sector (PS-FM) in the same ECC 6.0 client—two modules common to the public power industry. Implemented properly, the SAP New GL can dramatically shorten the processing time for the month-end allocations such as distributions, assessments, and overheads
In many cases, existing SAP customers on the FERC module can migrate to the New GL with the delivered leading ledger (OL) by SAP without having to create a new parallel ledger. This process works because the FERC module is an FI-GL solution, as opposed to a special ledger solution as some other industry-specific solutions have been designed.
We also have good experience combining non-FERC company codes with FERC-relevant company codes to consolidate reporting for profit and loss (P&L) statements and balance sheets.
While some utilities are driven to migrate to the New GL because it speeds up month-end closing by reducing the number of updates required to keep FI and CO in sync, there are other reasons to undertake a New GL migration. Implementing the New GL with the FERC module is ideal, as it provides access to FERC data in real time; what you see in your orders will also appear in your FERC regulatory reports. You get "one version of the truth" as we like to say, with the same codes and no special month-end processes required.
Subscribe to:
Posts (Atom)
