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 sap new gl. Show all posts
Showing posts with label sap new gl. Show all posts
Wednesday, January 9, 2013
ShareThisTuesday, August 28, 2012
Five Benefits of the SAP New General Ledger
More utilities are exploring the impact of an SAP New GL migration on their financial and regulatory reporting. While HPC is agnostic in the Classic vs. New GL, FERC or no FERC debate (we've built effective solutions for every scenario), we recognize five key benefits to migrating:
- Integrates external legal accounting with internal cost reporting
- Provides a means to satisfy IFRS reporting (although convergence deadlines are still pending)
- Allows for full balance sheets below company code level (e.g., by segment)
- Provides extensibility to introduce new fields to the GL (e.g., FERC account)
- Quickens the month-end close
Wednesday, June 13, 2012
SAP New GL extensibility and real-time FERC data
Today, we have more news about prototyping the SAP New GL and real-time FERC for a utility company in the midwest. We've been busy testing primary and secondary cost postings to the new functional areas that we'll use for FERC derivation.
Contact us to learn more.
Interested in this type of project for your utility? Check out our New GL prototyping service.
Wednesday, May 9, 2012
SAP New GL prototyping - continued
We've now gotten deep into the data redesign for prototyping the SAP New General Ledger at a utility company in the midwest.
During this pre-migration discovery phase, our joint HPC-client team has also identified a number of areas in which the utility could benefit from a larger SAP footprint, including extending Plant Maintenance to a greater portion of its business; utilizing Project Systems to manage schedules while FI/CO manages costs; and implementing a Fleet Management solution that tracks per-vehicle costs. More on this latter opportunity in the near future, as we're just about to roll one out at Sonoma County Water Agency that will be applicable to many other utilities and municipalities that want to track fuel consumption and vehicle costs as part of sustainability initiatives.
During this pre-migration discovery phase, our joint HPC-client team has also identified a number of areas in which the utility could benefit from a larger SAP footprint, including extending Plant Maintenance to a greater portion of its business; utilizing Project Systems to manage schedules while FI/CO manages costs; and implementing a Fleet Management solution that tracks per-vehicle costs. More on this latter opportunity in the near future, as we're just about to roll one out at Sonoma County Water Agency that will be applicable to many other utilities and municipalities that want to track fuel consumption and vehicle costs as part of sustainability initiatives.
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.
Monday, December 19, 2011
SAP New GL Survey - Share Your Thoughts!
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Tuesday, November 15, 2011
Document Splitting and the Balance Sheet in SAP New GL
In all of our previous posts about the SAP New General Ledger, we've only looked at P&L accounts. But what about the balance sheet? Using the New GL will eliminate either the accounts approach or the company code approach to IFRS compliance using SAP. A somewhat complicated feature is the use of document splitting, which we'll touch on next.
Let's suppose a vendor is paid with invoice line items charged to both generation and transmission on the same invoice, but with only one offset to the vendor account on the balance sheet. Using document splitting, the offset account charged to accounts payable is allocated or "split" between the generation and transmission lines. So, if $300 is charged to generation and $500 charged to transmission on the same invoice, the offset for the total of $800 is split to "follow" the P&L accounts that were charged originally. By doing this split, separate balance sheets can be generated for each segment (i.e., generation and transmission) below the company code level. This will save time during document entry, as the preparer doesn't have to be affected by a process change. An employee in Accounts Payable doesn't change his SAP business process. Rather, in the background, SAP will split the transactions entered to create the separation by segment.
Document splitting can be a complicated undertaking and shouldn't be conducted without ample testing. In fact, a utility's New GL conversion scenario should consider the impact of document splitting when determining a migration data and activation date. Since most large utilities can have thousands of open items during a New GL migration, it is suggested—and we highly recommend—to set an activation date as close to the migration date as possible to limit the amount of documents (and line items) that will need to be split.
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, 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.
Tuesday, August 16, 2011
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.
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.
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.
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