CenterPoint Energy s S/4HANA Central Finance POC as a First Step to Financial Innovation

Transcription

1 CenterPoint Energy s S/4HANA Central Finance POC as a First Step to Financial Innovation Rahul Gupta Solutions Manager, CenterPoint Energy Kai Bi Managing Director, Utegration

2 CenterPoint Energy Disclaimer This presentation is being provided for informational purposes only and does not purport to be comprehensive. Neither CenterPoint Energy, Inc., together with its subsidiaries and affiliates (the Company ), nor its employees or representatives, make any representation or warranty (express or implied) relating to this information. By reviewing this presentation, you agree that the Company will not have any liability related to this information or any omissions or misstatements contained herein. You are encouraged to perform your own independent evaluation and analysis.

3 Agenda The Advance Finance Vision and Case for Change Beginning the Transformation with a POC Key Elements of Our Solution Lessons Learned Questions

4 Introductions Rahul Gupta is a Solutions Manager in the Advance Finance Technology Group at CenterPoint Energy, a Fortune 500 company that includes electric transmission and distribution, natural gas distribution and energy services operations. He leads technology and solution design for the Advance Finance transformation program. Prior to this role, he was the Manager of Enterprise Integration at CenterPoint Energy. He was also at Deloitte Consulting where he specialized in technology strategy, M&A IT, and large scale SAP deployments. Rahul has a MBA from the Ross School of Business at University of Michigan and a BS in Electrical Engineering from University of Rochester. Kai Bi is Managing Director of Product Development for Utegration, a professional service and solution firm dedicated in SAP and Utilities Industry. Kai is leading the development of several products surrounding the digital core of SAP S/4HANA to make S/4HANA even easier to be adopted by Utilities Industry with high business values. Before joining Utegration in 2015, Kai worked in SAP for 15 years mainly in product development of SAP s financial solutions. His last work in SAP was Chief Product Owner of Cash Management in SAP S/4HANA. Kai has Master degree of Computer Science at Beijing University of Aeronautics and Astronautics.

5 CenterPoint Energy, Inc. (NYSE: CNP)

6 WHO WE ARE Utegration is one of the largest full service SAP Consulting and Solutions companies in North America focusing on Utilities, Energy, and the Public Sector. Official SAP Services, Software Reseller, and Application Development Partner 2015 SAP Utilities Partner of the Year Headquartered in Houston, Texas Offshore Office in Bangalore, India Founded in 2008, 283 Employees, 50 Clients Financials Analytics CR&B AMS S/4HANA Cloud Asset Management AMI Strategy UTEGRATION.COM

7 Our Case for Change Our Advance Finance journey began in 2015 in recognition that our processes and technologies do not reflect current advances in business and technology. Highly manual process to prepare and support regulatory filings Manual effort, operating activity not linked to financial outcomes 02 FP&A 01 Regulatory Our Vision: In order to lead the nation in delivering energy, service, and value, we will transform Finance from a transaction-centric organization to a thinking-centric, go-to partner. Reporting is reactive, not standard across the enterprise Culture is transactional, limiting analytics capability Legacy data structures from original SAP implementation 20 years ago 04 People 03 Reporting 05 Cost Model

8 Beginning the Transformation Central Finance POC Proof of Concept Strategy Mix of business and technology use cases Three primary threads: technical, solution, knowledge Key Questions How can we address some key Finance challenges? What solution components do we need and is the technology ready? How can we use this for our future path to S/4 HANA?

9 Target of POC Accomplishing the Promises of S/4HANA Simplification of landscape, architecture, and data models. Real-time Reporting and Analysis based on line item details in memory. Great User Experience through Fiori and other Cloud Offerings Non-disruptive evolvement towards S/4HANA Sufficient Business Values to the enterprise transformation Start to test latest technologies sooner than later

10 Central Finance POC Use Case Examples Use Case 1: Journal Entry of HR accrual Use Cases 2-4: Capital Work Order Cost Flows Labor posting to capital order Overhead applied to capital order Settled capital order to AUC Use Cases 5-6: Asset Activity Postings AUC (Asset Under Construction) to CCNC (Const. Complete Not Classified) CCNC to PIS (Plant in Service) Use Cases 7,8,11: O&M Work Order Cost Flows Expense posting to O&M order Settled O&M order to WBS element Settled WBS to final Cost Center Use Case 9: Regulatory (FERC) Reporting Use Case 10: Jurisdiction Reporting

11 System Landscape Simplification Utilities Industry System Landscape consolidated OLTP and OLAP merged BW Transactions and decision making in one system Smooth transition Processes optimized User experience improved Master Data cleaned up Data model simplified Custom-development ECC reduced More Real-time Analytics Logistic Processes Centralized Processes (AR/AP, Cash) Real-time Consolidation Reporting and Planning Unified Journal Entry Embedded Planning Central S/4HANA Finance

12 Key Learnings Replication Real-time replication Reliable with satisfying performance AIF Monitor gives good highlevel overview as well as details Debugging expertise is mandatory for the implementation project Rich set of BAdIs for enhancements and extensions Customer fields are supported Core FI Functions A basic but rather complete set of FI/CO/AR/AP configurations is needed FI/CO details can be kept Fixed Asset Accounting is not supported yet Open Item Management can be in either source system, or moved to the Central Finance system Central Cash Management is promising Master Data Orders can well be replicated. Order numbers can be the same as the source system Order Operations or Network cannot be replicated yet in 1610 WBS Element cannot be replicated Further to consider: Vendor/Customer, Cost Center Customer Fields are not really supported yet in 1610

13 Whether / How to Simplify Special Purpose Ledger? Turn to ACDOCA Merge into ACDOCA directly No duplication, no reconciliation effort All details are available Rich set of standard CDS Views In alignment with the direction of Universal Journal Entry Parallel Ledger or Special Purpose Ledger Using Parallel Ledger or continue to use Special Purpose Ledger Complexity in configurations Duplications with extra effort to reconcile Lose details Harder to reconcile and find correlations

14 Simplify Reporting Architecture current status Batch update Reconciliation Real-time Post BW FERC Regulatory Reports Actual & Budget Reports Income Statement Balance Sheet FERC SL BW CO- OM BW FIGL FI CO PCA Posting

15 Simplify Reporting Architecture target

16 Plenty of choices of Reporting/Analytical Tools * Not real CNP information

17 Leverage the Power of HANA Calculations Example: Cost Flow Tracing * Not real CNP information

18 Embedded BPC No need for data replication through ETL Real-time calculation on single source of truth The planning application is able to read actuals Real Time Much easier Plan/Actual/Forecast comparisons Drill-through to line item details directly from planning application S/4HANA SAP ECCFinance Transactions (FI Doc, SD/MM Order) Budget/Plan Traditional BPC/BW solution BPC BPC Database HANA Virtual InfoObj Virtual InfoCube Real-time Cube InfoObject InfoCube Planning Cube Master Data Transactional Data BW / Any DB ETL

19 Example: Cost Center Planning Plan matches Actual vs. Actual matches Plan * Not real CNP information

20 Business Values Proved Simplified data model brings obvious efficiency on month end close, reconciliation, reporting, data drill-down Real-time GAAP and Regulatory financial reports By its nature more transparency and clarity Attractive Reporting and Dashboarding technologies Simplify the financial planning set up and process Small impact to existing operations and processes

21 Moving From POC To Blueprint A Blueprint phase is more often art than science. The trick is to complete enough work to allow for confident decision making, estimating and future phase planning. It is NOT necessarily a detailed design exercise that produces deliverables too far in advance. Our focus was on four key workstreams to enable first steps towards advancing Finance. Business area Data model foundation Record to report FP&A Regulatory Taking Blueprint far enough Design data model thread that runs across RTR, Regulatory, and FP&A Prototype further for proof of concept in S4/Central Finance Define future state solution strawmen for critical current state challenges Develop plan for deployment in subsequent phases Finalize software selections for close automation/collaboration and account reconciliations Determine if robotics are appropriate and finalize appropriate software selection Develop plan for deployment in subsequent phases If benefits are enough to warrant an earlier deployment, gain Executive Committee approval and start detailed design Develop unit-based drivers for Electric and Gas (O&M and Capital) Shift towards implementing business process changes around budgeting and forecasting Finalize software selection for budgeting and planning Develop plan for deployment in subsequent phases Design data elements in support of regulatory filing automation (in concert with the Data Model foundation above) Finalize software selection for regulatory filings Develop deployment plan for subsequent phases

22 Optimized and Integrated Processes Drive the Solution Our solution focuses on enhancing and improving process Core Process Improvements: 1. Driver based planning linking Operations and Finance 2. Rolling / actualized forecast to allow FP&A to forecast more in line with when work is completed by Operations 3. Simplification of allocations processes to improve data transparency and traceability 4. Jurisdictional Balance Sheets for all Gas Operating Companies 5. Simplified data structures to improve reporting for Regulatory, Core Accounting and FP&A

23 Key Elements of our Business Focused SAP Solution Central Finance SAP ECC Process Improvements Processes moving to Central Finance: Jurisdictional Balance Sheet Real Time FERC Service company allocations (non capital) Cost tracing and reporting Manual Journal Entries Cash Application/Clearing Overheads Residual overhead clearings Non Regulatory Fixed Assets (Service Company and Properties) Fixed Asset Depreciation Direct Tax GL book of record and data source to BPC Intercompany reconciliation Financial Reporting Management Reporting Regulatory Reporting Close Automation Account Reconciliations Processes Remaining in ECC: Accounts Receivable Accounts Payable Regulatory Assets Plant Maintenance Materials Management Capital related overheads and allocations/settlements Cash Application/Clearing Operational transactions/reporting Indirect Tax Human Resources Billing systems SAP Supplier Relationship Management SAP BW SAP GRC Other integrating applications Technology Agnostic Process Improvements: Increased direct charging to improve transparency of allocated data Transmission & Distribution Split Unbundling labor rates Shift to actual costing to align with key industry peers Approach to usage of Cost Centers Approach to usage of WBS Elements Use of availability control for Internal Orders and WBS Elements Commitment Management

24 Key Messages To Take Home Separate the hype of new technologies and focus on technologies that can solve business challenges. Use Central Finance as way to challenge the business and think about the future. Build in time to learn for your S/4 HANA journey an understanding is needed for the various technical components and related capabilities. Engage the business early and often on key decisions as well as program outcomes. They begin to act as champions of the program. Make your transformation business led and business driven to gain improved organizational acceptance.

25 Please Join Utegration in Our Private Room Oak Ridge Room INNOVATIONS IN FINANCIAL & REGULATORY REPORTING USING SAP S/4HANA TUESDAY 12:45PM-1:30PM Join us to explore how you can accomplish real-time FERC Reporting installed directly in the SAP S/4HANA system. Kai Bi, Managing Director Product Development Alexis Nichols, Director of Financial Solutions

26 Connect with us Rahul Gupta E: P: Li: linkedin.com/in/rahgupta1 Kai Bi E: P: Li: linkedin.com/in/kai-bi