Wisconsin Energy: Transparent reporting in a matter of minutes through finance and IT collaboration

Wisconsin Energy Corporation’s (WEC) Finance Department underwent a significant technology transformation in order to realize process efficiencies and improve reporting. We talked with Matt Johnson, Program Manager Continuous Improvement, about the impact of new technology on WEC’s finance organization.

WEC is the largest electric and gas company in Wisconsin. With 1.1 million electric customers across Wisconsin and the Upper Peninsula of Michigan, as well as 1.1 million natural gas customers, the company maintains total assets of approximately $15 billion. WEC’s electricity is generated by a mix of coal-fueled power plants, natural gas- fueled peaking plants, several hydroelectric dams, and various renewable energy sources, including wind and biomass.

In 2013 and 2014, WEC engaged in a major finance transformation, with a large technology component. The goal was to simplify and automate the regulatory (FERC) accounting process, as well as upgrade an aging transaction system to lay the foundation for additional transformation initiatives. Prior to the transformation, WEC was heavily invested in an SAP platform. However, as its business model continued to evolve, and management pushed for more transparent reporting, WEC’s approach of maintaining two separate reporting processes, one for financial reporting and another for Federal Energy Regulatory Commission (FERC) and state ratemaking reporting, had become unsustainable.

As Matt Johnson recalled, “Going into this project, I assumed we would encounter many technical challenges because WEC had been in maintenance mode for so long. While we did encounter technical issues, they were the result of our attempts to unwind old customizations to take advantage of current functionality without negatively impacting the system’s outputs. Since our design was over a decade old, identifying staff members that could describe the strategy for the current application architecture was key to our success.”

WEC had experienced a number of issues as a result of their previous technology solution. Regulatory information was not available on a real-time basis. Additionally, users relied on manual mapping tables to reconcile GAAP and FERC accounts. As a result of these factors, hours of manual reconciliation slowed down the close process.

WEC therefore created a crossfunctional team with members from finance and IT with the goal of streamlining FERC reporting by designing a “real-time” FERC solution, enabled by a FERC based Chart of Accounts (COA). WEC then endeavored to integrate the solution into WEC’s close process.

Corporate and business unit finance members worked together to develop a new account structure that aligned FERC accounts and natural accounts, establishing the data foundation required for the technology solution. Further leveraging their investment in SAP, WEC customized SAP standard derivation rules that allow users to switch views between FERC and GAAP account line items. The company also modified its process by automating FERC-GAAP translation activity and scheduling the jobs to run nightly, rather than at month end.

WEC also understood the importance of finding skilled resources throughout the organization to contribute to building the new processes and take ownership of the solution. They therefore created a project transformation team to oversee and govern the projects necessary for this transformation. The project manager had full access to key personnel, including the corporate CFO, controller, treasurer, and director of IT.

WEC also understood the need for change management for such a significant transformation and created a transition plan from the original FERC solution to the new real-time solution and from the old COA to the new COA. This plan included a crossfunctional testing audience, formal training sessions, and a change agent network that participated throughout the initiative.

The returns on this initiative will be significant for WEC. The company has achieved increased transparency, with better access to managerial vs. regulatory numbers, and improved data reporting. It has started to realize increased efficiency, with better FERC drilldown, a standard set of derivation rules, and elimination of month-end FERC processing. WEC also has access to information, such as overheads and settlements, on a daily basis, rather than monthly, enabling more timely reporting. While previously, due to the number of customizations and manual interventions in the old system, the FERC closing process took an hour and a half or more, now the process takes mere minutes.

A side-benefit of the transformation has been greater clarity of roles between the finance and IT teams regarding data ownership and responsibility. This process has forced finance and IT to come to the table and clearly define the roles and responsibilities of each function within the organization relating to the data. They have been able to work more collaboratively as a result.

The next steps in WEC’s journey include the development of a new consolidation reporting system, which will reduce the number of reports generated to support the consolidation process by fifty percent. These reports were deemed either unimportant or have been replaced by user generated reports from their new consolidation system. The easier interface in the new system allows finance to build and populate their own templates, rather than requiring the assistance of IT.