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Generating Results

International utility Enel monitors the performance of global subsidiaries with Oracle Hyperion Applications.

by Logan Kugler

In the 1990s, major changes in European energy markets rolled through the continent as the newly formed European Union’s rules for fair competition called for reform of state-owned utilities. Italy’s energy market was not exempt, and in 1992 the Italian government privatized Ente Nazionale per l’Energia Elettrica, taking the utility public as Enel Group in 1999 and selling around 30 percent of the company on the Milan stock exchange. As part of that process, the managers at the new Enel were forced to sell the company’s transmission services by an initial public offering, the distribution grids in the most-important Italian cities to municipal companies, and nearly one-third of its generation capacity to new competitors (including some in Europe). By 2007, several major competitors had entered the fully liberalized Italian energy market that emerged from the transition.

While these dramatic market and business developments marked a complicated change for Enel Group—Europe’s second-largest utility by installed capacity—the company’s leaders also moved quickly to capitalize on the new opportunities of the open market. This meant rapid expansion through acquisition.

According to Giulio Carone, group controller of Enel’s Administration, Finance, and Control organization, Enel’s leaders looked beyond their borders for new opportunities outside of the mature (and increasingly competitive) Italian energy market. “We started by buying a small asset in Eastern Europe, in Romania, and then had the opportunity to buy some companies in North America and Slovakia; the biggest acquisition, by a public offer in 2007, was of the Spanish giant Endesa,” explains Carone.

Today, the Enel Group has a presence in 40 countries on 4 continents, with about 96,000 megawatts of net installed capacity, and sells power and gas to approximately 61 million customers around the globe. Enel Green Power manages renewable power plants for a total capacity of more than 6,000 megawatts. Enel has been listed on the Milan stock exchange since 1999 and has the highest number of shareholders of any Italian company, with about 1.5 million retail and institutional investors in 2010.

But making the leap from a single-market entity to a transnational entity is not a simple feat. To fuel and manage these massive changes, Enel needed technology to capture and make sense of massive amounts of information. “We had one first priority—to connect all of these companies to our information system to be sure that the information we get is correct,” says Carone.

One to Many

According to Etienne Gabel, an energy expert and associate director at IHS CERA, Enel’s acquisition of Endesa—with around 26 million power and gas customers in Spain and Latin America—and the creation of Enel Green Power added significant new business to Enel’s portfolio. These were important moves, Gabel notes, particularly in a tough economy. “In Europe, except for renewables where there’s still money to be made, returns are low,” he says. “So utilities, and Enel in particular, are looking abroad for growth.”

But this expansion added new complexity to the data managed by Carone’s organization. Previously, enterprise data about the performance and profitability of Enel business units was much easier to manage. With only one region to track and one government’s rules to follow, the Oracle Hyperion IT system that supported performance management and reporting operated on relatively modest data sets.

But Enel’s international expansion changed that.“The first thing we thought was important was to develop a platform based on the [Oracle] Hyperion software that we already had in Italy,” says Carone. “We were used to the system and the performance. So, we decided to use this platform to connect all of the companies around the world.”

The goal was to produce a single, reliable source of critical business information. “In our company, we believe that there is only one number,” says Carone. “We don’t want to have two different sets of numbers or different reports because this is not the way to manage the company.”

Bringing the data from hundreds of international sources in line is complex enough, but add to this the need to address statutory requirements that can vary significantly across borders—and oceans. “We wanted a system that all companies around the group could use to produce their own statutory and management reports,” Carone says.

To increase the relevance of management reporting, benchmarking, and analysis, 200 key performance indicators (KPIs) were identified to monitor the entire scope of Enel activities—energy capacity, generation, unit price, unit margin, cash, cost, and distribution, among others. That common set of KPIs drives a unified output from the system and has contributed to a common language across the organization. “If we speak about a particular KPI in the power plant generation—thermal generation—this KPI is the same from Russia to Chile,” Carone says.

Powerful Numbers

Standardizing that data and the associated reporting functionality now appears deceptively simple: transactional information comes from several local enterprise resource planning (ERP) systems into Enel corporate’s Oracle Hyperion system, is processed, and is then delivered both for statutory and management purposes to business unit leaders as well as executives at Enel headquarters.

While the model for moving this enterprise data through Enel’s global system can be described simply enough, making it work required significant expertise—certainly not an undertaking that could be handled with internal resources alone. To help navigate the process, Enel’s management turned to Accenture and Oracle.

Marco Passera is a principal with Accenture who designed and worked on the Enel project. The project was driven by a carefully developed plan, but a plan that wisely allowed for flexibility. For example, one major challenge arose with the acquisition of Spain’s Endesa, says Passera. At that time, Endesa was involved in a similar project to implement a new group statutory reporting tool, so adding processes and technology from Enel’s corporate Oracle Hyperion system added new complexity to that ongoing project.

Reconciling Endesa’s statutory reporting project with Enel’s companywide Oracle Hyperion data roll-up required that all referents and users involved clearly understand the benefits of the process and the capabilities that would be realized once the project was completed. An important sign of that buy-in, ultimately, was the acknowledgement by Endesa of the value of the Oracle Hyperion solution. “At the end of the project, they are clearly happier with this tool than the previous one,” says Passera.

Indeed, Enel management’s rollout strategy for the expanded Oracle Hyperion system involved top-down communication to business unit heads, controllers, and CFOs around the world. Seminars involving hundreds of employees were held to discuss the objective of the change, goals, and processes. “For most of them, the changes were impressive, but the benefit was clear from the beginning,” says Passera. “We had a good response from the field.”

In addition to high-level communication about the intended benefits of the project, key users were involved in the data collection and migration process. These users participated in the testing of the system—no minor feat of coordination.“We involved the administration in a complete parallel run,” says Passera.

Everyone across all global locations was involved in the process leading up to the go-live in November 2010. It was, according to Passera, “a single big bang.” When the switch was flipped, everyone in every location was expected to use the new tools.

Powerful Results

Feedback along the way from end users helped to ensure that needed functionality and performance expectations would be met. It was a “no surprises” approach that made the massive transition a success. The process went beyond theories about how the system might work to actual end-user experiences where users worked with their data and the Accenture team to test the system and get a real-world feel for how things ultimately would work.

About six months was spent tuning the application, says Passera—a period, he adds laughingly, where “a lot of people cried.” Tears of frustration, yes, but tears of joy as well; the time and effort spent generating consensus and ensuring the involvement and commitment from participants around the world ultimately contributed immensely to the success of the project.

“It’s something cultural, related to this type of merger and the type of relationship that Enel would like to establish between all the companies around the world,” Carone says. “Generating consensus is far more complicated and it takes longer, but if well managed can give good results.”

Ultimately, the breadth and depth of data and the Oracle Hyperion system’s ability to manipulate and report that data in various ways help users get the reports they need when they need them. “Everyone has the right level of detail,” says Carone. “Our CEO needs a certain level of detail, the head of a division needs another level of detail, and operations in every power plant needs another level of detail.”

While the implementation is relatively new, improvements have already been noted and reflected in financial performance. Carone says that in 2009, Enel launched a program that targeted a €3.5 billion improvement in cash generation. By March 2012, business leaders will be able to confirm, using data from the Oracle Hyperion system, whether the target was reached. Carone attributes this improvement to management’s ability to review critical enterprise data and identify efficiencies across the broad scope of operations. “We believe that IT can improve our work, to improve our performance and to get better results,” he says.

Only a small number of companies can create such a complex solution, Passera acknowledges. “But, in my opinion, only one system—only one tool—can really be used. So I’m very happy about the results from Oracle Hyperion and about the partnership between Accenture and Oracle. We created something that is now used in every single entity that Enel has in the entire world.”

Moving forward, Enel will turn to the data for even more-sophisticated outcomes, including predictive analysis to drive future planning. “We have tools that are designed to analyze and simulate the behavior of the market,” says Carone. “For us, it’s important to start thinking into the future and to leverage what technology offers us now.”

Logan Kugler has written for more than 50 national magazines including Biztech, Success, and PC Magazine.

 
 
Snapshot Enel
    • Headquarters: Rome, Italy
    • Industry: Electric utilities
    • Employees: More than 78,000
    • Revenue: €64 billion
    • Oracle products: Oracle Hyperion Financial Management, Oracle Essbase, Oracle Hyperion Planning, Oracle Hyperion Strategic Finance
    • Oracle partner: Accenture
Snapshot Giulio Carone
  • Group Controller, Administration, Finance, and Control
  • Length of tenure: 15 years
  • Education: Management, economics, and industrial engineering, Politecnico di Milano
Oracle Hyperion

Powerful Decision Support with Oracle Hyperion Applications

As companies grow and evolve, it becomes essential to manage master data across information silos that result from mergers and acquisitions, departmental initiatives, or legacy system proliferation. Oracle Hyperion Data Relationship Management provides enterprises such as Enel with a solution to build consistency within master data assets despite endless changes in the underlying transactional and analytical systems.

Specifically, Oracle Hyperion Data Relationship Management provides the industry’s first data-model-agnostic master data management solution built to enable financial and analytical master data management in dynamic, fast-changing business environments. The financial master data management system allows organizations to create an enterprise perspective on financial charts of accounts, cost centers, and legal entities with a view to governing ongoing financial management and consolidation based on consistent definitions of financial and reporting structures across general ledger, financial consolidation, planning, and budgeting systems. The analytical master data management system creates an enterprise view of analytical dimensions, reporting structures, performance measures, and their related attributes and hierarchies.

Use of Oracle Hyperion applications in this manner offers significant benefits. For example, customers can unify cross-functional perspectives to a master record while giving users the freedom to make changes and construct alternate departmental views of the data that are consistent and accurate. They can also streamline master data changes using drag-and-drop hierarchy maintenance and do side-by-side comparison and one-click navigation across both balanced and ragged hierarchies, with built-in referential integrity.

Oracle Hyperion solutions can also provide a framework for query, comparison, and full history of all master data changes, including documented versioning and rollback at any point in time or recorded modification to master data elements. And with workflow integration, employees can access workflow tools with hot-pluggable integration with Web services.

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