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
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.
Agenda
• The Advance Finance Vision and Case for Change
• Beginning the Transformation with a POC
• Key Elements of Our Solution
• Lessons Learned
• Questions
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.
CenterPoint Energy, Inc. (NYSE: CNP)
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.
2015
SAP Utilities
Partner of the Year
Official SAP Services, Software Reseller, and
Application Development Partner

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
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.
Our Vision: In order to lead the
Highly manual process to prepare and 01
Regulatory nation in delivering energy, service,
support regulatory filings
and value, we will transform Finance
from a transaction-centric organization
Manual effort, operating activity 02 to a thinking-centric, go-to partner.
not linked to financial outcomes FP&A

Reporting is reactive, not standard 03

across the enterprise Reporting

Culture is transactional, limiting 04

analytics capability People

Legacy data structures from original 05

SAP implementation 20 years ago Cost Model
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?
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
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
System Landscape Simplification
Utilities Industry

 System Landscape consolidated More Real-time Analytics

 OLTP and OLAP merged
BW
 Transactions and decision Logistic Processes
making in one system Real-time
Consolidation
 Smooth transition Centralized Processes
 Processes optimized (AR/AP, Cash)
 User experience improved
Reporting and Planning
 Master Data cleaned up
 Data model simplified Unified Journal Embedded
ECC
 Custom-development reduced Entry Planning

Central Finance
S/4HANA
Key Learnings
Replication
• Real-time replication
• Reliable with satisfying
performance
• AIF Monitor gives good high-
level 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
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
Simplify Reporting Architecture – current status
Batch update Regulatory
Reconciliation
BW FERC Reports
Actual &
Real-time Post Budget
Reports

Income Balance
Statement Sheet BW CO-
FERC SL
OM

BW FIGL FI CO PCA

Posting
Simplify Reporting Architecture – target
Plenty of choices of Reporting/Analytical Tools

* Not real CNP information

Leverage the Power of HANA Calculations
Example: Cost Flow Tracing

* Not real CNP information

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 ECC Finance

Transactions
Budget/Plan
(FI Doc, SD/MM Order) Traditional BPC/BW solution

BPC
BPC
Database
HANA Virtual Virtual InfoObject InfoCube Planning Cube
InfoObj InfoCube Real-time
Cube

Transactional
BW / Any DB
Master Data
Data

ETL
Example: Cost Center Planning
“Plan matches Actual” vs. “Actual matches Plan”

* Not real CNP information

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
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 Taking Blueprint “far enough”
• Design data model “thread” that runs across RTR, Regulatory, and FP&A
Data model • Prototype further for proof of concept in S4/Central Finance
foundation • 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
Record to • Determine if robotics are appropriate and finalize appropriate software selection
report • 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
FP&A
• 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)
Regulatory • Finalize software selection for regulatory filings
• Develop deployment plan for subsequent phases
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
Key Elements of our Business Focused SAP Solution
Central Finance
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
SAP ECC
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
Process Improvements
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
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.
 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
Connect with us

Rahul Gupta Kai Bi

E: rahul.gupta@centerpointenergy.com E: kai.bi@utegration.com

P: +1 713 207 8163 P: +1 832 388 4877

Li: linkedin.com/in/rahgupta1 Li: linkedin.com/in/kai-bi-2928484