MRE was looking to increase the speed and consistency of its financial planning and reporting functions. For faster reporting and lower risk of data loss, it wanted to leave spreadsheets behind.
MRE UK deployed a financial performance management solution based on IBM Planning Analytics—enabling it to rapidly generate management accounts, forecasts and budgets for assets across the business.
Acceleratesfinancial planning thanks to reduced manual work for budget contributors
EnablesMRE UK to start preparing its forecasts 1 week earlier in the month
Fastercreation of what-if scenarios
Business challenge story
Enhancing the speed and consistency of monthly forecasts
Renewable energy sources have an important role to play in reducing the UK’s dependence on carbon. Melton Renewable Energy UK is one of the leading independent generators of renewable energy in the country – its portfolio of assets has an installed capacity of 170MW.
The energy sector deals in long-term projects with large-scale investments, and payback periods are typically measured in decades and years, not days and months. To steer its operations effectively, MRE UK must maintain tight control over its budgets—and for many years, the company has utilized monthly profit and loss (P&L) and cashflow forecasts to accurately measure performance.
Jamie Lawton, Group Reporting Manager at Melton Renewable Energy UK, explains: “Through our Biomass Business, we own and operate a portfolio of five biomass fueled power stations based in the United Kingdom, with a total net installed capacity of 111 MW. Through our Landfill Gas Business, we own and operate methane-powered electricity generation assets at 23 landfill sites across the United Kingdom, representing 59 MW of installed capacity. Monthly forecasting is a valuable tool in the financial management of our business.
“Our month-end process isn’t just a case of reporting our results against an annual budget – we report our monthly figures and re-forecast every single month. Accuracy is a key objective, and we are always looking to enhance the consistency and accuracy when forecasting earnings before interest, tax, depreciation and amortization [EBITDA] and cashflow.”
In the past, MRE UK relied on separate spreadsheet models for each of its generating stations as well as its Landfill Gas business, which its financial controllers prepared at the beginning of the month. This increased the risk of losing historical data if its spreadsheets were accidently deleted.
“Speed, consistency and accuracy was important to meet reporting deadlines,” Jamie Lawton adds. “We saw an opportunity to move away from spreadsheets and embrace a central platform for forecasting and budgeting, and we looked for a solution to help us achieve the goal.”
“ Our IBM solution delivers consistent and accurate forecasts across the group, even when we make significant changes to the underlying business drivers. ”
— Jamie Lawton, Group Reporting Manager, Melton Renewable Energy UK
Embracing a central platform
MRE UK selected a financial performance management solution based on IBM Planning Analytics—an integrated, automated platform for planning, budgeting, forecasting and analysis that offers all the functionality of spreadsheets while eliminating the need for manual tasks.
“Of all the solutions we considered, we felt that IBM Planning Analytics was most comprehensive in its coverage of our financial processes,” recalls Jamie Lawton. “We were keen to automate as many of our planning processes as we could, and IBM Planning Analytics offered us the capabilities we were looking for.”
To help accelerate its deployment, MRE UK engaged IBM Gold Business Partner Aramar (link resides outside of ibm.com). Working together with Aramar, MRE UK implemented IBM Planning Analytics to deliver driver-based planning for P&L with automated cash flow and balance sheet reporting across monthly forecasts, budgets and the group’s long-term plan.
“We were incredibly impressed by Aramar’s commitment to create a solution that could pass P&L data into cash reporting and balance sheet in a seamless way so quickly” Jamie Lawton explains.
“Our controllers can now budget and forecast their EBITDA, and enter KPI information and cashflow lags, and Planning Analytics will perform the necessary calculations in real time to automate their Cash Flow and Balance Sheet which saves time and enhances consistency across the Group. If we make a change to a variable such as price, we can see the impact on our cash flow and balance sheet immediately—so understanding the full financial impact is much easier. Better still, IBM Planning Analytics enables our teams to create self-service reports across a range of KPIs or financials, which helps them get the information they need faster than before.”
One of the key successes of MRE UK’s project was adopting a train and mentor approach. Although training a team of five—rather than a single superuser—added some time to the start of the project, it reduced the company’s reliance on a single subject-matter expert and helped to minimize risk. By building its IBM Planning Analytics knowledge as a team, MRE UK can now resolve the majority of technical questions without external support.
“One of the advantages of building our competencies in Planning Analytics is that things that we initially thought would be out of scope because they seemed too complex went back on the agenda,” says Jamie Lawton. “For example, we’ve stopped modeling Landfill Gas royalty payments in spreadsheets and moved them into Planning Analytics, and we’re now considering similar projects for our internal loan and interest calculations.”
Jamie Lawton adds: “Over the course of our Planning Analytics deployment, we built up a close working relationship with the Aramar team. Aramar really took the time to understand how our business works, and that perspective certainly contributed to creating a solution that met our specific operational needs.”
Enabling faster, more consistent reporting
Today, MRE UK uses IBM Planning Analytics to produce all its management accounts, forecasts and budgets—from the group level down to individual assets. By replacing its spreadsheet models with a central, enterprise-class platform, the company has increased the speed and consistency of its reporting.
“In the past, some of our monthly forecasting relied on time-consuming manual processes—and when we came to the end of the year, we needed to make a note of all the costs we needed to take over into next year’s spreadsheet,” explains Jamie Lawton. “Thanks to IBM Planning Analytics, that’s all changed. We can now easily move costs into the next year, which helps ensure that all known costs are captured.
“Our monthly forecasting process is also significantly faster, and our budget contributors can now complete their plans rapidly. And because we’ve streamlined and accelerated the process, we can start our forecasts an entire week earlier in the month, which helps us meet our reporting deadlines.”
By building a single, consistent source of financial reporting data, MRE UK is opening up the possibility to perform what-if analyses that would previously have been time consuming and open to spreadsheet errors.
Jamie Lawton comments: “Previously, if we wanted to model the impact of a change in price across the group, we’d need to change that price in all the separate spreadsheet models. Now, we simply plug in the number once and it automatically flows through the whole model. During a recent annual budgeting exercise, we completed half a dozen what-if scenarios in just two hours—something that would have taken an entire day to complete before. Simpler, ad hoc requests are often faster still, and we can complete some requests in minutes.”
Jamie Lawton concludes: “Working with Aramar to deploy IBM Planning Analytics has had a significant impact on the financial reporting capabilities of the business. Our IBM solution delivers consistent and accurate forecasts across the group, even when we make significant changes to the underlying business drivers. We are now developing a new culture of analytics throughout the finance team—and we see great potential to use IBM Planning Analytics to improve more of our processes.”
Melton Renewable Energy UK
Headquartered in London, England, Melton Renewable Energy UK (MRE UK—link resides outside of ibm.com) is one of the leading independent generators of renewable energy in the UK with a portfolio of generating assets with a total net installed capacity of 170MW. With a fleet of methane-powered engines operating from 23 landfill sites across the UK and 5 biomass power stations, the company converts in the region of 1,000,000 tons of biomass fuels into electricity each year.
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Aramar (link resides outside of ibm.com) delivers performance management solutions around consolidation, planning, reporting, analysis and disclosure. An IBM Gold Business Partner, Aramar helps organizations of all sizes and industries to plan for, understand and control their business performance, and make better decisions as a result. To learn more about Aramar, please visit: www.aramar.co.uk (link resides outside of ibm.com).