Red Energy case study: Re-energising Financial Planning and Analysis

Every day, Red Energy provides electricity and gas to more than 1 million households and businesses across Australia. Red Energy is owned by Snowy Hydro, one of Australia’s leading integrated energy providers.

Challenge

Red Energy sells energy across several states in Australia. They segment their data and information into various subsets like brand, energy type and location to accurately analyse how each part of the business is performing.

It is a large and complex business, and conducting enterprise wide financial planning using spreadsheets was a cumbersome exercise. There were challenges in managing versions and formulas, and Red Energy needed a centralised and more stable environment to manage inputs and trust outputs.

Reporting was also built on Excel macros – an outdated, mostly manual system. Red Energy wanted to change this and be able to deliver real-time and tailored reports the business could self-serve.

Solution

Choosing a tool with finance logic and ownership

After reviewing several solutions, Red Energy decided on Workday Adaptive Planning. For them, there was a sense of familiarity due to the logic Adaptive Planning was built on, and its Excel-like feel. This made it easier to understand and for them to transition their existing spreadsheets into a new and upgraded tool that could help them do more.

Coupled with its user friendliness, the finance team would also be able to own the tool rather than relying on IT or external consultants to manage it.

Anthony Young, Financial Controller at Red Energy, says, “We wanted something that would work for us now, and also into the future. That’s why we chose Adaptive Planning. What really secured it for us was QMetrix and its people, whom we felt could support us in the best way to achieve our goals and the process”.

Red Energy is part of a multi-instance setup with their parent company, Snowy Hydro. After planning separately, Red Energy can now seamlessly push their budgets to Snowy Hydro and the budgets are consolidated there.

Complexity made simpler

A key metric in the energy and utilities industry is Cost to Acquire (CTA) and Cost to Serve (CTS). Previously, Red Energy used to calculate and report these numbers using a complex set of spreadsheets.

Together with QMetrix, Red Energy brought efficiencies to this model by building it in Adaptive Planning. The model calculates operating costs and allocates them according to states, fuel types, etc to provide a broader picture, and to enable slicing and dicing.

Anthony says, “QMetrix was extremely helpful in creating this complex model for us. They were clear on what we wanted to achieve, went above mand beyond to create a step-by-step user guide to show how they went from requirements to the actual build, and also tested to make sure outputs were as expected.

“Being able to report on a multi-dimensional framework has been integral for us. It is live at any time as all data is integrated. You have one source of truth and that means data integrity.”

David Fenton, Retail Commercial Manager at Red Energy, adds, “There have been huge time savings. Just on this model alone, we have saved half to one person’s time because we can run it more frequently, faster, and don’t have to do as many checks because we know the logic and structure has all been built up correctly, so the output is reliable. That valuable time can now be put into analysis.

“Scenario planning is so much easier as well. You just copy and edit, and repeat. It is a lot easier to track and monitor all of that, rather than joining multiple spreadsheets and running scenario models on those”.

Version comparison has been another upside. It is now easier to manage and review variances. Whether it is customer volumes or sales inputs, the finance team can easily track and explain why something has changed and its impact based on the underlying drivers.

Beyond the numbers – aligning business drivers to deliver performance

Adaptive Planning has also helped with the business partnering side of things. The finance team is able to tailor the budget entry interface and templates for the various stakeholders and budget owners, making it easier to enter data. It has also been really helpful having all the historical data available to assist with the budget or forecast inputs, rather than having to open up multiple spreadsheets.

Calculations are a lot more straightforward and easy for non-finance team members to understand. An example is the payroll budgeting function. In Adaptive Planning, it is centralised and built such that superannuation, wage increases and payroll tax are factored in. This makes for easier planning and for making changes as those factors automatically roll through.

Another benefit is being able to look beyond the numbers and focus on what drives them. Because the business can view all the information in one centralised and accessible place, people are better connected to the numbers. It has led to more productive discussions around business drivers and levers that can be pulled to influence business outcomes, rather than getting bogged down in the specifics of where each number has come from.

Red Energy have also streamlined board reporting using OfficeConnect – the Adaptive Planning Microsoft Office add-on. The finance team is still able to leverage and use Microsoft Excel, but easily pull in both financial and non-financial data for reporting, including the underlying drivers such as the number of electricity or gas customers, network consumption and so on.

David says, “The dashboards have been fantastic for reporting. We have configured them to each business unit’s needs, highlighting key drivers and their impact on performance. It is easy to switch between fuel types, brands, and more, and using one dashboard to see everything has delivered significant benefits”.