28 october 2010
OGK-4 automates the budgeting based on IBM Cognos TM1
In order to boost the efficiency of business planning, OGK-4 implements a new budgeting system based on IBM Cognos TM1. 

The new system will automate the processes of operational and three-year planning in accordance with requirements of the energy concern E.ON AG. The project is performed by GMCS, an IBM business partner.

OGK-4 is the largest thermal generating company in Russia in terms of sales that unites five electric power plants. Since 2007, OGK-4 has been a part of E.ON AG, an international energy concern.

Since the integration with the concern, one of the most important strategic tasks of OGK-4 has been the implementation of the three-year budget planning processes for the purpose of a more accurate forecasting of financial and economic activities and the improvement of the quality of reporting to the shareholders and E.ON AG. The process of drawing up the three-year plan is associated with considerable labor intensity of collection of the auxiliary budget forms from all branches, consolidation, preparation of consolidated reporting and input of adjustments according to IFRS. To solve this task the GMCS specialists proposed to implement a new budgeting system based on the IBM Cognos TM1 solution that meets the energy company's requirements for performance, scalability and opportunities for further development.

The project implementation contract was signed in Quarter II, 2010. The implementation of the project on the deployment of the new budgeting system is performed by stages. At the first stage, the processes of the preparation of the three-year plan are automated in IBM Cognos TM 1. Though the total scheduled duration of this stage is six months; within the first four months, the GMCS specialists already created a new methodology for budgeting, and developed a prototype of the three-year budget planning system that included 10 unique key budget forms. Following the results of the successful pilot launch of the prototype, at the moment GMCS performs works on its replication to the branches. All in all, more than 60 budget forms will be developed in IBM Cognos TM1 for all the OGK-4 centers for financial responsibility. The result of the first stage will be the preparation of the consolidated profit and loss account (P&L) of OGK-4 for three years in accordance with the E.ON AG standards.

At the second stage of the project that will start in November 2010, GMCS will automate the operational planning processes in accordance with the built budget model. The implementation of this stage will enable OGK-4 to prepare a detailed budget for one year, itemized by contracts both for operational payment management and cost control.

The final stage of building up the new budgeting system will be the set up of the automatic download of actual data from the OGK-4 accounting system in IBM Cognos TM1 to provide a full-featured plan/fact analysis of the revenue and expense budget.

"The project the implementation of which was started by the GMCS specialists united the benefits of the IBM software tools and the project team expertise to perform our tasks; and the automation of the full cycle budget planning in the system will be the final task," noted Mario Mazidowski, Financial Director, OGK-4.

"For GMCS, this project is not a simple continuation of the partnership relations with OGK-4, but also an opportunity to use our experience  and practices on the automation of budgeting processes in large geographically dispersed companies for the most large-scale implementation of the IBM Cognos solutions in the energy sector in Russia," comments Evgeny Erofeev, Director, BPM Products Department, GMCS.

"One of the most important advantages of the IBM Cognos software tools is the opportunity of the integration of the industry applications required for the implementation of business task considering the specificity of customer's industry," noted Sergei Likharev, Head of Information Management at IBM Russia and CIS. "The project implemented at OGK-4 clearly demonstrates these advantages of Cognos TM1."

About OGK-4

OGK-4 is the largest thermal wholesale generating company in Russia in terms of sales that unites five electric power plants with the total installed capacity of 8,630 MW, such as Surgutskaya GRES-2, Berezovskaya GRES, Shaturskaya GRES, Smolenskaya GRES, and Yayvinskaya GRES. 78.3% shares of OJSC OGK-4 are owned by E.ON Russia Holding, a 100 percent subsidiary of the international energy concern E.ON AG.
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