SUEK (Coal/Energy) Wins SAP Value Award in Accounting (saves RUB 300M)
On October 28, Museum of Russian Impressionism (Moscow) welcomed SAP Value Award Ceremony for the first time ever. See some scenes of the impressive event.
This event was the culmination of 3-months long contest. During this time period customers of SAP submitted nominations, a panel of experts reviewed the submissions and everybody had the opportunity to vote for winners www.sapvalue.ru.
What was the result? There were winners in 5 categories, plus one winner of a special audience choice award.
In the category Face to the Customer (best customer-orientation stories)
The winners are: Bashneft, KOMUS and Technodom Operator.
In the category Re-load Business» (massive unification of business-processes)
The winners are: DTEK Energo and Rusagro, Tele2.
In the category Excellence in Details (best stories in production and logistics)
The winners are: MosOblGas and OMK and Petersburg Metro.
In the category Expending Horizons (next level of transformation)
The winners are: Aeroflot, Trade Company «Megapolis» and Russian Railways.
In the category Reliable Business Partner» (business-initiative in finance)
The winners are: Gazprom transgas Belarus, NLMK, SUEK and Federal Grid Company.
The Audience Choice Award was granted to DTEK Energo.
All success-stories of the winners on the web-site www.sapvalue.ru.
In this blog we will provide details about SUEK’s winning submission:
Less effort and time required for preparing IFRS-compliant audited reports with SAP solutions
Siberian Coal Energy Company is a leading global coal company, the largest in Russia and the fourth largest in the world, with the world’s fifth biggest coal reserves. SUEK operates in seven regions of the Russian Federation.
- Name: Siberian Coal Energy Company (SUEK)
- Employees: 32,000+
- Industry: Coal mining
- Operating revenue: $4.1B (2015)
- Headquarters: Moscow
- Website: www.suek.com
In the past, SUEK used to make all financial closings with local 1C systems. Sometimes this took up to 30 days. About 800 people worked for the SUEK accounting department, but they needed two weeks to capture all data and another 15 days to compile management reports. No IFRS compliance was ensured. As a result annual financial statements were signed only in the second quarter, slowing down business development.
To accelerate financial closings and preparation of IFRS-compliant reports; to improve accounting accuracy while decreasing labor and financial costs, not least by reducing the number of employees in the accounting department; to ensure readiness for IPO.
SUEK benefits from a transparent and convenient accounting process. All bookkeeping data reside in a single system while all settlements follow uniform rules. SAP systems have allowed to extend economic control, including control of investment (across a range of parameters), and avoid user authorisation conflicts. Fraud risk has been minimized.
The employees were neutral at first but then have switched to a more positive attitude. Now, when the system is fully integrated, most of them highly appreciate it for its efficiency and friendliness.
- Regarding financial report preparation time, SUEK holds a competitive advantage over other major Russian companies. It needs only 13 days to sign audited accounts for the 12-month-period, and 9 days for a 6-month-period. Accounting closing requires just two business days a month, while only one day is required for preparing management reports.
- Business-processes are easy to modify and require minimum investment. The control environment has been improved through automation and centralization of manual testing.
- The following SAP solutions have been integrated: SAP ERP (FI/FM, CO, MM, SD, PM, PS), SAP HR, SAP BI (BW, BCS, BPS).
The ratings agency Moody’s considers fast closings as a clear competitive advantage that enhances a company image and reduces financing cost.
SAP solutions have helped accelerate decision making. SUEK’s Executive Board meetings for closing retained earnings for the previous month and choosing priorities for the following month now take place in the first ten days of the month, two-weeks earlier than before. Quality of reporting has increased and reduced report preparation time facilitates the raising of bank financing on favorable terms.
Fast information acquisition enables swift performance of deep insights and adjustments of company operations.
The majority of these benefits are substantial and future proof.
- The accounting department has reduced from 800 to 250 employees, resulting in annual savings of RUB 300M.
- Financing cost per year has fallen by tens of millions of dollars.
- Automation of diesel fuel metering and invoicing saves RUB 1.5B a year.
- Timely export VAT refunds have helped reduce working capital by RUB 500M.
Andrey Vanyushin, Deputy Chief Financial Officer at SUEK JCS: “In terms of financial reporting, we were outsiders. Now we are an acknowledged pacemaker.”