Norway is one of the greenest, most environmentally conscious countries on the planet. 98% of Norway’s electrical production comes from renewable sources. Dig deeper into the numbers and you’ll learn that the country’s abundant lakes and rivers, along with its unique topography, create ideal conditions for generating hydroelectric power. Consequently, hydro accounts for an astonishing 96% of domestic electricity production.
In many cases, established domestic energy companies—those that have been around for decades—are leading the way towards an even greener economy. One such firm is Arendals Fossekompani (AFK), a pioneer in Norwegian hydroelectric power generation. Founded in 1896, AFK has over 2,000 employees today in 27 countries. It operates within 6 sub-groups and is an active investor in other green-tech companies. AFK has been listed on Oslo Stock Exchange (OSE) since 1913.
Although AFK’s history is steeped in hydroelectric power, the company’s leadership decided in the 1960s to adopt a mission to diversify across a broad portfolio of companies with climate-friendly charters. This strategy has been so successful that hydroelectric power now accounts for only a small—but very profitable—part of the total revenue for the group.
AFK’s portfolio nearly spans the “from A-Z” spectrum. Alytic is an investment and consulting firm that was established to invest in data-driven businesses, such as identifying how research and analysis can improve the efficiency and sustainability of the world’s fisheries. Near the other end of the alphabet, AFK’s Vindholmen Eiendom is a real estate investment that’s transforming 67 acres of an old waterfront maritime business area into a stunning and eco-friendly living district.
In between, there are five international portfolio companies, all in the technology and energy space, headquartered in countries such as Canada, Spain, the United Kingdom and, of course, Norway.
AFK’s unique and multi-national business model requires sophisticated performance management expertise and systems. Finance teams must comply with 10 government entities and convert financial transactions in multiple currencies to consolidate reporting at the parent level in Norwegian kroner.
Lars Peder Fensli is AFK’s chief financial officer. Lars is leading the company’s financial management operations and strategy through an extremely active time of growth, capital investments, and mergers and acquisitions. These activities have increasingly put pressure on the finance team’s processes and systems.
“The last 14 months have been, without a shadow of a doubt, the most eventful period in our 125-year long history. We have listed two portfolio companies, established a third and made several acquisitions within the group – all while handling the effects of the pandemic. During this period, we also decided to find and implement a more efficient and future-proof reporting system,” says Lars.
The financial consolidation and close process was a logical first step for Lars and his team to address when modernizing performance management technologies and processes. Historically, AFK’s finance teams relied heavily on spreadsheets and disparate offerings from a mix of vendors. This necessitated a hybrid process of manual and automated activities during consolidations, close, and reporting. When many people are manually inputting and consolidating information, data accuracy is often a concern. It also can be difficult or impossible to drill down into journal entries and analyze information at a more granular level.
AFK had been successfully managing through these challenges; there was no watershed moment where leadership decided that they urgently needed a new enterprise performance management (EPM) solution. But as the business and challenges grew, there was an increasing concern about the lack of consulting resources that could support existing and outdated systems—a problem that would only get worse over time.
“It was time. Time to make a change. Frankly, we were overdue. Searching and vetting different vendors was both interesting and challenging. But we were highly motivated by the prospect of closing the books much faster than we normally would,” says Lars.
When it came time to consider modernizing their EPM systems and processes, Lars and the selection team looked at offerings from multiple vendors. Oracle rose to the top based on multiple criteria.
“We were pleased to learn about Oracle’s cloud based EPM system. Early in the selection process Oracle stood out as a preferred vendor. Further investigations improved and strengthened our belief in the system,” says Lars.
First, Oracle Cloud EPM offers a complete and natively integrated suite of applications, spanning all performance management processes, including planning, reporting, data management, profitability and cost management, account reconciliation, and financial close and consolidation. Also, there are extensive Oracle consulting partners in the Nordics. On the basis of these strengths, adoption of Oracle Cloud EPM by a wide range of companies is increasing within the region.
Lars also took note of the Oracle@Oracle story, which tells the true tale of how our finance team reaps the benefits of our own cloud applications. Our finance team now closes the books across 20 subsidiaries in just one day, and reports earnings just ten days after the period close. Oracle’s vision ultimately is to deliver capabilities to its customers to support a fully automated close.
An important selection consideration for AFK was the solution’s future roadmap. All cloud solutions offer their customers some plan for providing periodic updates. But those updates that, in essence, “renew” the solution, are only as good as the strategy behind them. Lars and the selection team viewed Oracle’s development strategy—which includes significant input from its customers—as superior to that of other vendors.
“We want to partner with solution providers who are committed to delivering technologies that move the world forward into a digital and green economy,” says Lars. “Oracle has demonstrated that its cloud strategy has created the most dynamic and future-oriented performance management offering.”
As a developer and provider of new technology, AFK is also keen on adopting new technology into its own operation. AFK is a first mover in the Nordics on Oracle Cloud EPM.
AFK chose Oracle partner inlumi over many other potential implementation firms based on their extensive Oracle expertise, their ability to guide customers in reaping the full benefits of digital transformation, and because they were seen as the best fit for AFK’s culture.
It’s still early in the game, but AFK is already experiencing favorable results. The company is now well on its way to having a single solution for financial consolidation and close across all of its operating entities. The finance team successfully employed the new solution to close the annual accounts for 2020, as well as the first quarter of 2021. By providing an overall picture at group level, management can gain insight through analyses and scenario testing, and act as an engine for change in the group.
Finance teams within the portfolio companies are pleased that they haven’t disrupted operations, even though they’ve dramatically changed how they complete the consolidation and close process. Moving forward, more EPM processes—such as planning—will be reengineered to take advantage of what technology can enable.
“Oracle Cloud EPM will help us accelerate and automate reporting while also reducing administrative costs,” says Lars. “Most importantly, my team and our business leaders have advanced options that enable us to make more data-driven decisions that help us anticipate and adapt to change.”
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