Background and Challenge

Senior management at a Fortune 500 gas and electric utility was facing an increasingly complex business environment that included regulatory changes in multiple states, volatile fuel prices and new competitors emerging in multiple geographies and service offerings. The dynamic marketplace was creating new challenges in forecasting effectively, and the company needed to reevaluate its approach to tracking business performance and strategic planning.

The utility looked to L.E.K. Consulting to evaluate its current planning process and identify opportunities to centralize planning and forecasting, which would provide senior executives with the ability to capitalize on emerging trends and respond rapidly to potential market changes.

Approach and Recommendations

L.E.K. developed a set of tools and processes to enable the utility to understand the key commercial and economic drivers that impact each business unit's performance.

Results

Based on initial findings, L.E.K. and senior management targeted three actions to improve planning efficiency and responsiveness:

  • Corporate Model Upgrading:  L.E.K. outlined a model that would focus more on business drivers and have the ability to run real-time business scenarios
  • Value-Driver Focus:  L.E.K. worked with senior utility executives to expand scenario planning beyond traditional financial reports to incorporate “revenue growth” factors. L.E.K. also worked with the utility to develop strategic planning modules.
  • Streamline the Planning Process: The utility used these tools to implement a more responsive and effective planning process, which also empowers senior managers to quickly see key commercial and economic drivers that impact each business unit’s performance. On an organization-wide level, the tools and processes are in place to link specific business operations to performance, which is critical in communicating with the investment community, employees and other important constituents.