Interview with Michael Sieber, CFO and member of the Executive Board of CKW Group
CKW Group is a leading Swiss provider of integrated energy and building technology solutions. For over 125 years, the company has been supplying electricity to its now over 200’000 end customers in the cantons of Lucerne, Schwyz and Uri. In addition, products and services in the fields of photovoltaics, e-mobility, heating technology, electrical engineering, IT & communication, security, and connectivity & data centres are offered throughout Switzerland. CKW Group has over 2’100 employees. In the financial year 2020/21, CKW generated sales of CHF 916 million. With a stake of 81 percent, Axpo Holding AG is the majority shareholder of CKW. In 2021, IFBC supported CKW Group in developing a core concept for a further development of the company’s financial management.
In the following interview, Michael Sieber, CFO and member of the Executive Board of CKW Group, provides insights on the project together with IFBC.
What were the key considerations in revising the financial management at CKW and developing a new core concept?
The energy industry is currently in a profound, structural transformation, which has become even more dynamic and complex with the outbreak of the Ukraine crisis. The general trends toward a climate-neutral energy supply as well as advancing digitalization are reflected in new, constantly changing customer requirements, emerge new business areas, and create previously unknown, new competitors. Swiss energy utilities are forced to continuously adapt and develop their business model, which also brings new requirements for financial management. The cornerstones for our existing financial management concept were established many years ago and have been continuously improved. However, particularly in the context of structural changes, we wanted to fundamentally rethink previously proven processes in order to ensure that CKW continues to be positioned in an agile and contemporary manner in the future, also from a financial management perspective. The upcoming migration to SAP S/4 HANA within the entire Axpo Group and the associated establishment of a uniform ERP solution offered us the ideal opportunity to clarify in advance the essential conceptual questions for an optimal design of financial management for CKW.
With the development of the new core concept, we further intended to establish a common and uniform understanding between the business units with regard to financial management. A harmonization contributes significantly to simplification as well as to an increase in the degree of process automation.
How was the project approach structured for developing a core concept structured together with IFBC?
As a basis for the development of the new core concept, the focus was initially on assessing the current situation. Based on these findings, the requirements and expectations for the future structure of financial management at CKW were sharpened in workshops with controlling representatives and the business unit managers. The insights gained fundamentally served for the development of Financial Management Principles, which describe the key parameters of CKW’s future financial management. After the Executive Board had approved these Financial Management Principles, they were specified in more detail in corresponding work packages, which were processed across both topics and business units. The resulting findings were finally summarized in a core concept and presented to the Executive Board for approval.
What are the key aspects of the core concept developed?
The key aspects of our core concept are essentially based on the predefined Financial Management Principles. In this context, it was necessary to specifically consider the regulatory requirements, which in particular affect the distribution network and business activities in the basic supply sector. In order to harmonize financial management within CKW, we have standardized the previously division-specific contribution margin accountings as well as the management of customer orders and projects. The resulting establishment of a common «financial language» is reflected accordingly in a shared understanding of financial and operational performance measurement and in the newly designed, integrated reporting system (management reporting) with financial and operational key figures for the individual business units. Another key component of the core concept was the design of the management and allocation of overhead costs.
What were the main challenges in developing the core concept?
The critical questioning of long-standing processes was one of the key challenges in this project. The project team members had to detach from established processes in order to open their view for new conceptual designs in the sense of a «greenfield approach». Another major challenge was to consider the justified requirements of the business in the context of the redesign of financial management. The management of different business models as well as regulated business and market activities had to be integrated in one core concept.
What steps are now planned with regard to the developed core concept?
As part of the project to establish an uniform ERP solution based on SAP S/4 HANA, we are currently working intensively on the specification and implementation of the defined requirements from the core concept. In the context of this project, the importance of the preliminary definition of the financial management concept of CKW has been fully confirmed. Thanks to their preliminary work, our employees involved have a sharpened understanding of optimally designing financial management and are familiar with the associated challenges. This enables them to contribute in a targeted manner to the successful realization of the ERP project. System-related elements of the core concept developed will be implemented as part of the ERP project. We will successively tackle non-system-specific further developments in the coming months.
Why did CKW choose IFBC as its partner?
When choosing IFBC as a partner, IFBC’s in-depth industry knowledge was one of the most decisive aspects. Furthermore, it was of central importance to us that IFBC could bring in a valuable external perspective based on its many years of broad experience in developing and establishing financial management concepts. And finally, we were convinced by IFBC’s flexible and agile project approach combined with a high «senior attention» with two experienced partners in the project team.
Michael Sieber holds a degree in Business Administration HWV/FH, a diploma as Controller SIB and a Master of Advanced Studies in Corporate Finance. He has been CFO of CKW Group and a member of the Executive Board since 1 February 2020. Previously, he held senior financial positions at Axpo for more than 15 years.