LTI software implementation at E.ON

About E.ON

E.ON is one of the largest providers of power, energy infrastructure, and innovative customer solutions in Europe. With headquarters in Essen, Germany, and 72 thousand employees, the group serves over 51 million customers worldwide, providing and administering over 1.6 million km of energy networks.

As a company committed to decarbonization and sustainability, E.ON drives the energy transformation in Europe with over 900 thousand renewable energy power plants and a commitment to become climate neutral by 2040.

The group’s innovative solutions such as intelligent power plants and distribution networks coupled with digitalization of the processes, allow consumers to enjoy the benefits of electricity and clean energy.

Factors driving the need for a change to professional LTI software

One of the main 3 tenets of E.ON’s strategy is full digitalization, automation, and standardization of the entire system, including networks, products, customer interfaces, and internal processes. Within the internal processes, calculating and administering long-term incentive plans through contemporary software became such a need.

Before purchasing the beqom software and partnering with GGS for implementation, E.ON used to process all the calculations and data management through Excel sheets. Granting the scale and complexity of the company, with circa 400 current executives plus 1600 further potential ones joining the program after the upcoming merger with Innogy, and willingness to open the program to a wider audience, that task simply became unmanageable.

Long-term incentive plans, commonly known as LTIPs, are a form of deferred variable pay based on performance. LTIPs’ calculations are rather complicated. In order to arrive at the right amount, you have to account for a number of factors such as:

• vesting events,
• key performance indicators (KPIs),
• maturity periods,
• payout dates or forfeitures,
• stock tracking,
• conversion of the phantom shares to cash.

And each of these elements differs for each program participant.

Additionally, E.ON, as an international company, had to manage payouts in different currencies and with different tax withholdings. Keeping track of all these indicators and variables in Excel manually, required of E.ON not only the use of substantial manpower spent on repetitive tasks but was also prone to errors and omissions. It simply became too much to handle.

Furthermore, with so many employees participating in LTI plans, E.ON needed all the documentation to be digitalized and organized. With Excel sheets, it was also hard to present the information to each recipient in a coherent manner and in one place. As a company committed to digitalization and cutting-edge solutions, E.ON made a point to replace the outdated system and provide the LTI recipients and management teams with excellent customer experience in form of personalized dashboards with hierarchical access, transparency, and error elimination due to manual calculations.

The cluttered Excels with data stored in a hectic way posed also a serious threat in case of an audit. Being able to provide a clear audit trail for a company of that size, was one of the most pressing needs to switch to contemporary secure software.

Our implementation team at GGS, after identifying all of the above-mentioned needs, began the transition to beqom’s professional LTI management software. The new platform would answer all the requirements and allow online collaboration, common access, audit trail, and security, as well as contemporary experience to the project's stakeholders. It was simply a necessary choice on E.ON’s path to full digitalization through technological update to HR processes and compensation management.

Identifying challenges

After studying the materials prepared by the client, hours of discovery sessions, and on-site visits, GGS solution architects and consultants gained full awareness of the needs and challenges posed by the project.

This is a crucial step in any large-scale software implementation undertaking. Our team at GGS always makes sure that both sides have a full understanding of the comprehensive view as well as minute details and challenges associated with the upcoming transition.

Hence, we identified the following challenges associated with E.ON’s particular case:

1. Acquisition and merge of an enterprise-size company

At the time when GGS started to work on implementing the new LTI beqom software, we learned about E.ON’s upcoming acquisition of Innogy. This utility company employing more than 42 000 people, including 1600 LTIP grantees, possessed its own unique compensation plans and specific ways in which they were managed.

In order to onboard such a giant along the way of an already-developing project, the GGS team had to make sure that all the data and programs are compatible. Therefore, implementing the E.ON’s transition while organizing and carrying out Innogy’s onboarding onto the project made the whole process much more demanding and required constant conversation between the three entities.

2. Data cleansing and management

The data stored by E.ON in Excel sheets up to this point were not ready to be transferred to the LTIP software. Prior to that, all the plans had to be reassessed and the obsolete data updated.

Additionally, E.ON also had to identify and fix all the errors, and organize and group the clean data into clusters. All this required a significant amount of labor both on part of E.ON as well as the GGS implementation team.

3. Complex LTIP calculations

GGS had to set up and run the beqom software with respect to intricacies associated with LTIP design and management.

This included calculations of complicated KPIs for each recipient, ongoing virtual shares tracking on the stock exchange (so-called “phantom” shares), eligibility approvals, allocations and accruals computing, forecasting of the future costs, and simultaneous reporting to managers and recipients alike, to name just a few.

All the data and their changes had to be also easily tracked for internal and external audit purposes.

4. Project’s high visibility within the organization

The transition to fully digitalized cutting-edge LTIP software was a high-profile project within E.ON for two reasons.

First, the success or failure of the implementation put at stake the company’s leadership in the field of digital transformation across Europe. The achievement of E.ON’s pledge to environmental protection through efficient and cost-saving management of resources, including paper and energy-use reduction as well as the creation of an employee-friendly environment in form of menial labor cutback relied on the successful realization of this project.

Second, the transition affected pretty much every single of E.ON and Innogy’s departments, since the total number of grantees, each notified of the change, exceeded 2000 people, including top executives. Additionally, scores of managers and HR employees, who so far had been managing the LTIPs the old-fashioned way, had to be prepared to operate within the new system and work with the GGS support team.

The Solution

Once we identified the challenges of the project, we were able to propose suitable solutions. Our GGS team continued the constant communication with E.ON and Innogy, making sure the propositions are well-understood, accepted, and the details of the implementation worked out. And the GGS testers confirmed that all the apps and programs are up and running.

Here is what we offered:

- Implementation of beqom LTI software

Prior to contacting GGS, E.ON had already chosen to transition to beqom LTI software. We worked with E.ON on implementation and adoption of beqom’s cloud-based platform for administering all the LTI plans.

With beqom software E.ON is now able to track the deferred bonuses in form of various instruments such as shares, stocks, or options over multiple profiles, follow the KPIs and vesting periods (years into the award), set the performance metrics, and monitor the eligibility, allocations, and approvals.

Moreover, the currency elections and tax withholdings with respect to different countries require minimal work to keep track of and are no longer prone to mix-ups.

With the obsolete and liable to mistakes Excel sheets now gone forever, E.ON is back on track with its digital transformation!

- Digital LTI dashboards

Thanks to beqom software capabilities, the GGS team created a custom dashboard system for E.ON.

In this way, each grantee now has access to the personalized LTI dashboard, where they can find all the information concerning the award in one place. The modern, streamlined look of the platform coupled with the ease of navigation and clarity substantially enhance the customer experience.

- Azure-based cloud solution

GGS proposed E.ON to implement the Azure-based cloud solution, powered by beqom, in order to easily manage access to the profiles with respect to seniority hierarchy. Additionally, the employees responsible for managing the LTIs are able to govern the grants, grant accruals, and track the forecasts.

The solution also supplies accurate foolproof calculations and hassle-free LTI reporting with detailed deferred bonus statements. In fact, now the information needed for audits is reliable and available within minutes!

And the all the grant letters and reports are prepared in advance.

- Flexible approach and ownership

Our architects and consultants advocated the idea of treating this solution as a tool that is flexible.

We explained how it can evolve with the company and adapt to dynamic circumstances and satisfy the changing needs. With proper preparation, a proactive attitude, and clearly outlined requirements, E.ON is now able to take ownership of the end product and administer the LTIPs, issue new grants, schedule the payouts and comfortably adjust the plans on the case by case basis.

All that with minimal but continued support from GGS’s side. And if the situation requires, our GGS support team and maintenance specialists are available to provide functional help (where to find such and such thing, how to set something up, etc.), debugging, and anything else, on the excellent service level any time!

- Agile Team and Scrum Project Management

At GGS, we believe in efficient project management.

Drawing upon the most current but dependable practices in the field, we kept in touch with E.ON on a sprint by sprint basis, making sure we deliver a valued product and exceptional service.

As avid practitioners of the Agile methodology, we leveraged collaboration, constant focus on business value, and attention to service quality to anticipate our client’s needs and exceed their expectations.

Achievement: Arriving at Success

Our GGS team’s dedicated effort and excellent communication skills as well as outstanding cooperation on E.ON and Innogy’s sides result in the project’s success!

Thanks to mutual effort, we made the transition as smooth as possible, even in the face of E.ON’s acquisition of Innogy. We cannot emphasize enough the importance of the partnership we have built with the E.ON and Innogy’s proactive Comp & Ben Executives, who, aware of the project’s high visibility, treated it as the top priority.

Thanks to that outstanding partnership and the implementation of the professional LTI beqom software we’re proud to share the following results:

• we saved 450 hours of manual work per year
• the end-user customer experience increased by whopping 200%,
• we increased the LTI administrators’ satisfaction by 35%,
• we reduced Comp & Ben department’s stress by 20%,
• the risk of inaccurate grants, payouts, accruals, and other errors dropped by 20%,
• we achieved 9/10 in overall satisfaction rating for the new LTI software as per surveyed E.ON and Innogy individuals,
• most importantly we accomplished E.ON’s strategic goal: the full digitalization of Comp & Ben department.

Here at GGS, we are proud that this 6-month journey we undertook with E.ON culminated in concrete and measurable effects.

The company not only achieved its strategic goal on the road to becoming the leader of progressive transformation but also significantly increased employee satisfaction both in the case of LTI recipients and admins responsible for LTIPs’ management. Equally importantly, E.ON doesn’t have to fear security breaches or audits-gone-wrong anymore. Now the calculations are done automatically, precisely, and securely.

This can also be your story! Schedule a consultation with GGS and learn about the benefits LTI software can bring to your particular company.