Case Study: How to Build an Integrated Enterprise Planning and Reporting Application at a Midsize Company. ebook

Transcription

1 Case Study: How to Build an Integrated Enterprise Planning and Reporting Application at a Midsize Company ebook

2 I. Introduction Manual planning processes with ERP and Excel are outdated. A BI solution can help make planning and reporting more flexible and efficient. This article documents a successful BI implementation at a midsize company. Alexander Bürkle, a supplier of wholesale electronics and technology services, replaced its previous planning system based on ERP and Excel with a BI platform from Jedox. The software s program modules support the planning process through individual P&L positions for revenue and cost planning. It also addresses the unique requirements of wholesale or industrial companies with regard to cost of sales, gross margin, HR expenses, and material costs. This case study explores the initial situation at the company, requirements for a new solution, implementation of the BI system, and the resulting changes in the planning process. It also examines the lessons learned during the project and the benefits of the new solution. Table of Contents I. Introduction A need for change Dynamic midsize company 1.2 New demands on planning and reporting 2. A new approach to planning and reporting Business Intelligence 2.2 Requirements for the new system 2.3 Selecting a suitable BI system 3. System implementation Feasible timeline 3.2 Connecting source systems 3.3 Comprehensive reporting 4. Decentralizing the planning process Planning modules for all P&L items 4.2 Top-down or bottom-up planning 4.3 Planning support for cost center managers 4.4 Collaborative planning process with workflow and approvals 4.5 Scenarios and simulations in sales planning 4.6 High user acceptance 5. Benefits of decentralized, integrated planning Advanced analytics provides new options 5.2 BI platform makes planning more effective 2

3 1. A need for change? 1.1 Dynamic midsize company Alexander Bürkle is a leading wholesale electronics supplier and technology services provider. The family owned and operated company based in Freiburg, Germany, has 700 employees with annual revenues of 300 million. The company supplies over 4,000 customers daily from a stock list of 3.8 million products in the segments of building services, industrial engineering, renewable energy, and consumer electronics. 1.2 New demands on planning and reporting The reporting and planning tools that were previously used at Alexander Bürkle could no longer keep pace with the company s growing requirements. The wholesale electronics supplier had just integrated two affiliate companies, reorganized its business into four divisions, and wanted to build its market positioning as a technology service provider. New planning requirements The four corporate divisions were organized into regions with separate branch offices within these regions. The company now had over 900 cost centers and 700 cost types along with a new system for cost accounting. Figure 1: Planning and reporting complexity grows after corporate restructuring The wholesale electronics supplier used an industry-specific, SQL-based ERP system (enventa), a merchandise management system, and Microsoft Excel for reporting and sales planning. Individual reports were programmed by the IT department in the ERP system. In addition to being expensive and time-consuming, reporting had very rigid structures with limited flexibility. Reports could only display results for the company as a whole. The system also could not deliver the desired, detailed analytics and forecasts by products or sales divisions. New corporate structure This prompted the company to implement a new system for integrated enterprise planning and reporting. 3

4 2. A new approach to planning and reporting 2.1 Business Intelligence Business Intelligence (BI) has established itself as a good alternative to traditional reporting and planning tools. BI supports high-performance, flexible usage scenarios through in-memory architectures and web, mobile, and cloud technologies. Self-service BI empowers business users to create reports and analyses on their own without needing IT support. Alternative: Business Intelligence Reporting: A BI solution is much more agile and even automates standard documents such as daily, monthly, or quarterly reports. The data from the ERP system can be flexibly combined with information from any other source. Results are visualized as charts and graphics in a dashboard. BI for standard reporting Figure 2: The BI and planning solution visualizes sales data Planning: Conventional, highly manual planning processes with ERP systems and Excel are outdated. Aside from being time-intensive, they are highly error-prone due to the complexity of managing multiple Excel sheets in an unstructured planning process. The planning scenarios from the ERP system itself have limited functionality and poor handling. Assigning access rights to the planning objects is also difficult in complex organizations. Planning with ERP / Excel is outdated 4

5 2.2 Requirements for the new system The wholesale electronics supplier had four main requirements for the new system: 1. Integrated planning module The company s main requirement for the new solution was an integrated planning module. It should add structure and transparency to the planning process and support management, sales directors, and field sales with separate permissions while reducing the workload on the responsible controllers. Four main requirements 2. Self-service reporting The controllers at Alexander Bürkle wanted an easier, more agile way to build, adapt, and automate detailed reports. They also wanted to complete these tasks on their own without the need for programming or IT support. The system should also integrate with Microsoft Office products. 3. Secure, web-enabled BI system 4. Complex cost allocation system All 22 branch offices should be able to access the reports from any location or device. High security standards and granular access rights were also required. Due to its four-tiered corporate structure, Alexander Bürkle had to implement twelve different cost allocation keys with further subdivisions in both cost accounting and the planning process. 2.3 Selecting a suitable BI system A team of controllers, IT, and senior managers worked together to select a suitable BI system. After narrowing down the list to four vendors and evaluating each solution based on the requirements, the team chose Jedox. The solution from the German software vendor stood out for its integrated planning module in the familiar look and feel of Excel. Reasons for choosing the BI platform Jedox The BI platform Jedox lays the groundwork for a uniform, predefined planning process. At Alexander Bürkle, 100 cost center managers in the field receive their customer revenues as the basis for sales planning. A data entry screen in the web interface of Jedox facilitates this process. The field sales representatives have the option to conduct their planning based on the past year s numbers, generate forecast numbers, or modify the data from the previous year in absolute values or percentages. The solution supports the collaborative top-down and bottom-up planning process with workflow and approval processes. The sales directors or controllers managing the process can see which plans have been submitted or not at a glance. They can also view the planning numbers and adjust them if necessary. 5

6 Figure 3: Web-based solution boosts planning efficiency at Alexander Bürkle The system clearly shows which numbers have been modifi ed, checked, and approved. At the end of the planning process, the fi nalized numbers are written back to the ERP system. Aside from the annual planning cycle, the system also supports rolling forecasts and ongoing planning adjustments. Some typical planning processes that incorporate data from the ERP or merchandise management system include: l Cost center/cost type planning: Guidance and support for cost center managers l Sales planning: Sales and operations planning, top-down and bottom-up planning, different specifi cations for individual regions, planning by articles, GAP planning, rolling forecast Typical planning processes l HR planning: Personnel expense planning, FTE planning, qualifi cation planning, reorganization and extending the organizational structures (including creating the new positions from Jedox in SAP) l Materials management: Spend volume, procurement of non-production materials, number of employees in the warehouse based on material movements l Service and maintenance: Planning of guarantees and goodwill costs, simulation, process improvements through log data analysis 6

7 3. System implementation 3.1 Feasible timeline Figure 4: The reporting application was implemented within 3 months With the support of a Jedox consultant, Alexander Bürkle implemented an integrated enterprise reporting and planning system based on Jedox. The project kicked off with a feasibility workshop, where the controllers and IT outlined a project schedule. This included key project steps and milestones derived from a rough concept for the targeted reporting and planning system. During the solution design, close attention was paid to the different modules and components of the reporting and planning processes as well as the scalability of the architecture. Feasibility workshop with project schedule 3.2 Connecting source systems Building a suitable data model is a central task at the start of the ETL process. Which content is included and how the data is linked depends on which information, metrics, and data sources should be used for the reports. The data is then extracted and controlled to ensure it has been transferred correctly without errors. Building a data model At Alexander Bürkle, data from individual tables of the ERP system's underlying Oracle database is merged with the planning data, revenue data, and other information. An SQL query supplies the data. Controlling duplicates, differentiating between customer and branch office numbers, and interpreting date values correctly (for example, January as the first month of the year and the tenth month in the fiscal year) are typical challenges in data extraction. Extracting the data In the next step, the data is transformed into a format required by the BI system. The Jedox platform supports the ETL process through helpful functions and plausibility checks. The BI system checks the imported data for duplicates and incomplete entries. For Revenues, Customers, for example, Jedox will give notification if data from individual customers or branch offices is missing. Transforming the data 7

8 The data must be marked with the right attribute and linked to the proper fields to enable indepth analyses in different hierarchies at a later time. If different plants supply a single customer, for example, these locations can be assigned as individual customers of a main customer number to ensure that the revenues are accessible for both the main customer and as individual customers for the plant. If the customer receives a bonus, this information will be saved for the main customer and automatically transferred to the individual customers. Another requirement in the ETL process at Alexander Bürkle was assigning customers to individual divisions, regions, branch offices, and field sales representatives. The data model and cube take each of these dimensions into account so they can be used for analysis. Users can select this information in Jedox through a graphical user interface. Dimensions in the data cube A consultant from Jedox initially provided support in building a data cube and loading the data. By the second project, the company's controllers were able to complete the bulk of the work on their own. Loading the data 3.3 Comprehensive reporting The data is now ready for analysis and reporting in a web interface. The current version of the BI platform offers pre-configured reports that can be adapted to individual requirements. Pre-configured reports Since the web interface of Jedox has the look and feel of Excel, users can apply their existing spreadsheet skills. Context menus from Excel for example, Paste contents can be accessed in the BI system with a right click. Approximately 80% of Excel formulas, including VLOOKUP, IF conditions, or SUMIF, can also be used 1:1 in the system. Users can also add rows and columns just as they would in Excel. Jedox offers countless other design options including combination boxes, hyperlinks, dynamic objects, and dynamic charts. Permissions for publishing reports can be assigned on cell or member levels. Reporting in a familiar Excel environment Figure 5: The user interface with the look and feel of Excel builds user acceptance for the new reporting tool 8

9 The controllers have already built 80 regular reports for the management board, sales directors, fields sales, inside sales, product management, human resources, logistics, procurement, and financial accounting at Alexander Bürkle. Users can access the reports from any location through the web interface of Jedox. The authorization system ensures that users can only receive authorized data for their specific areas. The employees can further refine the reports using pre-defined selection criteria such as areas or time periods. Flexible access to reports The first phase of the project was implemented in just three months with the support of a Jedox consultant. Within a short time, the controllers at Alexander Bürkle were able to develop and maintain their reports on their own. After a six-month period, they had built up the skills and knowledge to roll out the planning process in Jedox. BI implementation in three months The solution also generates automated reports, which evaluate information from 500 data fields. This data is also helpful for examining individual customers. With the software s drill-down functions, users can also examine individual cost centers down to level of individual documents. Drill-down capabilities The system also supports individual customer analyses. For example, it determines at which point a collective invoice should be generated based on a threshold for the number of invoices within a month. If the number of individual articles exceeds a certain amount, it pays to deliver them in a larger bundle. Individual customer analyses Figure 6: 80 reports for various target groups can be accessed from any location through the web portal 9

10 4. Decentralizing the planning process 4.1 Planning modules for all P&L items In the past, sales planning at Alexander Bürkle was conducted using the planning tools of the ERP system and Excel tables. Since the new corporate divisions could not be mapped in the legacy system, this was no longer an option. Planning in Excel alone would have been too complex and time-consuming. It also lacks a status module to provide an overview of the current process. This prompted the project team to completely redesign the planning process with Jedox. New approach to planning The BI platform supports the planning process with special program modules to plan revenues and costs for the individual P&L positions. It also accounts for the specific requirements of wholesale or industrial companies with regard to cost of sales, gross margin, HR expenses, and material costs. Planning for P&L items 4.2 Top-down or bottom-up planning At Alexander Bürkle, the managing directors kick off sales planning by setting the revenue targets and specifications for the individual business divisions. The sales directors then discuss these requirements with field sales, which translates these targets into planning numbers for their clients. Sales planning process The controllers then make the data available for detailed planning through the planning module of Jedox. Sales planning is based on the actuals from the previous year. A copy function then transfers this data to the planning area. Technically speaking, it is a multidimensional data selection. All customers, all products, or all branch offices can be transferred with a single command regardless of the amount of data. All seasonal fluctuations are transferred along with the historical data to the new planning year. The planning module offers automatic modifications, for example, based on how the holidays fall or the number of workdays in the month. Planning module of the BI system Approximately 100 field sales representatives from 22 branch offices now have 14 days to submit planning numbers for their customers. They access the Jedox platform online and enter their numbers through an input screen. The planning module of the BI system offers many different functions such as ABC customer classifications, cost of sales planning, and gross margin planning to support this process. Web input screen for planners 4.3 Planning support for cost center managers Field sales generates planning numbers for 200 customers on average. The actual sales numbers from April to February and the planning numbers for March of the previous year form the basis for planning. These numbers are differentiated by main product groups and region. The planning module from Jedox provides different options to realize the defined company goals for their customers. Helpful support for planners Users now can conduct across-the-board planning or edit individual main product groups or customers. They can also enter planning values for new customer. ll Options for across-the-board planning With the BI system, users can transfer planning targets as a percentage revenue increase or as an absolute value to the main product groups, gross margins, or individual customers with the touch of a button. Afterwards, they can adjust the values for individual customers if desired. 10

11 ll Planning for main product groups: The field sales staff modifies the revenue numbers of individual main product groups by entering the budget numbers as absolute values in euros and fine-tuning the results. Different planning options ll Planning for individual customers: Planners can modify the results for all customers (e.g. A customers) or individual ones to address special opportunities, risks, or expected changes. ll Planning for new customers Employees can also enter target values for new customers and flexibly define the data for product groups in the planning module. ll Gross margin planning Employees can enter gross margin figures as a percentage or absolute value. The system automatically calculates the numbers. ll Driver-based planning Specifications related to changes in quantities or prices provide an alternative to mere revenue-based planning. Users can enter an anticipated drop in price to better plan the need to compensate this effect through a higher number of items sold and corresponding marketing activities. ll Other planning aids Alexander Bürkle uses color-coding to highlight special customers. Green stands for new customers, orange for those reassigned from other sales divisions, and red for customers barred from deliveries of goods. Customers can also be grouped by an ABC classification. In the future, the company intends to display the planning values from the previous year as additional information in order to recognize variances between planned and actual revenues. Color-coding and comments Field sales can enter additional notes, for example, to explain why they had entered higher or lower revenues for a particular customer. These comments are saved in the database. The planning module allows users to undo entered data, value for value, or to completely reset the budget to the initial values. This makes it easier to test various scenarios for achieving the defined goals. Systematic data entry errors can be fixed with a touch of a button. This is possible because the actual numbers are accessible in the database for 12 full months. Undo function 4.4 Collaborative planning process with workflow and approvals Field sales representatives submit their data and close the data entry process with the touch of a button. The system then locks these fields to protect the values from subsequent modifications. The process status for the cost center now switches from red to yellow. Submitting entries The responsible sales director now sees the modified processing status in the planning monitor. If desired, the system can also send an automatic notification. The sales director checks the numbers and confirms them. The status switches to green. If corrections are necessary, the sales director reactivates the planning process for the individual field sales representative and the status turns red. The responsible employee can access these numbers again and make the desired changes. Planning monitor for sales directors 11

12 The planning monitor shows the current status of the planning process at all times. The sales director knows which individuals still have to complete their planning and when they have submitted their proposals. If necessary, an automatic reminder mail can be sent at a scheduled date. The managing directors can check the planning status for the entire company, the numbers for individual divisions, or the status for specific regions in more detail. Once the planning process has been closed, Jedox writes back the budget values into the merchandise management system. In this phase, the ETL process runs in the opposite direction. The system first saves the data to interim tables where they can be checked for completeness. Closing the planning process Figure 7: Workflow support and automatic data validation add transparency to planning processes 4.5 Scenarios and simulations in sales planning The BI platform offers capabilities for running what-if scenarios and analyzing trends. Typical uses for scenarios include new revenue segments, branch offices, customers, or organization of sales regions. Users can test any number of variants. What-if scenarios These variants can be calculated using absolute numbers or percentages. Planners can also start with historical data to apply past experiences to new customers or product groups. This ensures that a realistic revenue development is used as a planning variant. The data models support simulations in any number of parallel data hierarchies, for example, individual postal regions. Users can then compare, evaluate, and reduce the different variants to a preferred model. Running simulations in varying levels of complexity 4.6 High user acceptance Approximately 200 employees from the managing board to financial accounting, procurement, Strong user acceptance product management, human resources, and field sales work with the reporting and planning tools through Excel environment from Jedox at Alexander Bürkle. Employees with good skills in Excel quickly felt comfortable in the familiar Excel environment of the BI system. Others, including several employees with limited IT skills, received training through internal courses and targeted support. The flexible options for working with the system independently created strong acceptance among the users. 12

13 5. Benefits of decentralized, integrated planning Due to the underlying BI platform, planning can flexibly follow P&L items. Jedox unites reporting and planning on a single platform. The identical user interface simplifies handling for employees in comparison to separate planning tools that are only used once a year. The common pool of data also ensures a sound, reliable foundation for planning and reporting. Plan-actual comparisons are available at any time with a touch of a button. The system also supports what-if simulations and trend analysis. One platform for reporting and planning Business Intelligence Performance Management Dashboards Consolidation Visualization Decision Support Strategy Planning Balanced Scorecards KPIs Standard Queries Ad-hoc Queries Reporting & Analysis Planning & Reporting Cycle Actual-budget comparison Performance analysis Strategy planning Resource efficiency Cost optimization Budgets & Forecasts Scenario Analysis Sales Forecasting Rolling Forecast Budgeting Data Preparation Actual & Historical Data Trends & Future Data Integrated Financial Planning Driver-based Planning Data Integration Predictive Analysis Figure 8: Integrated enterprise planning concept 5.1 Advanced analytics provides new options There are many benefits to annual planning based on highly granular, multidimensional data. The greatest advantage namely, the vast options for in-depth variance analysis (exception reporting) first becomes apparent the following year. Exception reporting The BI system clearly visualizes variances so users can spot possible trends with just a glance. If the system shows variances for a main product group, they can click to view more details - even down to individual product levels. Users can utilize the findings from the variance analysis to calculate monthly forecasts. Jedox supports this process with year-to-go elements to calculate new forecast scenarios for the current year. Known trends are transferred with a command to the planning data of the remaining months, for example, as a percentage increase in revenues. Monthly forecast calculations With these capabilities, the controllers can evolve the primarily descriptive, historical analyses into evaluative, predictive analytics. 13

14 5.2 BI platform makes planning more effective The planning module from Jedox has made revenue planning at Alexander Bürkle much more effective: Flexible planning options Planning includes both top-down and bottom-up elements. The system is able to account for special requirements or requests from different regions and branch offices. Planning processes are conducted across all departments and divisions. Top-down/bottom-up capabilities, user concepts User concepts are one example of how Jedox makes the planning processes more effective. Instead of assigning permissions to each individual employee, the system administrators define user roles in groups. When a new field sales representative is hired, that individual receives the permissions defined for this group with a single click Simplified planning process Planning variants with across-the-board increases in revenue or differentiations by main product groups or individual customers facilitate the planning process because the system instantly calculates all modifications and shows the bottom-line effects. Optional planning variants are immediately visible Its integrated planning tools, optional comment fields, and color-coding simplify data entry tasks and reduce the work involved. Time-consuming manual consolidations are no longer necessary. Employees can now respond to the questions or requirements of the managing directors without delay. With a planning tool that is primarily based on pure Excel, any modifications to products or sales divisions involve a great deal of manual work and adjustments. The BI system from Jedox, in contrast, automatically modifies all planning documents. This eliminates the cumbersome task of consolidating multiple individual Excel sheets once and for all High-performance planning system Through the BI system's structure with its central database, uniform planning logic, and calculation rules, users at Alexander Bürkle can instantly see how individual actions affect the big picture. The company utilizes 9 million data records in planning. Despite this relatively large amount of data, the system processes ad hoc queries quickly. Revenue simulations for thousands of customers are also calculated within seconds Modern tools Employees at Alexander Bürkle can flexibly access all reporting and planning applications on the road from a variety of mobile devices, including laptops, tablets, or smartphones through a secure VPN connection. The displayed reports are identical and can be read on every device. Ad hoc queries on millions of data records Mobile and secure Authors Angelika Grom, Head Controller at Alexander Bürkle GmbH & Co. KG, a midsize electronic wholesales company based in Freiburg, Germany Norbert Grimm, Vice President Global Customer Success at Jedox. As a senior consultant, Grimm has over 25 years of experience in integrated enterprise planning, reporting, and Corporate Performance Management. 14

15 About Jedox: Jedox simplifies planning, analysis, and reporting with one unified cloud-based software suite. Jedox empowers decision makers and business users across all departments to help them work smarter, streamline business collaboration, and make insight-based decisions with confidence. Over 2,000 organizations use Jedox in 127 countries for real-time planning on the web, in the cloud, and on any device. Independent analysts Gartner, Howard Dresner and BARC recognize Jedox for its leading enterprise planning solutions. Europe: +49 (0) France: Americas: Asia: ANZ: Website: info@jedox.com Simply planning with Jedox and start your free trial today: