Financial Systems

Key Questions When Implementing a Global Consolidation and Reporting System

This blog is based upon my previous experience managing the global roll out of SAP Business Process and Consolidation (SAP BPC) for a multinational company. The company I worked for was a $7B IT Distributor that was organized along four geographical regions: North America, LATAM, EMEA, and Asia Pacific. In our case, the company was implementing SAP after more than 15 years using JD Edwards. The company has also been using Hyperion Financial Management (HFM) for 8 years. Having been implemented many years prior, the system was no longer aligned with how the business was being managed. Throughout the implementation of SAP, I found it critical to stay focused on these core considerations:

What issue are we trying to solve?

When undertaking the implementation of a consolidation and reporting system, you should think about what issues you are trying to solve. Is your current system out of date and in need of replacement? Have acquisitions or mergers with companies on separate G/L systems slowed down your reporting cycle? Understanding what issue you are trying to solve and what the goal is will help prioritize which functionality you should enable first.

Another consideration is the simple fact that your business may have evolved since you last implemented a reporting system. Businesses grow, acquisitions occur, or systems are reorganized or realigned under new leadership. When these things take place, you may run or manage your business differently and will want to report on the business as it is now organized. The current system may be designed with the way your business was previously aligned and may need to be replaced or updated.

Do we understand our data and where it’s coming from?

When implementing a global reporting system, it is critical to understand all the data sources that will be feeding the reporting system and how the data is structured. Even if the company is on a single ERP instance, the financial data structure in the ERP system might be at a more detailed level than is required in a consolidation system. In a reporting system, it wouldn’t be necessary to have an account for each bank account as it would in an ERP system. If the company has multiple G/L Systems, it will be necessary to create mappings and have a translation process for each system. The data from each system will be structured differently, and some may have more detail than others. In some instances, the source of data may be an Excel trial balance.

Some of the legacy systems may not be set up or designed to capture cost center or profit center classifications. The sources of data and construct of the data should not be minimized when considering the design of the system and the time it will take to complete the implementation.

What’s our time frame, and what are our resources?

A successful implementation of a global consolidation and reporting system will likely take between six to 12 months to complete from design, configuration, data conversion, user testing and parallel use before going live. The project will likely overlap with the annual audit and planning cycle for the year. The people leading those processes will also be key to the success of the implementation.

Carving out time from day-to-day activities of the Controller and Head of FP&A is necessary for a successful project. Without support of a project sponsor such as the CFO, the project will likely suffer due to conflicting priorities and limited resources. The project sponsor is also necessary in helping make critical design decisions and allocating resources.

Are we converting historical data?

Data conversion, from a time and cost perspective, will be the biggest part of the implementation. If, for example, you have 25 entities and you want to convert 2 years’ worth of data history, that equates to 600 monthly trial balances to be loaded and reconciled (i.e., 24 months x 25 entities). If you want to reconcile at the business unit or cost center level, it will take additional time. Entities whose base currency is something other than USD will take additional time to reconcile. This is particularly true of a Balance Sheet that may have items that translate to USD at a historical rate.

Other items that may need to be converted are annual budgets and forecasts. These may be in one or more currencies. A good practice is to bring in project help to assist with the loading and reconciling of historical data.

How invested are we in successful implementation (i.e., training)?

When doing a global implementation user acceptance and thorough training will be amongst the top keys to success. A global rollout will mean users in numerous geographies and time zones will need to be trained.

It can be costly to send consultants and subject matter experts around the world. However, without it, you’ll be left with a bunch of well-trained users at the headquarters and users in the field with limited knowledge and no support system. One way to gain user acceptance is to tie in the training with a broader organizational finance meeting.

What benefits can we expect?

If your company is not currently using a consolidation and reporting tool, then the benefits of using one will be immediately noticeable. There will be a single source of the truth. Everyone in your finance organization will have access to the same information. Analysis will be quicker and easier with actuals, budgets and forecasts all in the same system and not on disparate spreadsheets scattered throughout the organization.

Do we need outside support?

8020 Consulting offers clients a wide range of finance and accounting services in Los Angeles. If you’re looking for financial systems consulting support, then visit our service page to learn more.

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