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Arjuna Realize Financial Excellence in Shared Services Organizations Felix Pechtold November 2012

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Page 1: Arjuna - SAP Finance Day

Arjuna Realize Financial Excellence in Shared

Services Organizations

Felix Pechtold

November 2012

Page 2: Arjuna - SAP Finance Day

Page 1

Agenda

1. DSM & Explanation of Arjuna

2. Scope & Business Case

3. Strategy & How Tooling Supports

4. Shared Services Framework

5. Question & Answers

Page 3: Arjuna - SAP Finance Day

Page

Bright Science. Brighter Living.TM

creating

value for

CUSTOMERS EMPLOYEES

SHAREHOLDERS

Meeting consumer

demands, becoming supplier of choice

Engaged, motivated and talented team

Delivering sustainable value creation

Page 2

Innovations addressing:

Global Shifts

Health & Wellness

Climate & Energy

SOCIETY

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Materials Nutrition

Unique business positions of DSM

• Global leader in nutritional ingredients for feed, food and personal care

• Market leader in anti-infectives and key custom manufacturing player

• Market leader in sustainable high performance materials

• Merchant market leader in nylon precursor caprolactam

• Innovator active in advanced biofuels, biochemicals and biomedical materials

Health

Page 3

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DSM at a glance 2011, continuing operations

• Net sales € 9,048m

• EBITDA € 1,296m

• Net Profit € 594m

• ROCE 14.0%

• Capital Employed € 6,581m

• Capex incl acquisitions € 1,508m

• R&D € 476m

• Workforce 22,224

• Amongst leaders in sustainability

No 1 in 6 out of 8 years DJSI

* Innovation Center and Corporate Activities related Sales & EBITDA weighted distributed over clusters

Page 4

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1. Explanation of Arjuna: The way to Arjuna

Collaborating in

‘One DSM’

“CSD” “One DSM” Finance

Management

Agenda

Leverage

Financial

Operations

Arjuna

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With Arjuna we are creating a strong foundation for excellent shared

financial services within DSM worldwide.

We introduce a new vision on organisational excellence, with different

points of view, new insights and inspiration.

We develop harmonised and streamlined financial processes and

supporting tools which will be serviced by a new global Financial

Shared Service Organisation, with a Back-Office in India and 6 regional

Front-Offices close to our Business Groups and markets.

And we do all this in a down-to-earth and respectful way.

We are on a journey.

Finance in motion, creating new perspectives!

6

1. Explanation of Arjuna: Arjuna mission statement

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1. Explanation of Arjuna: Arjuna objectives

1. Harmonized & lean processes;

improve quality, compliance,

speed, transparency

2. Enable Finance to focus on more

value adding tasks

3. Create platform for leverage of

other Functions

4. Enable Acquisitions and

Partnering via easier integration

(agility)

5. Reduce costs

Tooling Goal:

Implement financial processes and supporting systems for global

Financial Shared Service Organization

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1. Explanation of Arjuna: Arjuna roadmap

• Runs from 2011 – 2014

• 2011 Mobilization, design & development

• 2012 Build SSC Tooling/Processes and Piloting

• 2013 – mid 2014 Migration

• 5 Pilots with increasing scale & complexity to detail

design, test, demonstrate feasibility & capability

• Pilot 1 - AR/CM (DSM Business Support Sittard)

• Pilot 2 - AP (DSM Food Specialties Delft)

• Pilot 3 - AP, GL/Closing, AA (DSM Business Support

Sittard)

• Pilot 4 – AP, AR/CM, GL/Closing, AA, Reporting, Taxes

(SFAC DSM Nutrional Products Basel)

• Pilot 5 - AP, AR/CM,GL/Closing, AA, Reporting, Taxes

(DSM Engineering Plastics Sittard)

Page 10: Arjuna - SAP Finance Day

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Agenda

1. DSM & Explanation of Arjuna

2. Scope & Business Case

3. Strategy & How Tooling Supports

4. Shared Services Framework

5. Question & Answers

Page 11: Arjuna - SAP Finance Day

Page 10 10

2. Scope & Business Case: New organizational model

SSO Organisation

SSO Front-Offices

SSO Back-Office in Hyderabad India

Retained Organisation

Transactional processes, rule-based activities

Account Man.

BGs/SUs

Problem Solving

/Steering of BO

Language, bus.

proximity Legal/ Fiscal/

Statutory

Activities to be performed close to business for strategic, know-how,

sensitivity / confidentiality

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• G/L Accounting Completeness and Correctness

• GL Processing and Problem Resolution

• IC Reconciliation

• Cash man. Exec.

• Master Data (partly)

• Legal/Fiscal Acc.

• BS Valuation & Result Det.

• Accruals, prov., Prod.Cost., invent. val.

Reporting

• Data Coll. & Val. for Corp. & BU Rep.

• Man. & Fin. Report (SEM) (partly)

• KPI/process reporting

• CBS/Intrastat rep. (partly)

• Consolidation Entries

• Managerial Rep.

• Transfer pricing

• Master data

• Invoice Processing

• Payments Creation

• Accounts Payable Inquiry, Problem Resolution and Correspondence

• Procurement Card Program Administration

• Master Data Man.

• T&E

• Purchasing Support

• Tax Accounting

• Insurance Claims Handling & Processing

• Management Activities and Training

• Master Data

• Treasury

• Tax Planning and Advise

• Insurance Policy

Review & Negotiation

• Insurance Risk Assessment

• Capital Project Accounting

• Investment Related Accounting

• Master Data

• Budget Creation / Authorization

Retained Org. activities

SSC activities

• Billing

• Reporting (partly)

• Customer Payment Receipt and Application

• Accounts Receivables Inquiry, Problem Resolution and Correspondence

• Customer Credit Management

• Collections (partly)

• Master Data (partly)

• Collections (partly)

Accounts Payable

Accounts Receivable

Other

Asset Acc. General Ledger (incl closing and consolidation)

Controlling

• Bus. Proc. Man. (partly)

• Corp. & BU Planning, ASR, Analysis (non- routine)

• Performance

Man./MT’s

• Bus. Proc. Man.

• Bus. Risk Man.

• Ad hoc analysis

Wave 1 : focus on trans. processes ================= Wave 2: expand scope ====================================

2. Scope & Business Case: What is in scope of Arjuna?

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2. Scope & Business Case: 2-Wave Migration

Wave I Wave II

Now June-2014 Dec 2015

Wave I:

•Focus on Accounting

•Learning curve and mitigation of risks

on migration; starting with small units

•Consolidate small sites; revisiting

small site is not efficient;

consolidation to be led by BGs (esp

DNP)

Wave II:

•Increase scope by focusing on rule

based reporting & controlling

•Increase Back-Office ratio once

track-record established

S S

S

L

L

L

L

L

L L

70% 70% 70%

50%

50%

50%

50%

20%

20% 20%

FTE

BC realization

50%

Activity scope;

AP, AR,

GL/Closing, AA

20% Activity scope;

rule based

Reporting/Control

S S = Small sites (<

8 FTE)

addressing activities scope of ca 600 out of current 950 FTE

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3 VAT short-term

improvements

1 Master Data Cleansing

2 Harmonized & Fast Close

4 PtP improvement

5 Inter Company

simplification

Define and clean key Master Data and maintain the required level of quality

Benefit: efficient SSO (& higher Back Office ratio), less rework / trouble shooting

Execute fit-gap analysis and make an action plan to realize use same terminology Harmonized & Fast closing activities & schedule (5 days goal)

Develop implementation per business, ready by end 2012

Benefit: ensure smooth closing process & management report earlier available

Combine purchasing categories to uniform purchasing for indirect spent To be embedded in organization

Benefit: efficient SSO (& higher Back Office ratio), less rework / trouble shooting

Comprehensive and efficient budget process Simple invoicing/cost charging process with central monitoring

Benefit: reduce manual effort (also from outside finance) and enable ‘fast close’

2. Scope & Business Case: Process Improvements in short

Improve process indirect tax from new legislation to declaration Make rule based decision trees, when possible automate

Benefit: efficient SSO (& higher Back Office ratio), less rework, tax compliance

13

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Agenda

1. DSM & Explanation of Arjuna

2. Scope & Business Case

3. Strategy & How Tooling Supports

4. Shared Services Framework

5. Question & Answers

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How do we become Excellent?

The DSM Financial Shared Service Center can improve in 3 important directions:

• Gaining efficiency and growth through automation (e.g. SAP FSCM, VIM, FCC)

Core Financial Processes are Harmonized and Standardized

BG Finance Department able to perform Value Adding Tasks

• Gaining efficiency through streamlined communication (Shared Services

Framework)

Clear Rules of Engagement with standard communication Lines

Inbound and outbound communication with clients of the service center

are improved by tight integration between communication frontend and

business applications

• Increasing effectiveness by transparency on Business Performance and SLA’s

Measuring and Proving to each other we are keeping promises

3. Strategy & Tooling: Deliver Excellent Service

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How do we deliver Service?

Delivering to all BG’s across DSM

Harmonized & Lean Processes; improve quality, compliance, speed and transparency

Holistic overview across clients is necessary

Collaborate with all Customer Groups

Clear Rules of Engagement with standard communication Lines

Has an excellent customer care ethos and focus on service quality

Has sufficient scale to optimize economies of scale and adapt to changing demands

Using standard processes and technology to plug-and-play (create platform)

Enable Acquisitions and Partnering via easier integration

3. Strategy & Tooling: Deliver Excellent Service

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3. Strategy & Tooling: Supported by SSF

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Financial Closing Cockpit incl CPS SAP Invoice Management Multi Backend scenario

SSF Including Dispute, Credit, Collection Management

3. Strategy & Tooling: Integrated into one platform

Page 20: Arjuna - SAP Finance Day

Page 19

Agenda

1. DSM & Explanation of Arjuna

2. Scope & Business Case

3. Strategy & How Tooling Supports

4. SAP Shared Services Framework

5. Question & Answers

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4. SSF: High Level Process overview

Communication with (internal / external) partners

3. Complete service request

1. Start & create service request

2. Processing service request

4. Reporting

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4. SSF: Creation of a Service Request

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4. SSF: AP Process Integration Launch VIM Analytics Dashboard

Open SIM Analytics Document View

(prefilled with Vendor ID)

Open SIM Analytics Dashboard

Open DP Document

Create

Service Request

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4. SSF: Business Roles

• SSC Front Office AP/GL/AR

• SSC Back Office AP/GL/AR

• SSC Manager

• Occasional User

• - (Business Users working in ECC)

Each Business Role is specifically

designed for a certain task and

thereby has differences in screen

layout and Navigation Bar entries

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4. SSF: Account Fact Sheet Confirm Customer

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4. SSF: AP Process Integration Confirm Vendor and Company Code

Open SIM Analytics Dashboard

(prefilled with Vendor ID)

Result List with SIM Document View

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4. SSF: Inbox

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4. SSF: Reporting

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