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Gaining Complete Confidence in your Numbers:
Reinventing the Record-to-Report Process
Kenneth FritzExecutive Vice President, Trintech
Mike DuderichFinance Director, Americas R2R Operations, Unilever
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AGENDA
Why Record-to-Report?
Record-to-Report Challenges
Reinvention Approach
Solution-in-Action: The Unilever Case Study
Summary
Q&A
Kenneth Fritz – Trintech
Mike Duderich – Unilever
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“
”
“Out of intense complexities intense simplicities emerge.”Winston Churchill
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Myth Busters
Myth:
Highly educated finance personal are working on value added activities
Reality:
Many expensive controllers/FP&A professionals spending 2/3 of their time or more on low value information activities
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Improving the Record-to-Report Process William Marchionni, The Hackett Group
• Focus relentlessly on driving Process Simplification & Standardization to combat increasing business & regulatory complexity.
• Invest in Integrated Close to differentiate from peers relative to business performance & financial reporting
• Broad organizational value (through reliable information and business directed focus) provided by efficient and effective consolidation and close process.
• Integrated Systems & Single version-of-the-truth are critical to success for R2R process; enterprise-wide data standards & associated governance are requisite foundations.
• All Top Performing R2R organizations leverage technology extensively as an important component of the Integrated Close
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Top R2R performers, on average, reduce process cost as a percentage of revenue by 51%
much of the savings result from automating manual processes and eliminating duplication. Source: “Account-to-Report Leaders: Achieving and Sustaining Top Performance” – Hackett Group, May 2012
Year 1Year 2
Year 3Year 4
Year 5
$0.0
$50,000,000.0
$100,000,000.0
$150,000,000.0
$200,000,000.0
$250,000,000.0
$300,000,000.0
$53,560,000.00
$109,798,000.00
$168,847,900.00
$230,850,295.00
$295,952,809.75
Peer Group vs. Top Performer Finance as a % of Revenue Savings
Annual SavingsCumulative
Note: Assumes 5% Annual Growth
Improving the Record-to-Report Process William Marchionni, The Hackett Group
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Financial crisis &
recession
Response to Sarbanes-Oxley act
World-Class to Peer Gap
31%
45%
48%
World-Class to Peer Gap
Source: Hackett Finance Benchmarks
Superior Ability To Respond To Volatility…
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Cost Reduction is a Key Driver in R2R Investment…
The results: minimized risk, resources and costs
shorter cycles
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Gartner View on R2R
Market Adoption Accelerating for Financial SolutionsGartner continues to define Financial Governance as a whole and also in two subsections, with a strong emphasis on Financial Governance Suites.
Financial Governance Suites Advantage 0 to 2 This is an emerging area and financial governance suites offer a strategic solution with new solutions entering the market in the last year. Evaluate against disclosure management and close management solutions.
Disclosure Management Choice 0 to 2 If your current disclosure processes are manual and rely on sp read sh ee ts , evaluate within the next 12 months. These offerings are maturing in depth and scope.
Close/Reconciliation
Management
Choice 2 to 5 If your current close processes are manual and rely on spreadsheets, evaluate within the next 12 months. Evaluate the whole close process. Try to avoid tactical purchasing of reconciliation management solutions.
Source: Gartner IT Market Clock for Financial Management Applications, August 2012
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Current Challenges
The role of finance is changing and executives are faced with increased need for fast and reliable information while meeting new regulatory requirements.
One SourceOf the Truth
People & Governance
RegulatoryRequirement
s
Efficiency & Effectiveness
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What Chief Accounting Officers Find Challenging
“Our goal is to remain on the constant improvement curve because there will be persistent cost pressure on finance.” – Intel CAO
“What I do not know (unknown risk) and lack of communication between key departments” – General Motors Controller and CAO
“Risks of things falling through the cracks as things are handed off between shared service centers” – J&J VP, Controller and CAO
“Changing regulatory environment” – Best Buy SVP, Controller, CAO
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The CFO’s Perspective
Evaluating Record-to-Report risk & performance:
1. Manage Risk
2. Increase Effectiveness
3. Increase Efficiency
• What is our R2R risk? • Do our processes complement our risk appetite?
• Are we doing the “right things” – in the right order?
• Are we missing critical steps? • Are these steps auditable? • Are they sustainable?
• Are we “doing things right?”
• Are we leveraging technology, people and processes for maximizing value and ROI?
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Regulatory Deadline
Time
Efficiency
Eff
ect
iveness
RISKRISKRISK
RISK
RISK
Reduce Risk
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Regulatory Deadline
Time
Efficiency
Eff
ect
iveness
RISK
Reduce Risk
Increase Efficiency
Incre
ase E
ffectiv
en
ess
Save Time
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Regulatory Deadline
Time
Efficiency
Eff
ect
iveness
RISK
Reduce Time & Mitigate Risk
Transf
orm
ati
on &
Pro
cess
Im
pro
vem
ent
Reg
ula
tory
Dead
lin
e
Reduce Time & Mitigate Risk
Transf
orm
ati
on &
Pro
cess
Im
pro
vem
ent
Reg
ula
tory
Dead
lin
e
Reduce Time & Mitigate Risk
Tran
sfo
rmati
on
& P
rocess
Imp
rovem
en
t
Reg
ula
tory
Dead
lin
e
Reduce Time & Mitigate Risk
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Tran
sfo
rmati
on
& P
rocess
Imp
rovem
en
t
Reg
ula
tory
Dead
lin
e
Reduce Time & Mitigate Risk
Tran
sfo
rmati
on
& P
rocess
Imp
rovem
en
t
Reg
ula
tory
Dead
lin
e
Reduce Time & Mitigate Risk
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Record-to-Report Process Timeline
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How the R2R Process Often Works
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#CFOD13SAP®
Close Cockpit
Legacy
Systems
Outsourced
External
How the R2R Process Often Works
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How the R2R Process Often Works
SAP®
Close Cockpit
Legacy
Systems
Outsourced
External
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How the R2R Process Often Works
SAP®
Close Cockpit
Legacy
Systems
Outsourced
External
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The first, unified financial governance solution to reinvent the
entire Record-to-Report process
How Trintech Helps
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Cadency Record-to-Report
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Cadency gives financial executives a newfound “controlled agility”
A configurable console allows each participant to focus on specific responsibilities and areas critical for success.
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Unilever: Record-to-Report Case Study
Mike DuderichFinance Director,
Americas R2R Operations
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Fast Facts - 2012
€1 BILLION INVESTED IN R&D
WORLDWIDE
190COUNTRIES IN WHICH OUR PRODUCTSARE SOLD
TURNOVER OF
€51 BILLION
AT END OF 2012EMPLOYEES AT THE END OF THE YEAR
173,000
EMERGING MARKETS NOW REPRESENT
55% OF TURNOVER
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Our € 1 Billion Brands
Home Care
Refreshment
Foods
Personal Care
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Enterprise Support - MISSION
Providing excellent services globally – enabling Unilever to win in the market
Better serve consumers and
customers
Translate global scale
into local cost
competitiveness
Creating maximum
Agility
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Enterprise Support - FINANCE SERVICES
Excellent Services At Benchmark Costs
Finance ServicesPerformance
Process Performance Harmonised Processes
Automation
Centralisation
Satisfied Users
Engaged Team
Continuous Improvement
Levers
Transformation Programmes
End to End Ownership
Re-tendering Project
Outsourcing Footprint
Operating Centers
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Our R2R Transformation Journey2011
5 week reporting, inconsistent & complex
processesRisk reduction through greater compliance driven by end-to-end, standard global processes
Embrace one single finance services organisation
Enhancing effective business partnering to drive virtuous circle of growthLeveraging Information as a
strategic asset to drive effective commercial decision
making Tomorrow 20142 Week reporting,
streamlined & end to end aligned processes globally
Accelerated financial reporting
Agile and scalable finance services organisation
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What Have We ChangedOne Global Process Blueprint• Externally benchmarked best practices• Facilitates continuous improvement• Implemented across all geographies
One set of Unilever Selected Tools• Externally benchmarked automation• Embedded controls• Workflows for status follow up
Globally Harmonised Three Tier Organisation• Limited country team members• Unilever Operating Centres• Harmonised outsourcing footprint
New Service Provider Contracts
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New Global R2R Process
32
Global Process Blueprint• Streamlined, single best practice process adopted globally• 68 sub-processes supported by detailed desktop procedures• Embedded into all reporting systems and supported by a new
toolset
Process Flows
Policy & Procedures
Master Data
Transact - Sub Ledger
Transact - Judgmental
Transact - Non Judgmental
Intercompany Local Reporting
Narratives Desktop Procedures
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Journal Entry &
WorkflowWorkflow
G/L to Reporting
System Interface
Account Reconciliati
on & Workflow
Close monitoring
Intercompany
Transactional System - SAP
Used by all levels of the 3 tier model
Used by Service Providers and Operating Centres
New Global R2R Tools
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New GLOBAL R2R OrganisationActivities cannot be transferred
out of country due to fiscal or legal requirement
ENTERPRISE SUPPORT
ENTERPRISE SUPPORT
BUSINESS FINANCE
Activities where economy of scale can be leveraged and
global expertise developed
Transactional, rule-based activities
Tier 1:COUNTRY
Tier 1:COUNTRY
Tier 2:OPERATING
CENTRES
Tier 2:OPERATING
CENTRES
Tier 3:SERVICE PROVIDER
Tier 3:SERVICE PROVIDER
• Fully Aligned KPIs with Business Finance and Providers
• Process Ownership at Operating Centres• 3 Tier Governance Managed by Operating Centres
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Where are we on the Journey
2,500Users of the new
R2R Tools
61% of
Unilever’s annual
turnover
Western Europe
North America
Germany& CEE
South Africa
India
China
Japan
Indonesia
Intercompany
Hub
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Key Takeaways
Transformation integral part of overall business strategy
Business case cost/benefits clearly articulated
Large scale change agenda while still delivering business as usual (closing books, reporting results)
Driving global scale by centralizing expertise and doing things ONE way (process, systems) across 190 countries
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Summary
Cadency reinvents, transforms and shortens the entire R2R cycle
By establishing a repeatable “Rhythm of Finance” through orchestrating all stakeholders, activities and interoperable processes in a collaborative, real time workflow environment
Cadency reduces costs & improves efficiency enterprise-wide
By optimizing resources, costs, risks and activities across the entire finance organization worldwide through:
Transparency and control across the governance model for the R2R cycle
Empowering continuous process improvement methods across the entire cycle
Cadency enables “controlled agility”
By facilitating easy realignment for an ever-changing business and regulatory environment
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Why That’s Good: Cost Savings
Top R2R performers, on average, reduce process cost as a percentage of revenue by 51% much of the savings result from automating manual processes and eliminating duplication. – The Hackett Group
Source: “Account-to-Report Leaders: Achieving and Sustaining Top Performance” – Hackett Group, May 2012
Year 1Year 2
Year 3Year 4
Year 5
$0.0
$50,000,000.0
$100,000,000.0
$150,000,000.0
$200,000,000.0
$250,000,000.0
$300,000,000.0
$53,560,000.00
$109,798,000.00
$168,847,900.00
$230,850,295.00
$295,952,809.75
Peer Group vs. Top Performer Finance as a % of Revenue Savings
Annual SavingsCumulative
Note: Assumes 5% Annual Growth
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“
”
“To improve is to change;to be perfect is to change often.”Winston Churchill
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Where to Start
Quick Wins:
- Centralize reconciliations
- Standardize JE process- Automate the disclosure
management process- Eliminate duplicate tasks
Standardize:
- Create Workflow for entire record to report process
- Reviews and approvals for all R2R process activities
- Standardize production of Statutory Reports
Automate:- Consolidate close tasks
across the organization within Shared Services
- Automate reconciliations to a
risk-based process
- Bring XBRL in-process within the R2R cycle
- Accelerate data collection and timeliness of judgment based decisions
- Electronic records for entire record to report cycle for Audit
Optimize:
- Orchestrate the entire record to report process
- Leverage benchmarks for process measurement from period to period
- Optimize share of effort between Shared Service Centers and specialized functions
- Agility to absorb acquisitions and other new business conditions
- Effective and empowered collaboration throughout the R2R cycle
1. CRAWLStart with quick wins
based on highest priority
2. WALKEstablish entire R2R process; target white
space
3. RUNAutomate key bottlenecks
4. SPRINTOptimize entire process
and supply chain
Process Cost and Cycle timeQuality, Transparency & Visibility
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Who Can Help
Our Strategic PartnersKPMG – Global
Deloitte – Global
E & Y – Global
Accenture
Cap Gemini
Hackett – UK, Europe, US
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Thank You!
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