Thinking Outside the Box A pharmaceutical company transforms financial decision support services to improve performance and reduce costs DOWNLOAD

Abstract

The CFO of a global pharmaceutical company was looking for innovative ways to improve service levels to internal customers while more effectively managing costs. Management had already implemented many traditional cost-cutting measures, but that wasn’t enough. Deloitte was asked to help find innovative ways to do more with less and no idea was off limits.

The initiative began with working sessions held around the globe, bringing together hundreds of the company’s finance professionals and commercial leaders to share ideas on how to improve performance and reduce costs. A portfolio of viable options emerged, from quick wins to bold ideas.

One idea stood out: Like many organizations, the company had a mature shared services organization for routine transactions; however, at the time virtually no global Fortune 50 enterprise had expanded the scope of shared services to include financial decision support activities. The business case was clear, but gaining buy-in proved challenging. Without a comparable industry case study, leaders were concerned that a vastly different approach could affect their effectiveness.

The Challenge

An activity survey revealed that many of the company’s senior finance professionals were spending a significant amount of time gathering and validating data. The project team recommended decoupling these rules-based activities from the analytic role these professionals performed. Moving rules-based activities to a shared services center could free up the finance professionals for more analytic responsibilities.

Creating Decision Support Centers of Excellence was a bold move – financial planning and analysis activities are not usually considered for centralization, especially in a decentralized corporate culture that values local autonomy. This involved:

• Creating Decision Support Centers of Excellence. Two regional centers could provide support by performing data validation and basic planning and reporting processes.
• Standardizing processes and reporting. Processes could be streamlined by selecting leading business unit practices, resulting in a global standard process and reporting blueprint.
• Establishing a clear governance structure. A steering committee of divisional CFOs was created to provide ongoing guidance and visible support. This global governance structure allowed sustainable, enterprise-wide approaches, instead of siloed enhancements.
• Focusing on the retained organization. A clear end-state organization design was created that was designed to improve the performance of the retained groups as well as establish an effective new shared services organization.

How We Helped

Financial planning and analysis is highly visible, strategic work performed by senior finance professionals who work in close proximity with the business. With this particular project, Finance leaders were concerned that the projected cost savings were not enough to justify the potential risk to their ability to set strategy, make decisions and direct future financial performance.

Typically, Deloitte would ease their concerns by connecting these executives with other clients who had implemented similar changes. But this project was different – it was the first time financial planning and reporting processes with this large of a scope were centralized at a global Fortune 50 enterprise.

Fortunately, the project team had built strong leadership alliances, which were leveraged to understand and address the concerns up front. In the end, this lead to the transformation of the company’s decision support services. The team followed this process:

• Analyze opportunities. The team led working sessions globally with active participation and leadership from business finance professionals who shared improvement ideas.
• Develop the business case. In some cases, senior finance professionals were spending up to 30 percent of their time gathering and validating data. Moving these activities to global shared services centers could save the enterprise millions per year, but more importantly, free up time for Finance leaders to focus on higher value analysis.
• Build consensus. Finance leaders initially expressed reservations that the benefit was not worth the potential risk of disrupting their ability to set strategy, make decisions and direct future financial performance. Project leadership met with each of them to discuss their concerns and initiate a pilot to demonstrate the new operating model.
• Choose appropriate leaders. The global leader and customer advisory chairperson were selected with the end customers in mind. The global lead was previously a business unit CFO and finance director who brought immediate credibility to the customer base. Another well-respected finance director was asked to chair the customer advisory board, allowing the team to react and resolve concerns more effectively.
• Design and launch. The team helped design an approach that recognized the differences among the regional markets. To establish a quick win in North America, a “lift and shift” approach was used for the initial migrations, with standardization occurring after migration. The North American center was also located with one of the company’s existing U.S. shared services operations, allowing them to benefit from this organization’s leading practices. The European approach required defining standard processes across 17 countries. The center was located alongside the company’s offices in its largest European market, which allowed the center to be staffed with many of the company’s existing finance professionals.

Solution

One year after the project was launched; the company’s Decision Support Center of Excellence was fully operational, creating considerable value for the business. It is on target to meet the annual savings projections and local finance professionals are adding more value to their country-wide and business-unit finance organizations. They are also on tract to eventually spend 75 to 80 percent of their time on decision support analytics, rather than data gathering and validation.

The team managed an effective/efficient migration, transferring financial reporting activities from more than 60 business units to the new centers. Plus, more than 300 financial processes were streamlined and centralized. Some of the unanticipated benefits of the centralized model included helping to accelerate integration and divestiture activities, easing a global planning tool deployment and improving coordination with other centralized Finance functions.

Perhaps even more important, the company’s organizational culture is being transformed to support streamlined operations and continuous improvement from a global, rather than country, perspective. This initiative laid the foundation for centralizing analytical support on a company-wide basis, supporting the company’s long-term goal of becoming an industry leader through high-quality financial performance.

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.