Finance in a Fix Transforming the finance function at a fortune 50 technology company DOWNLOAD

Abstract

A large technology company had outgrown its finance capabilities and needed to transform its finance function. The company suffered from a variety of problems with basic accounting and reporting and had been forced to restate its financial results. It also relied on thousands of analysts and countless spreadsheets for simple data analysis and management reporting. These problems exposed the company to unacceptable levels of regulatory risk, and made it hard for the company to operate nimbly. Reports that took weeks to generate can now in many cases be delivered at the push of a button. The company has also reduced finance’s operating costs by more than $50 million annually.

The Challenge

The company had grown rapidly to become one of the world’s largest technology companies. Along the way, its finance function had evolved haphazardly and didn’t receive the attention and investment it needed.

Company executives relied on thousands of analysts and countless spreadsheets for financial analysis, reporting and reconciliation. This approach was costly, inefficient and slow. It could take weeks to get basic information such as product profitability or regional revenue. And even when an analysis was complete, there were so many versions of the “truth” that decision-makers didn’t know what to believe. Even worse, the company constantly wrestled with basic accounting and reporting problems and eventually found itself having to restate its financial results.

How We Helped

Over the past few years, Deloitte has been helping the company in its efforts to transform its finance function across the entire enterprise. However, our involvement began on a much smaller scale. Like many companies, it initially believed that a new financial system would solve all of its problems. We were invited to submit a proposal to help them implement the new system. But after taking a closer look at the company’s situation, we told them that we didn’t believe they were ready for a new system and that they should focus first on creating a robust data model with consistent data definitions across the enterprise. In our view, implementing a new system on top of their current challenges would just add to their problems.

Of course, that wasn’t exactly what company leaders wanted to hear. But eventually they agreed that the reality of their situation was unacceptable and put the brakes on their financial system implementation. We then helped them develop an enterprise-wide data model. Our project team worked closely with various system implementation teams to help coordinate activities to keep the projects moving forward in parallel. Also, we helped establish strong governance processes to enforce the new data model and rules.

Since that first project, we have helped the company with a wide range of finance-related initiatives. At times, our team has included more than 130 professionals specializing in everything from strategy and operations to technology integration, tax, controls, security and risk. And the transformation process continues.

Solution

Working side-by-side with finance leaders, managers and staff, we are helping the company take its finance capabilities to a whole new level. Key focus areas and solutions include:

• Oracle financials. We helped the company successfully complete an Oracle implementation that had been struggling. The project moved the business from multiple Oracle systems to a single global instance built around our enterprise-wide data model. Now, we are helping them adapt the Oracle system to accommodate a new sales channel that will enable the business to compete more effectively in the marketplace.
• Tax. Our tax specialists helped them implement a new system and processes to manage the dizzying array of state and local tax issues that stem from the company’s direct sales business.
• Controls. After the company was forced to restate its financial results, our enterprise risk and security specialists helped them conduct a comprehensive study of the company’s financial systems to identify and address a number of control issues – particularly the need for greater segregation of duties across systems. We also helped the company in their efforts to achieve Sarbanes-Oxley compliance.
• Financial processes. One of the company’s business divisions had finance capabilities that were particularly unsophisticated. We helped them overhaul the division’s entire finance operation, as they implemented new processes for everything from handling invoices to calculating warranty reserves. We also helped them develop and implement better ways to coordinate financial transactions with key suppliers.

These improvements are helping the company avoid major problems such as financial restatements by providing information that is more accurate and reliable. They also improve the company’s strategic agility by providing decision-makers with information that is timely and insightful. Reports and analysis that used to take an army of analysts weeks to produce can now be delivered in less than two days – or in many cases, at the push of a button. Also, thanks to their new data model, the company was able to complete a major restructuring in less than four months – a massive change that company executives acknowledge would have taken years to complete under the old model.

The number of analysts needed to generate reports and custom analysis has been slashed by approximately 25 percent, reducing finance’s operating costs by more than $50 million annually. Even more important, the improved productivity and enhanced capabilities enable the finance function to play a more strategic, forward-looking role in the decision-making process and to serve the business as a true strategic partner.

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.