Financial steering model upgrade in connection with ERP renewal

Challenge

A leading machine manufacturer had initiated a program to renew its ERP and overall operating model. The company had a strong legacy for steering and following-up the business performance in a very siloed, rigid, and untransparent fashion. The ERP renewal was considered a great opportunity for upgrading the financial steering model to improve transparency, agility, and increased full-chain accountability.

Brave the Future

Together with August, the client started the financial steering model upgrade with a ‘Blueprint’ phase. During this first phase, August facilitated numerous discussions among client’s senior management to nail down the key principles and definitions for:​

• Business requirements for financial steering (e.g. real-life use-cases (pricing etc.), which would benefit from the increased transparency to numbers)​
• Management P&L format reflecting the financial responsibilities (e.g. profit responsibility for full-chain, for country operations, for manufacturing operations, etc.)​
• Reporting, planning and forecasting dimensions (e.g. Organization, Product, Customer, Service, Project, Contract)​
• Profitability calculation rules per dimension (e.g. direct cost allocation logics)​
• Causal assignment logic of SG&A costs​
• Lifecycle profitability analysis​
• Agile planning practices to succeed in the uncertain business environment​

The resulting ‘Blueprint’ document described also conceptual data requirements and a roadmap to test the definitions before full-scale IT implementation phase

Impact

Change management was imperative during the ‘Blueprint’ project. The client wanted to ensure that the upgraded financial steering model was accepted by businesses and the whole Finance community. Enough time was dedicated for the discussions with key stakeholders: the discussions resulted in common alignment regarding the steering principles and paved successfully the way for the next phases in the development journey.