Malcolm Gray, General Manager, Finance at Century Yuasa Batteries, comments: “We used to create an annual budget for all three divisions based on a complex web of linked spreadsheets. It was a laborious process that took about three months each year. It was easy to make mistakes and introduce errors, so we had to spend a lot of time checking the figures. Moreover, if any information changed at the last minute, we had to update dozens of different spreadsheets individually, which could take days.
“In addition to the complexity of the process itself, the resulting budget wasn’t as detailed as we would have liked, and it didn’t really take into account the different priorities and operational needs of the different divisions.”
Century Yuasa Batteries was spending three months per year on its budgeting cycle. The company wanted to replace this laborious, inflexible spreadsheet-based process with a more automated solution.
Century worked with Bistech to build a sophisticated planning solution based on IBM® Cognos® Express, which can analyse multiple scenarios for crucial variables such as lead pricing, foreign exchange rates, and trends and seasonality in sales and pricing.
Taking the opportunity
The introduction of a new ERP system provided an opportunity for Century’s finance team to redesign the whole budgeting process from the ground up.
Malcolm Gray comments: “Our old spreadsheets wouldn’t have been compatible with the new ERP, so we had a choice between building a new set of spreadsheets – which would still have had most of the flaws of the existing process – or implementing a more powerful, enterprise-class business planning solution. It was an easy decision to make.”
Building on a strong relationship
As the result of a string of successful projects based around IBM Cognos Business Intelligence software, Century had built a close relationship with Bistech, an IBM Business Partner that focuses on business analytics and performance management solutions. When the company decided to find a new planning and budgeting solution, consulting Bistech for advice was the natural choice.
“Bistech is an ideal partner for our finance team because we don’t want to act like an IT department – we want to be able to focus on our own work.” says Malcolm Gray. “We know we can trust the Bistech team to give us the right advice and help us manage our analytics solutions. Their technical expertise, project management skills and excellent support have made a decisive contribution to delivering many successful projects.”
Selecting the right solution
Bistech recommended a solution based on IBM Cognos Express Planner. The initial objective would be to replicate the capabilities of the old spreadsheet-based budgeting process. In a second phase, a more advanced budgeting model would be introduced, with customised sub-models that would align with the specific needs of each of Century’s three divisions.
“We liked the fact that IBM Cognos Express has been designed specifically for mid-sized businesses,” says Malcolm Gray. “It delivers the same advanced features as an enterprise-level solution, but at a price-point that makes it much more affordable. Our previous experience with Cognos Business Intelligence also helped to convince us that the software would be reliable, user-friendly and easy to integrate with our other systems.”
Seeing results quickly
In a rapid implementation, Bistech helped Century develop the phase one budgeting model within just three months – enabling the company to start its annual budgeting cycle on the new solution. Once the budget was complete, the team began working on the second phase of the solution. Three sub-models are used to budget for Century’s three business units. By focusing on different dimensionality between the divisions, the right balance between an efficient budgeting process and a level of detail that still allows for great precision and accuracy is achieved.
“We now have a very sophisticated business planning solution which takes the different needs of different parts of the business into account,” comments Malcolm Gray. “The increased level of detail, better data quality and greater flexibility of the new model are a huge step forward for our company.”
The speed and flexibility of making these kinds of changes opens up a whole new way of working for Century’s finance team.
“Instead of relying on our best guess for factors such as exchange rates and lead prices, we can easily run multiple scenarios with different figures,” explains Malcolm Gray. “So we can see what the effect on our business would be if the lead price rises and the Australian dollar weakens against the New Zealand dollar, for example. By running many different scenarios, we’re able to make contingency plans for a wide range of situations. The ability to expect the unexpected means that the company can be much better prepared for changing market conditions.”
Looking to the future
In the near future, Century plans to use the solution to transform the way it manages its budgeting process altogether, by moving from an annual budgeting cycle to an 18-month rolling forecast.
“We will still create an annual budget for compliance reasons, but this will really just be a snapshot of our rolling forecast,” says Malcolm Gray. “Having an iterative, ongoing business planning process will suit our business much better than the current static annual budget, so we’re keen to make the move. The flexibility of the IBM Cognos Express solution will be a key enabler here.”
Overall, Century regards the deployment of IBM Cognos Express as a vital and highly successful strategic decision.
Malcolm Gray concludes: “Above all, the solution gives us more confidence in our business plans and allows us to access planning and forecasting information in a much more timely way. We have already reduced the time and effort we spend on the budget process by around 30 percent, saving a full month each year, and we expect further benefits as we extend the solution into other areas, such as manufacturing and cash flow analysis. We can see clearly where our costs and sales are coming from, and the likely effects of key external factors on our bottom line – helping us guide the business more effectively in an ever-changing marketplace.”