New General Ledger, Fast Accounting

Feature Article | January 16, 2008 by Sanjay Khanna

With more than nine million households connected in 13 federal states, Kabel Deutschland GmbH (KDG) is the leading cable network operator in Germany. The company is responsible for the marketing of cable connections, the setup and operation of modern domestic networks, and all services relating to cable connections.

In March 2003, Deutsche Telekom sold Kabel Deutschland to an investor consortium and since then, the company has undergone a strategic change of direction: Kabel Deutschland is now not only a pure infrastructure provider, but also a triple-play service provider supplying its customers with digital TV and radio programs, broadband internet, and telephony – all via cable connection.

Attractive for international financial markets

To make the company attractive for international financial markets, investors asked the executive board to create future financial statements in accordance with three crucial accounting standards. In addition to the German Commercial Code standard, the company needs to draw up its financial statements in accordance with US-GAAP and the International Financial Reporting Standards (IFRS).

Two additional factors increase the demands on accounting: Kabel Deutschland breaks down the financial statements by product group – Cable Connection, Digital TV and Radio Programs, Internet, and Telephony – and creates financial statements for non-calendar fiscal and calendar years. Along with a flexible new general ledger for the consolidated financial statement, the enterprise needed to ensure its reporting covered all international financial statement standards.

Previously, Kabel Deutschland worked with a non-homogenous system landscape that was not able to cope with the new requirements. For example, it was necessary to add some information on segmentation after the fact. For this reason, Kabel Deutschland decided to migrate from SAP R/3 to SAP ERP. The heart of the project was the new general ledger in SAP ERP with group consolidation in SAP Strategic Enterprise Management – Business Consolidation System (SAP SEM-BCS).

“Our goal was to accelerate our financial close for both market and business reasons,” says Christiane Palm, Kabel Deutschland’s head of IT Finance and Administrative Systems. “To improve our competitive position, we had to improve financial operations, develop technological savvy around SAP ERP 6.0 for upcoming projects and set the stage for future flexibility.”

Step by step towards more security

For Max Schaifers, executive partner at Accenture leading its SAP group in Germany, this is simply the wisest course. “Accenture believes that becoming a high-performance business is a journey, and organizations should not feel that they must implement new functionality just to upgrade.” He continues: “Accenture’s experience shows, though, that upgrading is a perfect opportunity for companies to harmonize their system infrastructure, processes and applications.”

For the overall engagement Kabel Deutschland took advantage of the Accenture Rapid Upgrade Solution incorporating the Accenture Upgrade Analysis Tool for SAP. These enabled Kabel Deutschland to start with the best possible information base to prioritize immediate challenges, lay out project timelines, address known risks, and build a solid foundation for application enhancements.

The migration project got under way in the summer of 2006. To mitigate risk and to ensure a cost-efficient upgrade from SAP R/3 4.6c to SAP ERP 6.0, Kabel Deutschland chose a step-by-step approach rather than a big-bang methodology. The managers at Kabel Deutschland were primarily concerned with keeping downtimes to a minimum and ensuring compliance with security standards.

To address security challenges, Kabel Deutschland and Accenture conducted a security impact analysis and integrated testing approach. Business continuity and downtime potential were also addressed through downtime evaluation, multiple mock cutovers and contingency planning. Business users participated in analysis, testing, and training related to functional changes, while technology changes were resolved in part by Accenture professionals’ experience with the underlying SAP NetWeaver platform’s technical architecture.

As a first step, a purely technical upgrade formed the basis for the enhanced functionality. This change led to practically no change for the 1,000 or so users compared to the SAP R/3 they had previously used, which is why the upgrade was completed within three months. Afterwards, the users were able to work in the usual way in their SAP environment.

Quantum leap in new general ledger

The actual quantum leap came with the migration to the new general ledger functionality in SAP ERP. Parallel general ledgers were set up for the GCC, US-GAAP and IFRS accounting standards. Kabel Deutschland benefited from the speed and flexibility of the new SAP ERP general ledger: It provides customer-specific ledgers as a kind of construction kit that the user defines in line with requirements.

Online document splitting and the real-time integration of SAP ERP functionalities for accounting and controlling were also set up. Finally, the team defined the customer-specific fields of the new general ledger, which map the information for the individual Kabel Deutschland product segments.

Integrated reporting with SAP SEM-BCS/BW was also set up in parallel to group consolidation. The old group reporting was complex since the data came from different systems. For this reason, the effort involved in synchronization was high, and parallel or segmented reports were not possible.

In total Kabel Deutschland and 2007 SAP Pinnacle Award-winning partner Accenture teamed over a three-month period to modify functionality known from seven “classical” SAP R/3 modules – Financials (FI), Controlling (CO), Materials Management (MM), Project Management (PM), Sales and Distribution (SD), Human Resources (HR), and Enterprise Consolidation (EC-CS) – along with 15 mostly non-SAP interfaces and more than 900 reports.

Accounting with transparency and time savings

The new general ledger was created in a development environment up to the end of 2006, was then tested in the following spring, and went into production on April 1, 2007. The first financial statements are currently being created with the new solution at Kabel Deutschland – with noticeable time savings.

The documents are posted to the relevant ledgers largely automatically via the online split with information on the accounting principle, segmentation, or fiscal year variant. As a result, Kabel Deutschland receives a transparent view of accounting that is always reconciled, making data analysis considerably easier and improving the quality of posted data.

“The project did require an intense degree of focus from both the Kabel Deutschland and Accenture teams,” says Palm. “Both organizations paid attention to the immediate implementation as well as the need to lay down a solid platform for future business growth.”

“Taking one step at a time is fine,” adds Accenture’s Max Schaifers. “In addition to immediate benefits, an SAP ERP 6.0 upgrade initiative is an important step towards enterprise SOA and enables a shift that supports businesses to realize high performance through new functional and strategic capabilities.”

Kabel Deutschland sees its upgrade to SAP ERP 6.0 as a success. Now it is waiting for the right window to conduct planned application enhancement projects.

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