Strategic Enterprise Management with a Perspective

Feature Article | July 26, 2004 by admin

Since the end of the nineteenth century, agricultural cooperatives have been founded in Bavaria and Austria based upon the ideas of Friedrich Wilhelm Raiffeisen. Joint investments and the cooperative’s good loan rates were to enable individual farmers to prosper in the agricultural market. These cooperatives produced BayWa in Bavaria in 1923 and RWA in Austria in 1993. At the end of 1993, Raiffeisen Ware Austria was created by the merger of the agricultural cooperatives. Since then, it has been the largest wholesale and service provider company in Austria. Its activities reach into the entire country, but its business focuses on the 43 cooperatives in Burgenland, Lower Austria, Upper Austria, and Styria. To act with more flexibility in the market, the operative business was transferred to the newly founded RWA AG in 1998. Since 1999, RWA has worked in a strategic alliance with BayWa. The company delivers differentiated service offerings in agricultural and non-agricultural area, including technology, home and garden, and building materials.

External view of RWA

External view of RWA

The BayWa Group has offices in nine countries of Central and Eastern Europe. Its business focuses on the agrarian, construction, and energy sectors. RWA has been integrated into the BayWa RWA group since 1999, which now has 5.89 billion Euro in annual revenues and more than 15,500 employees, making it one of the largest companies in Austria.

IFRS

IFRS

To provide management with a more manageable view of the annual financial statements, which are organized in a decentralized manner, and interim reports, the group needed a new data warehouse technology. The group decided on SAP Strategic Enterprise Management – Business Planning and Simulation (SAP SEM-BPS) and the underlying SAP Business Information Warehouse (SAP BW). The financial area at BayWa and the financial and controlling departments at RWA joined forces for this international project. Some subsidiaries created their annual statements with SAP R/3 4.6B, but others use non-SAP applications. The group needed uniformity among all these statements and the ability to adjust them to meet the requirements of international financial reporting standards (IFRS), previously called international accounting standards (IAS). The group wanted to design its closing processes not only to be faster, but also more reliable, more up-to-date, and more transparent. Less effort would be required in individual operations to enter data for analytical purposes and informative enterprise data would be available quickly. This project, the first of its kind to occur in Austria, displays an efficient combination of consolidation and reporting data in a central data warehouse and complete integration of data from SAP R/3 and non-SAP systems.

CNT

CNT

On one hand, the BayWa and RWA subsidiaries use various accounting programs. On the other hand, the SAP solutions have different customizing options, such as different structures. Differing charts of accounts serve as an example. The reporting data relevant to consolidation used to be captured in a Access form and then uploaded to the consolidation system in the controlling component of SAP R/3. The controller used Microsoft Excel workbooks to handle shareholding controlling. The workbooks contained data from the balance sheet and from the profit and loss statement, meaning that the data had to be entered a second time. This approach led to inconsistencies between group consolidation and shareholder reporting. To avoid having to create a new data-mapping design according to the rules of IFRS for each subsidiary, the group decided that it would rather use the pre-structured applications in SAP BW across the entire group. BayWa and RWA therefore entrusted the RI Solution subsidiary and CNT Management Consulting with technical realization of the project. The result is a multidimensional database with an Excel-based reporting and data-entry tool.

Test Case: Annual Closing

The project began in July 2003 with the formulation of requirements and the data model. As early as November, a team from RWA, RI Solution, and CNT introduced the first prototype with the required basic functionalities of the profit and loss statement to the primary users, the financial accountants at RWA. After an intensive testing phase in December, pilot operation of the solution began in the Austrian RWA subsidiaries, which were successfully able to produce the annual closing statement for 2003 in January and February 2004. During the pilot phase, the team also enhanced the system with additional functions, such as the calculation of deferred taxes. The solution was first used in April 2004 at BayWa companies in Germany and Austria for the first-quarter close. During the summer of 2004, the project team is converting monthly and quarterly reporting to the new system little by little. At the same time, the Eastern European companies are being rolled out one by one.

Uniform data exchange

With the aid of SAP SEM-BPS, the relevant financial data can regularly be transferred from legacy operational system into SAP BW over an integrated interface. For the first time, subsidiaries can load their reporting data directly into the new data warehouse, regardless of which solution produced the data. This means that subsidiaries that do not use SAP solutions can either transfer their reporting data with custom-made input templates or upload them into SAP BW automatically and directly in an upload file. A validation tool developed by CNT in very close collaboration with BayWa-RWA customers provides comprehensive validation of data from SAP BW, reporting, or analysis of receivables. Data inconsistencies no longer occur.
The entire supply of data is stored on a central server. The formatted and checked data is then available for complex reporting queries and is also automatically transferred to SAP Enterprise Controlling – Consolidation System (SAP EC-CS) for creation of the group balance sheet.

Made-to-measure reports

When producing the balance sheet, it’s important that data can be converted from the format required by German commercial law to IFRS format, that the cash flow can be determined automatically, and that calculation of deferred taxes is no longer produced by magic. From the familiar Microsoft Excel workspace, users can query a number of reports: balance sheets, individual plan–actual analyses, or highly complex multidimensional analyses. Reports containing key figures, graphics, or key performance indicators do not post a problem. Even management can have reports and analyses created individually from Excel and access a uniform supply of data when doing so. This ability contributes a great deal to placing decision making on firm ground. Otto Schönbauer, the director of finances and controlling at RWA emphasizes, “It was very important for us that our employees work with a user-friendly tool. The goal was to use the system for the 2003 annual financial statement. We did it.”

All set for SAP Business Information Warehouse

The new solution allows creation of a group-wide annual financial statement according to international standards. Accounting and reporting are uniform through the group and internationally. “The system provides unified reporting and annual closings of higher quality and more transparency,” says Schönbauer confidently. “Work has become much more comfortable for controllers.”
Several best-practice methodologies have developed from this project and other projects will benefit from the methodologies. In the foreseeable future, enterprise planning, support for strategic controlling, and a balanced scorecard in SAP BW will enhance the functionalities available.

Andreas Dörner

Andreas Dörner

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