Mergers and acquisitions are forcing companies to consolidate disparate financial systems. But many organizations don’t have a single version of their financial data, resulting in poor data quality and possible complications with regulatory compliance.
Such was the case for Alcan, a global manufacturer of aluminium, light gauge sheet, foil and packaging materials. That’s why it’s now in the process of upgrading to Hyperion System 9 Financial Data Quality Management (FDM), a packaged solution for developing standardized financial data management processes with a Web-based user interface. In October 2000, Alcan acquired Algroup, a deal that involved more than 200 plants. As a result, former Algroup employees were required to send financial data to Alcan on a tight schedule.
“We tried to do it manually and we were just swamped with data files,” said Nancy McFadden, lead system administrator with Montreal-based Alcan. “There would be mistakes and they would resubmit all these data files via e-mail and we were just overwhelmed with the quantity of files. It was a real nightmare.”
The company rolled out Hyperion FDM, which at that time ran on Citrix, to address the problem of disparate financial systems. In September 2003 it upgraded to the Web version. That December, it acquired another company, Pechiney – and this time the acquisition involved 400 plants. Using FDM, it was able to integrate Pechiney the first time around, instead of attempting to do it manually.
Alcan is now in the process of rolling out System 9 and should be live with it next July. As part of this process, the company plans to purchase an Oracle database. System 9 integrates financial management applications with a business intelligence platform. “Data quality management is a huge issue out there that many companies are wrestling with,” said John O’Rourke, senior director of product marketing with Hyperion.
Usually when people talk about financial data quality, they’re really talking about it from a customer perspective, he said. And they’re looking to bring together customer information from different billing systems, CRM systems and other data sources, trying to “merge and purge” and help improve the marketing process. But a dirty little secret of finance, he said, is that many companies have problems collecting data from multiple sources and bringing it together to do financial reporting. And in the age of Sarbanes-Oxley and Bill 198, having audit trails is critical.
A company such as Alcan has offices all over the world, said O’Rourke, which collect data at a local level. Different regions have different ways of collecting data, as well as different currencies. And some data comes in manually, some through spreadsheets or flat files. Because FDM is a Web tool, it allows users to submit their own financial data to corporate headquarters by providing them with a link between their local chart of accounts and corporate’s chart of accounts. One by one, the accounts are mapped and the results loaded. “Now they run a report and receive a balance sheet and income statement report, and it allows them to sign off on it,” said McFadden
While initially finance users worried they were going to be burdened with more work, McFadden said they now like using the system because of the visibility it provides. They’re also able to validate their own data and do their own corrections. “It’s awkward for somebody to always tell you, ‘You have a mistake here and you can’t balance this,’” she said. “They feel more confident about the data they’re sending.”
FDM has also made Alcan SOX compliant. “We didn’t even have to modify anything,” said McFadden.
“We had the tool already and it was fully compliant.”