New Balance Picks up the Pace and Closes Financial Books Twice as Fast
When the finance team at New Balance Athletic Shoe, Inc. got word that support for the company’s financial consolidation solution was due to end, the team quickly began questioning the future process. What new system would replace the existing solution, and how much time did the team have to make the move?
Around the same time, New Balance began blueprinting a project to replace its legacy IT environment with SAP ERP. The existing legacy green-screen back-end system made the financial close process a monthly marathon instead of a sprint. As Todd Paulauskas, Financial Information Systems Manager, explains, New Balance had previously been using a legacy (pre-SAP) Business Objects solution on top of its aging ERP system and data warehouse to consolidate and report financial data every month. While the company was able to close the books as scheduled, the task wasn’t performed in the fastest or most efficient manner.
“Our environment was very disparate, and we were using five different instances of that legacy consolidation system across our enterprise,” says Paulauskas. “Because these instances weren’t connected and each had different attributes and properties, we couldn’t move data from one instance to the other very easily. With various groups keeping forecasts locally in spreadsheets, consolidating those for month-end close was challenging.”
A single integrated ERP system would streamline this financial close process. In anticipation of the ERP rollout, the finance team began designing processes that could leverage the new system. This plan included implementing the SAP Business Planning and Consolidation application. A few months later, the ERP project was put on hold. But, with the legacy consolidation system going off support shortly, the finance team didn’t want to hold off implementing a replacement.
“We decided if we couldn’t fix our foundation by updating our ERP system, we should shift gears and focus on replacing the financial and management reporting system, even if the new solution would have to sit on top of our legacy systems,” says Paulauskas. “We researched available tools in the market. And even without SAP ERP beneath it, we liked the power of the multidimensional views SAP Business Planning and Consolidation provides. For example, it allows finance to slice revenue numbers by legal entity, product brand/line/category, or customer/distribution channel all in parallel. Achieving those kinds of views with our legacy tool required either a reconfiguration or a reconciliation, usually both, and sometimes was not even possible.”
Once the decision was made, finance and IT stepped up the pace and worked together to implement SAP Business Planning and Consolidation 7.5, version for the Microsoft platform — an application that has ultimately cut New Balance’s average financial close time in half.
Teamwork Makes the Dream Work
Putting a new consolidation solution and process on top of a legacy environment was not going to be simple. And New Balance’s financial management understood that the key to successfully executing this complicated implementation meant having people with both finance and IT backgrounds working in lockstep with each other.
New Balance’s Operations Controller Richard Walker was the project’s executive sponsor and brought the vision and leadership the project needed. Walker chose Paulauskas to lead the project because of his combination of finance and IT experience. And Darren Balardini, International Finance Manager at New Balance — who has more than 11 years of experience with the company’s legacy financial systems — was appointed to the project team to ensure the consolidations planned for the new system met the statutory and regulatory requirements for the business.
“The key to the success of this project was the
executive sponsorship. The CFO and VP of Finance supported this on a global basis, and
now we’re looking for more things out of SAP Business Planning and Consolidation.”
— Richard Walker, Operations Controller,
“We tried to leverage what we learned from the previous systems to identify what we wanted to improve for the future,” says Balardini. “This kind of change is not always easy for people to swallow, so having an executive sponsor on board who could paint the broader picture and help people understand the long-term vision and strategy was incredibly valuable.”
New Balance was a ramp-up customer for SAP Business Planning and Consolidation 7.5, and received plenty of support from SAP. A few months before go-live, the team also brought in an independent consultant with experience implementing the application in a legacy environment to complete and help validate its design.
Given the project’s complexity and aggressive timeline, the project team decided to approach the implementation in waves. Wave one would focus on using the application to consolidate the actuals because accurate consolidation of the actuals would provide the basis for future work in two other key finance processes: budgeting and forecasting.
“We regularly conveyed the message to users that wave one revolved around the actuals set of information and the processes that happen at month end,” says Paulauskas. “That way, they would know we could perform month-end activities correctly once we went live, before getting the budgeting and forecasting capabilities up and running.”
Balardini emphasizes that communication was also important in managing scope creep during requirements gathering. Managing end-user expectations of the first wave was critical and required detailed documentation and regular updates so business users knew what was being rolled out and when.
The project was blueprinted in 2009; requirements gathering began in late 2009 and continued into January 2010. Development took two months and then testing began in April 2010.
“By mid-June we had recreated the legacy environment including all of the monthly actuals numbers and all of the core reports. On June 14, we turned SAP Business Planning and Consolidation on and officially began our quest to make it the sole book of record for financial information at New Balance,” says Paulauskas.
“Previously, many of our financial analysts were consumed with generating, aggregating, and shipping off reports. They didn’t have time to properly analyze the numbers or investigate issues. Now, we can get the right numbers in the right places to the right people more quickly.”
— Todd Paulauskas, Financial Information Systems Manager, New Balance
Clearing the Data Governance Hurdle
As the implementation progressed, the project team began to realize a growing concern: data governance. When the team started looking into how the data from various legacy systems could be extracted and pulled into SAP Business Planning and Consolidation, it became clear that data from various subsidiaries and business units wasn’t matching up.
“We started to develop some global rules for importing data, and we found exceptions that kept popping up in the data,” says Paulauskas. “Even in the summarized data, where you wouldn’t expect a lot of variability, we kept seeing variations.”
As an immediate fix, Paulauskas and additional developers wrote custom Microsoft SQL scripts to deal with some of the exceptions beyond the scope of what SAP Business Planning and Consolidation can do natively. But in the long term, the plan will be to develop a more extensive, IT-backed data governance strategy.
Crossing the Finish Line
With wave one live, work on wave two began in October 2010. The budgeting functionality went live in January 2011, while forecasting was rolled out in stages during 2011. The legacy system ran in parallel with the new system for almost an entire year, and each month the team brought more users off the old system and onto the new one. “If we had a bigger team, we could have cut the cord sooner, but we didn’t have as much time as we would have wanted to focus on training and moving people over,” Paulauskas says.
Today, SAP Business Planning and Consolidation remains the only SAP solution in the varied New Balance systems landscape, with more than 100 finance users and 215 more using the sales forecasting functionality.
“Because our landscape doesn’t have any other SAP touchpoints, the new application has required a lot of integration — but it’s well worth the efforts,” says Paulauskas.
The biggest benefits of putting this application on top of the legacy environment have been improved visibility and faster financial close. With one single data source for actuals, budget, and forecast numbers, all the figures in various reports add up however they are sliced. The financial and management reporting now has an increased depth, ease, and consistency to it, as well as a consistent look and feel that wasn’t present in the legacy environment. And the executive team is noticing.
“The visibility we get into our intercompany transactions and partner relationships has helped us not only improve the integrity of the numbers, but also streamline the process,” says Balardini. “We have cut our consolidation time dramatically. Instead of taking four weeks to officially close on a given month, now it takes two weeks for the global close.”
“The visibility into our intercompany transactions and partner relationships has helped improve
the integrity of our numbers and cut our consolidation time dramatically. Instead of taking four weeks to officially close on a given month, now it takes two weeks for the global close.”
— Darren Balardini, International Finance Manager, New Balance
The team’s long-term goal is to achieve a five-day close process globally. The faster reports and processes allow members of the finance team who were previously bogged down running reports to spend more of their time analyzing the data in those reports.
“Before implementing SAP Business Planning and Consolidation, many of the financial analysts in our organization were consumed with generating, aggregating, and shipping off reports,” says Paulauskas. “They didn’t have time to properly analyze the numbers or investigate issues. Now, we can get the right numbers in the right places to the right people more quickly. That frees up a lot of time for people to spend on more value-added activities.”
July 01, 2012