The Australian Government Attorney-General’s Department has tackled time-consuming and tedious financial report production with an implementation of SAP Disclosure Management which integrates seamlessly into its existing SAP environment. Freya Purnell reports.
Background
The Commonwealth Government Attorney-General’s Department (AGD) has around 1600 employees, and a departmental budget of $377.5 million.
Lawrence Hosking, Director, Financial Reporting, Facilities and Property, Attorney-General’s Department, says using business intelligence more effectively will play an important role in achieving the efficiencies expected from agencies in these challenging environment.
In the past, the department had a very strong reliance on Excel spreadsheets and models, which when it came to producing financial reports, “was fraught with danger, requiring rework and version control”.
With an existing SAP ECC6 system in place and a constant drive within government to achieve greater efficiencies, the department wanted to leverage this system with a comprehensive database to enable flexible reporting.
In particular, the department was keen to automate the production of annual financial statements, because it was time-consuming, stressful and could “test relationships” in the workplace.
Choosing a solution
Back in July 2012, working with SAP partner NTT DATA Business Solutions, the department decided to adopt SAP Business Planning and Consolidation (BPC) in the SAP environment, as well as SAP Disclosure Management.
“For us, [the decision] was driven by efficiency, automation, and the way we could link our SAP environment together so we didn’t have disparate systems operating and not talking to each other,” Hosking says.
“BPC and Disclosure Management had major capabilities required for our external reporting, so they were fit for purpose. We were able to achieve our organisational objectives, and we were able to tailor the products to suit our needs as well.”
In the case of Disclosure Management, not only would automating financial statements enable them to be produced in a much more timely manner, keeping the information within the SAP environment, rather than in Excel spreadsheets, would also provide a level of comfort in terms of accuracy when the Australian National Audit Office (ANAO) conducted their financial statement audits.
“Having all the information in SAP end-to-end makes the process easier. It reduces their work time, and also probably gives them a far greater level of assurance over what we do,” Hosking says.
Another advantage of the Disclosure Management solution was that it leverages Microsoft Office applications for processing documents – an environment familiar for financial reporting team members. Being able to output final documents in Word instead of Excel to send for typesetting will be beneficial in terms of producing the department’s annual report to parliament.
Implementation
While the department had originally seen Disclosure Management demonstrated back in 2012, it took until January 2014 for the project to reach the top of the organisational priority list. In the meantime, the department went through a significant SAP transition, including the implementation of a paperless Accounts Payable system.
The department adopted a business partnering approach with NTT DATA Business Solutions for the project, and as it was of the first end-to-end SAP implementations of Disclosure Management, they also gained input from the SAP team in Germany.
The prototype phase of the project ran from February to March 2014, with implementation and deployment set for April to July, including ensure the enterprise architecture and IT infrastructure was in place.
The original plan was to have Disclosure Management in place in time to produce the 30 June 2014 reports.
“As the director responsible, from my perspective there was a lot of risk with that initially. But I thought we would push ahead and see where we go to,” Hosking says.
By mid-May, the team decided this would be too risky, particularly as the ANAO had to be comfortable with the use of the new system, so they decided to stick with the previous process for 30 June 2014 and have the system fully implemented ready for the new financial year.
“We made the decision about six weeks out – we could have got there in the end, but it was going to be a lot of work, I didn’t want to break people during that process, and we only had a finite budget we could spend as well,” Hosking says. “It meant the project still had the momentum but it was not critical for the organisation’s requirements.”
By 30 May 2014, the 2012/13 financial statements and the appropriate disclosures were imported into Disclosure Management for comparative purposes.
During June, the department’s team reviewed sample outputs from the system, gave feedback, and incorporated disclosures into the financial statements.
“That was a really valuable training exercise, as the person from my team was working on that to get the skills. It meant we lessened the need for consultants to assist in that regard,” Hosking says.
Ultimately the implementation of Disclosure Management was completed by 7 July 2014.
“During that time we also had to prepare our year-end financial statements, we undertook a large revaluation driven by changes to the accounting standards and other year-end activities, so it was a really great outcome from our perspective.”
Parallel runs were undertaken for every month up to the December financial close, the department has now fully transitioned to Disclosure Management.
Solution overview
The Attorney-General’s Department now has an end-to-end SAP environment integrating SAP ECC6.0, Business Warehouse (BW), BPC and Disclosure Management, which ensures a “single source of the truth”.
The system now extracts financial accounting and entity closing information from the ECC6 environment into BW. The chart of accounts and trial balance are imported from BW into BPC, maintaining the master data, including additional attributes.
Next the trial balance is validated to ensure the information is correct, and then data is processed through input templates into Disclosure Management, so it can be correctly mapped to ledger codes. Additional journals and disclosures can also be added at this time.
The fourth step is consolidated reporting, producing the income statement, balance sheet and note details, and then producing a set of financial statements, which for the department are around 40 pages in length.
While it did take some work to ensure the formatting of the reports was correct in the original outputs, the system itself is very easy to use and manage within the department, Hosking says.
“BPC operates in Excel with Microsoft Office integration with a scalable service oriented architecture, and we have a unified solution and consolidation within SAP for both our planning and consolidation capabilities. It has a robust library of report templates that enables rapid report creation. We’re able to amend disclosures within our team ourselves, so we don’t have to rely on technical resources,” he says.
The department also uses the system as a budgeting solution for its internal budgets. Taking a bottom-up approach, business managers within the department (key finance staff in each division) use the Excel BPC add-on to their budget information at a cost centre.
“Salary budgets are calculated and entered via Business Warehouse, and non-salary accounts are entered into the system manually. Then we’ve got our budgeting for revenue expenses in the BPC environment. The next stage is we can extract our actuals from ECC6, and so a comparison on how our budget actually looked,” Hosking says.
Challenges
One of the challenges during the project were template changes by the Department of Finance, in the lead-up to year-end. However, having incorporated all these changes now means the report templates are ready for the 14/15 financial year-end – bar any further changes.
Another complicating factor was that their installation of SAP BPC had to undergo an upgrade during the project’s timeframe, and Hosking says with hindsight it would have been better to have scheduled this for a different time.
Key success factors
Among the reasons for the success of the project was strong CFO sponsorship, a highly engaged project team, and plenty of planning.
“We made sure we had sufficient resources, not only from NTT, our business partners, but also within our organisation. We also identified key people right along the process, and made sure they had the right skills and they were trained as well, so they knew how the product worked.”
While the project was ultimately conducted in a short 6-8 week timeframe, generating a quick win for the organisation, it also meant open communication was crucial.
“We had regular project meetings, and when we had issues, we talked to each other straight away on the phone or in person,” Hosking says.
Benefits achieved
The implementation of Disclosure Management has successfully systemised what was previously an Excel-based process, with a seamless end-to-end SAP system requiring minimal manual intervention.
While the first year-end run is still ahead, Disclosure Management has already been used as part of its regular month-end process. This has cut the process from five to six days down to four days, including sending information to the Department of Finance.
“It gives our team more time to breathe at the end of the month. It’s not as hectic and chaotic for them, and they can plan and do other tasks including quality assuring the information that is provided,” Hosking says. “From a business perspective, our executive team are getting reports earlier, and can start planning for the future. Using the product itself has benefitted the organisation greatly.”
There is also confidence within the department that they are complying with statutory reporting requirements.
Business users now have a consolidated database for financial numbers prepared and published. Because the system has an intuitive interface, end user training needs were limited, and it can now be managed and maintained by finance staff, reducing costs and contributing to a low cost of ownership.
There is also scope for the solution to now be used for wider use cases such as automating the production of Portfolio Budget Statements.
