“Nothing is built on stone; everything is built on sand, but we must build as if the sand were stone.”
(Jorge Luis Borges)
The highly dynamic market environment and the rapid evolution of technology now have a constant impact on the transformation needs of business processes in companies.
Although this context is extremely variable and mobile as “sand,” the need to build a “solid” process such as Closing, nevertheless remains a business priority in order to chart a proper course for the future. It is now well known that the Closing/Fast closing process is only one of the pieces of a puzzle that is completed with the iterative processes of planning, but it however remains a fundamental element of it in order to be able to build and hypothesize a complete design.
As we had mentioned in a previous article “Fast Closing and ERP: is it time to rethink boundaries?“, it also becomes a fundamental element to establish the boundaries of the various applications within the Closing process. In this regard, what we would like to show you is a real case of a home appliance manufacturing company in which, using a well-established methodology, we set ourselves with the client two fundamental objectives: to rethink the closing process and to optimize all the activities related to it.
The project, which we will briefly describe to you in its macro-phases, leveraged four key areas:
- Processes: total and/or partial revisiting of the processes involved
- Organization: realignment of the responsibilities of the key figures involved in the Closing processes
- Technology: identifying the capabilities of existing or “new” applications for proper coverage of the Closing process steps
- People: identification of competence and/or role gaps of the people involved within the process and activation of an appropriate change management program
Fast Closing: identification of Key Principles
In this first quick assessment project phase, the client’s board supported by the AKC team identified change guidelines such as:
- The key business performance indicators and the supporting control model
- The main responsibilities within the organization in the Closing process with approach: central VS local
- The responsibilities/boundaries of the application perimeters involved
The unification of the models
In this second project phase, the goal achieved was the unification of the cascading control/dimensional models:
- The business control model aimed at representing the performance indices identified in assessment
- The dimensional model of the transactional/management system (ERP) in which the core administrative/accounting processes are recorded
- The dimensional model of the corporate performance management (CPM) system aimed at the data closure and consolidation process
Maintaining consistency among the above three models ensures that there was a uniformity of language among top management, day by day activities carried out by operational staff, and controlling people dedicated to the data closure and consolidation process.
This uniformity of language implicitly allows processes throughout the chain to be carried out more effectively.
The realignment of the management system (ERP).
In this third project phase the ERP was realigned in order to properly “map” within its dimensional model the needs of the control model. The main elements analyzed and realigned to the model were:
- all control model objects: profit centers, cost centers, internal orders, job orders, statistical allocation and/or allocation drivers
- the product cost structure: cleansing and revisiting the cost elements according to a net allocation approach between fixed and variable costs.
The implementation of the CPM system
Since the company lacked a full-fledged CPM system, a specific tool was implemented in this fourth project phase in order to cover some important process steps so far not covered by structured applications (closing and consolidation activities until then had been carried out on office automation/excel tools).
The main pillars on which the implementation of the CPM tool was developed were:
- Definition and implementation of the CPM dimensional model.
- Definition and implementation of closing processes by individual Company with related operational tasks
- Definition and implementation of Group closure processes
- Definition of the reconciliation process at both the individual Company and Group level
Change management
In order to operationalize the change, with the changes made within the ERP system and the implementation of the process broken down in a structured way into steps/tasks supported by a workflow within the CPM tool, a specific staff onboarding plan was activated that was based on three areas of work:
- revisiting procedures with clear distinction of responsibilities with central VS local approach
- training plan to engage staff by leading them to have a complete understanding of the closing process
- operational training on applications to enable proper maintenance of the data over time and proper performance of operational activities.
Conclusions
The closing project, with even its acception/declination of Fast Closing, is by its nature a complex and articulated process. In order to enable companies to create value by making available the necessary information in a clear and comprehensive manner and simultaneously within the timeframe of a precise Corporate Closing timeline, it must be designed in a detailed and coherent manner.
No aspect of this must be overlooked: organizational model, technological landscape, processes and procedures, but above all, awareness of the context in which people perform this activity by providing them with all the skills they need.
