IBM: Winner of the Finance Impact Award, North America 2020Add bookmark
SSON's Impact Awards are globally recognized, annual awards that honour and celebrate shared services achievements across several different categories, across four different regions in the world. Applications are evaluated by a judging panel made up of leading practitioners selected for their experience and are exemplary members of the services delivery community.
Today’s shared services operating models are the engine of enterprise transformation. Here we share an edited version of IBM’s winning application for the Finance Impact Award.
IBM Enterprise Operations and Services (EO&S) is a unit of shared services functions within IBM’s Finance and Operations business unit with a core mission to transform and execute global support processes for internal and external stakeholders. The EO&S leader reports directly to the IBM Chief Financial Officer who reports directly to IBM’s CEO. EO&S functions include Accounts Receivable, Analytics, Enterprise Business Agility, Enterprise Performance Management, Strategic Enterprise Transformation, Quote to Cash Transformation and Operations, Real Estate Operations, Client Support Transformation, Sales Incentives, Sales Management Support, Enterprise Asset Management and Contracts & Negotiations.
- Date SSO started: 01/01/2006
- No. of business units currently served: 14
- Number of employees: 14
- Number of countries currently servicing: 175
OBJECTIVES OF THE TRANSFORMATION
IBM employs nearly 30K sellers who are paid commissions on performance against a combination of several different financial.
measurements encompassing the depth and breadth of IBM product offerings. IBM also operates under tight timelines for quarterly reporting allowing 5 days for the booking of commission expense and liabilities for all resources across 200+ countries. Given the materiality of the commission activity, entries are subject to extensive scrutiny and liability estimates are expected to land within a +/- 5% margin of error to avoid material misstatements.
In addition to the inherent complexity, the Global Sales Incentives (GSI) Finance Team (~80 analysts worldwide) was further challenged by a highly manual reporting and journal booking processes. The commission calculations were executed through a combination of tools and spreadsheets for different types of plans. These were consolidated manually through non-standardized excel spreadsheets at the geography level for journal bookings. Given the manual, error-prone nature of the process and focus on the accuracy of the commission entries, analysts spent a significant amount of time verifying manual calculations and fixing data entries. This left no time to provide analysis to senior management on commission trends to enable real time decisions. In addition, the manual nature of the process required significant amounts of overtime hours to complete the reporting process each quarter resulting in poor employee morale and difficulties in attracting and retaining top talent to the team.
To address the complexity of the process along with the vast amount of manual effort, the GSI finance team executed a complete transformation of the financial process to improve efficiency and productivity by automating manual tasks and enabling a shift to higher- value activities. The key to the transformation vision was the Commissions Expense Accrual (CEA) Tool which is an automated cloud-based, business intelligence enabled solution for end-to-end commission expense calculations. The CEA tool was conceived entirely inhouse through the collaboration of key members of the GSI Finance Team working with IT. Team used design thinking to conceptualize the vision for the tool and applied agile mythology to deploy the solution in iterations and modules, and it took 1.5 years from conception to deployment. The solution is built in cloud, utilizing such technology as Cognos analytics, Python, and Red Hat Enterprise Linux (RHEL) platform.
- Following an agile/design thinking approach a cross–functional team was formed with representatives from all geographies to discuss the concept of the solution, working close to the IT development team to ensure that each step of the design would follow the user requirements. The team first evaluated all the current initiatives in place, adopted the best practices from each of the current processes and then added additional functionality to conceive an end-to-end solution to be consistently applied to all geographies.
- Based on the agile methodology practices, such solution was broken down in 4 initial modules to ensure the progressively product delivery in phases, testing and course correcting throughout the implementation journey. In addition to the focus on a standardized solution, the team also ensured that the solution was feasible to implement in the mentioned modules to provide short-term benefits to the teams faster, while at the same time ensuring flexibility in the design process to allow additional future enhancements to the solution.
- After formulating the high-level design for the automated solution, the team broke the entire development process into smaller iterations. Throughout the development and implementation of the solution, regular discussions were held with both the process SMEs from each Geo and the Technical team to ensure that all key outcomes were being addressed and the solution would be consistent at the worldwide (WW) level. Technical aspects of the implementation were discussed with Finance and Accounting stakeholders as needed to ensure process alignment. Once each module was developed at the WW level, several rounds of testing occurred with each of the geographies and additional enhancements and improvements were implemented based on feedback from the user testing phase prior to final deployment.
- The design of the solution presented several challenges that the team could overcome with continuous collaboration and sharing expertise throughout the process. Prior to the implementation of the unified solution, there were already numerous spreadsheets performing the calculations, each of them covering different processes in each region. There was not a standardized approach across the countries and multiple interactions with the stakeholders were required to address the concerns of designing a unified solution, especially considering all the particularities we could have in a geography level. Besides that, the migration of an Excel-based technology to a new Cognos Analytics system afterwards supported by Python for the RPA solution brought additional challenges in a learning curve and adoption standpoint. Specific training sessions across all geographies were performed to ensure that users were comfortable with the innovative system that was being implemented.
The design of the solution presented several challenges that the team could overcome with continuous collaboration and sharing expertise throughout the process.
- Prior to the implementation of the unified solution, there were already numerous spreadsheets performing the calculations, each of them covering different processes in each region. There was not a standardized approach across the countries and multiple interactions with the stakeholders were required to address the concerns of designing a unified solution, especially considering all the particularities we could have in a geography level.
- The migration of an Excel based technology to a new Cognos Analytics system afterwards supported by Python for the RPA solution brought additional challenges in a learning curve and adoption standpoint. Specific training sessions across all geographies were performed to ensure that users were comfortable with the innovative system that was being implemented.
- Alleviate concerns among the team that the automation of the commission process will result in resource reductions as work previously done by humans will now be automated through the tool. This required education on skills needed to be successful in the new automated environment. While the CEA tool has freed up time that was spent on manual and repetitive tasks, the time savings from the automation of simple tasks allowed users to redirect the focus on higher value activities such as analysis and providing meaningful insights to key stakeholders. Additional coaching and development to enable analysts to improve their analytical and problem-solving skills to be successful in the new environment also contributed to the accelerated adoption of the solution.
- On the business controls side a significant effort was spent on a rigorous internal audit driven certification called the Application Systems Control and Auditability (ASCA) certification. The certification provides an independent assessment of the controls and auditability of IBM applications which manage data that ultimately impacts financial or regulatory reporting.
The commission finance transformation project covers all aspects of the commission finance process including budgeting, forecasting and financial reporting. Having all processes automated in one end-to-end platform deliver efficiencies while providing consistency and standardization across all geographies.
Significant benefits from the commission reporting process transformation:
- Commission accrual accuracy increased by 1 percentage point from 3% variance to 2%, resulting in a $20M direct bottom line improvement to IBM pre-tax income.
- 60% reduction in manual operational tasks enabling shift to higher value analysis.
- 4 days improvement in reporting cycle time to senior leadership
- 20 hours reduction in overtime hours worked per analyst per quarter close. Total improvement of ~ 4500 overtime hours/year
To drive further transformation on the end-to-end process, an additional solution integrated with the CEA tool has been developed utilizing Robotics Process Automation (RPA) BluePrism technology to automate the commission booking process. The Ledger Booking Automation (LBA) solution was designed in-house by key members of the GSI Finance Team in 7 months. It was deployed world-wide in 2Q of 2019.
BENEFITS AND IMPROVEMENTS
Significant benefits from the commission booking automation:
- Cycle time improvement of 15 minutes per ledger entry, resulting in more than 320 hours/year savings and up to 75% reduction in manual ledger booking tasks.
- 7 points improvement in ledger booking accuracy from 93% to almost 100% virtually eliminating the need for time-consuming corrective entries and improving the quality of expense forecasts.
- 100 hours/year savings due to automated backup document storage.
Finally, worth mentioning that one year after the deployment of CEA tool, the team’s employee engagement was ranked “best in class”, the highest possible rating within IBM, evidencing the improvement on employees’ morale.
- Ensure a complete understanding of the process flow to enable a comprehensive solution. Also, to support effective implementation and user adoption of the solution we needed Subject Matter Experts from both business process and IT side be engaged right from the beginning of the development effort.
- Do not automate from management directives but from the ground up with appropriate level of user input. Right from the design point, ensure that the Solution is scalable and easily adaptable to other business processes using existing tools.
- Categorize the workstream into smaller modules to ensure appropriate prioritization and periodic testing and implementation.
WHAT MAKES YOUR TRANSFORMATION SUCCESS STAND OUT?
The commission finance transformation project is a unique end-to-end automation of the commission process that covers all aspects of the commission finance process including budgeting, forecasting and financial reporting. Having all processes automated in one end-to-end platform delivers efficiencies while providing consistency and standardization across all geographies. Additionally, this solution was conceived and driven from the bottoms-up through a user community collaboration with IT department.
The deep involvement of the financial analysts’ community who were the ultimate users of the automated solution allowed for a customized product that specifically addressed all the pain points associated with the existing process. In addition to improved productivity generated from the deployment of the tool, it also significantly improved the morale of the GSI finance team as they were able to not only reduce the amount of overtime worked during critical time periods but were also able to focus on higher value tasks that allowed them to provide more timely and meaningful insights around commission trends which also greatly improved the quality of the relationships with key stakeholders including brand and geo finance teams.
Column 2 of the SSON Impact Awards: The Winners Series available HERE.