Marico, with its presence across the globe, is one of India's major FMCG companies. According to the company's website, every month, over 70 million consumer packs from Marico reach approximately 130 million consumers in about 23 million households through a distribution network of more than 3.3 million retail outlets in India and overseas. Around 20 million outlets stock the company's products.
With such a vast presence, the process of budgeting, financial planning and analysis had become the backbone of the company's operations, so the IT team at Marico began looking out for fast and flexible financial performance management--a suitable performance management software.
Way back in 2004, after the company deployed SAP SEM for its financial planning, it realized that the solution was not meeting its business requirements. As technology started to mature, Marico felt a strong need to have the right performance management software in place. "In August 2007 we invited an external consultant, in Group, which conducted a three- day discovery workshop. After going through different processes across our different segments they came out with a detailed study report. in Group team reiterated our understanding that Marcio Limited had already achieved operational excellence through software solutions, but there remained the strong need for a strategic budgeting, planning and reporting solution," says Harshal Sulakhe, the manager of business applications for Marico India.
The finance and budgeting team was entirely dependent on Excel-based solutions. Hence, data sensitivity and data integration were major issues--several Excel sheets had to collate at the central level. "We wanted to address these areas, but at the same time it was challenging, since we required a performance management software which was as flexible as the existing systems. Hence, during the evaluation, we had a two-pronged agenda--first to move into the automation stage, and second, to look at flexibility keeping in mind the data integrity aspect," Sulakhe recalls.
In early 2008, the IT team (along with functional users) at Marico began its hunt for the right performance management software. The entire process of evaluation took around six months, during which four vendors were evaluated - SAP, IBM, Hyperion and SAS. "We found IBM Cognos to be the best performance management software for our company's requirements. This tool looks after financial processes such as planning, reporting and budgeting, as well as other functions like investor relations. Cognos also takes care of inventory rationalizing for the manufacturing units. Through this feature of the performance management software, we can do a standard versus actual consumption comparison," explains Sulakhe.
The performance management software covers the entire Marico group, including the Marico corporate MIS team which does collation and final reporting, as well as the individual MIS teams of different segments. Implementation of the performace management software started in August 2008 with a target date of December 2008. The entire implementation was done by IBM consultants, along with Marico teams which comprised of IT and functional teams from respective segments.
What to automate and what not to automate using the performance management software was a big question for the team at Marico. Despite this, the team managed to automate most of the budgeting and planning processes. Other than that, the change management issue pertained to the performance management software's adaptation. Users had to do a lot of unlearning and learning. "Here, IBM helped us by organizing training for the super users. Three business users were identified from each segment to champion the cause. These users were then provided with classroom training in use of the performance management software by IBM's training team," informs Sulakhe.
Standardizing templates was another major challenge during the performance management software's implementation. Every new person that came in tried to change the Excel-based templates, and this became a roadblock for the rest of the team. According to Sulakhe, "With the performance management software, we did a standardization of those templates and developed as similar as we could to the existing ones. In these templates, 'versions and scenarios' remain the same across the different segments of the business. 'Version' is the monthly budgeting submission, while 'scenario' is the outstanding and basic targets that we have."
Another challenge was to get the bill of material configured on Cognos so that users didn't really have to move out of the budgeting system to the transaction system just to find out the material cost. With the performance management software, users can do impact analysis, wherein they can look at the cost impact due to changes in the prices of raw materials and other goods in future. With Cognos, they can do an impact analysis not only at quarterly level, but also look at monthly and yearly impact on costs.
Another innovative solution cited by Sulakhe concerns exchange rates. Since budgeting is a forward-looking exercise, there's always a need to track the impact of exchange rates on the business. "We built a cube in Cognos called exchange rate cube. This calculates the Indian rupee figures for different geographical locations, so even if the organization makes an acquisition in a new country, the performance management software takes care of the conversions with minimal changes and tweaking," notes Sulakhe.
According to Sulakhe, data integration has been one of the major benefits derived from the performance management software's implementation. "Additionally, reduction in submission time was a sure benefit - the submission time was reduced from five days to four hours. The ROI was achieved in one and a half year, as opposed to three years for other projects. Support from the vendor remains excellent," remarks Sulakhe.
In future, the team at Marico is looking at dashboarding through the performance management software. The system has Web access as well, and some standard dashboards are provided with the software. "Today, the performance management software serves the basic purpose of financial performance management. We are now trying to cover functions other than finance, and attempting to extend it to our other departments," says Sulakhe.