The Koc group in Turkey has vastly improved its financial reporting times since implementing Hyperion Financial Management (HFM), reducing calculations from one hour to one minute, and consolidation periods from three hours to 30 seconds. Hyperion is distributed in South Africa by Global Technology Business Intelligence (GBI).
The Koc Group was formed in 1926 and today incorporates 100 companies with 50 000 employees.
It is the largest private sector entity in Turkey, with a combined turnover of $9,8 billion, including inter-company transactions. Without these, its consolidated turnover was $6,7 billion to the end of December 2002. It expects to report turnover of $15 billion for 2003.
Koc founded companies in other countries in order to increase worldwide market share and increase efficiency of its operations. It has $3,2 billion in international sales, accounting for 7,1% of Turkey`s exports.
Its vision is to be among the 200 largest companies in the world. Koc operates in nine different sectors: automotive, household appliances and consumer electronics, consumer goods and retail, energy, finance, tourism, foreign trade, construction and mining, and IT and telecommunications.
It has a number of strategic partnerships, including Fiat, for which it is one of four worldwide production centres. It also produces the Ford Transit Connect van for export to Europe. Other major international partners include LG, Allianz and B&Q.
During November and December each year Koc prepares budgets for each of its subsidiaries. The data is consolidated, combined and translated for each strategic business unit (SBU) and top-level group management, prior to being reviewed and approved. Forecasts are prepared every quarter and actuals reported on each month.
Financial statements are shared with each decision-maker throughout the group, using Hyperion Financial Management (HFM). This assists in monitoring the performance of each entity.
In 1994, Koc Sistem, the IT arm of the group, established a project team of 50 people to set up a data collection and consolidated reporting system for the group. It analysed the reporting requirements of each subsidiary, and defined a standard chart of accounts (SCA) to meet all requirements for data collection, consolidation and reporting.
Ismihan Feyza Baysal, Koc Application Consultant, says: "The system handled everything, from data entry to validation, inflation restatement - Turkey has an incredibly high rate of inflation - translation, consolidation and combination, as well as process management."
However, it had its weaknesses too. It did not remain abreast with other technologies, was not Web-enabled and could not connect to other systems (it ran locally on machines), was not flexible, and it was difficult to add new functionality that took months to develop. It was also difficult to apply changes to the SCA.
Adding an entity took a developer two weeks and users were not able to create their own schedules and reports. There were also performance problems - calculations in base entities took one hour and consolidation three hours.
During 2001 the group underwent a three-month product evaluation phase and decided to install HFM and Hyperion Reports on its test servers, for the consolidation of data and reporting purposes. There are three power-, 20 interactive- and 300 basic users, while another 350 employees are able to view the reports. Essbase, for reporting and analysis purposes, was installed for use by 350 interactive users.
Data is entered either via the Web or through SAP. Budgeting and forecasting information is loaded from other applications.
Validation of data is ensured by preventing users from making submissions to the head office until it is correct.
Two consolidated reports are generated - one with inter-company transfers and one without. The accounts are also translated into other currencies in which the group operates.
Once the data is correct, it is approved and published for sharing with other decision-makers. If it is not correct, it is rejected. Inter-company transactions are matched against each other, and data adjusted across the accounts accordingly.
Koc runs a mirror of HFM on Essbase, as it provides multi-dimensional analysis, allowing the input of data from disparate sources.
Feyza Baysal says: "Analyzer has a very user-friendly graphical user interface, giving us new views, charts and grid representation of our reports, so we can analyse data from different perspectives."
She says HFM has a powerful calculation engine, its strongest property compared to its rivals. It also allows for rapid calculations and has an Excel add-in, so users can work in an environment that is familiar to them.
The first phase of the implementation was from June 2001 to March 2002, followed by phase 2, which commenced in June 2002, and was completed in May this year. The benefits thus far include:
* Better calculation times: These used to take an hour, and are now done in one minute.
* Better consolidation times: Down from three hours to 30 seconds.
* Flexible data entry schedules and reports - users can now create their own.
* Central management and delivery of a single, unified view of financial and non-financial management reports.
Koc did not need to develop any other applications to run on top of Hyperion`s, as the system automatically delivers what the group requires. It is also customisable and extensible, giving the organisation the option to build in its own rules.
Reporting cycles have been reduced from 15 days to nine and are accurate and timely, providing company-wide information and a single version of the truth. Because it is Web-enabled, users can access the system from anywhere in the world, given the relevant security rights.
IT costs have been reduced, as the system is centralised. Productivity, both within the IT department and among users, has been improved.
HFM also provides in-depth analysis of indicators, giving guidance and real decision-making support.
Lastly, "Independent auditing firms trust the information," says Feyza Baysal. She says future plans include:
* Applying the International Financial Reporting Standards 29 (IFRS 29) set by the Capital Markets Board of Turkey to the Hyperion applications, to meet requirements for the reporting of hyperinflation.
* Implementing a budgeting model.
* Customising information for sub-groups.
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