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How Finance can create value and business
insight
- and drive globalization
The VELUX case
Deloitte CFO agenda 2016, 5 September
GLOBAL DIGITAL COLLABORATE
BRING ⁄ LIGHT TO LIFE
THE VELUX VISION
To lead the development of better living environments with daylight and fresh air through the roof, and to be rated as the best in the eyes of our customers.
3
Company facts
The VELUX Group is owned by VKR Holding A/S, a limited company wholly owned by the foundations and family.
The VELUX Group’s financial results are incorporated into VKR Holding’s consolidated accounts.
17 sales companies around the world
40 production sites in nine countries
9,500 employees
globally
2.4bn
2015 numbers (EUR)
VKR Holding
revenue
268.7m
VKR Holding
net profit
CULTIVATE ⁄ A SIMPLE IDEA
• We have a successful history of managing the VELUX Group as the sum of numerous local companies with a strong entrepreneurial spirit
We realised we had a challenge
• The steady and profitable growth which we were used to changed overnight in 2008, introducing decreasing demand and higher volatility
• Our ability to react efficiently were challenged by low flexibility and scale-ability and too rigid financial and operational planning
2006 2007 2008 2009 2010 2011 2012 2013
For Finance we introduced a new
operating model…
Americas
4 Countries
1 PCOs
4 SCOs
Americas
4 Countries
1 PCOs
4 SCOs
Western Europe
12 Countries
13 PCOs
12 SCOs
VFC + Group
Western Europe
12 Countries
13 PCOs
12 SCOs
VFC + Group
Asia
4 Countries
1 PCOs
4 SCOs
Asia
4 Countries
1 PCOs
4 SCOs
Eastern Europe
16 Countries
6 PCOs
16 SCOs
Eastern Europe
16 Countries
6 PCOs
16 SCOs
From +55 separate finance functions located in and part of Group, Sales- or Production companies:
VELUX Finance
Global Business Services
Global Financial Management
Global Accounting & Tax
One Global Finance OrganisationOne Global Finance Organisation
Global Business Services
71 employees
globally
VELUX Operations India250
• Process efficiency
• Accurate data in right time
• Cost effectiveness
• Common ERP-platform (SAP)
• User friendly front-ends to approve invoices etc.
• Internal bank interfaces etc.
• Global management
• Front offices serving as first point of contact for business
• Global delivery centre in Delhi (Accenture)
Purpose:
Technology enabler
Organisation
• Invoice processing, Payments, Vendor Master/Statements, T&E
• Cash application, Credit hold, Dunning/Customer statements
• Fixed assets, IC, GL-postings etc.
Tasks:
Global Financial Management
133 employees
globally
in local companies
105
o Business intelligence
o Product costing
o Group business analysis
28
• Financial management of VELUX
• Information/reporting/decision support
• Business Partnering
• Common ERP-platform (SAP)
• SAP BW, BPC and Hana
• SAP Business Objects
• Global management
• Regional structure
• Local presence (Production, Sales, Group- and Support Systems)
Purpose:
Technology enabler
Organisation
• Financial Performance Management
• Planning/forecasting
• Product costing, Pricing analytics
• BI/Analytics
Tasks:
Global Accounting and Tax
19 employees
globally indirect tax and group tax
9o Compliance
o Consolidation10
PWC services for local statutory reporting and tax
• Financial compliance
• Group accounts
• Tax
• Common ERP-platform (SAP)
• SAP BW, BPC and Hana
• Global management
• Indirect tax for all Europe handled in center in Warzaw
• Local statutory reporting outsourced to PWC
Purpose:
Technology enabler
Organisation
• Direct and indirect tax
• Statutory accounts
• Group accounts
Tasks:
Vendor reconciliation
Global Financial Management
Group accounts
Fast close
Statutory reporting
VAT/Indirect tax
Group tax
Vendor creation
Blocking of debtors
Payments
Bank statements/reconciliation
Invoice approval process
AGM
Management reporting
Integrated forecasting
Product profitability
Customer profitability
Financial decision appraisals
Target setting and follow-up
Performance Management
Business intelligence
Costing
All the things which can stop the business……..
All the things which can grow the business……..
Business partnering
Sales Performance
Production Performance
Performance Management
Logistics Performance
Group Functions Performance
Forecasting
Performance Management
Etc.
We believe in our numbers…because
we believe in our processes
Net sales
COGS
Other direct costs
Gross Margin
Sales & marketing costs
Market contribution
Group costs
Group EBIT
Group accounts
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Fixed assets
Inventory
Etc…
Sales Performance
Production Performance
Performance Management
Logistics Performance
Group Functions Performance
Forecasting
Performance Management
Etc.
We believe in our numbers…because
we believe in our processes
Net sales
COGS
Other direct costs
Gross Margin
Sales & marketing costs
Market contribution
Group costs
Group EBIT
Group accounts
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Fixed assets
Inventory
Etc…
Gross/Net turnover
Gross Margin
Other sales costs
Market contribution
Group costs:
D&D, Group-IT, Corporate marketing, Common logistics, HR, Finance, Group management etc.
Market EBIT
Group EBIT
Sum of all Market EBIT
Material prices
Products
Sales channels
Production Group Functions Sales
Other prod. cost
Sales prices
Trade conditions
Product mix
Logistic standard costsUnit volume and mix
Marketing cost
Production standard costs
Allocated Group cost
Group cost variance
Purchase price variance
Material variance
Labor variance
Overhead costs variance
Depreciation cost variance
Other variance
VELUX Performance Model
VELUX Performance Process
2: Break-down of targets
3: Plan to reach target4: Monitor and follow-up
Input: Global target (step 1)
Horizon: 1-2 years
Timing: June - September
Who: VELUX Management and management teams
Purpose: Link targets to business structure
Examples: • Market Contribution in D, F, GB, USA, E27• Market share• Production cost efficiency
Input: Plans defined in step 3
Horizon: Current and next year
Timing: Monthly
Who: Management in cooperation with Finance
Purpose: Review performance and develop forecast
Examples: • Follow up on actual and forecasted performance• Define new actions to address gap (if any)• More trend reporting and forward looking
Input: Targets (step 2)
Horizon: 1-2 year
Timing: October/Monthly
Who: SCo, PCo, Business support
Purpose: Develop plan and commitment to reach targets
Examples: • Planning supported by simulation tool• Actions, initiatives, financial impact • Operational plans
1: Global target setting
Input: Strategic plan, initiatives etc.
Horizon: 1-2 year
Timing: June-September
Who: VELUX Management, BoD
Purpose: Link strategy to performance management
Example: • EBIT-%
Gross/Net turnover
Gross Margin
Other sales costs
Market contribution
Group costs:
D&D, Group-IT, Corporate marketing, Common logistics, HR, Finance, Group management etc.
Market EBIT
Group EBIT
Sum of all Market EBIT
Material prices
Products
Sales channels
Production Group Systems Sales
Other prod. cost
Sales prices
Trade conditions
Product mix
Logistic standard costsUnit volume and mix
Marketing cost
Production standard costs
Allocated Group cost
Group cost variance
Purchase price variance
Material variance
Labor variance
Overhead costs variance
Depreciation cost variance
Other variance
VELUX Performance Model
Target
Target
Target
Target
Target
VELUX Performance Model and Process
SAP BPC on Hana
Dashboards
Web based standard reports
Analysis plug-in for Excel
• Planning and simulation (monthly rolling forecasting)
• Allocation engine for profitability measurement
• Interactive dashboards with focus on ‘Target KPI’s’ and trends
• Support Top Management
• Standard reports available
• Support broader group of data users
• Analysis tool for data mining
• Support Finance Business Partners
Target
Example: Production Management
Management Team
Finance Business Partner
Dashboard
Month XXX
Dashboard
50.000
45.000
40.000
35.000
30.000
25.000
480
470
460
450
440
430
27%
26%
25%
24%
23%
22%
25%
24%
23%
22%
21%
20%
V-X
19,2%
19,0%
20,1%
21,1%
21,3%
Standardized Financial Management
• Creating a global performance management model with functional-specific processes has been a lever for Finance to:
• Organize in a partner structure globally with local presence – teaming up with and spanning functional silos
• Drive investments in digitalization and use BI to create value
• With this off-set the next step (currently being rolled out) is to:
• Create uniform processes for financial management in all companies and functions (‘Financial Management in a box’ approach)
• Standardize skill level(s) to increase competences and gain flexibility/scale-ability (scale up/down/replace)
My take on where Finance are heading…
Global Business Services
Global Financial Management
Global Accounting & Tax
…to extended Business Services incl. process owners with change
capabilities
From Finance Shared Services
Centre…
…to support of all Performance Management
From Financial Management…
…to more of the sameFrom Accounting
& Tax…
My take on where Finance are heading…
• What started as a Global Finance organization will turn into a more broad, consolidated back-office function covering all performance and transactional processes in the business
• The transformation in Finance has been a vehicle for globalization in the wider business (transfer “services” from functions outside Finance to Global Business Services)
• Digitalisation has provided possibilities for Finance to accelerate this development – and move from focus on Financial Performance to wider Business Performance (financial and non-financial)
• Only Accounting & Tax will remain as classic “Finance”
GLOBAL DIGITAL COLLABORATE
THANK YOU FOR LISTENING!