Serco North America drives efficiency in planning and performance reporting
Serco is an international services company with more than 100,000 employees, delivering mission-critical services to government and private clients in over 30 countries. Serco North America (NA) provides IT & Professional and Managed services to state and local governments, the Department of Defence, federal civilian agencies, and the intelligence community.
One of Serco NA's strategic goals is to double its business through acquisitions however, its planning solution was out-of-date and not scalable enough to support this level of growth. The implementation of a more scalable planning and reporting tool was therefore business critical.
Serco NA was using between 200 and 250 excel spreadsheets to complete each budgeting and quarterly forecasting planning cycle; the sheer volume resulted in many misspent man hours and meant it look a long time to generate output.
"It would take us almost two weeks to submit Business Unit forecasts and budgets and roll them up; and of course using excel spreadsheets left a lot of room for errors," explained Jeremy Petit, Director of Financial Planning and Analysis, Serco NA.
The management team began to lose confidence in the integrity of the financial forecasts because of the time taken to perform planning, and the potential for error. The annual planning cycle is used to generate billing rates to agree with the Defence Contract Audit Agency (DCAA) so accuracy is of paramount importance. Furthermore, creation and analyses of 'what if' scenarios was previously close to impossible, as heavy excel proliferation meant there was too much data to consolidate and analyse using such manual tools.
There was a clear need to implement a system to streamline the process.
SAP Business Planning and Consolidation (BPC) was identified as the right solution to give Serco NA a scalable planning and reporting platform, allowing it to meet its objective and drive its budgeting and forecasting cycles.
The SAP BPC Income Statement and Cost Allocation solution encompasses web-based business process flows, excel-integrated input schedules and a planning engine. It includes:
- An automated monthly actualisation process necessary for expedited 'actual' Vs 'plan' reporting and the 'baselining' of quarterly forecasts
- A complex indirect cost allocation waterfall and cost rate calculation model
- 'On the fly' burdening of indirect costs to the direct P&L, showing immediate profitability at a contract and profit centre level during the planning cycle
- Employee-level planning of indirect salary costs
- A suite of management reports to enable month-end and planning cycle reporting, including automated variance walk-through analysis.
In addition to designing, developing and delivering the solution to meet the requirements of Serco NA, Bluefin Solutions took ownership of the SAP BPC application installation and configuration. Bluefin Solutions also managed the service transition period and trained Serco NAs in-house support functions, empowering them to support the solution going forward.
Serco NA's management team can now look at its key business areas and easily identify growth and less profitable areas. "We no longer have people just keying in numbers - they are now focussed on providing insightful, value-adding analysis. We can now extract and push reports days, even weeks, faster than previously", said Jeremy.
- Significant reduction in planning cycle: Serco's quarterly planning cycle has condensed from one month to four days. The speed of budget forecasting now means that each quarter the company has been able to reduce more than a week's worth of data entry, data roll-up and reporting.
- High level of automation and increased accuracy: The new solution is highly automated, with far less room for human error; this is crucial considering that the planning output is directly linked to the Federal Government agreed billing rates and therefore bottom line profitability.
- Quicker performance reporting at month-end: Ability to instantly generate automated Profit Centre and Business Unit Variance Analysis, following each month-end close.
- Improved decision making: The management team has faster access to business performance related information, empowering them to make timely decisions around key areas, i.e. pipeline slippage, ending contracts, and re-bid analysis.
James Morgan, CFO, Serco NA, commented: "The SAP BPC system has been successfully utilised for the Q1F and there were no significant blips in performance. Furthermore, I've received nothing but positive feedback from users with regards to system performance and how the system is meeting our ultimate goals of driving a more efficient planning cycle and providing more insightful performance reporting. One user told me that the forecasting cycle which used to take 3 weeks, took only 1.5 weeks this time; and they expect it will continue to improve as users become more proficient with the system."
Working with Bluefin Solutions
"This successful engagement is a real testament to the implementation team. We like to think that government contract accounting is difficult to understand, yet the Bluefin Solutions team picked it up within the first few days and understood it probably as well as most people here, which was hugely helpful", said Jeremy.