SThree takes a more strategic view of profitability with SAP PCM

SThree is a FTSE-listed global recruitment company which operates in 19 countries and employs circa 2,000 staff across 50 offices. 

Following a period of growth, SThree needed to upgrade its profitability analysis capabilities in order to deliver better insight to the business and drive more informed strategic decisions.  There was also a need to ensure SAP had a sound structural design to support several business roadmap projects as well as ongoing expansion and change.

The business challenge

SThree has had a longstanding strategy of growth into new countries and sectors. As well as a significant increase in operating profit, the organisation has also seen the number of operational countries expand from six in 2006, to 19 in 2014, and headcount increase from circa 1,500 to 2,500.

This growth however, left the business’ reporting processes outmoded, which made understanding costs and profitability problematic. A poor implementation in 2006 meant the structural design of SAP was fundamentally flawed and needed rectifying in order to support ongoing growth and several business roadmap projects.

Designed to support a much smaller operating model, SThree’s financial reporting system was limited, complex and slow. Some of the information had to be entered manually, which led to inaccuracies. And capturing data in a consistent format was becoming increasingly difficult as the business expanded. 

Furthermore, the system lacked three crucial elements when it came to analysing profitability:

  • A quick and effective way to allocate indirect costs to commercial activities in order to calculate the net margin on a sale
  • The granularity needed to determine four key reporting requirements – i.e. profitability by sales team, brand, country and sector
  • The scalability needed to support a growing international business.

“We lacked proper profitability data. We could report on gross profit, but couldn’t take the analysis to the next level in order to understand net profit. Because we didn’t know which countries, offices or teams were making a profit or loss, we couldn’t make informed decisions about where to invest in the future.” Pete Wells, Group IT Delivery Manager, SThree

The solution

Bluefin Solutions analysed the existing reporting solution and worked with SThree to assess the company’s current and future reporting requirements.

Following this, Bluefin proposed a three-part SAP installation:

  1. Redesign of the SAP Organisational Structures (HCM and Finance) and improved source data capture -  data required to calculate gross margin for SThree’s four key profitability indicators
  2. SAP Profitability and Cost Management (PCM) – to allocate indirect costs to each of the four reporting requirements, based on the business activities that contributed to each cost. This is what would allow SThree to carry out net margin analysis
  3. Profitability reporting – leveraging BusinessObjects to produce more meaningful and interactive management P&L reporting

“Part of the real value-add from Bluefin’s consultants was their thinking at the onset of the project and the insight they provided as a result of this.” 

"Bluefin’s project management ensured that the implementation went as smoothly as possible, and made optimal use of both companies’ resources.” Pete Wells, Group IT Delivery Manager, SThree

The business benefits

The new automated financial reporting system has given SThree ready access to the data required to track its four profitability indicators. This level of insight has empowered SThree to be able take a more strategic view of profitability, by:

  • Understanding business costs and what’s driving them in greater detail
  • Producing accurate net margin analyses and forecasts quickly and cost efficiently
  • Providing senior management with interactive data reports for analysis
  • Focusing resources on profitable areas of the business in order to grow revenues
  • Making informed decisions about less profitable areas, which has led to SThree pulling out of certain territories
  • Monitoring sales teams’ performance based on a detailed view of their profitability
  • Designing sales incentives and pay commissions based on an accurate view of performance
  • Ensuring a fit for purpose design to support business growth and ongoing business project roadmaps

“The new system has given us real profitability data for the first time, and the insight gleaned has given us a new perspective on the profitability of the business. Without this, we may well have carried on operating in unprofitable markets, or missed opportunities to expand into more lucrative ones.” Pete Wells, Group IT Delivery Manager, SThree

SThree is now planning to take its profitability analysis to the next level so it can determine the profit  generated by individual recruitment consultants as well as different candidate groupings based on based on sector experience, specialist skills and so on.

Why Bluefin Solutions?

Bluefin Solutions initially worked with SThree on an SAP upgrade which, having been delivered smoothly and ahead of schedule, came to be seen as a model of success, even winning an SAP Quality Award.

Having established a successful relationship, SThree then asked Bluefin to become the implementation partner for its profitability analysis project.  This resulted in another SAP Quality Award in 2013.

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