Zestful performance

The foundation of shared service centers is becoming a common practice in large corporations and capital groups. They are usually responsible for the handling of the financial-accounting practices for other companies or departments within the company. Other popular area handled using the internal outsourcing model are personnel/remuneration processes.

The Financial Accounting Center has been functioning in Grupa Żywiec since 2007 and its competence includes almost all the financial-accounting processes of the group: receivables, payables, general accounting, consolidation and reporting, taxes, liquidity and remuneration. Concentrating those functions in a separate company has enabled for the reduction of financial care and fostered the introduction of the latest world standards in financial management.

Today, three years since its foundation, the center, located in Bielsko-Biała, executes processes for over 55 thousand customers of the 6 companies of the Grupa Żywiec, handling about 223,000  incoming invoices and 4 million A/R invoices a year. All these processes are run by only 140 center employees. Hence, one of the management priorities in the Financial-Accounting Center Żywiec is a focus on work efficiency.

The rising number of operations, multiple performance indicators and complex algorithms, on which they are based, as well as the increasing number of employees, has resulted in higher reporting requirements, which impeded the precise monitoring of the FAC work efficiency.
The FAC attaches a high importance to the personal efficiency of the employees and monitors their work using Key Performance Indicators (KPI). The fulfilment of the plans is the key factor in the bonus system.

Another argument in favour of the necessity of precise KPI monitoring is the financing method of the company. The Center works for the benefit of other companies of Żywiec, which pay for the services provided through internal settlements. This requires a reliable evaluation of the level of services provided for internal customers and a precise calculation of unit costs for each operation and its allocation to the specific company.

Work with zest

At the beginning of 2009 in the Żywiec Financial-Accounting Center works were commenced on the creation of the concept of a performance monitoring solution, that would also enable the calculation of a  premium for the FAC employees.

The basic assumptions of the project included an extension of the utilised tool for the key performance indicators necessary to calculate the premium, by adding new indicators, the ability to assign them to specific employees and calculating the premium on this basis and the facilitating of reporting in the requested dimensions and statements.

The targets indicated by the management serve as reference points for the key performance indicators. The creation of the best premium calculation method is connected with the necessity of the precise registration of all activities performed by the FAC and taking into account the absent information .

The solution is designed to measure the personal efficiency of the employees, monitor the performance of the SLA parameters stipulated in contracts with customers, and to calculate the unit cost for each type of document.

The technical aspects of the project execution were taken care of by the IT Department of the Grupa Żywiec, highly competent in the scope of the applications used in the company (including SAP ERP, SAP HR, SAP BW and others, that serve as data sources for the solution created for FAC). One of the contractors engaged was BCC (now All for One Poland).

During the blueprint phase, the solution was called Werwa (Zest).

Data repository

Werwa Solution, created for the purposes of the Financial Accounting Center within the SAP BI system, collects and stores data from multiple source systems of the Grupa Żywiec, for example SAP ERP (SD, FI, CO data, customer data, statistical data), Dynamics and Basware systems (sales, financial and statistical data), SAP HR (work-time calendar, personnel actions) and the ReadSoft system. The data (or values) are mostly statistical information, including for example, the number of invoices, shipments, scanned documents, the number and type of absences, of planned working days and the days worked, etc

Another data source is information entered manually by the supervisors of the FAC  employees. The information includes, for example, targets for the premium KPI’s, assignment of the premium KPI’s to employees, target corrections, premium calculation parameters etc. The data is entered with special forms, BW sheets.

The data repository is automatically supplied with data necessary for calculating KPI’s from the systems working in the Grupa Żywiec and the FAC. It is performed on a daily basis for the cumulative values and selected non-cumulative values. The remaining non-cumulative data and the data entered manually are updated monthly. The repository serves as a data source for all operations performed in the system, and is also the place where their results are stored.

Unlike the formerly used premium indicator calculation tools, the current solution enables the storage of all the data, even those entered manually, in one location, and available from the system.

Key Performance Indicators

Data from the repository is the basis for calculating the performance indicators. Each indicator is assigned an appropriate algorithm and the source values necessary for its calculation. All the indicators information – including the calculation method along with their behaviour in reports – is controlled by the indicator attributes. It ensures the full flexibility of the solution and its user-friendliness. New indicators and values can be assumed in the system by the FAC employees.

The indicators present data in various cross sections, providing for example information on the. receivables value in total at the end of the period, the number of stock keeping units, overdue payment values, including the number and percentage share of different transactions, percentage of A/P invoices with purchase orders, etc.

The above examples are related to business indicators. The other group consists of bonus KPI’s, used for the calculation of premium for the employees.

Calculation of premium

The FAC performs many various financial-accounting operations with a different degree of difficulty and time-consumption. However, it is easy to count all the single actions performed as part of the operations and when each action has been assigned a specific value, it is easy to evaluate an employee’s performance, which is the basis for the calculation of the premium. The most characteristic bonus indicators are, for example, the number of posted invoices, number of posted PK lines, number of associated documents from a bank account, etc.

For each of the bonus indicators, the department manager assigned a different target and an achievement measurement model („the more, the better”, „the less the better”). Depending on the allocated tasks, the manager assigns selected bonus KPI’s (maximum four) to the employee.

Bonus data (values and indicators) are stored for each login and are used for the monthly calculation of the basis for the premium and the total premium is calculated quarterly. The premium is corrected with the HR indicators. An employee’s absence from work, for example leaves of absence or business trips are deducted from the time worked.

In unusual situations (for example, when an employee changes sections and the manager doesn’t know his abilities, the administrator can manually correct the targets, which will affect the calculated premium. Apart from the bonus indicators, the premium also depends on the quarterly evaluation of the employee performed in the system by his superior.

On the basis of the final data, SAP BW Report Designer prepares an evaluation sheet (in PDF format) for each employee, including all the elements of the calculated premium.

A photograph of a work day

Another integral part of the Werwa solution is the work time registration module. It’s a ready-to-use format available online, where the employees choose tasks grouped into processes and sub-processes and enter the time spent working on the tasks. The set of tasks is obviously different for each department. In addition, the Werwa administrator can edit the task lists and, for example, add a new task.

A work day photograph is not used for the calculation of the premium, it only provides data for different reports and analyses, for example, information on the time a person or a department spent on each task. In the long run, the work time analyses at a section or department level, can be used to optimize certain tasks when establishing targets.

Unit cost

As part of the solution, a cost matrix has been prepared, which allows for the calculation and controlling of the unit cost of each document type. The calculation is based on the controlling data from SAP related to the actual costs incurred by the FAC in a given period, and the data stored in the Werwa repository on the basis of the unit cost and the number of processed documents, a service value is calculated for each customer – companies of the Grupa Żywiec – and then the system generates an attachment to the invoice, including the calculation of remuneration.

Portal, Paseczek, LCD

The above mentioned functionalities allow for a reliable measurement of the FAC efficiency and profitability – in a general and in a vertical and horizontal perspective. The indicators can be analysed in order to measure the profitability of the processes, activities for each customer, and with a split into FAC departments or sections, down to the level of a single employee.

In the Werwa system, reporting and data presentation tools are available in multiple distribution channels.

The following reports in SAP NetWeaver Portal are an excellent reporting tool for the FAC management and the managers responsible for organizational efficiency:

• a report for the manager, which presents bonus indicators against the target for the employees of the department for a defined period;
• an employee evaluation sheet presenting the calculation of the premium (with all its elements) for a given quarter;
• a report for the manager, presenting the calculation of the premium (with all its elements) for the employees of a department for a given quarter;
• a report that shows indicators against benchmarks for a defined period with a possibility of splitting them into company codes;
• a report that shows SLA indicators for a defined period with a possibility of splitting them into company codes;
• a report that shows the change of targets for the department employees;
• a report that shows a work day photograph;
• general statement of values and KPI’s;
• the employees can obtain a report, which presents bonus indicators against the target for a defined period.

These are the most commonly used statements. There are also technical reports available, which enable the administrators to check all the source data and the data calculated as KPI’s. Additional reports may be prepared in accordance with the employees’ requirements, as part of the system extensions.

In addition to the reports available in SAP NetWeaver Portal, the employees are kept informed on the KPI performance. It is done through an application that allows for extracting and formatting the data in order to present it in LCD. Such panels have been placed in the FAC corridors. They show the information on the business indicators in an appealing graph format.

Bonus indicators for each employee are not presented in the panels. However, they can check the indicators which are of interest for them, on an on-going basis. Another communication medium is used for this purpose –  the Paseczek application, available on the monitors.

The indicators data reported from the Werwa system is processed in a special application and then presented to the employees as an information strip. Of course, each employee can see only his own bonus data.

Architecture and tools

The solution was designed using SAP BW Integrated Planning. All the functions and algorithms for KPI calculation and all the data entry formats were prepared using the tool. It’s a very flexible Solution, and now that multiple parameterisations have been included, maintenance of the Werwa Solution and adding new indicators and values is very simple and can be done even by employees who are not SAP BW developers.

In addition, the following SAP tools have been used: Query Designer (for the query creation), Web Application Designer for creation of web templates (reports, data entry formats) and Report Designer used to create reports for printing or exporting to PDF (invoice, premium request).

Applications which prepare the data for visual presentation on the LCD panels and monitors, have been developed using ABAP.

Agnieszka Pluszcz-Bernat, Accounting Department Manager, Financial-Accounting Center Żywiec

Marcin Piątkowski, Manager of the Werwa project, Business Systems Development Department, Grupa Żywiec