Interim Management Solution
Vodafone AirTouch and VivendiNet were joint venture partners in a multi access portal designed to provide cutting-edge content to the existing customer base of the two partners. The joint venture was formed as Vizzavi and Vodafone Group selected a member of their finance team to take on the role of CFO; the problem was that he was finishing an assignment in Hungary and could not take up the reigns for five months. During his absence the company planned to grow 80 members of staff, invest in building a technology platform, spend aggressively on marketing and acquiring subscribers, forge top class partnerships with content providers, install Oracle financials and move offices from temporary accommodation to London.
Working alongside the CEO and the rest of the board JTA’ s interim CFO started work on day one of Vizzavi. We worked closely with teams at Vodafone Multimedia and Vizzavi Europe to provide a finance function, end-user IT solutions and office facilities.
What we achieved:
- Built financial models for revenues, investment and headcount
- Presented financial plans to shareholder for approval
- Implemented an interim accounting solution running over a Citrix ASP model
- Recruited a finance team
- Set up interim systems for Expense, Invoice payment, Payroll etc.
- Defined budgets and developed variance reports to control investments
- Worked with board heads to complete quarterly re-forecast plans to shareholders
- Recruited IT team to install end-user systems and to support users
- Bought and managed the installation of office IT infrastructure
- Worked with central team on the implementation of Oracle Financials
Creating a Market Intelligence Data Warehouse
We were working with a Market Intelligence function that was responsible for publishing research reports from a blend of internal and purchased data. The function’s work was complicated by many factors, including:
- Purchased data arrived denoted in calendar years which did not coincide with our client’s fiscal year.
- Our client has a complex geographical hierarchy where subsidiaries report into regional and area units. The Market Intelligence produced was required to show views for each subsidiary, region and area so every report necessitated a consolidation process.
By designing a database that was able to hold all types of data along with metadata to describe our client’s reporting hierarchy we were able to automate both the CY to FY conversion process and the consolidation of data.
When we launched this simple database tool it quickly started to produce up to 2,000 Market Intelligence Reports per month for a user base of 500 staff. By reviewing the audit data we soon found that users from other departments has discovered the tool and were using it for purposes not associated with the original MI goal. For example traveling executives were using the reports as a briefing to the market in subsidiaries that they were due to visit.
The system was later enhanced by linking to an OLAP cube which was designed to speed up the querying of data and it also allowed us to use the MDX language to define calculated field such as Business Ratios, Growth Rates and KPIs.
We also connected the system to security tables that were already established in other financial systems so that we could publish more sensitive data whilst ensuring compliance with Sarbanes Oxley.
A Case Study in Financial Modelling
At the time we started work at Hutchison 3G the company was well established having been running for 9 months. The company wanted to see how strategy would impact the ten year forecast of financial performance. Also company management wanted to set and monitor budgets at a time when the business was investing in rapid growth.
Working as part of a small finance team co-located with the sales division we set about developing a suite of complex inter-linked business models. These covered customer growth, churn of user base, pricing strategies, revenues, cost of sales, administration costs, personnel related costs, marketing spend, and customer acquisition cost. The models were split by sales channel (e.g. own branded retail, independent distributors, on-line sales) and operating division. The individual models fed into a consolidation system to give enterprise wide data.
What we achieved:
- The models allowed us to set-up cost centres with realistic budgets and to give managers variance reports.
- Sensitivity analysis of what-if scenarios allowed us to better understand the intricacies of this highly complex business.
- The models calculated payback periods and Internal Rate of Returns of a variety of projects. This allowed us to prepare business case models and presentations and so bid for CAPEX and OPEX funding for important projects from our investors.
- Investors would often ask questions about different strategies and scenarios. Having great business models allowed us to simulate scenarios and to give detailed and meaningful answers to their questions.
- A picture is worth a thousand words. Showing the business performance graphically really helped management to get to grips with this new and unknown business.
- Being integrated in the team meant that we could develop close working relationships with management and really understand their business plan.
Competitor Intelligence Case Study
Our client wanted to include detailed discussions on competitor growth and strategy during their business planning cycle. They had already started to do this some years previously by buying expensive competitive intelligence. The issue was the value gained in the discussions did not justify the cost of getting the research and there was no overall framework that all subsidiaries followed. We proposed a new mechanism with simpler research and a data warehouse and reporting tool.
Competitive Intelligence Research
The research was derived from SEC Filings usually the form 10-K submitted each year. The research covered 21 large corporations from the Software industry and involved selecting as much detailed information as was available in the filing and loading it into a purpose built database. Starting from the form 10-K allowed to have great confidence in the initial values however these numbers were often not sufficiently granular to allow for meaningful debate in the organisation. Because of this we developed models to generate much more granular data with the constraint that it always consolidated to give the same values as the 10-K.
Boosting quality and user ‘buy-in’
By adopting a modelled approach we introduced some inaccuracy in the data and the users were hesitant to trust the values from the model. Both of these issues were addressed by our development of an on-line feedback tool. The tool allows users to comment on all of the detailed data and to suggest alterations and submit locally sourced research papers. Users are encouraged to attach documentation to justify their feedback.
The tool allows administrators to review the suggested changes and to accept or reject the suggestions from the field. Users receive automated e-mail responses from the system to confirm that their changes were accepted.
The data warehouse and on-line reports
The resulting database automatically handled conversions between the various reporting periods of the competitors and provided consolidations of data into the reporting structure of our client. The database also calculated Quarter-on-Quarter and Year-on-Year growth values and revenue mixes. The database fed a series of on-line reports built to bring many advantages to our clients:
- Users can see competitive research for many companies in one place: In this case an easily accessed portal.
- Values can be more easily compared because they are all rebased to calendar years instead of the different Fiscal Years shown on the original Form 10-Ks.
- The on-line reports can be printed or used in internal presentations.
- The data warehouse can be used to build complex models to estimate more detailed data from the original filings.
The production of the on-line tool, along with a management process to gather input from the field has greatly improved the reliability of the model, allowed us to receive local insight for low cost and encourages users to buy-in to the data.