reinventing the record-to-report process for worry-free governance, risk & compliance

1© 2013 Ask, Share, Learn

www.proformative.com

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Gaining Complete Confidence in your Numbers:

Reinventing the Record-to-Report Process

Kenneth FritzExecutive Vice President, Trintech

Mike DuderichFinance Director, Americas R2R Operations, Unilever



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AGENDA

Why Record-to-Report?

Record-to-Report Challenges

Reinvention Approach

Solution-in-Action: The Unilever Case Study

Summary

Q&A

Kenneth Fritz – Trintech

Mike Duderich – Unilever



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“

”

“Out of intense complexities intense simplicities emerge.”Winston Churchill



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Myth Busters

Myth:

Highly educated finance personal are working on value added activities

Reality:

Many expensive controllers/FP&A professionals spending 2/3 of their time or more on low value information activities



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Improving the Record-to-Report Process William Marchionni, The Hackett Group

• Focus relentlessly on driving Process Simplification & Standardization to combat increasing business & regulatory complexity.

• Invest in Integrated Close to differentiate from peers relative to business performance & financial reporting

• Broad organizational value (through reliable information and business directed focus) provided by efficient and effective consolidation and close process.

• Integrated Systems & Single version-of-the-truth are critical to success for R2R process; enterprise-wide data standards & associated governance are requisite foundations.

• All Top Performing R2R organizations leverage technology extensively as an important component of the Integrated Close



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Top R2R performers, on average, reduce process cost as a percentage of revenue by 51%

much of the savings result from automating manual processes and eliminating duplication. Source: “Account-to-Report Leaders: Achieving and Sustaining Top Performance” – Hackett Group, May 2012

Year 1Year 2

Year 3Year 4

Year 5

$0.0

$50,000,000.0

$100,000,000.0

$150,000,000.0

$200,000,000.0

$250,000,000.0

$300,000,000.0

$53,560,000.00

$109,798,000.00

$168,847,900.00

$230,850,295.00

$295,952,809.75

Peer Group vs. Top Performer Finance as a % of Revenue Savings

Annual SavingsCumulative

Note: Assumes 5% Annual Growth

Improving the Record-to-Report Process William Marchionni, The Hackett Group



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Financial crisis &

recession

Response to Sarbanes-Oxley act

World-Class to Peer Gap

31%

45%

48%

World-Class to Peer Gap

Source: Hackett Finance Benchmarks

Superior Ability To Respond To Volatility…



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Cost Reduction is a Key Driver in R2R Investment…

The results: minimized risk, resources and costs

shorter cycles



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Gartner View on R2R

Market Adoption Accelerating for Financial SolutionsGartner continues to define Financial Governance as a whole and also in two subsections, with a strong emphasis on Financial Governance Suites.

Financial Governance Suites Advantage 0 to 2 This is an emerging area and financial governance suites offer a strategic solution with new solutions entering the market in the last year. Evaluate against disclosure management and close management solutions.

Disclosure Management Choice 0 to 2 If your current disclosure processes are manual and rely on sp read sh ee ts , evaluate within the next 12 months. These offerings are maturing in depth and scope.

Close/Reconciliation

Management

Choice 2 to 5 If your current close processes are manual and rely on spreadsheets, evaluate within the next 12 months. Evaluate the whole close process. Try to avoid tactical purchasing of reconciliation management solutions.

Source: Gartner IT Market Clock for Financial Management Applications, August 2012



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Current Challenges

The role of finance is changing and executives are faced with increased need for fast and reliable information while meeting new regulatory requirements.

One SourceOf the Truth

People & Governance

RegulatoryRequirement

s

Efficiency & Effectiveness



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What Chief Accounting Officers Find Challenging

“Our goal is to remain on the constant improvement curve because there will be persistent cost pressure on finance.” – Intel CAO

“What I do not know (unknown risk) and lack of communication between key departments” – General Motors Controller and CAO

“Risks of things falling through the cracks as things are handed off between shared service centers” – J&J VP, Controller and CAO

“Changing regulatory environment” – Best Buy SVP, Controller, CAO



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The CFO’s Perspective

Evaluating Record-to-Report risk & performance:

1. Manage Risk

2. Increase Effectiveness

3. Increase Efficiency

• What is our R2R risk? • Do our processes complement our risk appetite?

• Are we doing the “right things” – in the right order?

• Are we missing critical steps? • Are these steps auditable? • Are they sustainable?

• Are we “doing things right?”

• Are we leveraging technology, people and processes for maximizing value and ROI?



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Regulatory Deadline

Time

Efficiency

Eff

ect

iveness

RISKRISKRISK

RISK

RISK

Reduce Risk



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Regulatory Deadline

Time

Efficiency

Eff

ect

iveness

RISK

Reduce Risk

Increase Efficiency

Incre

ase E

ffectiv

en

ess

Save Time



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Regulatory Deadline

Time

Efficiency

Eff

ect

iveness

RISK

Reduce Time & Mitigate Risk

Transf

orm

ati

on &

Pro

cess

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ent

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Transf

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Tran

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& P

rocess

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Record-to-Report Process Timeline



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How the R2R Process Often Works



#CFOD13SAP®

Close Cockpit

Legacy

Systems

Outsourced

External




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SAP®

Close Cockpit

Legacy

Systems

Outsourced

External



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The first, unified financial governance solution to reinvent the

entire Record-to-Report process

How Trintech Helps



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Cadency Record-to-Report



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Cadency gives financial executives a newfound “controlled agility”

A configurable console allows each participant to focus on specific responsibilities and areas critical for success.



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Unilever: Record-to-Report Case Study

Mike DuderichFinance Director,

Americas R2R Operations



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Fast Facts - 2012

€1 BILLION INVESTED IN R&D

WORLDWIDE

190COUNTRIES IN WHICH OUR PRODUCTSARE SOLD

TURNOVER OF

€51 BILLION

AT END OF 2012EMPLOYEES AT THE END OF THE YEAR

173,000

EMERGING MARKETS NOW REPRESENT

55% OF TURNOVER



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Our € 1 Billion Brands

Home Care

Refreshment

Foods

Personal Care



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Enterprise Support - MISSION

Providing excellent services globally – enabling Unilever to win in the market

Better serve consumers and

customers

Translate global scale

into local cost

competitiveness

Creating maximum

Agility



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Enterprise Support - FINANCE SERVICES

Excellent Services At Benchmark Costs

Finance ServicesPerformance

Process Performance Harmonised Processes

Automation

Centralisation

Satisfied Users

Engaged Team

Continuous Improvement

Levers

Transformation Programmes

End to End Ownership

Re-tendering Project

Outsourcing Footprint

Operating Centers



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Our R2R Transformation Journey2011

5 week reporting, inconsistent & complex

processesRisk reduction through greater compliance driven by end-to-end, standard global processes

Embrace one single finance services organisation

Enhancing effective business partnering to drive virtuous circle of growthLeveraging Information as a

strategic asset to drive effective commercial decision

making Tomorrow 20142 Week reporting,

streamlined & end to end aligned processes globally

Accelerated financial reporting

Agile and scalable finance services organisation



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What Have We ChangedOne Global Process Blueprint• Externally benchmarked best practices• Facilitates continuous improvement• Implemented across all geographies

One set of Unilever Selected Tools• Externally benchmarked automation• Embedded controls• Workflows for status follow up

Globally Harmonised Three Tier Organisation• Limited country team members• Unilever Operating Centres• Harmonised outsourcing footprint

New Service Provider Contracts



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New Global R2R Process

32

Global Process Blueprint• Streamlined, single best practice process adopted globally• 68 sub-processes supported by detailed desktop procedures• Embedded into all reporting systems and supported by a new

toolset

Process Flows

Policy & Procedures

Master Data

Transact - Sub Ledger

Transact - Judgmental

Transact - Non Judgmental

Intercompany Local Reporting

Narratives Desktop Procedures



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Journal Entry &

WorkflowWorkflow

G/L to Reporting

System Interface

Account Reconciliati

on & Workflow

Close monitoring

Intercompany

Transactional System - SAP

Used by all levels of the 3 tier model

Used by Service Providers and Operating Centres

New Global R2R Tools



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New GLOBAL R2R OrganisationActivities cannot be transferred

out of country due to fiscal or legal requirement

ENTERPRISE SUPPORT

ENTERPRISE SUPPORT

BUSINESS FINANCE

Activities where economy of scale can be leveraged and

global expertise developed

Transactional, rule-based activities

Tier 1:COUNTRY

Tier 1:COUNTRY

Tier 2:OPERATING

CENTRES

Tier 2:OPERATING

CENTRES

Tier 3:SERVICE PROVIDER

Tier 3:SERVICE PROVIDER

• Fully Aligned KPIs with Business Finance and Providers

• Process Ownership at Operating Centres• 3 Tier Governance Managed by Operating Centres



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Where are we on the Journey

2,500Users of the new

R2R Tools

61% of

Unilever’s annual

turnover

Western Europe

North America

Germany& CEE

South Africa

India

China

Japan

Indonesia

Intercompany

Hub



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Key Takeaways

Transformation integral part of overall business strategy

Business case cost/benefits clearly articulated

Large scale change agenda while still delivering business as usual (closing books, reporting results)

Driving global scale by centralizing expertise and doing things ONE way (process, systems) across 190 countries



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Summary

Cadency reinvents, transforms and shortens the entire R2R cycle

By establishing a repeatable “Rhythm of Finance” through orchestrating all stakeholders, activities and interoperable processes in a collaborative, real time workflow environment

Cadency reduces costs & improves efficiency enterprise-wide

By optimizing resources, costs, risks and activities across the entire finance organization worldwide through:

Transparency and control across the governance model for the R2R cycle

Empowering continuous process improvement methods across the entire cycle

Cadency enables “controlled agility”

By facilitating easy realignment for an ever-changing business and regulatory environment



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Why That’s Good: Cost Savings

Top R2R performers, on average, reduce process cost as a percentage of revenue by 51% much of the savings result from automating manual processes and eliminating duplication. – The Hackett Group

Source: “Account-to-Report Leaders: Achieving and Sustaining Top Performance” – Hackett Group, May 2012

Year 1Year 2

Year 3Year 4

Year 5

$0.0

$50,000,000.0

$100,000,000.0

$150,000,000.0

$200,000,000.0

$250,000,000.0

$300,000,000.0

$53,560,000.00

$109,798,000.00

$168,847,900.00

$230,850,295.00

$295,952,809.75

Peer Group vs. Top Performer Finance as a % of Revenue Savings

Annual SavingsCumulative

Note: Assumes 5% Annual Growth



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“

”

“To improve is to change;to be perfect is to change often.”Winston Churchill



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Where to Start

Quick Wins:

- Centralize reconciliations

- Standardize JE process- Automate the disclosure

management process- Eliminate duplicate tasks

Standardize:

- Create Workflow for entire record to report process

- Reviews and approvals for all R2R process activities

- Standardize production of Statutory Reports

Automate:- Consolidate close tasks

across the organization within Shared Services

- Automate reconciliations to a

risk-based process

- Bring XBRL in-process within the R2R cycle

- Accelerate data collection and timeliness of judgment based decisions

- Electronic records for entire record to report cycle for Audit

Optimize:

- Orchestrate the entire record to report process

- Leverage benchmarks for process measurement from period to period

- Optimize share of effort between Shared Service Centers and specialized functions

- Agility to absorb acquisitions and other new business conditions

- Effective and empowered collaboration throughout the R2R cycle

1. CRAWLStart with quick wins

based on highest priority

2. WALKEstablish entire R2R process; target white

space

3. RUNAutomate key bottlenecks

4. SPRINTOptimize entire process

and supply chain

Process Cost and Cycle timeQuality, Transparency & Visibility



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Who Can Help

Our Strategic PartnersKPMG – Global

Deloitte – Global

E & Y – Global

Accenture

Cap Gemini

Hackett – UK, Europe, US



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Thank You!



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Thank You Sponsors!

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reinventing the record-to-report process for worry-free governance, risk & compliance

Business

risk riskrisk risk risk

r2r risk

report risk performance

minimized risk

unknown risk

risk appetite

risk increaseeffectiveness

process cost