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Accenture

Siemens AG’s goal of being listed on the New York Stock Exchange set up an enormous challenge for the Europe-based electronics giant, including a requirement to adopt U.S. Generally Accepted Accounting Principles. With the help of Accenture and SAP, Siemens was able to implement a new business capability and process on time and on budget.

The New York Stock Exchange remains the world’s foremost securities marketplace more than 200 years after its start. Each business day, between the time the opening and closing bells sound, countless stock orders flow through the exchange, providing investors exposure to a wide range of buyers and sellers. It’s every investor’s dream.

The problem, says Hermann Giehrl, head of information systems management at Siemens corporate finance, is that Siemens wasn’t part of it. And for a very large, multinational company with an extremely complex organizational and financial reporting structure, getting there wouldn’t be easy.

There was no example to follow. No other Europe-based company of such scale had ever achieved a listing on the NYSE. To get there, Siemens would have to pave the way.

Paving the way is not a foreign concept for Siemens AG. For more than 150 years, Siemens has pioneered electrical engineering and electronics solutions: from manufacturing, transportation, health care, energy, lighting, and mobile communications. Today, the Munich, Germany-based company has grown into a global network of innovation and a leading company with revenues totaling €84 billion. To this end, the mission of its finance organization is focused on creating greater value for the company’s more than 800,000 shareholders.

With the globalization of financial markets, Siemens corporate finance was challenged to provide higher quality as well as more timely and detailed financial information to its shareholders with increased efficiency. Adding to the challenge, Siemens was facing low marks from industry analysts, an ebbing cash flow, and downturn in business trends. The lack of high-quality financial information was clearly contributing to waning confidence among analysts and investors about the company’s performance and investment potential.

Paving the Way

Siemens rose to the challenge, establishing a 10-point program to identify and respond to priority management issues, one of which was to increase shareholder value by gaining greater access to international capital markets — none more important than the NYSE. Achieving a listing on the NYSE would, however, require Siemens to adopt U.S. Generally Accepted Accounting Principles (GAAP) as opposed to standard European reporting formats. In effect, Siemens needed to curb high reporting costs and shorten the cycle time for preparing financial statements in order to provide analysts and investors with more accurate and timely numbers.

Europe’s standard for financial management provides for two separate sets of financial documents. The first, management reports, are generated by a company’s operating entities and used internally for business management purposes. The second, legal consolidation reports, reflect abbreviated performance results by legal entity and are issued periodically to external parties.

With 1,200 fully consolidated subsidiaries worldwide and 16 different business units, the cost and time involved for the dual reporting was becoming prohibitive for Siemens. Consequently, Siemens recognized the need to develop a new business capability and process that would integrate the reporting functions and, at the same time, support both U.S. GAAP and German accounting principles.

Developing the solution, however, presented significant technical challenges, as the company’s existing system was based on a complex architecture, requiring the implementation of enterprise integration standards for efficiently linking together countless applications and interfaces. The new technology would also have to address limited capabilities and performance challenges of the existing architecture. To effectively integrate the reporting functions, the company’s restrictive and complex legacy systems required the implementation of SAP Enterprise Controlling module — an innovative, Web-based technology that was brand new and unfamiliar to Siemens information technology engineers.

“We didn’t have the technical skills or manpower to design and implement this new business capability,” explains Giehrl. “Further, adopting U.S. GAAP methodologies would require widespread cultural adjustments and employee re-education throughout the Siemens worldwide organization. This meant that the execution of the effort would have to be precise, well orchestrated, and thoroughly tested to effectively minimize and manage Siemens’ business risk.”

A Fresh Approach and Agile Spirit

To move forward, Siemens chose to team with Accenture due to its familiarity with the objectives of the Siemens finance organization as well as its longstanding alliance relationship with SAP and successful track record in implementing SAP-based enterprise solutions. Accenture brought together a team of professionals who were well-versed in the latest technologies and had extensive industry experience and finance knowledge. From the beginning, Accenture was instrumental in leading the way for the Siemens finance group by helping to secure buy-in for the project from Siemens senior management.

With the green light from management, the finance team and Accenture launched the Enhancement of Siemens Processes in Reporting and Information Technology (ESPRIT) project. As the acronym aptly suggests, the ESPRIT project embodied a fresh approach and agile spirit. The pioneering and collaborative efforts of the joint Siemens-Accenture project team were demonstrated through the development of a comprehensive plan for architecting the groundbreaking financial reporting solution. Working side by side, the finance and Accenture professionals managed a smooth transition to U.S. GAAP while simultaneously deploying a Netcentric solution that efficiently consolidated the company’s management and legal reporting functions, a first for any European company.

Accenture worked closely with SAP to pioneer the development of the financial reporting solution based on SAP Enterprise Controlling/ Consolidation System. SAP Business Information Warehouse was used to make all reporting and closing information accessible via the Web.

During the course of the implementation, a wave of mergers and acquisitions, and related organizational restructuring activities, injected a new element of complexity. The Siemens organization grew from 650 to more than 1,200 fully consolidated subsidiaries, resulting in a 90 percent increase in project scope. The challenge was even more magnified, as the technological infrastructure at some affiliated subsidiaries (e.g., in Africa and China) was also discovered to be inadequate, posing unanticipated issues in effectively supporting the new reporting capabilities. The sheer complexity and scope of the solution delivered by Accenture makes Siemens the world’s largest SAP Enterprise Controlling/ Consolidation System implementation.

To address the unanticipated events encountered during the project and to sustain buy-in for the various strategy, technology, process, and organizational solution components required, Accenture applied its distinctive approach for stakeholder expectations management. Accenture helped develop tailored approaches for effectively managing all the different expectations among a vast and diverse group of stakeholders in Siemens accounting and financial controlling organization.

To enable the new reporting capability, Accenture also worked with Siemens corporate finance to re-engineer its disparate and sequential financial data processes. Previously separate work plans, flow charts, timeframes, and deliverables are now integrated into a single, cohesive financial process that eliminates dual entries of data and facilitates streamlined parallel data processing, resulting in reduced reporting cycle times. This, in turn, enables consistent and more timely communication of financial data to all corporate finance stakeholders for better-aligned corporate forecast and analyst expectations.

The final, crucial element to the whole project was training the organization to use the new system. Accenture was particularly instrumental in creating a dynamic performance simulation training program, which was designed to simulate actual business conditions in facilitating a smooth transition to the new reporting system and also providing long-term competitive advantages. The simulation training was ultimately proven to be 50 percent more effective than Siemens’ conventional classroom training.

Accenture then used a Web-based business-readiness tool to track progress and identify problem areas to be addressed for ensuring the overall preparedness of Siemens decentralized organization from both a technical and content perspective. As an added quality assurance measure, Accenture designed and implemented an online user survey to identify specific follow-up actions needed on an individual/company basis. The end-to-end solution was successfully deployed, on time and on budget, in a four-phased release over a 28-month period, and followed up with ongoing applications management and helpdesk services for supporting the Siemens financial community.

Another First

The pivotal outcome of the solution delivered by Accenture was the creation of a globally efficient, Web-enabled reporting system that allows Siemens’ workforce to speak the same financial language and work smarter. The system complies with U.S. GAAP standards to support the requirements for the NYSE and other listings while also addressing German accounting principles. The solution effectively provides 3,000 users throughout Siemens corporate finance organization with secure access to a consolidated data resource over the company’s intranet. Users connect from more than 1,200 fully consolidated subsidiaries spanning 16 business units and all continents and languages through a user-friendly, front-end interface to enjoy real-time access to the same information, in the same format, and with the same currency.

“The project organization and teamwork with Accenture were superb,” observes Giehrl. “A key factor in the project’s success was the close cooperation with our partners.”

Roland Lochner, currently the CIO of Siemens Industrial Solutions and Services, who led the Siemens Corporate Finance SAP Business Information Warehouse project, explains:

“One of the most important drivers of the whole project was to reduce the cycle time for reporting and closing. … The complex challenges and our stretch goals could only be realized with a centrally managed system. The Web-enabled solution offers fast and reliable access to a central data pool with the transparency and flexibility that is necessary. Today, we know at the push of a button who has reported data, the quality of the data reported, and subsequently who needs to refine and resubmit their data.

“Speed and transparency of our financial reporting have an impact on the attractiveness of Siemens to investors as well as on the cost of capital,” adds Giehrl. “Through the successful implementation of SAP Enterprise Consolidation and SAP Business Information Warehouse, we achieved better control over our figures.”

The success of the project is ultimately measured by the following results:

• 50 percent cycle time reduction for financial reporting and consolidation;
• 25 percent cost reduction through streamlined information delivery;
• Improved access to financial information and enhanced reporting capabilities through increased Intranet availability — from 70 percent to 100 percent;
• 70 percent decrease in monthly and quarterly financial reporting events;
• Increased content and organizational management flexibility with changes implemented in less than two hours versus the previous six-week turnaround;
• 100 percent quality rating of financial information reported versus the prior average of three corrections made after a reporting deadline; and
• Improved decision-making through higher quality, more timely, consistent, and detailed data reported by business segment.

Reflecting on the overall project, Hermann Giehrl remarks that the global consolidation of the company’s financial reporting functions and adoption of U.S. GAAP represent another first in Siemens’ history of innovation, to which Accenture was a major contributor. “Accenture’s professionals brought their IT expertise, financial backgrounds, and fresh ideas to bear on the project,” concludes Giehrl. “Their energy and creativity helped to motivate, sustain, and synchronize the collective efforts of all participants. Their commitment to this ambitious project is evidenced by the value created for our shareholders through significant global cost efficiencies, enhanced availability and usability of financial information, and greater access to international capital markets.”

Finally, the groundbreaking reporting solution ultimately allowed Siemens to be listed with the NYSE. Siemens now shares the age-old honor of the ringing of the NYSE opening and closing bells, with access to a wide range of potential investors each business day.