Treasury Today Country Profiles in association with Citi

The difference between data and information

Gas containers

Business intelligence systems today bear little resemblance to the monolithic IT-driven projects of old. When a company can derive useful financial data as and when needed without the aid of an IT department, it is proof that the technology has emerged into the sunlight at last.

Business intelligence (BI) systems have something of a reputation for long-winded and expensive projects that often come to nothing. Between 70% and 80% of corporate BI projects fail, according to research in 2011 by analyst firm, Gartner. But technology has move a long way since the bad old days of the IT-centric implementation and now the focus for many vendors is on delivering what the business needs, not what IT wants.

Hexagon Ragasco is one of the latest businesses to discover that BI need not mean pain and expense. The company produces composite liquefied petroleum gas (LPG) cylinders and since being founded 15 years ago, it has seen sales increase tenfold. Managing this growth requires clear accurate and timely business information, especially as 90% of its million-plus units of annual production are now exported. Getting hold of this information had become increasingly difficult. Whilst the Microsoft Dynamics Navision enterprise resource planning (ERP) system Ragasco uses had been supporting day-to-day operations, the company was struggling to produce any relevant business insight using its own spreadsheets. It turned to a BI system for help.

“The plants are highly mechanised, robot driven and rely on very few people. Therefore it is important for Ragasco to gain access to accurate performance information on a daily basis,” explains Tom Madsen, CFO, Hexagon Ragasco. Following a search of the market, an online demonstration of the. Net-based PrecisionPoint BI offering provided the first quick win, Madsen purchasing the system the next day. Ragasco has been a PrecisionPoint user since 2008 and earlier this year decided to upgrade to the latest version.

The system, based on the Microsoft Dynamics BI stack, separates reporting from transaction processing so no modification is necessary: its automated process interrogates the Navision system and creates a separate data warehouse. Reporting is offline, so in-depth analysis does not impact on the performance of the day-to-day operation of the ERP system. The data within the BI system is automatically synchronised with the source so any changes in the ERP are accounted for.

Madsen explains that by creating links between tables and fields, the PrecisionPoint online analytical processing (OLAP) cubes (multi-dimensional views of data) provide a single source of information that links directly back to figures in Ragasco’s general ledger. Where data was previously only available via monthly reports, it is now on-demand. The system gives Ragasco the ability to quickly move between global and detailed financial figures, a function Madsen describes as “extremely valuable”.

Using a Targit front end to create dashboards, the system is now used by Madsen and his two finance colleagues. For a company with no internal IT team and a reliance on third party IT service providers, the ability to take control of the reporting function has been key. Automating the report process has saved at least one FTE position.

With 90% of the revenue generated by exports, the company has extended the reporting to manage multiple currencies, including euro and sterling and Norwegian krone. It now tracks sales and the cost of raw materials so that it can ensure price changes directly reflect actual currency fluctuations rather than any additional charges by the supplier. Ragasco has also added logistics reporting to improve cost and control over inventory.

“The aim is to extend reporting across all areas of the business that rely on information from the ERP system because ERP-based information is very static and hard to understand,” Madsen explains. He believes that extracting critical business information from an ERP is a challenge facing many organisations. With Ragasco now using the BI tools he feels the finance function is able to gain a better understanding of many more parts of the business, “which is essential to impose strong, end-to-end operational control”.