A “revolution” in financial reporting brings faster and deeper insights

For this executive, it wasn’t just the timeliness and convenience that was stunning. It was also the level of granularity—by SKU, packaging, and several other variables—that made for an “informed” discussion, to say the least.

But it wasn’t always so. This story is about how it all began.

Based in Solar’s headquarters in Fortaleza, on Brazil’s northeast coast, Hermeson Anibal Marques leads a team of about a dozen in the finance department, whose mission is to report the numbers to the many decision-makers who rely on them. As a 10-year veteran in the reporting area, Marques, as much as anyone, can speak to how much financial reporting has evolved at Solar within a surprisingly short timeframe.

“As a kind of reporting hub in the company, it was up to our team to gather financial information from many internal sources and transform it—through a series of spreadsheet-based models—into highly tailored ‘slices’ suitable for planning, budgeting and more,” Marques explains. “A lot of what we did involved running simulations of various decision scenarios, and it was almost all manual and it took a lot of time to run them.”

Rather than a single inflection point, the forces driving the need to change had long been building. Over many months, for example, Solar had been acquiring other bottling companies within Brazil to expand its market presence and gain market share. In parallel with this expansion, Solar was also moving to further decentralize its business, with the directors of the company’s 18 state-level units accountable for operating decisions and profitability. For this model to succeed, Solar needed to ensure that the right data—sliced to a high-level of granularity—was available to each decentralized unit for planning and decision-making purposes.

The problem, says Marques, was complexity. “There was a broad consensus that our existing [spreadsheet-based] system simply couldn’t handle how complex the data reporting and modeling had become,” he explains. “And we knew—and our trusted solution provider agreed—that adapting the system wasn’t the answer. We needed a planning tool that could accommodate the complexity of our business and remove a barrier to our agility.”

In its long relationship with Solar, the provider Marques speaks of—CTI Global, an IBM Business Partner focused on decision-support solutions—had built that trust by helping the finance team at key junctures as the demand for more, better and faster data steadily grew. Now, with Marques and his team at another critical point, he saw CTI’s deep process knowledge as ideal for what he needed most—and it wasn’t technology. “What we were really looking for was expertise at the financial process level, knowing the best practices when it comes to presenting the most relevant data for specific business decisions,” says Marques. “CTI had that expertise, but just as important, they were committed to getting our team ready to handle it ourselves going forward.”

In the big picture, Solar was asking CTI to optimize the processes by which it ran the financial simulations that were so critical to the company’s planning and decision-making. That meant making the process not only faster and more accurate, but also more flexible in terms of its ability to support decentralized analysis by Solar’s different business units.

From an implementation standpoint, the challenges to building such a system were two-fold. The first—where CTI’s track record proved essential—was knowing how to use the right financial data elements to properly frame Solar’s most important business decisions. It sounds simple, says Marques, until you consider the complexity of all the dynamic and interdependent factors that go into simulating even a single decision. “If you’re going to simulate how a price change for a single SKU in a single market is going to impact margins, company profit after taxes and Cash flow you need to be able to test the assumptions at a very granular level with real data in a very complex cause effect financial modeling,” he says. “That’s why deep experience with the financial nuts and bolts of bottling processes is an absolute prerequisite to getting it right.”

The other big challenge relates directly to the type of decentralized decision-making Solar is moving toward. And here, says Francisco Loschiavo Neto, Managing Partner at CTI, the underlying principle is simple, but the execution is far from it. “If a planner or director runs a simulation at the state or even customer level, seeing the impact on the whole company—maintaining a single source of truth—is absolutely essential,” says Loschiavo. “That continuous integrated planning is something no spreadsheet approach can handle, and we believe IBM Planning Analytics does it better than any other solution.”

The revolutionary impact also extends to every part of the company, and every level of management, where the insights generated by Planning Analytics insights are enabling people to make complex decisions faster and with more confidence. Slowly but surely, Marques believes, the revolution in planning data is beginning to reshape the decision-making culture companywide. “We seem to have passed a threshold where more people are more interested in it,” he says, “and they’re demanding it more and more.”

The next chapter of Solar’s planning transformation is unfolding today on the supply side of the value chain. The near-term aim, Marques explains, is to use the “what-if” capabilities of Planning Analytics to see how changes in external cost drivers—such as commodity prices, taxes and exchange rates—impact not only pricing policies, but also demand levels, inventory and production plans. “It’s very detailed, complex stuff,” he says, “but having flexible, easy-to-adapt business rules make it much easier.”

As one of the largest Coca-Cola bottling companies in Latin America and indeed the world, Solar’s decentralization trend is a strong endorsement of the value of local decision-making. By enabling the company to bring the power of simulation-based analysis to its enterprise, the new Planning Analytics solution is making it more nimble than ever.

Based in Fortaleza, Brazil, Solar Coca-Cola (link resides outside of ibm.com) is the second largest Coca-Cola bottler in the Brazil and the 15th largest in the world, with 13 factories operating across the country’s northern and northeastern regions. Solar has more than 15,000 employees and is responsible for the production and distribution of more than 350 products from the Coca-Cola portfolio. With annual revenues of approximately BRL 9.6 billion, the company reaches 25 million homes across Brazil.

Established in 1992, CTI Global (link resides outside of ibm.com) is a company specialized in corporate management, with extensive experience in financial and control planning, bringing together knowledge in business, finance and technology. The company develops decision-making solutions for medium and large corporations, with tailored solutions to help executives in the simulation for strategic and economic scenarios.