As Fiat maneuvers beyond Italy, new analytics help steer managers in the right direction.
by David Baum , May 2013
Over the past decade, few industries have experienced as much turmoil as the automotive sector. As the global economy entered a protracted slide and consumer spending waned, many auto manufacturers were forced to lay off tens of thousands of workers, sell entire divisions, and even turn to government support just to survive.
Despite this upheaval, Fiat Group Automobiles S.p.A. has remained strong. Leaders at the 114-year-old, Turin, Italy–based company saw economic distress as an opportunity to bolster their position as one of the world’s leading automotive brands. A European automotive pioneer, Fiat has built and sold nearly 100 million passenger cars and light commercial vehicles, with models that have won the honor of European Car of the Year 12 times.
This position of strength allowed Fiat to develop a partnership with the US automaker Chrysler—originator of such iconic brands as Jeep and Dodge—after the American company emerged from government-sponsored bankruptcy reorganization. Now, Fiat is Italy’s largest auto manufacturer and the majority shareholder of Chrysler—the combined company has nearly 215,000 employees, 158 plants, and 77 R&D centers, and its 2012 revenue approached €84 billion.
And it looks as if Fiat’s management is just getting started. The fourth quarter of 2012 brought plans to accelerate into the high-end auto sector in Europe, Middle East, and Africa (EMEA), focusing on the premium Alfa Romeo and Maserati brands. Leadership is also working to develop Jeep products for international markets, maintain leadership in light commercial vehicles, and emphasize the popular Fiat 500 and Fiat Panda models as pillar vehicles.
To support these goals, Fiat’s corporate finance team is spearheading business intelligence (BI) and enterprise performance management (EPM) initiatives to give senior managers and finance professionals a global view of operations.
As Fiat Group Automobiles adds operations and brands, financial managers need more-detailed planning functionality. This is particularly important in EMEA and Latin America because outside of Italy, Fiat Group Automobiles’ largest country of production is Brazil (where Fiat is the market leader). Managers needed to easily cross-analyze data among countries, channels, and products, even drilling down into variables such as model, power train, and vehicle equipment. They needed a decision-support system for planning and analysis within each region, brand, and legal entity.
Now, it’s very easy to analyze data from each division. I don’t have to spend several hours running queries just to extract the data.
Additionally, an emphasis on integration between Fiat and Chrysler has challenged Fiat’s finance community to redefine the business accountability and develop metrics that would allow senior management to monitor the business at a minute level.
“We sell the Fiat 500 in the US, and we sell Jeep in Europe,” says Virginia Rossi, manager of financial planning and analysis at Fiat Group Automobiles, who is responsible for technical and managerial reporting in the EMEA and Latin America sectors. “Previously, we had to reconcile information from more than one system and run multiple queries to determine the impact of exchanging products between the different companies.”
What followed was a two-phase EPM/BI project, which unfolded over several years, to yield greater transparency into corporate sales and marketing data, enable controllers to conduct more-accurate planning scenarios, and improve visibility into Fiat’s rapidly expanding global enterprise.
The information and communications technology (ICT) team launched a cross-region initiative to develop a new group reporting platform based on Oracle Hyperion solutions. Oracle partner Techedge SPA collaborated with Fiat’s finance department and ICT team to implement the EPM solution.
“The main problem facing our financial professionals was a lack of consistency among regions and brands,” explains Pierpaolo Veglio, ICT finance process manager at Fiat Group Automobiles. “We needed to consolidate financial information into dashboards for managerial reporting and enforce standards to allow for more-complete, consistent, and accurate reporting.”
Working with Rossi and the ICT team and sponsored by the EMEA CFO, Veglio designed a system to deliver insight into operational performance, especially the myriad variables related to new and used car business, plant productions, and after-sales service. The first phase of the project, started in 2005, entailed implementing Oracle Hyperion Financial Management for managing statutory consolidation and group treasury reporting activities. The ICT team migrated financial information from a legacy accounting system to Oracle Hyperion Financial Management and created a common chart of accounts.
The system draws data from a third-party enterprise resource planning (ERP) system and Microsoft Excel spreadsheets, through Oracle Hyperion Financial Data Quality Management, to present users with preaggregated data across countries, legal entities, and business functions. Finance managers such as Rossi use the consolidated Oracle system to track profit margins by brand, generate balance sheets, and monitor cash flow and treasury activity across Fiat Group Automobiles.
In addition,Veglio and his team developed an EPM solution to support planning and reporting for a cross-border initiative between Italy and Brazil. The deep connections between Latin America and EMEA made the finance interactions—and the IT solutions that support them—an important test case for the operations of the entire company. Regional reports break down the data by brand and geographical location to help managers study pricing, profit and loss, dealer incentives, and other financial metrics. Controllers use these reports to analyze sales activity among dealer channels and direct channels such as fleet, rent-a-car, retail, and government.
Percentage increase of worldwide shipments of mass-market brands in 2012, a total of 4.2 million units
Today, more than 1,500 people in more than 70 legal entities depend on these Oracle Hyperion reports for statutory and management reporting—an important step in the company’s evolution into an analytics-driven organization.
While the EPM system allows managers to trace the profitability of every type of car sold in each country, it lacked the ability to access disparate data sources to conduct “what if” analyses and detailed planning exercises. So in Phase 2, Veglio’s ICT team used Oracle Business Intelligence Enterprise Edition to link Oracle Hyperion Financial Management and Oracle Hyperion Planning applications—more than 30 applications, anchored by a multi-dimensional Oracle Essbase database—with calculations that reveal a more granular view of profitability. Oracle Business Intelligence and Oracle Hyperion applications display this information through dashboards and parameterized reports.
“We needed drill-down capability in the reports to connect the total margin number from the consolidated report with detailed analysis from the planning solutions,” says Veglio. “The planning application is only the first part of an integrated reporting system that helps finance professionals to understand the business from all the different standpoints.”
Fiat’s Oracle Hyperion Planning foundation now supports core financial management activities and an interactive BI environment. Approximately 50 senior finance professionals depend on the BI system, from regional controllers to the highest officers of the company. The BI system is live in EMEA and Latin America and will soon be rolled out globally. “Now, it’s very easy to analyze data from each division,” Rossi says. “I don’t have to spend several hours running queries just to extract the data.”
Rossi’s team uses the EPM system for financial planning and analysis related to new cars, used cars, spare parts, and warranties. Employees can drill down into financial results—for example, to analyze profit margins, cash flow, or treasury activity at a more discrete level—and view the data in dashboards or export the data to Excel for further analysis. (See the “Empowering Excel Users—the Smart Way” sidebar.)
This type of analysis is also useful for high-level finance officers such as brand controllers, legal entity CFOs, and regional CFOs and COOs. “Senior officers can get immediate visibility into the data to make strategic decisions,” says Rossi. “If a CFO is preparing for a quarterly call with financial analysts, it’s very easy for him to analyze and compare all of the data.”
Analysts in the marketing and sales departments have a simple, straightforward way to track the effectiveness of campaigns and promotions. Having one common environment for pricing, profit and loss, and incentives makes it easier to conduct planning exercises such as product simulation and sales price optimization based on dimensions such as time, market, and product.
Other analysts use the system to track the effectiveness of dealer incentives on sales—especially valuable since the Chrysler merger. Veglio says they can sort data by model and region and obtain consistent answers from anywhere in the world. Managers can quickly define forecasts and create budgets so employees can concentrate on the right strategic activities. The system also simplifies integration of planning and budgeting between regions.
As the integration of Fiat and Chrysler progresses, some analysts say it could become a model for trans-Atlantic cooperation in the auto industry. Together, Fiat and Chrysler sold around 4.2 million cars and light commercial vehicles in 2012, with a long-term goal of increasing global sales to between 4.6 and 4.8 million vehicles by 2014. Fiat is on track to achieve these aggressive sales numbers.
Fiat’s EPM system helps streamline essential management processes, creating a smarter, more nimble organization. It allows the close monitoring of performance, enables flexible planning, and validates trust in the data at a time when the company needs the full backing and confidence of its stakeholders. Oracle remains at the heart of this strategy as Fiat continues to roll out enterprisewide information systems that enable a new level of performance reporting, analysis, forecasting, and risk management.
David Baum is a freelance business, technology, and lifestyle writer in Santa Barbara, California.
Users of Fiat’s new business intelligence (BI) environment have multiple options for how they view and analyze data. While the default is a series of Web-based BI dashboards and reports, some financial professionals still prefer to use Microsoft Excel to analyze and visualize data. Fiat’s information and communications technolgy (ICT) team used Oracle Hyperion Smart View for Office to enable this additional level of analysis.
Pierpaolo Veglio, ICT finance process manager at Fiat Group Automobiles, calls Oracle Hyperion Smart View for Office an “Excel conduit” to data in the Oracle Essbase database. Excel users can retrieve information directly from Oracle Essbase and Oracle Hyperion Financial Management to populate charts and graphs.
“We used Oracle Hyperion Smart View for Office to give to our finance colleagues a sort of book-generator for data in Excel,” he explains. “Oracle Hyperion Smart View for Office lets them analyze the data in a familiar spreadsheet environment. We have built reports in Excel to give them all the information that they need to conduct detailed analysis on a particular market, margin, or type of car.”
Rather than letting individual users accumulate data in personal spreadsheets in an unregulated fashion, Fiat’s BI environment generates accurate, preformatted, and precalculated data extracts that are loaded directly into Excel applications. Direct access to Oracle Essbase eliminates error-prone data entry processes. Authorized users can view, import, manipulate, distribute, and share data in Microsoft Excel as they plan budgets, scrutinize pricing strategies, and investigate financial scenarios. Similarly, they can refresh periodic reports with new information directly from Oracle Essbase, so that financial reports always reflect current and accurate results.
“Our financial managers and analysts can spend their time managing and analyzing data instead of collecting and preparing it for presentation,” sums up Virginia Rossi, manager of financial planning and analysis at Fiat Group Automobiles. “The imported content, such as profitability analysis, SG&A analysis, cash-flow projections, and balance sheets, can be refreshed from within the Excel environment.”