CEVA consolidates financial management systems, on budget, in six months.
by David A. Kelly, November 2009
CEVA Logistics, a global leader in supply chain management, was created in November 2006 when private equity firm Apollo Management acquired TNT Logistics from Thomas Nationwide Transport of The Netherlands. Seven months later, CEVA acquired Houston, Texas-based Eagle Global Logistics (EGL), to create a logistics powerhouse with 50,000 employees in more than 150 countries. But the expanding CEVA—now boasting €6.3 billion annual revenue—urgently needed a single reporting and consolidation package for 400 users in 240 entities worldwide.
As a recently divested company that quickly acquired another company of almost equal size, CEVA had many business areas whose financial results were locked within disparate IT systems. CEVA’s Contract Logistics and Freight Management lines of business—formerly operating as different companies—used nonintegrated consolidation and reporting systems that made the monthly closing process time consuming and complex. “The global consolidation process for the company relied on two antiquated legacy systems, which were prehistoric and inefficient, lacked transparency, and were in risk of collapse,” says Alan Dempsey, group controller at CEVA, in The Netherlands. “We simply couldn’t provide timely consolidated financial information.”
“Naturally having paid €1.4 billion for EGL, CEVA’s executive management board and Apollo as our shareholder wanted to understand in detail the financial results of the newly acquired company, including all its global operations,” says Ruben McDougal, CFO at CEVA.
To solve this problem, Dempsey and the CEVA team turned to Oracle Hyperion Financial Management as the core of a new financial consolidation process and implemented a global solution in only six months. Oracle Hyperion Financial Management is a Web-based application that provides global financial consolidation, reporting, and analysis. The system is modern, fast, and user friendly, and it consolidates 240 different entities into a single management and legal entity reporting structure at CEVA.
Management’s challenge of efficiently consolidating financial information from different entities isn’t all that unique. In fact, for various reasons, many companies need to collect financial information from different sources, consolidate and validate it, map it to a corporate chart of accounts, and make the necessary consolidation adjustments before producing either internal or external financial reports. What is unique is the speed with which CEVA selected and deployed its new financial consolidation solution and the success that it has achieved.
“A lot of our customers, such as CEVA, are leveraging Oracle’s Hyperion performance management solutions to shorten cycle times and spend less time, effort, and resources collecting, consolidating, and reporting financial results,” says John O’Rourke, vice president, product marketing, Oracle Enterprise Performance Management Global Business Unit. “The Oracle Hyperion Financial Management solution is a great platform for reducing cycle times, improving the accuracy of information, and also improving internal and external transparency.”
Today, CEVA is a leader in the global supply chain management business and is one of only four companies in the world that can seamlessly transport products from one end of the globe to another. For example, CEVA can manage a customer supply chain from inland China to a seaport or airport, ship it across the Pacific Ocean to a seaport or airport in the U.S., and deliver it to either a manufacturing facility or the end customer—all with only one supplier and full track and trace visibility.
Unfortunately, the company’s financial management applications weren’t as integrated as its products and services. Generating consolidated financial reports from the different systems took multiple, disconnected steps. First, the former TNT Logistics business (nearly half of CEVA’s annual revenue) would consolidate its results by entity in the Oracle Hyperion solution. Then, the former EGL part of the business would submit results into a legacy Comshare system, and those results would be further subconsolidated into four geographical regions and then submitted to CEVA’s global headquarters. The financial team at global headquarters would then have to aggregate the results from both systems into a single set of reports.
Although CEVA’s management ended up with the reports it needed, the process didn’t provide adequate transparency or any easy way to analyze or manage the different businesses from the aggregated financials. From basic profit-and-loss analysis to income statements and balance sheets, CEVA’s business understanding was essentially limited by a cumbersome financial reporting process.
“In essence we had just bought a business and had very low visibility of its results, along with a consolidation process that took a long time,” says CEVA’s Dempsey. “Anytime we wanted analysis or an explanation of results, we would have to liaise with our new colleagues in Houston and ask them for more information. As a result, the turnaround time for data sets was naturally very slow.”