Getting the financials right

Demand for timely financial reports has lead ASX-listed Perth Internet service provider (ISP), iiNet, to ditch manual processes in favour of automated reports.

The ISP selected NEC to implement an IBM Cognos TM1 and business intelligence (BI) offering in May. “It was taking too much time to generate departmental, monthly, half yearly and annual reports,” said iiNet CIO, Matt Toohey.

“Analysing historical data was a time consuming process with information pulled from several different data sources, and the preparation and consolidation of monthly financial results was largely manual.”

The budgeting process also required multiple inputs and spreadsheet consolidation, meaning changes were slow and potentially error-prone. In addition, rolling forecasts were difficult to produce, with little scope for scenario planning or version control.

“Data integrity, budgeting, forecasting and reporting were our four main business issues, and it was clear future acquisitions and organic company growth would only make the limitations of our systems worse,” Toohey explained.

Since the implementation, the ISP’s finance team has been able to obtain and analyse old data much more quickly. Staff can also share results using a Web-based tool, while monthly financial reporting to the board is now automated.

According to Toohey, Cognos was selected because of its ease of use and ability to work with all of iiNet’s data sources.

“The BI team is introducing company-wide self-service reporting using Cognos as well as a number of advanced predictive data models to fight churn and optimise marketing campaigns,” he said.

“The main benefits sought from the business improvement team were to lower marketing costs through targeted, direct marketing capability.”

Self-service reporting is aimed at lowering operational overhead costs by “putting the power back” into the users’ hands, without the need for information services intervention. Toohey added this also provides efficiency within the iiNet group to obtain information faster and in customised formats to match the situation.

“The entire staff of 2000 workers will benefit from the reporting and dashboard capability of Cognos including finance, marketing, business improvement, information services and human resources,” he said.

According to Toohey, the company took a calculated risk in choosing NEC to do the implementation, as the vendor had no customers in the IBM enterprise space in Western Australia at the time.

Two key factors drove the decision. Firstly, there was a clear sense of “genuine buy-in” from senior management at NEC to achieve the implementation on cost and time, he said.

“Secondly, the per day cost of resources NEC committed to as a once-off for this project was significantly cheaper than competitors. This reinforced our views of the company’s commitment to this project and working with iiNet,” Toohey said.

Working directly with the iiNet finance team, NEC conducted an assessment of the scenario and proposed a phased design and implementation. Budgeting and forecasting was completed in the second phase.

The detailed distributed planning application was activated with budget data collection, workflow control with integrated security assignments and monthly rolling forecasting processes.

iiNet has automated processes for subscriber revenue, operational expenses, capital expenditure, depreciation/amortisation, working capital/debt modelling and tax calculations.

The third phase was integration of the BI solution, running on top of other financial data delivered by the earlier projects, which automatically generates most of the financial month-end reports that were previously complied manually. Toohey said the shift from manual spreadsheets to automated reports means staff can now trust the integrity of company data.

iiNet financial controller, Ben Jenkins, said there was “a lot to learn” with the new platform, so getting the right training from NEC was important to ensure employees were making the most of Cognos reporting.

“NEC kept members of the project team onsite after the platform went live and was available to answer questions and help us with any problems. This saved us time and helped us get up to speed with the system quickly.”

Jenkins’ advice for other CIOs when dealing with two vendors on a project is to establish a strong relationship with all parties. “This lowers program risk and maximises engagement output between vendor, supplier and company. You should also apply ownership when the vendor is a recommended partner of the supplier,” he said.

“Make sure the supplier understands that you are using the vendor on its recommendation. This creates a reputational responsibility for the supplier to ensure delivery from the vendor is in everyone’s best interests.”

iiNet also uses IBM technology to support its database environment including storage, network, servers and operating systems. The vendor’s SPSS modeller is used for BI predictive modelling.

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IT projections

Turning to other projects, Toohey is now looking to replace its enterprise resource planning (ERP) system. The current ERP is Microsoft Dynamics Navision 5.1 and was last updated in 2007.

“We have recently decided to upgrade to Dynamics NAV 2013 to take advantage of the improved functionality available,” he said. This upgrade will be completed by early 2014.

According to Toohey, iiNet is moving at a “lightning pace” when it comes to technology projects. In the first 10 months of 2013, the information services team completed 116 projects.

One of these included changes to its customer service platform. For example, customers can use self-service options rather than waiting for a customer service representative. This has also created strong operational cost decreases throughout the business, said Toohey.

The IT department also worked on the integration of acquired companies including South Australian ISP, Internode, which was purchased for $105 million in 2012, and Canberra-based telecommunications company TransACT, acquired for $60m in 2011.

“Some very large cost consolidations have been recognised through the integration and migration of acquired businesses into iiNet systems. This will continue throughout 2014,” Toohey said.

“It was a good time to invest in the Cognos platform to help with integration of the two companies. This will also ensure we have the flexibility to integrate any future acquisitions.”

IT has also rolled out more products for customers including Internet protocol TV, 4G mobile services and hosting. iiNet supports more than 1.3 million broadband, telephony and IPTV services in Australia.

“The continued evolution of our product portfolio and offerings brings more customer services to market, which benefits an increase of product per customer and revenue streams,” Toohey added.

Problem: Financial reports were taking too long to generate due to manual historical data analysis

Solution: iiNet selected IBM Cognos TM1 and BI to automate financial reporting and improve data integrity