In this interview, John Gooch of Hunt Consolidated discusses the company's implementation and use of SAP Business Planning and Consolidation on SAP HANA. Topics covered in the video include:
- A review of Hunt Consolidated's operations including the drivers to implement SAP Business Planning and Consolidation on SAP HANA
- Who within the organization was involved in evaluating SAP Business Planning and Consolidation on SAP HANA
- The makeup of Hunt Consolidated's implementation project team including the selection of an outside consulting firm to assist in the implementation
- The importance of business buy-in and acceptance of the new solution
- Future plans for expanding the use of SAP Business Planning and Consolidation across Hunt Consolidated
Lucy: Hi, this is Lucy Swedberg with SAPinsider, we’re here at Financials 2014, in Orlando, Florida, and I’m delighted to be joined by one of our customer presenters here, we have John Gooch from Hunt Consolidated. Welcome, John.
John: Thank you.
Lucy: So I was hoping just to kick things off, if you can tell us a little bit about your role and also Hunt Consolidated, what the company is and what it does?
John: Sure, so I work for Hunt Consolidated, the Hunt family of companies is one of the largest privately held organizations in the world, and we’re primarily known for our oil company, so a large part of what we do is oil and gas exploration and development, things like that, but we also have a diverse array of other independent business units that are, you know, range from real estate investments, we have power generation utility, we have another business unit focused on making investment in biotech and technology, agribusiness, things like that, so we’ve got a lot of different business units that have differing needs in there, in what they want to do for planning and for consolidations.
Lucy: Great. And what do you do for the company?
John: So my role at the company is, we have a business warehouse group, it’s located in the consolidated parent company in the office of the CFO, and so my background is more in BW, although with a focus on planning, and we service most of the reporting needs of the organization, all of the consolidated financial reporting comes through us, and all of the other reporting needs, both operational and financial, we work with that but we also support and maintain the consolidation system, as well as the planning tools that we’ve used over the years.
Lucy: Ok, great. So here at the event you’re speaking about your implementation of BPC on HANA, so before we get into that could you set the stage for me a little bit, about what was going on in the organization, the before picture, if you will, that eventually led you to look into a solution like this?
John: Sure. So before our project, the planning really wasn’t planning. We had used prior SAP tools, like Business Planning and Simulation, BPS, and then our most previous one was Integrated Planning, it’s called IP. And we just never really had a good business buy-in and ownership to a complete and integrated, thorough planning process. Most of the organization thought of planning as you know, a chore, that has to be done every year, it’s a big data collection exercise, but all of the sort of driver-based things that you think about, it’s happening in people’s heads, you know, a large part of it’s still good ol’ boy network, oh I know what the OPEX is gonna be, I know what the revenue is gonna be, you know, put this number down. A couple of years ago the oil company, the main driver of this, had got a new president, who brought a renewed focus on strategic planning and executing to a strategy and following through on that and created a planning group over the, that was responsible for the CAPEX budget and forecasting process, who had come from an organization where they had used a tool like Hyperion, a multi-dimensional view of the data, he knew what a good planning tool can bring and what a good planning process can bring, so that first year of him, and that first year of this was really them doing almost kind of a business process redesign of planning, to actually firm the process up, tie it more directly to incentives, and really use it as a tool to manage and run the business.
So with that, obviously the tools that we had in place were just not up to snuff to support that. As a BW group, we’d kind of been keeping an eye on like, SAP’s direction with the tools and kind of seeing where they were going, we saw that they acquired OutlookSoft, turned it into BPC, saw successive versions, they got better and better but weren’t quite there with the integration.
Then comes the 10.0 version, and then comes HANA. And so we looked very seriously at that—so the 10.0 comes at a time when the business was prime for implementing a tool like this, they wanted it, they asked us to implement it. And so it was a really good, the timing was fortuitous, it was a really good opportunity to get in here and do that. So then became kind of strategic discussions about ok, so how do we go about doing this? We have a BW system that’s about ten years old, sitting on Oracle, so we decided ultimately to stand up a new box, we were looking at different database systems but SAP kind of showed us the promise of HANA at the time, this is a couple of years ago, BPC on HANA was very new, it wasn’t yet available til middle of the year, we did some cost benefit, we, and ultimately decided to go with BPC.
Lucy: Great, can you talk a little bit about the people involved in this decision and your organization, was it a balance of business and IT?
John: Absolutely. And again we got started with the oil company, so they were our primary stakeholders in the first phase, for about the first year of the project, phase one. And again he came with a Hyperion background, so it was at first a sell to him to say we wanted to use BPC, he didn’t know it, he wasn’t familiar with it, he knew Hyperion, he knew what it could do, he knew SBase, that sort of thing, so though we might have, without that influence, been predisposed to just go ahead and pick BPC, we’re an SAP shop, we’re strategically aligned with SAP as a single source vendor for this sort of thing, we would have just, it would have been a foregone conclusion, we decided to go ahead and go through kind of more of a formal selection process.
And so we had some consulting outfits come in and do some demos of both systems to us. Really what we’re trying to find out is, look, there’s a lot of advantages to BPC, but we wanted to make sure, does it have the functionality that they need to be able to do what they do, that they know that Hyperion does, and we found that they’re, in a lot of respects, functionality-wise, very similar. So then, the difference, the differentiator is BPC is integrated in with SAP and BW, we have deep in-house BW knowledge, we already know how the support organization with SAP works, where to go to find information, conferences like this, things like that, you know all of a sudden if we’d done Hyperion maybe we’d have to be going to different, you know, types of conferences!
So, that’s kind of, you know, we convinced him, and he is a reasonable enough person to realize you know, that—and he trusted us—so once the decision was made, he was all behind it, which, he could have been like, some people are like, “I wanted Hyperion all along,” and then just grumbled and dealt with it, but thankfully stuck with it.
Lucy: Sounds like it worked out!
John: Yeah, yeah.
Lucy: So talk to me a little bit about the makeup of the project team, once you’d decided that BPC on HANA was the way to go, and your approach and the timeline for the project itself?
John: Sure, sure. Well obviously, we wanted to make sure that, in addition to a strong resource on the BW side, since we were going to basically be taking on ourselves all of the configuration of getting data out of BW or getting data out of SAP and bringing it in to BPC, we’ve already got that, I mean my background was a consultant before at Hunt and I’d implemented BW many times for lots of the other oil and gas companies, so we knew what we were doing. But, we needed help implementing BPC, none of us had done that before so we went through a partner selection process, and we ended up choosing itelligence, at the time it was Aster Group.
So we’ve been working with them now for about two years, and so the team is formed with, initially we had what they called a design consultant, that’s more of an overall architect, and then I’m kind of the counterpart from the client side to that respect, and then one, I’m sorry, two, what they call application consultants, more about working with than actually building out you know, the various templates and models and solutions, and then on our side, we thought it critical, we had to have dedicated business resources. BPC is an end user tool, at least in the 10.0 iteration, it’s…business buy-in, business acceptance was critical for us, it was a critical success factor. If we didn’t have that, if they didn’t want to use it, it didn’t feel like they owned it, it wasn’t going to succeed, so we had a couple of business resources from that oil company planning group, dedicated almost 70% of their time on this project.
And so essentially—and then we had a couple of other resources from the consolidated level of the organization, also senior analysts, also involved in the development of this project to make sure that a) what the oil company was building for their model also worked for what they needed at a consolidated level, and also this is going to carry on into the other projects, so that process, and then dealing with the planning groups at the consolidated level, that representation was there. We occasionally called on our Basis team to do things like you know, system copies and install, and HANA being a new thing that was a learning curve, and it remains so. I think some of the things like you know, good back-up schedule and some of the other types of house-cleaning tools they were very used to with Oracle are new things for them in HANA. So, and of course we have a PM, a project manager, who’s also, he’s my boss, out of the Business Warehouse side of things, kind of runs the project, you’ve got a steering committee, the executives from the various businesses that we’re doing this project for.
Lucy: Great, so clearly a company-wide project, you can tell.
John: The company was completely behind it, you know, up to Ray Hunt himself, and we’re constantly in our steering committee, you know, we’re talking to the executives, the highest levels of the organization, telling them what we’re doing, asking them to help with key decisions, that you know, as an overall group, it’s, we’ve got a financial reporting group involved, we’ve, it’s very visible, and a very involved project from a lot of different people.
Lucy: Great. So, you go through the project, you’re on the other side of it now, can you talk a little bit about improvements to the process itself, sort of the consolidation process as well as the planning process, now that you’re up and running?
John: Now, on the planning side of the process, obviously, it was just even having a process, one that actually is planning, you know, supplying drivers, and working through what-if analysis, and actually looking at the things that go into a plan that can change if you change assumptions, things like that. Some of the IBUs that we ended up implementing, oil in particular, realty, delved much more deeply into building that fundamental functionality, some of the others not so much. Only because of what their business case was, even as an IBU, was kind of in a state of flux. How they were even going to be organized was in a state of flux, so you know, that kind of guided a more in-depth solution for some and more of an, ok, let’s just get the required, what we need out of you in order to fill out the consolidated financials.
Process is still a learning for us, only because it’s, it, there was no process before, so it’s been an emergent thing, and so what’s important for us is ongoing communication, we’re constantly now meeting, weekly, with the various folks that are involved in doing, say, monthly forecasts or, and of course during the annual plan, and the long-term plan, and just constantly doing a, what we’d call a plus-delta, like ok, what went good, what went bad about what we’ve done here, cause we’ve got a lot of moving parts in this, BPC’s got a lot of flexibility, but it’s got a lot of complexity too, to do a lot of the things that we’re doing. For the oil company to generate a scenario there’s running a revenue calculation script, and then running a differential calculation script, and then volume conversions and then OPEX and then let’s pull in CAPEX, you know, lots of different things are happening that have to happen in certain sequences and together they still want to maintain a very hands-on approach with the model, not a plug in a bunch of things, hit the button, at the end is a fully complete, developed plan; it’s more plug in some things, hit a button, it gets it to this point, do some things, supply some other things here, hit another button, that uses still some of these assumptions…I know I’m kind of not explaining that well but, so, it’s something we’re still learning but we’re improving upon. What’s nice is we’ve got engagement from the business, I mean they’re in this process, they’re working it.
Lucy: I was just going to say, that sounds like a true example of a collaborative effort, between the sides.
John: Yeah, it’s actually happening, yeah. People from the outside might look at this and go, it’s kind of like, oh, it’s herding cats or you’re kind of losing control but no, I mean these are people who wouldn’t even spend a lot of time on this, to actually get them together and just continue to discuss this, try to improve it, roll with the punches with that, I think it’s a really good thing.
Lucy: So looking forward, what’s next? It sounds like, you know, this is a continuous process of course, but do you have any you know, additional things that you’re looking to tackle?
John: Well, we’re still you know, in the process of rolling it out, so we are in the middle of a development project now for our refinery line of business, they were a challenge because unlike all of the other IBUs that were based in Dallas with us, you know, the corporate offices, they’re out in Tuscaloosa, Alabama, they’re not on SAP, so they’ve always kind of been this…apart. They do their thing, right. Whereas all the other business units are on SAP, on the same chart of accounts, and pull it all through.
So we, we met with them, and it was, it’s one of those things, it’s an exercise in trying to get that business user buy-in, and when they don’t think that they want something like that, and a lot of that comes from just not understanding what BPC is, or even what multi-dimensionality, what that even means. So, I think with things like that, you know, what we’ve found is find a pain point, you know, find something that these people—you know, there’s a pain point in their process, their process can’t be perfect. Find a pain point, show how BPC can address that, demonstrate to them so they can see it real, and then you get the light bulb moment, now we’ve got a project that these people are happy, we’re putting BPC in to help them, not to do it because our consolidated says we need you to do this, because we need your plan to come through this, we’re now building things that are going to help the operations planning out there. So that’s pretty exciting. And now it’s looking like there’s other parts of the organization, like our power, we have a public power generating utility that now really wants to go whole hog into a plan phase, so I think we’re talking now about a phase six, now, five…six?
John: Yeah, so looks like it, yeah, some more going forward, and I think what we want to definitely do is not let it stagnate, we want to keep the continual process improvement going. My main concern, like anything that I’ve seen with systems is you can build it, they’ll use it for a while, but if there starts to be silence, if there starts to be, you know, silence…no news doesn’t necessarily mean good news. Constantly engage with them ok, here’s where we are now, how can we make it better, what are some other things we can do in here, maybe you know, our approve operations needs more detailed planning at a project level, how can we pull that in and integrate it with what we’ve got? I think we’ve got a great baseline, for the future.
Lucy: Great. So you’ve imparted a lot of advice along the way here, but if you had to think of maybe one key tip for other organizations, attendees at events like this or our readers online, what would be something that you might want to pass along?
John: Well, I mean, I would say keep realism, you know, that BPC, no system is a magic bullet. You know, don’t focus on the system as it will solve the problems. Even HANA, HANA’s a great thing, what HANA has enabled us to do is it’s expanded our options of how we go about solving a problem, but by itself HANA, you know, you don’t just put in HANA, you put in BPC, and now you’ve got the best planning. You, all the fundamentals are still there, you still have to think about end user acceptance and buy-in, you still have to think about how the process is actually supported, how are you actually improving what they do to actually manage the business, right, and if you’re not doing that it doesn’t matter if it runs in ten seconds, you know, if they don’t like it, they won’t use it, if it doesn’t meet their needs, they won’t use it, so never forget that. And if you’re on the bleeding edge of something, you know, keep a realistic mindset about, you know, you’re going to run into problems, you know, be in the mode of having to have good work-arounds but yet, you know, press it with SAP and say look, we’ve got a real problem, help us solve this. And they’ve been good about that. So yeah, definitely.
Lucy: Great, so some excellent lessons learned, I thank you so much John for joining me and sharing those, and again we’re live in Orlando for the SAPinsider Financials 2014 event. Again, thanks so much, John, for taking the time.
John: No problem, I appreciate it!