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Case Study

 

How Rock Bottom Is Freeing Finance to Become Strategic Performance Advisors

by Dave Hannon | insiderPROFILES

October 1, 2010

When the finance team at Rock Bottom Restaurants, Inc. realized it was spending more time on data entry than data analysis, it decided it was time to improve its technology. Hear from the CFO and VP of Finance how the move from a spreadsheet-only system to SAP BusinessObjects Planning and Consolidation dramatically improved Rock Bottom’s budgeting and planning processes.
 

It’s something of a tragic irony that the fastest-growing businesses, which could benefit most from streamlining their processes and systems, are often forced to put off IT projects so that employees can focus on day-to-day business activities. Many growing companies continue to manage their finance operations, such as budgeting and planning, with manual, error-prone, spreadsheet-based systems — not only constraining the ability to develop sophisticated, long-range planning, but also preventing resources from having any time to analyze their current performance.

In these environments, it’s not uncommon for finance employees to spend 80% of their time cranking out standard budgetary planning reports, while only 20% of their efforts are focused on value-added work, such as analyzing labor complements, cost of goods, marketing spend, or ROI. The finance team at Rock Bottom Restaurants, Inc. (RBR), for one, recognized the importance of converting the time its resources spent as report creators into time they could spend being real financial analysis experts for the benefit of the business.

The Colorado-based restaurant company’s CFO, Brian Armstrong, is in charge of the business’s usual finance functions, such as budgeting, planning, and analysis. But his dual role as Senior Vice President of Corporate Performance Management also carries the responsibility of overseeing shared services and functions such as governance, compliance, and performance. Wearing these two hats gives Armstrong a clear vision of how important planning and analysis are to the business’s overall performance. So it’s no surprise that he recognized the company’s budgeting and planning cycle suffered from a lack of effective technology.

 

 

 
 
      
            
Brian Armstrong
 
 
 
“It won’t take us over four months to budget anymore. We’ll finally get to multi-task in the fourth quarter in a way that we previously weren’t able to.”
Brian Armstrong, CFO,
Rock Bottom Restaurants

 

       

After carefully considering various budgeting and planning tools in the market, RBR selected SAP BusinessObjects Planning and Consolidation, version for the Microsoft platform. And according to Armstrong, the company is already benefiting greatly from the deployment.

“It won’t take us over four months to budget anymore,” he says. “We’ll finally get to multi-task in the fourth quarter in a way that we previously weren’t able to.”

Moving from a Spreadsheet-Based System

Like many midsized companies, RBR historically used spreadsheet templates to manage its budgeting and planning processes for all its 103 corporate stores. As the company expanded and added more casual dining and brewery restaurants across the US — the total store count is 145 including the 42 franchise locations — it eventually found itself using more than 300 very large Microsoft Excel templates to collect budgeting data from a variety of sources, including 103 templates for the restaurants’ data alone.

The manual process of rolling up all of those templates into one source often kept the finance team working extremely late office hours during the beginning of the annual budgeting cycle.

“We had to re-link, open, save, and close each template,” explains Brian Morrow, Vice President of Finance and Corporate Controller at RBR. “It was a very time-consuming process. Due to the size of the templates and data truncation risk, we couldn’t have two restaurant templates open at the same time.”

     

 

         

      

Brian Morrow

    
 
 
 
“Instead of spending time putting data in databases and making sure the links are working, our team is looking into why a restaurant’s prime cost changed from one month to the next.”
Brian Morrow, VP of Finance, Rock Bottom Restaurants

 

 

 

 

 

 

 

 

 

The previous system also extended the company’s annual budgeting season to a full four months. “It took up 70% of my team’s time during that budgeting season,” says Armstrong. “They went dark from September to December — or sometimes even January.”

In addition to the amount of time it took, the manual nature of the spreadsheet-based budgeting and planning system brought into question the integrity of the data. Instead of focusing on solving the issues the data was bringing to light, the management team often debated the data’s accuracy. “It gave us an excuse not to act on what the data was showing,” Armstrong says.

Clearly, a change was needed. The goal, says Morrow, was to “develop a performance-oriented environment where people were more data-driven and not buried in detail — an environment in which they could use a handful of key performance indicators to really drive their business forward.”

Rock Bottom

But despite the clear need for a more reliable planning and budgeting system, the project had to make it to the top of RBR’s priority list. “As in any company, there were competing needs for the capex dollars,” says Morrow. For example, he says that spending money on a new line of flat-screen TVs for the restaurants would have a much more tangible ROI than purchasing a new application for the finance organization — at least in the eyes of the senior management team.

“We had to present a clear business case to the senior management team to show them that this application would not only make the finance team’s lives easier, but also would help the entire company in the long term,” Morrow says.

After three years of socializing the proposal — and with strong advocacy from one obvious senior manager, Armstrong — the finance team received approval to implement the SAP BusinessObjects Planning and Consolidation application, with a launch target of August 2009, when the 2010 budgeting cycle began.

Rock Bottom

Evaluating a New Budgeting System

The first step in researching the market for budget planning and forecasting tools was to develop a set of priorities. Beyond the functionality requirements, the finance team established clear criteria for evaluating the various tools:

  • Easy integration: The finance team didn’t want to get bogged down in an overly long and complicated implementation, and was looking for a technology-agnostic tool that would integrate smoothly with the company’s existing non-SAP back-end systems.
  • Scalability and flexibility: The application needed to work well for a medium-sized, multi-unit retail chain, but also be scalable so that more retail units could be easily added as the company grew.
  • Affordability: Cost was certainly a major factor throughout the evaluation process. True to its function, the finance team was planning to keep the project on budget, which meant evaluating not only the up-front cost of the technology, but also the total implementation and service costs.

Considering all of these factors, RBR zeroed in on the SAP BusinessObjects Planning and Consolidation, version for the Microsoft platform, application. The finance team opted to take a “toe in the water” approach to implementation and then expand the depth and breadth of the tool’s use as needed. Six initial users were identified as those who would get the most from the application early on: Armstrong and Morrow, three users in the company’s planning and analysis group, and another user in the compensation department who contributes to the budgeting process.

In the second quarter of 2009, the implementation team started building templates and figuring out how to pull data in from existing templates.

“We spent a month checking everything, doing trial runs, making process improvements, and deciding how to integrate each budget feeder into the application,” says Morrow.

RBR went live with the application in September 2009, the start of its 2010 budgeting cycle.

Chicago Chop House

Reaping the Benefits

With some healthy experience in running SAP Business-Objects Planning and Consolidation, the finance team at RBR doesn’t miss the spreadsheet-only days and is already seeing great improvements in its budgeting and planning processes. In terms of hard numbers, Armstrong provides clear evidence of the benefits gained. The finance team:

  • Reduced the number of templates from more than 300 to “low double-digits,” where it remains today
  • Replaced a 15-minute template-updating process to an instantaneous one, saving 500 hours of “hourglass watching” each year
  • Cut the month-end package creation process from several days to as little as four hours
  • Reduced the budgeting process from four plus months to about two-and-a-half months in the first year of use

But perhaps even more important than the time-savings benefits, RBR’s finance team is also more confident in the data being produced. This confidence allows them to analyze the data much more thoroughly and provide recommendations.

“Instead of spending time putting data in databases and making sure the links are working, our team is actually looking into why a restaurant’s prime cost changed from one month to the next,” says Morrow. “We know what we have is accurate, so we can focus on how to effect change based on it,” says Armstrong. “We are producing higher-quality work with fewer people now, and this application has a lot to do with that.”

Going Forward

Armstrong and his team hope to roll the application out to a broader audience within the company and look into what other functionality can be leveraged. “Everything we wanted from our original deployment a year ago, we got,” he says.

Armstrong points to the scorecarding and dashboarding capabilities in SAP BusinessObjects Planning and Consolidation as an example of functionality other parts of the company could benefit from using. “That could elevate the level of strategic sophistication in the organization,” he says, by increasing and expanding visibility into the data.

“You can’t just focus on what you’re doing at your desk. You have to understand the impact that your job has on the performance of the business. And once you make that connection, you can change your workload so it’s not just a task, but it’s a value-add,” he says. “It’s up to us to deliver that education, and it can be done through an application like this.” 

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