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Case Study

 

Cirque du Soleil Drives Creativity and Expansion with SAP Solutions

by Dave Hannon | insiderPROFILES

July 1, 2011

You may know it for its dazzling circus performances, but Cirque du Soleil, at its core, is a business—and it has relied on SAP solutions for the past decade to manage its rapid growth. From accommodating the financial complexities of a global business to keeping up with an increased demand for costumes, SAP solutions like SAP ERP Financials have helped Cirque du Soleil optimize and review business processes while collecting valuable business data.
 

Imagine a company that operates not one, but three product distribution models, two of which involve touring — physically picking up and relocating — as often as every couple of days, completely ripping down enormous, complicated structures and rebuilding them from scratch...

Now imagine that the same company is tripling its new product output and expanding into new regions like China, Russia, and Turkey. Welccome to the business side of Cirque du Soleil, which produces touring shows under the big top that stay in a city for six to eight weeks, touring shows in arenas that remain in a city for two to three days, and permanent shows that stay put in one fixed location.

Behind its stunningly creative and wildly unique circus performances and products, Cirque du Soleil is a business — a successful and savvy business — that has grown consistently and strategically for the past 25 years and is in the midst of its biggest growth spurt yet. The company that started as a handful of street performers now boasts close to 5,000 employees, including more than 1,300 artists, across much of the globe.

“Creativity can be found in every aspect of our business — from creating a dazzling show or costume to the more traditional business roles like finance or HR. It’s deeply rooted in our company culture,” says Jean Legal, Cirque’s IT Director.

“Because creativity is the driving force of our company, we in IT need to be creative ourselves. We can’t turn down a creative idea because it doesn’t fit with our existing technology,” says Olivier Gariepy, Senior Business Analyst at Cirque. “And we have to find processes and solutions that never slow down the creative process for our shows or any other project.”

To keep pace with this driving force, Cirque has relied on SAP solutions for the past 10 years to effectively manage its creative business and continued growth.

Change Comes to Town

In its early years, Montreal-based Cirque du Soleil had a fairly straightforward product strategy: It would develop one new show per year and tour extensively with that show circus-style, transporting its own big-top tent, employees, and supplies. Its biggest business challenges in those days were logistics-related: orchestrating how to ship replacement costumes to a moving show, arranging customs paperwork for border crossings, or getting new employees to the current “job site.”

     

Jean Legal

“Creativity can be found in every aspect of our business — from creating a dazzling show or costume to the more traditional business roles like finance or HR. It’s deeply rooted in our company culture.”
—    Jean Legal, IT Director, Cirque du Soleil

But in recent years, the company has been expanding rapidly into new areas and distribution channels. The expansion started in 1993 when the business tried something different — Mystère® — a permanent show that stayed in one place rather than touring around the world. In this case, the show’s home was a custom-built theater in Treasure Island Hotel and Casino in Las Vegas, Nevada.

“The Las Vegas show was a breakthrough for us at that time,” says Legal. “A show like that can only be done in a permanent facility. It was a different approach than what we were used to.” Mystère was such a success that it spawned a new product distribution model, and the company has since launched additional permanent shows in Las Vegas, Orlando, and overseas locations such as Macau and Tokyo.

And to fill the gap between its permanent theater shows and its traditional, traveling, big-top shows, which usually remain at a location for six to eight weeks, Cirque launched a third distribution model: touring arena shows. These touring shows move around more quickly than big-top shows and are similar to rock concerts in that they perform in existing venues in cities for two to three days. This year, the company is producing Zarkana®, which will be presented at New York City’s Radio City Music Hall, as well as IRIS® at the Kodak Theatre in Los Angeles for the first time.

More recently, the frequency of new productions — “new product development” for this company — basically tripled when it increased from one new production a year to three, and complexity increased as it began breaking into new markets like China and Russia. In addition, in 2000, the company began producing television and film projects, thus expanding its retail and licensing businesses.

And while the growth is diverse, it’s also well planned and builds off the capabilities provided by its SAP ERP system.

Financial Complexities of an International Business

Perhaps the most direct impact that SAP solutions have had on Cirque’s business is evidenced by the company’s use of SAP ERP Financials to operate and streamline portions of its very complicated financial supply chain.

     

Olivier Gariepy

"Because creativity is the driving force of our company, we in IT need to be creative ourselves. We can’t turn down a creative idea because it doesn’t fit with our existing technology."
—    Olivier Gariepy, Senior Business Analyst, Cirque du Soleil

“We basically have a highly complex environment so we need a very robust yet flexible financial system to support that,” says Legal. “Tax processing is a crucial element of our business. For example, we have a growing retail business driven by the point-of-sale at our shows, and we have to be able to accurately process the appropriate taxes for those revenues.”

Legal points to SAP ERP’s ability to easily handle multiple currencies and languages as another way the system streamlines the company’s truly complex international business model.

“Because of all the travel we do outside of Canada and the US, we have to cope with the reality of various markets and countries — each of which presents a unique set of challenges,” says Legal. For example, two years ago, Cirque entered the new market of Russia with a first show, Varekai®, which then led to the presentation in 2010 of a second touring show, Corteo®, in Moscow, Saint Petersburg, and Kazan. “In Russia, it’s mandatory that business paperwork such as purchase orders and purchase requisitions are prepared in the Russian language, but the character set was completely new to us,” Legal says. “Fortunately, our SAP system was there to support some of these aspects, and so we have come to rely on this capability as we expand into other new markets.”

The flexibility of SAP ERP Financials helps in the budgeting process as well. For example, every time Cirque sets up a new show, it creates a new budget for the setup of facilities. “Through creative use of the standard SAP functionality, we have been able to facilitate this process,” says Legal. “Everything is relayed through the same fixed budget so we can monitor the expenses for that specific project very closely.”

Other areas of Cirque’s business have also leveraged SAP technology to support its traditional business processes, such as those pertaining to production and material requirements planning (MRP).

Cirque headquarters

Keeping Up with the Increased Demand for Costumes

Because MRP processes are typically used by manufacturers, it might seem strange that Cirque uses SAP ERP functionality for MRP at all. But by 2008, the growth of the company and its productions put increased demand on its Costumes workshop, which creates and reproduces custom-made costumes for all Cirque shows. And if you’re picturing a few seamstresses quietly stitching away, think again. In fact, there are close to 400 specialist artisans dedicated solely to producing and maintaining all the costumes for Cirque’s shows.

In 2011, Cirque’s Costumes workshop in Montreal will produce around 20,000 wildly unique costume items and 3,000 pairs of custom-made shoes. That level of production will require the use of nearly 150 kilometers of fabric from around the world, 80% of which will be treated and dyed in-house by specialists in textile design. The Costumes workshop creates and maintains every costume item with careful attention. For example, one specific wig requires four weeks to create and is renewed four times a year — for a total of 16 weeks dedicated to a single item.

cirque sign

As Gariepy explains, the turnaround time for the costume production process is crucial. “The proper costume must be available for the respective show when the performer needs it,” he says, adding that there’s typically not a very long lead time to get a replacement costume produced and shipped to a specific performer.

As the demand for costumes increased, the company’s traditional materials management process struggled to keep up. And without a flexible system in place, most of the material requirements for the busy Costumes workshop resided only in the heads of the costume specialists, which slowed the process.

“Since we expanded, we didn’t increase the number of people or physical space in our Costumes workshop — so we had to become more efficient,” says Legal.

The first step toward a more efficient MRP system was to forecast how many costumes each show would require over a year. From there, a materials forecast could be derived for the specific costume components and requirements, so the proper materials would always be in stock. This improved forecasting capability would minimize the peaks and valleys in demand so the Costumes workshop could work in a steadier pattern.

           
         

Note

For a deep-dive look at how Cirque du Soleil implemented MRP at its Costumes workshop, see the story “High Wire Act: Cirque du Soleil Blends SAP Applications with Proprietary Programs to Make Sure the Show Always Goes On” in the ProjectExpert knowledgebase at www.projectexpertonline.com (subscription required).

Today, the MRP system is configured such that costume specialists order components for a specific costume by simply identifying which costume it is and which performer will be wearing it. The system does the rest of the matching work and provides the Costumes workshop with the components required to make that costume. That automation greatly expedites the costume creation process.

“The objective was to make sure the whole process would be easy — we didn’t want the head of wardrobe to have to make a very complicated transaction to get this information,” says Gariepy. “We wanted a single interface to manage inventory and orders. And we didn’t want to lose three weeks to training them.”

The Show Will Go On: Looking Down the Road

The implementation of SAP solutions has helped Cirque du Soleil optimize and review some of its business processes while collecting some valuable business data. And the next step is leveraging that data further.

“We are starting a new chapter in our company’s journey,” says Legal. “There is a thirst for information across the company. For example, more people are asking how we can use business intelligence. Right now, we are stepping into that zone where we can analyze the information we have.”

*The trademarks Cirque du Soleil, Mystère, Zarkana, IRIS, Varekai, Corteo, and Michael Jackson: THE IMMORTAL World Tour are owned by Cirque du Soleil and used under license.

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