In virtually every company, the budgeting process can be, to varying degrees, cumbersome and tedious. In fact, a large percentage of the people responsible for budget planning probably wish they could wave a magic wand, say the magic word, and pull an accurate, comprehensive budget out of a hat like the proverbial rabbit.

At the Pharmaceutical Division of Bayer Corporation in West Haven, Connecticut, they don’t have a magic wand. They do, however, have a Wizard. Not the kind that you’re likely to read about in a fairy tale. This wizard - appropriately named the Planning Wizard - is a high-tech, web-based tool that allows managers at the company’s 900+ cost centers to create yearly budget plans with a level of speed, accuracy and efficiency that they’ve never experienced before. What’s more allows for seamless communication between the Pharmaceutical Division’s North American headquarters in West Haven - and its sister facilities in Clayton and Raleigh, North Carolina; Berkeley, California; and corporate headquarters in Leverkusen, Germany.

But that only scratches the surface of the system’s benefits. The Planning Wizard has effectively integrated cost center budgeting with capital and headcount planning (a particularly crucial element in Bayer’s planning process). This integration eliminated redundant data entry and dramatically streamlined the planning process. Furthermore, the system produces management-level reports that are easy to read and easy to incorporate into the company’s existing decision-support process.

This sophisticated, intuitive system has done much to augment the company’s planning process. As a replacement to the previous budgeting system - a paper-based system that used Excel spreadsheets and required manual input by the cost center managers - it not only helps reduce costs and maximize profits, it offers a user-friendliness that virtually all cost center managers have quickly embraced.

"We decided early on that ease of use would be a critical factor in any new system", explained the project manager for Business Planning and Financial Systems. "While some of our cost center managers have accounting expertise, these people are also doctors, salespeople, and research scientists. Their accounting and budgeting expertise, in many cases, was limited. Plus, as we grew to more than 900 cost centers, the data entry process, understandably, became more difficult."

"Essentially, we needed a system to produce easily scan able reports that would convey the management level information our people need in a rapid, user-friendly fashion." Moreover, there was a need to more tightly integrate business processes and the planning system, thus enabling cost center managers - all senior-level managers and above - to capture, create, or contribute to cross-functional, strategic planning issues, and to alleviate redundant data entry.

In the most simple terms, the need arose for a system that could accommodate the extraordinary growth - and the corresponding growth in the volume of data - of the Pharmaceutical Division of Bayer Corporation, one of the primary business groups in the Health Care segment, which is one of four major business segments that make up the Bayer conglomerate.  It was agreed that the Planning Process must be redesigned.

The complexity of the Planning Process required the redesign to have a focused, methodical approach, which encompassed three separate project teams: the BReW (Business Reorganization Workshop) Crew, the BPR (Business Planning Redesign) Core Team, and the BPR Design and Implementation Team. The role of the BReW Crew was to develop and implement a redesign concept, gain approval by the Pharmaceutical Management Committee, and convert those concepts and processes into practical application in the Planning Process. Subsequently, the BPR Core Team, comprised of nine people - most at the vice president level - not only provided validation and enhancements but also helped to expand ownership of the planning process redesign beyond the Finance organization. The concept of establishing a planning baseline, as well as reviewing activity changes and new projects, was validated and embellished by the BPR Core Team. Lastly, the BPR Design and Implementation Team was charged with converting the concepts, processes and flows into a system in under four months. The details were developed concurrently with the process of defining a system platform, desktop requirements, and rollout methods to over 500 users across four sites.

Through the development and implementation of the Planning Wizard, cost center managers were provided with an effective desktop tool that allows access from multiple sites, provides transparency to information with a user-friendly front end, and enables line management to plan for and manage their cost centers. And as a result, the Pharmaceutical Division of Bayer Corporation has one of the first-ever, web-enabled planning applications to streamline the Planning Process and ultimately make the cost center managers responsible for both planning and executing results. Plus, the audit trail creates full accountability in the system.

The system, it should be noted, has definite "personality." It features an actual wizard icon - a colorful, playful character - whose presence helps liven up the work screens. Other creative graphics not only add more color but also help guide the user through the budgeting process. In addition, it makes the system less intimidating to the non-accounting-oriented mangers who use it.

The "guts" of the system consists of an IBM RS 6000 server, located in the West Haven facility, running Oracle® 8i and containing several million records. Having information in the Oracle database, according to project manager, "lets us ‘slice and dice’ the information as many ways as we want." The system also incorporates a firewall-protected intranet server, which subsequently feeds information to the Oracle server/data warehouse and then on to a Hyperion system for further reporting. Additional systems have been incorporated on the back end for reporting purposes, including an SAP Business Information Warehouse (BW) .

Users access their planning information via Bayer’s corporate intranet from any of the company’s North American locations or its German headquarters. The web-based aspect was chosen due to the ease of distribution of applications over the Internet. The application-design criteria required a user-friendly approach in aiding non-financial cost center managers to prepare, analyze and change their own budgets and to reinforce the concept of "ownership" and "empowerment" in the Planning Process. A high level of security has also been built into the system, with access to sensitive areas such as payroll properly restricted.

The new system has been instrumental in reducing system redundancy, eliminating the AMBS system for manpower planning, an Alpha 4 application, various templates, a complete salary database, and an initiatives database.  The front-end delivery mechanism is arcPlan’s inSight/dynaSight, which is a flexible analysis tool that allows point-and-click easy of use.

"inSight/dynaSight inherently offers the flexibility and functionality to create analytical applications for corporate-wide distribution," explained arcplan’s representative. "However, a successful system must also allow the users to effortlessly create processes and logic that can subsequently be applied to their everyday decision-support tasks".  Bayer has empowered their cost center managers to take control of budgeting, capital and headcount planning through the user-friendly Planning Wizard. "Thus, an otherwise loathsome task has been transformed into the basis by which all budgetary considerations are made within the group, all in a timeframe that would paralyze most project staffs."

Amazingly, the project was implemented, start to finish, in a scant nine weeks. This included not only the development of the inSight/dynaSight-based Planning Wizard but the implementation of the back-end. The short timeframe for implementation of the system was part of the reason that inSight was chosen as the preferred front-end tool. "We were convinced that we couldn’t have met the time requirements with any other front-end tool." said Ellis Williams, a principal partner in the firm of Williams & Partner, the management consultant called in to create the Planning Wizard. "In fact, we started developing the system in January, and data was being input in April. inSight’s ease of implementation enabled us to get the entire system up and running in the nine-week timeframe that we had; no other system would have allowed us to do that."

The interface of inSight/dynaSight with the back-end system was also a key element in the purchase decision. "inSight/dynaSight works very well with the back-end," said Williams. "We chose inSight in part because of its flexibility. We knew that no matter what type of server we employed, inSight would interface with it to give us the highest level of functionality possible." 

inSight also excels because of its multitude of performance features such as corporate-wide applications, short development times, and Internet /intranet capability - all important considerations in the development of the Planning Wizard.
After going through the first budgeting cycle, Bayer examined ways to refine it, a relatively easy task given inSight’s dynamic character and flexibility.
"We made major functionality improvements," said the project manager. "For instance, in the first year the budget system would only make automatic compensation adjustments for salaried personnel. In the second year this was expanded to included automatic compensation adjustments for wage earners as well."
The benefits of the system have been substantial. Besides the overall improvement of the planning process, the company has realized an estimated savings of $2 million per year. In addition, the project manager said, managers can now "seasonalize" budgets - inputting information on a monthly basis - for greater accuracy and more precise decision making.  Further, the amount of time managers actually spend on the computer, as well as the time handling paper, is greatly reduced, not to mention the cost of the paper itself. Plus, the system is updated every night, so the accuracy and timeliness of the information is assured.

According to the project manager, the Planning Wizard gives Bayer a significant advantage in the highly competitive pharmaceutical industry. "By making us watch costs - and helping us make a more rational allocation of resources - we believe we have an advantage over our competition," she said. "And it will grow more significant with each budgeting cycle."

Then, there’s the matter of Bayer’s core business objectives. Everything Bayer does must satisfy one or more of these objectives. The Planning Wizard helps satisfy five: increasing fiscal responsibility of management; assuring rational allocation of resources; ensuring consistency with strategic objectives; continuous improvement process; and improving Bayer AG’s profit margin.
"Just as important, the system’s ease of use ensures that cost center managers will actually use it", said the former Executive Vice President and President of the Pharmaceutical Division. "The key goal of the Planning Wizard was to provide a user-friendly system which would ensure that budget planning was carried out by all levels of cost center managers, thus increasing financial responsibility across the whole division."

The project manager summed up the system’s benefit succinctly: "Under the old system, the budgeting and planning rules were not being enforced," she said. "The new system has brought a new level of discipline to the planning and budgeting process, as well as a new level of confidence that can be credited to the way that the system has been accepted by our users."

Not quite magic out of a hat, but pretty impressive by any standard.

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Copyright: Williams & Partner, 2004