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A transformational journey of five phases for the office of finance

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A transformational journey of five phases for the office of finance

How Laing O’Rourke streamlined its financial processes by replacing multiple legacy systems with a single corporate performance management solution 

By Rupert Madath, Delivery Services Director, EOH UK

Rupert Madath

Rupert Madath

With locations in the UK, Australia, Hong Kong, Canada and the Middle East and 15,000+ employees, Laing O’Rourke is a client-centric organisation that designs and delivers complex engineering and construction solutions for customers across a broad spectrum of project types in the building, infrastructure and natural resources sectors.

Prestigious projects include London 2012 Olympic Park, Heathrow Terminal 5, Hinkley Point C, The Leadenhall Building (Cheesegrater), Australia Pacific LNG Facilities, Al Raha Beach in Dubai, Liverpool Street Crossrail station and Hong Kong Mass Transit Rail.

Time for change

For years Laing O’Rourke (LOR) had been managing its group financial consolidation with PwC’s CLIME system but, in 2011,it was felt that thiswas aging and unstable and not keeping up with the demands for speed and scalability that the finance team needed. LOR was over-relying on Excel to complete critical business processes that required a lot of manual interaction. The system was also slow and cumbersome when responding to business changes and offered limited reporting and analytics capabilities. Last but not least, the old system worked in GBP only rather than multicurrency and did not include an inter-company reconciliation tool.

LOR decided that the company’s consolidation system needed an upgrade and embarked on a journey that would transform how the finance team analyse and report data.

What started as a simultaneous statutory and group management consolidation implementation developed into five distinct project phases over the course of a transformational six-year period.

In August 2011, LOR settled on the need for a single system to manage all its existing and anticipated financial consolidation and forecasting needs.

“The finance team wanted a consolidation system that would also be a strategic planning, advanced reporting and analytics tool that would facilitate faster access to data and make financial processes more efficient. We wanted both management and users to feel they could fully trust the data and processes,” said Graham Pattison, LOR’s FP&A Systems Manager.

LOR’s goal was to achieve refined financial processes as part of a phased implementation.

The solution – a technology-led financial transformation journey of five phases

Once requirements were agreed, the finance team began looking at solutions offered by corporate performance management suppliers and, following an exhaustive competitive tender with Tier 1 consolidation vendors, selected CCH Tagetik’s CPM system.

“CCH Tagetik’s key selling point was that its CPM solution is extremely user friendly and flexible enough to provide consolidation, budgeting, forecasting and bespoke solutions using out of the box functionality,” said Pattison. “We also wanted a system that could deal with complex solutions with simplicity and that finance could maintain and support without continuous reliance on IT and consultants.”

Once the vendor had been selected, LOR needed an implementation partner and EOH demonstrated the technology expertise, consulting and knowledge transfer skills LOR was looking for.

Phase 1 – Statutory and group management consolidation

LOR has two distinct consolidations: an annual, statutory consolidation of legal entities that produces consolidated group statutory accounts, and a group management consolidation that simultaneously looks at actuals and forecasting. As part of LOR’s statutory process, the two consolidations need to be reconciled at year-end.

“We kicked off the more complicated management accounting project in November 2011 and went live in May 2012. While we were about two thirds of the way through, we began incorporating the statutory accounting phase. That took 6 to 7 weeks to implement which allowed us to be ready for our March 2012 year-end.”

The LOR finance team configured the entire statutory accounting phase with EOH guiding and advising them.

The management accounting process needed more design input from the implementation partner to support LOR’s specific requirements. LOR had a number of ‘laingorourkeisms’ where things are reported in a way that requires bespoke design.LOR worked collaboratively with the vendor and implementation partner to find solutions.

Phase 2 – Streamlined tax calculation process

In March 2013, the journey continued with the financial tax pack implementation.

LOR wanted to streamline its existing tax calculation and submission process and for the tax numbers to automatically feed into group consolidation sitting in the CPM platform.

“EOH incorporated tax submissions into the statutory consolidation by integrating a bespoke Excel pack into the CPM statutory application.Prior to year-end, the tax team input bespoke tax data directly into CCH Tagetik.  At year end, the pack combines the statutory consolidation and tax data, calculates the tax entries and posts the outputs directly back into the statutory consolidation,” continued Pattison. “The CPM solution process portal caters for submission and lockdown for accounting and tax separately. The CPM platform emails the tax team to inform them when an accountant has performed a late adjustment which ensures that accounting and tax are in sync and provides significant efficiencies”.

Phase 3 – Long-term contract forecasting

In January 2015 LOR completed working on yet another bespoke application, long-term contract forecasting.

“We are a long-term contracting business and have to forecast costs and calculate margin at any given point in the contract life.Until then,LOR had used an old SAP BW solution that we no longer had the in-house skills to manipulate properly. Our implementation partner helped us build a whole new contract forecasting system within the CPM solution. The long-term contract data application now feeds the management accounts application so that everything sits in one single solution.”

The long-term contract forecasting project not only replaced legacy systems; it also enabled LOR to automatically extract its financial data from CCH Tagetikand utilise it within the Data Warehouse and other external reporting solutions for non-CCH Tagetik users on a timely basis.

Phase 4 – Budgeting

LOR’s management accounts consist of a monthly 5-year forecast that is compared to the previous forecast every month. But the company also wanted to start collecting separate fixed budget versions that they could also use for comparison. In March 2017 the finance team decided to create an additional data entry process to collect the budgets on the same basis as the management accounts. “This project was incredibly straight forward because this functionality was out-of-the-box within the CPM solution. Something that could have taken six months was achieved in six weeks instead, with the majority of the effort being collaborative LOR and the implementation partner’s design work and testing.”

Phase 5 – Cash flow planning/liquidity forecasting

This is an ongoing phase which will allow the company to efficiently manage short term liquidity by forecasting and analysing direct cash flows. Pattison expects the project to be finalised by mid-2018, it’s just a matter of final testing, UAT and roll-out.

Business impact

Since deploying CCH Tagetik with EOH, LOR financial processes are much more streamlined. “We previously needed accountants to do tasks that are now performed by the CPM solution. Currently the team can focus on more value-added activities like better analytics and decision-making – and everyone has increased confidence in reporting and analysis.”

LOR’s finance team are far less reliant on IT and consultants, which means they are much more reactive to business change. The team can analyse a piece of information in a heartbeat whereas before it could take days.

“Reflecting on the different projects, the financial and management accounts were really about replacing and improving existing systems but the new tax process and long-term contract forecasting are where the major added value is seen. The projects resulted in significant effort reduction and improved the decision-making process making a real difference to LOR’s business”.

The tax pack project changed complicated, risky, resource intensive procedures into a click of a button that allowed the team to focus on tax management rather than the process itself. It also guarantees that robustness LOR wanted and needed.

What’s next?

LOR’s finance team has a number of other operational projects to implement in the future, the collection of non-financial data being one of them. The team also wants to incorporate individual subsidiary statutory accounts into the CPM solution that can cater for any differences to the group consolidation. EOH consultants will be key partners in these future phases because they know LOR’s processes inside-out and are best placed to add real value to the ongoing development.

Conclusion

LOR’s finance team couldn’t do what they do now with their old systems. And having an implementation partner who understands exactly what you want from the start and who recognises the context in which you are trying to implement is key as it will keep the total cost of ownership low and enable self-sufficiency. This is crucial as it allows rather complicated solutions to be implemented straight-forwardly by finance people without the need to hire expensive IT consultants.

It’s been a long, transformative journey that has helped LOR become more visionary with the use of technology. And it’s left LOR wanting for more, keen to learn what else they can do with the CPM system.

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ECB launches small climate-change unit to lead Lagarde’s green push

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ECB launches small climate-change unit to lead Lagarde's green push 1

FRANKFURT (Reuters) – The European Central Bank is setting up a small team dedicated to climate change to spearhead its efforts to help the transition to a greener economy in the euro zone, ECB President Christine Lagarde said on Monday.

Lagarde has made the environment a priority since taking the helm at the ECB, taking a number of steps to include climate considerations in the central bank’s work as the euro zone’s banking watchdog and main financial institution.

She is now creating a team of around 10 ECB employees, reporting directly to her, to set the central bank’s agenda on climate-related topics.

“The climate change centre provides the structure we need to tackle the issue with the urgency and determination that it deserves,” Lagarde said in a speech.

She said that climate change belonged in the ECB’s remit as it could affect inflation and obstruct the flow of credit to the economy.

The ECB said earlier on Monday it would invest some of its own funds, which total 20.8 billion euros ($25.3 billion) and include capital paid in by euro zone countries, reserves and provisions, in a green bond fund run by the Bank for International Settlement.

More significantly, ECB policymakers are also debating what role climate considerations should play in the institution’s multi-trillion euro bond-buying programme.

So far the ECB has bought corporate bonds based on their outstanding amounts but Lagarde has said the bank might have to consider a more active approach to correct the market’s failure to price in climate risk.

“Our strategy review enables us to consider more deeply how we can continue to protect our mandate in the face of (climate) risks and, at the same time, strengthen the resilience of monetary policy and our balance sheet,” Lagarde said.

(Reporting by Balazs Koranyi; Editing by Francesco Canepa and Emelia Sithole-Matarise)

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What to expect in 2021: Top trends shaping the future of transportation

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What to expect in 2021: Top trends shaping the future of transportation 2

By Lee Jones, Director of Sales – Grocery, QSR and Selected Accounts for Northern Europe at Ingenico, a Worldline brand

The pandemic has reinforced the need for businesses to undergo digital transformation, which is pivotal in the digital economy. In 2020, we saw the shift to online and cashless payments accelerated as a result of increased social distancing and nationwide restrictions.

The biggest challenge on all businesses into 2021 will be how they continue to adapt and react to the ever changing new normal we are all experiencing. In this context, what should we expect this year and beyond, in terms of developments across key sectors, including transport, parking and electric vehicle (EV) charging?

Mobility as a service (MaaS) and the future of transportation

Social distancing and lockdown measures have brought about a real change in public habits when it comes to transportation. In the last three months alone, we have seen commuter journeys across the globe reduce by at least 70%, while longer-distance travel has fallen by up to 90%. With it, cash withdrawals for payment has drastically reduced by 60%.

Technological advancements, alongside open payments, have unlocked new possibilities across multiple industries and will continue to have a strong impact. Furthermore, travellers are expecting more as part of their basic service. Tap and pay is one of the biggest evolutions in consumer payments. Bringing ease and simplicity to everyday tasks, consumers have welcomed this development to the transport journey. In-app payments are also on the rise, offering customers the ability to plan ahead and remain assured that they have everything they need, in one place, for every leg of their journey. Many local transport networks now have their own apps with integrated timetables, payments, and ticket download capabilities. These capabilities are being enabled by smaller more portable terminals for transport staff, and self-scanning ticketing devices are streamlining the process even further.

Lee Jones

Lee Jones

Ultimately, the end goal for many transport providers is MaaS – providing an easy and frictionless all-encompassing transport system that guides consumers through the whole journey, no matter what mode of travel they choose. Additionally, payment will remain the key orchestrator that will drive further developments in the transportation and MaaS ecosystems in 2021. What remains critical is balancing the need for a fast and convenient payment with safety and data privacy in order to deliver superior customer experiences.

The EV charging market and the accelerating pace of change  

The EV charging market is moving quickly and represents a large opportunity for payments in the future. EVs are gradually becoming more popular, with registrations for EVs overtaking those of their diesel counterparts for the first time in European history this year. What’s more, forecasts indicate that by 2030, there will be almost 42 million public charging points deployed worldwide, as compared with 520,000 registered in 2019.

Our experience and expertise in this industry have enabled us to better understand but also address the challenges and complexities of fuel and EV payments. The current alternating current (AC) based chargers are set to be replaced by their direct charging (DC) counterparts, but merchants must still be able to guarantee payment for the charging provider. Power always needs to be converted from AC to DC when charging an electric vehicle, the technical difference between AC charging and DC charging is whether the power gets converted outside or inside the vehicle.

By offering innovative payment solutions to this market segment, we enable service operators to incorporate payments smoothly into their omnichannel customer experience that also allows businesses to easily develop acceptance and provide a unique omnichannel strategy for EV charging payments. From proximity to online payments, it will support businesses by offering a unique hardware solution optimized for PSD2 and SCA. It will manage both near field communication (NFC) cards and payments from cards/smartphones, as well as a single interface to manage all payments, after sales support and receipt with both ePortal and eReceipts.

Cashless options for parking payments

The ‘new normal’ is now partly defined by a shift in consumer preference for cashless, contactless and mobile or embedded payments. These are now the preferred payment choices when it comes to completing the check-in and check-out process. They are a time-saver and a more seamless way to pay.

Drivers are more self-reliant and empowered than ever before, having adopted technologies that work to make their life increasingly efficient. COVID-19 has given rise to both ePayment and omnichannel solutions gaining in popularity. This has been due to ticketless access control based on license plate recognition or the tap-in/tap-out experience, as well as embedded payments or mobile solutions for street parking.

These smart solutions help consider parking services more broadly as a part of overall mobility or shopping experience. Therefore, operators must rapidly adapt and scale new operational practices; accept electronic payment, update new contactless limits, introduce additional payments means, refund the user or even to reflect changing customer expectations to keep pace.

2021: the journey ahead

This year,  we expect to see an even greater shift towards a cashless society across these key sectors, making the buying experience quicker and more convenient overall.

As a result, merchants and operators must make the consumer experience their top priority as trends shift towards simplicity and convenience, ensuring online and mobile payments processes are as secure as possible.

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Opportunities and challenges facing financial services firms in 2021

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Opportunities and challenges facing financial services firms in 2021 3

By Paul McCreadie, Partner at ECI Partners, the leading growth-focused mid-market private equity firm

Despite 2020 being an enormously disruptive year for businesses, our latest Growth Index research reveals that almost three quarters (74%) of mid-market financial services companies remained resilient throughout the pandemic.

This is positive news, especially when taking into account the economic disruption that financial services firms have had to go through since the crisis began. No doubt 2021 will also hold its own challenges – as well as opportunities – for firms in this sector.

Challenges outlook

Unsurprisingly, the biggest short-term concern for financial firms for the year ahead involved changing pandemic guidance, with 42% citing this as a top concern. With the UK currently experiencing a third lockdown many financial services businesses will have already had to adapt to rapidly changing guidance, even since being surveyed.

Businesses will also be considering the need to invest in working from home operations, and there may be uncertainty over re-opening offices on a permanent basis.  According to the research 30% of financial services firms are planning to adopt remote working on a permanent basis, so decisions need to be made now about whether they invest more in enabling staff to do this, or in their current office premises.

Due to Brexit, UK financial services firms are no longer able to passport their services into Europe, which may cause problems, particularly in the next 12 months as the Brexit deal is ironed out and the agreement is put into practice. Despite this, Brexit was only cited by 24% of financial firms as a short-term concern. While it’s comforting to see that UK financial firms aren’t hugely concerned about Brexit at this juncture, it is going to be vital for the ongoing success of the industry that the UK is able to get straightforward access to Europe and operate there without issue, otherwise we may see these concern levels rise.

Looking ahead to longer-term concerns for financial services businesses, the top concern was global economic downturn, of which 40% of firms cited this as a worry when looking beyond 2021.

Investing and adopting tech

Traditionally, the financial services sector has been slow to adopt digital transformation. Issues with legacy systems, coupled with often large amounts of data and a reluctance to undertake potentially risky change processes, have meant many firms are behind the curve when it comes to technology adoption. It’s therefore promising to see that so much has changed over the last year, with 45% of financial services firms having invested in AI and machine learning technology – making it the top sector to have invested in this space over the last 12 months.

One business that exemplifies the benefits of investing in machine learning is Avantia, the technology-enabled insurance provider behind HomeProtect. The business has undergone a large tech transformation in the last few years, investing in an underlying machine learning platform and an in-house data science team, which provides them with capabilities to return a quote to over 98% of applicants in under one second. This tech investment has allowed them to become more scalable, provide a more stable platform, improve customer service and consequently, grow significantly.

This demonstrates how this kind of tech can help businesses to leverage tech in order to offer a better customer experience, and retain and grow market share through winning new customers. This resilience should combat some of the concerns that firms will face in the next year.

Additionally, half (51%) of financial services firms have invested in cybersecurity tech over the last year, which allows them to protect the platforms on which they operate and ensure ongoing provision of solutions to their customers.

International resilience

Clearly, there is a benefit of international revenues and profits on business resilience. In practice, this meant that businesses that weren’t internationally diversified in 2020 struggled more during the pandemic. In fact, the businesses considered to be the least resilient through the 2020 crisis were three times more likely to only operate domestically.

Perhaps an attribute towards financial services firms’ resilience in 2020, therefore, was the fact that 53% already had a presence in Europe throughout 2020 and 38% had a presence in North America. This internationalisation gave them an advantage that allowed them to weather the many storms of 2020.

Looking at how to capitalise on this throughout the rest of 2021, half (51%) of are planning overseas growth in Europe over the next 12 months, and 43% in North America. Further plans to expand internationally is not only a good sign for growth, but should further increase resilience within the sector.

Conclusion

While there are many concerns, the fact that financial services businesses are investing in technology like AI and machine learning, as well as still planning to grow internationally, means that they are providing themselves with the best chances of dealing with any upcoming challenges effectively.

In order to maintain their growth and resilience throughout the next 12 months, it’s imperative that they continue to put their customers first, invest in technology and remain on the front foot of digital change.

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