AGAPLESION automates planning for 100 companies with IBM Cognos Planning

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AGAPLESION is one of the biggest Protestant providers of public health services in Germany. Incorporated on the 26th of June, 2002 in Frankfurt am Main, Germany, AGAPLESION is a public utility that in partnership with Christian and social enterprises operates hospitals, residential and nursing facilities, and training centres. There are more than 80 facilities in the group, including 22 hospitals with 5,000 beds, residential and nursing facilities with 2,800 places, 800 assisted living flats, four hospices, five medical care centres, five ambulance services, 12 nursing schools and an academy.

AGAPLESION employs about 12,000 people, and the combined annual turnover of all the group companies amounted to approximately €620 million in 2009.

Experience with IBM Cognos performance management
AGAPLESION has been using IBM Cognos solutions since 2006 for intelligent performance management of its numerous facilities. AGAPLESION uses IBM Cognos Business Intelligence to create reports and analyses, and consolidates data from 100 or so facilities using IBM Cognos Controller. In the future, AGAPLESION plans to use IBM Cognos Metrics Studio to provide supervision and analysis of important company metrics within a scorecarding environment.

Sebastian Polag, head of AGAPLESION’s business controlling, emphasises two specific advantages of the IBM Cognos solutions: “Our affiliated companies use a huge number of different applications for their business management. With the IBM Cognos solutions it is very simple to integrate heterogeneous data from these companies within a uniform format and uniform dimensions. The data then can be provided to the appropriate employees and executives for reports, evaluations and analyses. The IBM Cognos solution components link well to each other, which avoids time-consuming and error-prone media breaks.”

The IBM Cognos performance management solutions run on HP/Compaq servers in the Frankfurt computer centre under Microsoft Windows Server 2008 and Microsoft SQL Server. Users access the solutions via a Citrix terminal server application.

Comprehensive planning solution
Planning activities for the group companies was formerly carried out with the help of spreadsheets. Some of the AGAPLESION companies, primarily the dependent service companies, even completely renounced regular economic planning. The combination and consolidation of this huge number of spreadsheets was very time-consuming and error-prone. The annual planning process for each subsequent year occupied a number of employees, with some interruptions, for approximately four months.

The complexity of the process, the time needed and the lack of flexibility caused AGAPLESION to look for a way to manage the various planning processes within the group. The aim was to find a highly integrated solution which covered performance planning for income forecasts and cost planning and, subsequently, investment planning and maintenance planning. In the area of the performance planning, the new solution should be also able to fulfil the detailed requirements of the health insurance sector, in which the planned treatments due in subsequent year have to be agreed in advance.

Based on good experience of IBM Cognos solutions, AGAPLESION took the strategic decision to standardise its group solutions and procedures on IBM Cognos Planning. In fact, AGAPLESION already possessed a Cognos Planning license which had not been used so far.

Quick project success with CENIT AG
Following the decision, AGAPLESION entrusted CENIT AG, one of the most successful IBM Cognos partners in Europe, with project execution. The business management and industry-specific competence of the CENIT specialists, as well as their comprehensive experience of IT projects of different scales, enabled them to complete project within the specified time and budget.

Installation, integration, modelling and training in record time
Within approximately six weeks, the new Cognos Planning solution was installed and integrated with the Cognos applications already in use. The installation and basis modelling was completed by two CENIT consultants, who subsequently trained the AGAPLESION team.

Sebastian Polag is very contented with the smooth course of the project, and praises the excellent cooperation with CENIT: “The CENIT specialists showed very high technical competence. They quite obviously control the system, and we were immediately on the same wavelength.”

In the late summer of 2010, the installation was completed, and in October 2010 the new planning solution went live without requiring a test phase.

Polag explains the reasons behind good user acceptance of the Cognos solutions: “Because we have worked with IBM Cognos solutions for a long time in our company, employees got along easily with the new planning solutions. The work, which in the past was very laborious using spreadsheets, such as the detailed cost element planning and cost centre planning, has become quite simple with IBM Cognos Planning.”

Planning of performance, expenses and investments for 100 companies
AGAPLESION uses IBM Cognos Planning in three main areas: performance planning, cost planning and investment planning and maintenance planning.

For performance planning, the hospitals are obliged to report treatments planned for the following year to the health insurers, and to have them approved. For this purpose AGAPLESION carries out a detailed planning of their treatment and nursing activities for the following year, for example per functional department or - in the residential and nursing facilities - per residential area. The basis of this planning is usually built from historical profiles, containing past-year actual figures, which can be created with Cognos Planning by mouse click to pre-fill the tables for each kind of treatment. These basis figures can be adapted manually afterwards to consider foreseeable changes, for example an imminent head physician’s change or a planned annex. The pricing and summing up of treatments results in the planned total revenue.

For cost planning, AGAPLESION considers the consumables required for the next year, such as drugs, infusions, bandages, hip joint endoprostheses and syringes.

Investment and maintenance planning takes place in two steps. In the first step, an investment wish list is gathered from the departments of the group. Machines such as operating tables, medical and office equipment appear on the list, as well as planned building developments and maintenance.

The wish list is brought into Cognos Planning and worked on by the purchase department, which evaluates all items with an expected cost. In subsequent discussion with management, decisions are made on the investments in detail. Cognos Planning presents the list in a form which enables selection or de-selection of any and each item during the decision-making process. As the whole investment sum is evident any time, it is possible to stay within fixed budgets without requiring new calculations.

The results of the three planning processes flow into the profit and loss forecasting process. Expected income is derived from performance planning, projected expenses are used to create the cost data, and capital expenditure is generated from investment planning. In addition, other numbers contribute to profit and loss planning, such as personnel costs based on payroll applications and ERP data.

Polag explains the practical advantages of the Cognos-based planning process: “What is particularly useful in IBM Cognos Planning is the ability to enter plan values at all levels. Detailed figures are automatically summed up at the higher levels. Inputs at the upper aggregation levels can be distributed to the underlying single positions following automated distribution keys. For example, annual values can be automatically broken down into monthly or weekly positions.”

About twenty employees from the financial control, IT and central buying departments are intensive users of the new planning solution. Now, with IBM Cognos Planning the company’s group-wide planning of performance, expenses, investment and maintenance, as well as the profit and loss forecasting, can be successfully closed. All AGAPLESION companies have their own standardised business plans, consolidated with IBM Cognos Controller.

Flexibility, precision and enormous time saving
Instead of up to four months in the past, Polag estimates that AGAPLESION will be able to complete its planning process in just one month. Group-wide current and historical figures are available on a common database, and highly integrated applications enable company-wide performance management, encompassing planning, reporting, analysis, scorecarding and consolidation.

The result of the Cognos-based solution is a large reduction in manual effort, and huge time savings in the planning process. The previous time spent on error search, correction and consolidation of countless Excel spreadsheets has been eliminated, and the rising requirements of health insurers which want more information on the planning of medical and care facilities can be easily fulfilled with the new solution.

IBM Cognos Planning has integrated seamlessly into the existing IT landscape of AGAPLESION, and the company has a complete, group-wide performance management solution, offering significant business flexibility and an important competitive advantage.

New projects on the horizon
Polag foresees a number of additional tasks for Cognos Planning: “The execution of the planning for bigger projects, such as construction projects and liquidity planning, have already been taken into consideration. Because of the ease of use of Cognos Planning and our large experience of IBM Cognos solutions, we are now able to carry out such projects on our own behalf.”

In addition, AGAPLESION is considering further application possibilities with IBM Cognos: “We have found out that for certain activities we have reached the limits of our planning solution, because of the huge information volumes totalling some 25 million records. It would be desirable to introduce a deeper, more detailed level to the budget planning for the health insurers. We are considering solving these special cases with IBM Cognos TM1, which with its innovative in-memory processing can process huge amounts of data in near real-time.”

All in all, Polag is certain that with the standard group-wide IBM Cognos performance management solution, AGAPLESION will be able to master its future challenges.