City of Jyväskylä shapes up its financial reporting

Increasing transparency with help from IBM

Published on 17-Feb-2012

Validated on 16 Aug 2013

"We can easily access all the financial information. Since the reports also include budget comparison figures, each supervisor can monitor whether we have used too much money or are staying within the budget." - Olga Ukkonen, Financial Manager, Kylän Kattaus

Customer:
City of Jyväskylä

Industry:
Government

Deployment country:
Finland

Solution:
BA - Business Analytics, BA - Business Intelligence, Information Integration, Optimizing IT

IBM Business Partner:
Pro Info Kuparinen

Overview

The city of Jyväskylä has improved its financial reporting, monitoring salary payments and cost accounting of some service areas using an IBM Cognos solution. The city is now able to get transparent, real-time financial information without external consultation services.

Business need:
The city of Jyväskylä needed faster and more accurate financial reporting and payroll monitoring. Jyväskylä wanted a reporting solution that it could manage by itself without help from expensive external consultants. According to users inside city of Jyväskylä, the existing business intelligence solution from SAP did not offer suitable tools for this.

Solution:
The city decided to extend its use of IBM Cognos 8 software, which was already being used by the social and health care services, to handle financial reporting. The same solution was also used to monitor payroll and provide more accurate cost accounting for some service areas.

Benefits:
The city is now able, without external help, to access faster and more accurate financial reporting. For example, a primary school principal is able to click a button and see the school’s financial situation in real time. The solution has made monitoring staff-related costs – the biggest single expense – more accurate. In addition, it has enabled the city to price healthcare services based on actual expenses at unit level, and monitor internal catering company right down to the level of individual kitchens.

Case Study

The city of Jyväskylä has improved its financial reporting, monitoring salary payments and cost accounting of some service areas using an IBM Cognos solution. The city is now able to get transparent, real-time financial information without external consultation services.

In the past, the city of Jyväskylä used business intelligence software from SAP for financial reporting, but according to the application specialist Ulla Rautiainen, this solution did not have the tools required to enable the city to be self-sufficient in producing reports.

“We needed to use external solution providers to help us create reports. Getting the information to the reports, especially from external sources, was difficult and expensive,” she says.

The city’s social and healthcare services were already using IBM Cognos software, so it decided to improve financial reporting by extending its use and by upgrading to a new version.

With the help of Pro Info Kuparinen, an IBM Business Partner, the extension of the solution was completed much faster than expected, Rautiainen says. “We started the project in spring 2009, and by the start of 2010 the basic financial reporting function was already in full use.”

Basic reports are run every night, so the users receive real-time information about their unit’s financial situation. The report shows, amongst other things, the annual budget, current actual spend and percentage spend against the budget, as well as comparison figures for the previous year.

“For example, a primary school principal is able to click a button and see the school’s financial situation and how much money is left,” says Rautiainen.

Better and faster information
The new solution is already producing financial reports at cost level for most of the city’s service areas and units. For the top management, the system produces reports at a consolidated level about the financial situation in all service areas.

Information from the city’s payroll system is also transferred into the Cognos solution. Previously, each service area had to request information about its salary costs from payroll clerks in the finance team, but now salary payments can be monitored using Cognos reports.

Rautiainen comments: “The solution has brought transparency to the payroll department and has defined a standard way to monitor staffing costs. This is the city’s biggest single expense, so monitoring it effectively can only be a good thing.”

Rautiainen thinks that one particular benefit of Cognos is the way it automates the reporting process. The reports are created significantly faster, and they now include comparison figures from the previous year, which was not possible before. Above all, Rautiainen says, the city is now self-sufficient in reporting, which saves a lot of money.

Giving kitchens greater insight into their financial situation
The Cognos solution has enabled the creation of activity-based costing reports for the city’s internal catering service, Kylän Kattaus. It enables managers and supervisors to monitor the financial situation of their kitchens on a monthly basis, across four central kitchens, 90 service kitchens and ten preparatory kitchens.

“We can easily access all the financial information,” says Olga Ukkonen, the financial manager of Kylän Kattaus. “Since the reports also include budget comparison figures, each supervisor can monitor whether we have used too much money or are staying within the budget.”

In this solution, Kylän Kattaus allocates administrative costs to the central and service kitchens in proportion to their staffing costs. Next, the central kitchen costs are divided between the service kitchens in proportion to their revenue. The preparatory kitchens, which make their own food and therefore do not use the central kitchens, receive the administrative costs but not the central kitchen costs.

In addition to the kitchen-specific reports, the solution produces reports about Kylän Kattaus for the city’s catering service managers. All reports are also available for all staff on the Kylän Kattaus intranet.

In the near future, information about the number of meals that have been sold will be transferred from Kylän Kattaus’s electronic ordering system into the Cognos system. “When this data is combined with existing information about costs, salaries and numbers of personnel, we will be able to calculate various key performance indicators and even use this information when we are pricing the meals,” says Ukkonen.

Pricing healthcare services in line with costs
The city’s social and healthcare services have deployed an IBM Cognos solution which will be used to calculate prices for each type of activity based on the actual outputs of each health centre, hospital, child health clinic, oral health clinic, or other healthcare facility. Activities, in this context, include visits to doctors, nurses and other healthcare personnel, days spent as an in-patient in a ward, and so on.

The solution will allocate the costs of administrative and support services (such as technical services, equipment maintenance and cleaning) to the activities themselves. “We have never had this kind of accurate activity-based pricing before,” says financial services manager Riitta Helins. “We also receive the information much faster than we used to.”

According to Helins, with the help of unit-specific prices based in the actual outputs, Jyväskylä will be able to invoice Muurame, Hankasalmi and Uurainen (the other municipalities in a new co-operative area that was founded in the beginning of 2011) according to the actual overall cots.

Equally, the city’s decision-makers will also be able to use the solution in various ways – for example, to analyse the causes of variations in the pricing of activities at different health centres and find methods to increase operational efficiency.

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Products and services used

IBM products and services that were used in this case study.

Software:
Cognos Business Intelligence

Legal Information

© Copyright IBM Corporation 2012 Oy International Business Machines Ab PL 265 00101 Helsinki Finland Produced in Finland February 2012 IBM, the IBM logo, ibm.com, and Cognos are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of other IBM trademarks is available on the Web at “Copyright and trademark information” at www.ibm.com/legal/copytrade.shtml. Other company, product or service names may be trademarks, or service marks of others. References in this publication to IBM products, programs or services do not imply that IBM intends to make these available in all countries in which IBM operates. Any reference to an IBM product, program or service is not intended to imply that only IBM’s product, program or service may be used. Any functionally equivalent product, program or service may be used instead. All customer examples cited represent how some customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics will vary depending on individual customer configurations and conditions. IBM hardware products are manufactured from new parts, or new and used parts. In some cases, the hardware product may not be new and may have been previously installed. Regardless, IBM warranty terms apply. This publication is for general guidance only. Photographs may show design models.