Published on 11-May-2012
"IBM Cognos TM1 is the perfect complement to the SAP NetWeaver Business Warehouse. The solution allows analyses and plans to be created daily at the touch of a button, even where large volumes of data such as those handled globally by the Takeda Group are concerned." - Henrik Wirth, Head of Department Financial Reporting Systems, Takeda
Business Analytics, Business Integration, Business Performance Transformation, Information Integration, Performance Management
Takeda is a global pharmaceutical company focusing on research. The corporation is commercially active in the fields of metabolic diseases, gastroenterology, oncology, cardiovascular illnesses, disorders of the central nervous system, inflammatory diseases, disorders of the immune system, respiratory illnesses and pain management. Takeda is traditionally strong in North America, Japan and the rest of Asia; its global reach has been further boosted by Takeda’s position in Europe and by growing market shares in emerging markets.
Pharmaceutical companies are under ever-increasing cost pressure. Takeda needed a central solution for reporting and planning in order to improve the transparency and cost-efficiency, and achieve better profitability.
Takeda implemented SAP NetWeaver Business Warehouse, which collates financial data on a daily basis. This provided a platform for the company to introduce a central, web-based reporting and planning system based on IBM® Cognos® TM1®, which automates the entire reporting and planning process.
The new information system increases transparency in the fields of operations, production, sales and planning. Every day, heads of department and managers all over the world have access to the facts and figures they need to lower production costs, optimise sales processes, and improve productivity and profitability.
To read a German version of this case study, please click here.
Takeda is a global pharmaceutical company focusing on research. The corporation is commercially active in the fields of metabolic diseases, gastroenterology, oncology, cardiovascular illnesses, disorders of the central nervous system, inflammatory diseases, disorders of the immune system, respiratory illnesses and pain management. Takeda is traditionally strong in North America, Japan and the rest of Asia; its global reach has been further boosted by Takeda’s position in Europe and by growing market shares in emerging markets. Takeda is represented in over 70 countries, makes annual global revenues of approximately €15 billion, and is one of the world’s leading companies in the pharmaceutical sector.
Cost pressure on the rise
Over the past few years, cost pressure for pharmaceutical companies has been ratcheted up, particularly in the saturated markets of Europe, the USA and Japan. The process of developing innovative drugs is labour-intensive and expensive, whilst at the same time competition is intensifying and the cost pressure coming from health insurance companies is increasing. Growth rates are stagnating or falling. “Faced with the current market situation, pharmaceutical companies are focusing more and more on emerging markets such as Russia or Brazil,” explains Henrik Wirth, Head of Department Financial Reporting Systems at Takeda. “At the same time, Takeda had to deal with the challenge of lowering costs considerably, particularly on the European market.”
An eye to centralisation
Against this backdrop, the company decided around three years ago to realign its business operations in Europe. To start with, Takeda grouped the 25 European countries where it had representation into four business regions – or “hubs” – and set up a central shared service centre. All internal financial processes, such as accounting, are performed here and the financial figures are then loaded into a central SAP ERP system. By centralising its operational financial processes, the company reduced the number of redundant steps within those processes.
Closely linked to these operational restructuring measures was the realignment of financial reporting and planning. “We needed detailed business forecasts and a uniform planning and information system for the individual European countries, the European hubs, the commercial headquarters in Zurich and, in the medium term, the rest of the global sites too,” says Wirth. The specific goal was to automate the reporting and planning process in order to increase cost transparency, minimise the effort involved, lower costs and improve sales performance.
En route to a central database
Takeda (then under the name of Nycomed) took the first step in this project in mid-2009, when it implemented SAP NetWeaver Business Warehouse to act as a central data storage location. All the financial data from all the company’s subsidiaries and sites is collated into this warehouse every day from the SAP ERP system that is used all over the world. Sales, costs and other key financial figures are allocated in the SAP NetWeaver Business Warehouse for reporting in line with the company’s organisational structure. This information is then prepared and transferred automatically into a consolidation system (Oracle Hyperion Financial Management), which handles legal consolidation.
Takeda also required a central reporting and planning solution. Previously the company had used various reporting tools, including Oracle Hyperion Essbase. In addition, practically every national subsidiary had its own business intelligence system and numerous employees who were responsible for it. The planning process, too, was neither centralised nor automated.
“Following a short selection process, it was clear that IBM Cognos TM1 would be the ideal solution for us,” says Wirth. He adds: “With its in-memory OLAP technology, IBM Cognos TM1 has the power to centralise and accelerate the whole reporting and planning process – when it comes to performance, this software beats the solutions we used in the past hands down. At the same time, the web-based interface of TM1 Web offers controllers at the various sites the option of designing their own reports on a decentralised and individual basis, or entering planning data into the system,” explains Wirth. Last but not least, one of the attractions of IBM Cognos TM1 was that the solution featured an interface to SAP NetWeaver Business Warehouse – another reason not to have to rely on Oracle Hyperion Essbase in future.
Step by step towards a central information system
At the end of 2009, Takeda installed IBM Cognos TM1 and at the same time established a product data warehouse (PDW) for reporting purposes; the PDW contains all the drugs manufactured at product level. Cardiovascular drips, calcium capsules or painkillers are listed in various pack sizes and strengths – this list now runs to about 14,000 individual products in total. With the help of TM1, the individual production costs (direct costs) for each product are calculated in the PDW automatically. These figures form the basis for management reporting, as well as for cost and sales controlling.
The project team used this information to configure TM1 data cubes for the various different reporting and planning requirements, including one at management level that is used for reporting and company planning. This cube is filled with the actual data from the consolidation system as well as cost detail information from the PDW. In addition, the team modelled several reporting cubes that are filled with data from SAP NetWeaver Business Warehouse automatically and cover different reporting paths at country and hub level. By the start of 2011, the new information system was finally ready for use.
Information paths centralised successfully
With its new information structure based on SAP NetWeaver Business Warehouse and IBM Cognos TM1, the company has managed to centralise its reporting and planning process. What started out as a project for Nycomed alone now extends across the entire Takeda Group. “Thanks to IBM Cognos TM1, it was relatively straightforward to adapt the information system that had already been established to the extended structures,” says Wirth. “The centralisation has enabled the group to make considerable savings in terms of both effort and costs. In Europe alone we have been able to save on around 50 controllers. Furthermore, the significant annual licence costs we were paying for the previous reporting tool are no longer an issue.”
Today, around 500 managers, controllers and heads of department all over the world use the new solution for reporting and planning purposes. Users log on via the TM1 Web interface and either generate the sales and cost reports relating to their areas of responsibility or enter planning data into the system. According to Wirth: “This solution offers end users a range of reporting options – and, since they are already familiar with the integrated Excel interface, there is no need for lots of training.”
Cost transparency at the touch of a button
The Takeda Group can now improve cost efficiency whilst serving new, emerging markets better. Daily sales reports, for example, ensure that the necessary transparency is achieved: data from SAP NetWeaver Business Warehouse is available every day, having been updated overnight. Controllers all over the world can obtain an overview of the sales and costs for their areas of responsibility from the beginning of the month up until the previous day. Local management can see, for instance, that sales of a cardiovascular drug are falling, and they can then adapt the sales and production processes accordingly. Comparison reports can also be used to show in just a few clicks whether the monthly budget is being adhered to or whether it needs to be revised. In parallel, an order ticker that is updated every hour informs regional management about the order situation, and an automatically calculated run rate quantifies the performance of each subsidiary and region on each working day.
What’s more, every month around 3,500 standardised cost reports are e-mailed to those responsible for the cost centres around the world, thus playing their part in creating transparency within the individual subsidiaries. “IBM Cognos TM1 has significantly increased cost transparency. Every day, the responsible staff in various departments and market regions can see where they stand, what costs can be lowered and what products can be marketed better,” explains Wirth. “And the performance is really impressive, too. Working with practically identical volumes of data, the processing speed for reports has increased in some cases 100-fold compared to Oracle Hyperion Essbase.”
Planning data always under control
The company has also made a quantum leap in the field of planning. The entire group planning process now runs on IBM Cognos TM1 technology. Planning data is uploaded by the global subsidiaries via a web application and transferred to the TM1 planning cube automatically in the Zurich controlling headquarters. Henrik Wirth explains: “IBM Cognos TM1 offers us the opportunity to track planning objectives accurately at group level by assessing them at various estimate points throughout the year, as part of annual planning and in the context of five-year planning too. This enables the group to correct planning data flexibly and to distribute resources more precisely and efficiently.”
Further expansion stages are already in the pipeline, as Wirth explains: “In future we will tailor the planning process to local conditions even more. The main regions, that is North and South Asia, Russia, Europe, the Middle East, the USA and Latin America, will then use IBM Cognos TM1 to create and automate their own individual planning processes specifically customised to their particular needs.”
More opportunities, more savings
But the opportunities offered by IBM Cognos TM1 do not stop there. Henrik Wirth and his controlling team also use the solution in parallel for other projects. They have developed a transfer pricing module based on the TM1 technology, for example, which calculates the optimum internal transfer prices within the various group subsidiaries. To this end, IBM Cognos TM1 processes product data and actual figures from all the group subsidiaries. “The module is based on extremely complex operational relationships. It prevents unnecessary taxation costs from arising during internal exchanges or transfers of products, and saves the Group many millions of Swiss francs every year,” explains Wirth. “IBM Cognos TM1 offers incredible opportunities to transform and map complex structures of this type really quickly.”
About IBM Business Analytics
IBM Business Analytics software delivers actionable insights decision-makers need to achieve better business performance. IBM offers a comprehensive, unified portfolio of business intelligence, predictive and advanced analytics, financial performance and strategy management, governance, risk and compliance and analytic applications.
With IBM software, companies can spot trends, patterns and anomalies, compare “what if” scenarios, predict potential threats and opportunities, identify and manage key business risks and plan, budget and forecast resources. With these deep analytic capabilities our customers around the world can better understand, anticipate and shape business outcomes. For more information about IBM TM1 and Business Analytics please visit ibm.com/analytics
Products and services used
IBM products and services that were used in this case study.
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