IBM Accelerated External Reporting Solution

Bridging the gap for financial analytics with a ground-breaking, end-to-end solution for statutory and tax reporting

Published on 12-Jul-2013

"From an IT perspective, having a single, centralized solution for statutory and tax reporting is a huge step forward in protecting, controlling and managing this vital data." - Jon Correnti, Manager – Technology Enablement, IBM Finance IT

Customer:
IBM

Industry:
Computer Services

Deployment country:
United States

Solution:
BA - Business Analytics, BA - Business Intelligence, BA - Performance Management, BA - Risk Analytics, Big Data, Big Data & Analytics, Big Data & Analytics: Transform processes, Business Integration, Business Performance Transformation, Business Process Management (BPM)

Overview

For most companies, the need to file regular reports with financial regulators and tax authorities, and the gathering, amalgamation, analysis and reporting of data for each of the legal entities within their group, can often be a significant challenge.

Business need:
With a complex business model that operates in hundreds of locations and has varying legal entities from country to country, IBM wanted to cut the cost and complexity of its global statutory and tax reporting processes, while gathering the rich data it needs to enhance financial analytics.

Solution:
IBM has developed the IBM Accelerated External Reporting Solution, which provides a seamless end-to-end process for gathering and validating financial data and producing statutory and tax reports – quickly, accurately and with minimal manual effort. The solution is based on a combination of proven IBM technologies, which enables rapid, low-risk deployment.

Benefits:
The solution streamlines data-gathering and external reporting for both statutory and tax environments. It empowers financial analysts by eliminating manual work and supporting deep-dive analytics. It will potentially save millions of dollars annually on staffing, consultancy and audit costs for statutory reporting.

Case Study

Bridging the gap for financial analytics
For most companies, the need to file regular reports with financial regulators and tax authorities, and the gathering, amalgamation, analysis and reporting of data for each of the legal entities within their group, can often be a significant challenge.

For organizations of the size and complexity of IBM, which has over 900 legal entities across more than 170 countries worldwide, the challenge is a significant burden. Manual processing – typically relying on manipulating data in vast spreadsheets – creates a vast workload for accountants and carries a significant risk of introducing errors.

To continue to meet its growth targets and demonstrate compliance with ever-increasing regulatory and tax requirements, IBM needed a more effective and sustainable way to manage its accounting data from the annual or quarterly financial close through to the final filing of its statutory and tax reports.

Tighe Sefcik, Chief Financial Officer for the IBM® Cognos® software brand, explains: “There are solutions in IBM’s portfolio that provide very robust support for back-office finance processes such as consolidations and data modeling. And with the launch of IBM Cognos Disclosure Management and its ability to tightly integrate with our other finance analytics products, we now had the opportunity to build a solution that can help bridge the gap between the so-called ‘last mile’ of financial reporting and the typical planning, analysis and forecasting done in most organizations. Using our current suite of products, we saw that gap as an opportunity to not only transform external reporting for IBM, but also to bring an entirely new, innovative solution to market for our clients.”

Building an innovative end-to-end analytics platform
IBM formed a project team and steering committee that included stakeholders from its external reporting and tax departments, its finance IT department, and senior executives in finance positions across the company, as well as accountancy experts from one of the company’s largest alliance partners.

“The first priority was to gain greater control of our financial information by creating a robust process for gathering and storing data from all the relevant systems and contributors across the business, and automating the creation of the reports themselves as far as possible,” explains Sefcik. “This would give us a platform for more detailed and sophisticated analysis of the data in phase two of the project. In combination, both phases should deliver several million dollars in annual savings for both statutory reporting and tax.”

End-to-end financial analytics
The IBM Accelerated External Reporting Solution comprises a data warehouse built on IBM DB2® technology, which imports data from the company’s general ledger systems and transforms the figures into the legal entity structure necessary for both statutory and tax reporting. A set of web forms and workflows supports additional data collection from contributors across the global business, and IBM Cognos TM1® is used to adjust the data to meet specific local reporting requirements in different countries.

When the data is ready for filing, IBM Cognos Disclosure Management enables IBM analysts to produce the final reports quickly and easily – linking data from the Cognos TM1 model directly into the final report document. If the Cognos TM1 data gets corrected or updated during the report-writing process, Cognos Disclosure Management refreshes the figures in the draft document automatically – ensuring consistency and eliminating the need for hours of manual checking of each draft of the report.

Jon Correnti, Manager – Technology Enablement in the IBM finance IT team, comments: “The IBM Accelerated External Reporting Solution is based on a combination of very robust and well-integrated technologies, each of which has a strong pedigree in the finance sector; but they have never been linked together before in such an end-to-end way. From an IT perspective, having a single, centralized solution for statutory and tax reporting is a huge step forward in protecting, controlling and managing this vital data.”

Changing the game for statutory reporting
Christopher Gullotta, Director – IFRS Policy and Implementation and Statutory Reporting at IBM, has worked on some of IBM’s most complex and challenging statutory reporting situations in the past, and sees the IBM Accelerated External Reporting Solution as a game-changer for the business.

“The challenge with statutory reporting has always been two-fold. First, we have so many legal entities, and such a complex corporate structure, that getting the right data together used to be a laborious process. Second, the reporting standards themselves differ significantly in different countries, so it’s not possible to take a one-size-fits-all approach.

“The IBM Accelerated External Reporting Solution solves both of these issues: it gives us the data in the right structure for legal entity reporting, and it provides the tools to adjust it to local requirements and produce the reports themselves quickly and easily. Instead of huge, 30 or 40-tab spreadsheets being shared between 40 or more teams around the world and then consolidated manually, we have a single point of control and a much more automated process. It’s going to save us hundreds or even thousands of man-hours.”

By standardizing the process, the IBM Accelerated External Reporting Solution will also help to quickly identify and minimize local variations and differences in approach between different accountants in business units, wherever possible.

“There’s a general trend in statutory reporting towards globalization,” says Gullotta. “As the adoption and development of International Financial Reporting Standards [IFRS] continues, we hope to get to a point where we can provide report templates to all the different countries, so they won’t have to write their own individual reports from scratch any more.

“The IBM Accelerated External Reporting Solution process will also allow for a much higher level of management visibility over not only the statutory reporting workflow, but also the processes within the workflow. This visibility will allow us to make better decisions on staffing and execution.”

Enriching data for tax reporting
Michael Fleischer, Vice President – Global Tax Operations at IBM, also foresees significant benefits for his own department: “From a tax point of view, we usually start out with the same data as the statutory reporting team, so it makes perfect sense to have a single data warehouse that both departments can access. The IBM Accelerated External Reporting Solution should eliminate a great deal of duplication of effort and encourage much closer collaboration between our two teams.”

Cheri Rosenblatt, Global Tax Professional at IBM, adds: “To complete our tax reports, we often need to ask the business for supplemental information at a legal entity level. With the IBM Accelerated External Reporting Solution, we will be able to streamline the collection and consolidation of a significant volume of data. We can use the solution’s web forms and workflows to standardize our data collection process and use it to enrich the statutory reporting data automatically.”

Instead of requiring the tax team to keep track of individual spreadsheets sent by email, the IBM Accelerated External Reporting Solution provides a fully controlled, transparent and auditable process for data collection.

“We have full oversight of who is responsible for contributing the data for each legal entity, and whether they have sent the information we need,” says Rosenblatt. “This makes it dramatically easier to manage the whole process, because we can see exactly what is missing and who we need to contact.”

Mitigating risk and planning for the future
Fleischer comments: “Ensuring that we have complete and accurate information from all our legal entities is critical for tax audits. In a company the size of IBM, we have an average of 300 audits underway at any given time – and with the increased precision and automation of the IBM Accelerated External Reporting Solution, we are in a much stronger position to satisfy the auditors about the quality of our processes and data.”

Looking to the future, the tax team is also looking to exploit the analytics capabilities of the solution to perform scenario modeling and assess different possible tax situations. “We don’t just want to be filing tax returns – we want to get ahead of the game and add more value to the business in terms of risk mitigation and tax optimization,” says Rosenblatt. “The IBM Accelerated External Reporting Solution will be the key to helping us prepare tax plans for all kinds of contingencies, so we will be better prepared for changes to tax structures in different countries around the world.”

Bringing the benefits to IBM clients
With phase one of the IBM Accelerated External Reporting Solution already live, IBM’s statutory reporting and tax teams have a robust, centralized, end-to-end process for managing financial data from the moment the figures are finalized at the end of the month, quarter or year, through to the completion and filing of the reports themselves.

Sefcik concludes: “This isn’t just a solution for IBM. It’s relevant for any organization that needs to find a better way to bridge the gap between its financial close process and the external filing of its reports and tax forms. We are bringing a solution to market that will have an immediate effect, helping others simplify, accelerate and provide insight to what is typically a very manual and complex financial process today, especially for organizations that are large and complex like IBM. We look forward to proving its value for our clients worldwide.”

About IBM Business Analytics
IBM Business Analytics software delivers data-driven insights that help organizations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance management, and risk management.

Business Analytics solutions enable companies to identify and visualize trends and patterns in areas such as customer analytics that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns and work to meet regulatory requirements. By making analytics widely available, organizations can align tactical and strategic decision-making to achieve business goals.

For more information
For further information please visit ibm.com/business-analytics

Products and services used

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

Software:
Cognos TM1, Cognos Business Intelligence, Cognos Disclosure Management

Legal Information

© Copyright IBM Corporation 2013. IBM Corporation, Software Group, Route 100, Somers, NY 10589. Produced in the United States. July 2013. IBM, the IBM logo, ibm.com, Cognos, DB2 and TM1 are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at: www.ibm.com/legal/copytrade.shtml. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. The client is responsible for ensuring compliance with laws and regulations applicable to it. IBM does not provide legal advice or represent or warrant that its services or products will ensure that the client is in compliance with any law or regulation. Statements regarding IBM’s future direction and intent are subject to change or withdrawal without notice, and represent goals and objectives only.