At the 2018 Modern Finance Experience in New York, Christopher Ayotte from Asurion and Brian Deegan from Peloton Group presented a compelling session about Asurion’s allocations and costing journey. What’s so exciting about this? Well, if you are using spreadsheets and are determined to stick with them—probably nothing. But, if you want to transform your business, there is plenty to get excited about.
I asked Ayotte what excites his management the most in costing and allocations and his answer was very concise: “Transparency. Having that common language of source and destination, which everyone can understand and use, so that there is no doubt of where costs go.”
In today’s business world, you might think that transparency would be a given. Unfortunately, with the number of organizations still using yesterday’s technology, this is often not the case.
Asurion, LLC is a privately held company based in Nashville, Tennessee that provides insurance for smartphones, tablets, consumer electronics, appliances, satellite receivers and jewelry. If you’ve ever lost or broken your cellphone, chances are you’ve interacted with them. This award-winning company boasts a 4.8-star rating (out of a possible 5 stars) from millions of satisfied customers.
Asurion shared that their biggest challenges were a lack of transparency and visibility into cost allocations; analysis capabilities were limited, and it was a slow process. Stakeholders were questioning the validity of outcomes because they could not easily look across product lines and answer the question, “Who are our profit winners?” The process to find this information was painfully slow, and during critical times they could not get the answers in a timely manner.
Asurion currently has a hybrid cloud solution. Oracle Profitability and Cost Management runs in the cloud, and they run Oracle Hyperion Financial Management on premises. Hyperion is still their book of record, but Profitability and Cost Management Cloud gives them the visibility they need; plus, they can do journal entry changes for a clean close.
“They now have a consistent and repeatable process. Business users can understand it, and there are no 'black box' calculations. They get a name, description and how it will allocate in natural language that includes the steps taken,” said Ayotte.
At the end of the process, the text describing the rules used for allocations is there to pull into reports—including all the steps and the why of what is being done. The process is transparent, consistent and understandable. The logic associated with calculating a piece of cost is saved, and you can compare it to historic iterations.
“This is a powerful ability; the rules and rule sets are period-specific. You have the transparency to look back and see what changed over time or in a scenario,” said Deegan. There is no more wondering in the future why you made that change, as you can trace the “why” something was changed. “Very insightful, we really like this feature,” said Ayotte.
Another major benefit for Asurion is that rule definitions are built in—no coding required. This means that they were able to transition to a shared ownership of the allocation process between FP&A and IT.
The user-friendly interface for IT and Finance makes it easy to collaborate and manage changes to reflect evolving business needs. It also means that there is much less maintenance of the allocation solutions and they readily support “what-if” analysis. Now, instead of asking, "What is the system doing?" they can ask, "Is this what we want the system to do?"
In only 12 weeks, Asurion met all their project goals. They are now able to make decisions faster —it was taking 2 hours to run calculations; now it takes only 15 minutes or less. They can close the books faster and scale calculations across all customers and all products. They can adapt their profitability and cost calculations flexibly and quickly, and the application can grow as they do.
Some of the key benefits Asurion experienced:
What did they learn while moving costing and profitability to the cloud? Asurion learned that they should engage a broader audience at their company, talk with them early to help understand a broader value proposition, ensure the right individuals are engaged in the project and at the table early on, for all key decisions. They learned to keep their calculations simple; this ensures the visibility they need, reduces overall model maintenance, and enables more flexibility in the future.
Deegan concluded, “Ensure you have the ‘why’ as well as the ‘what’ you want to accomplish to ensure you have included the right level of detail and can answer the questions appropriately.”