Pearson PLC is the parent company to a family of large publishing and media businesses, including Pearson Education, the Penguin Group, and the Financial Times Publishing Group. Its subsidiaries run many different ERP and budgeting systems, but Pearson PLC has gained great insight into its overall performance by implementing systems to facilitate fast close in the management and statutory reporting processes.

BPM Magazine: In such a large, dispersed organization, how does Pearson manage performance across all of its divisions?

Noel Gorvett: Across the Pearson group, there are multiples of ERP and general ledger systems. We use SAP, Lawson, Sun, Oracle, PeopleSoft, JD Edwards -- they're all out there. From them, with all the variations of transaction level data, we consolidate monthly for management reporting to head office and divisional boards using Hyperion Financial Management. There are local applications within Pearson Education, Financial Times, and Penguin for their lower-level, more detailed reporting.

BPM: But HFM is where performance information gets consolidated so you can see the big picture for the company?

Gorvett: That's right.

BPM: So, what is included in these performance reports?

Gorvett: It's primarily from an actuals comparative perspective. All the businesses within the Pearson group do their planning and forecasting very differently due to the differences in the businesses that they run, so the group application is at a summary level for all scenarios.

BPM: What is your process for importing the appropriate information from all your G/L systems into HFM? Have you automated that process?

Gorvett: Well, automated to the extent that we possibly can. There's always room for improvement because not all the information that we collect is stored in the general ledgers. A lot of it is kept offline or is collected by users in the various divisions. So where possible -- and also where need be. There might be a division that's so small that they only need to put 10 numbers in, so why automate that?

The process starts with businesses using their general ledgers to do all their transaction management. Then they get to the end of the month to close their books; do a trial balance; and load that data, along with whatever supplementary information is required, into the HFM system where they do their consolidation, validation, and use process management to push it through. The business is now driven very much by process management. At the end of working day three each month, the divisions have received the data from their operating companies. The divisions then reconcile and consolidate that by end of day five, when they submit it through to PLC, who then have it to process on day six and do whatever topside adjustments need to be done. It normally ends up on the board table anytime between close of day six through day eight.

BPM: Wow, that's fast. What challenges did you face in trying to streamline the close process so much?

Gorvett: From a technical perspective, we were moving from a very decentralized environment into a centralized environment, so one initial challenge was getting the business and IT to work hand in hand. IT had to host HFM and create an infrastructure environment where we could connect to one central database. Another challenge from a cultural perspective was to get the businesses to buy into the perspective that although they are responsible for the data, they aren't responsible for the infrastructure or the hardware or the software. They no longer have to install software on their desktops; now it's in the big blue ether and completely Web-delivered, albeit very secure over the corporate infrastructure. Once the data is in the system, it is visible to anybody (with relevant security controls), whether it's signed off on -- in other words, whether they've actually promoted it and validated it yet -- or not. Historically, people had the mind-set of "My data's mine until such time as I pass it on to somebody else." They prepared it locally on their desktop in an Excel spreadsheet or legacy system. Only when they wanted to e-mail it to somebody, or at the appropriate deadline, did anyone else actually get visibility of it.

Accepting that transparency was a fairly big change for some of the business users. Part of that was also proving to people that Penguin can't see Pearson Education data, for example, and Penguin Australia can't see Penguin America's data.

BPM: How did you overcome those concerns?

Gorvett: It was an education process. Once people realized that the information in HFM is very much uncompetitive data, for lack of any other word, the bridge became easier to get across. There was also a degree of, "This is what Pearson is doing. Here's the Pearson flag. You will follow it." In the beginning of the whole program, we put together what we call the "Pearson Blueprint," which was basically a document that stated, "Here is the Pearson process. This is what we're collecting, this is how we're going to collect it, who we're going to collect it from, all the definitions." And that was signed off on by the financial controllers and the CFOs of all the businesses. So at least we had their buy-in to do it. Then we just had to crack the local user population. To be fair to them, it wasn't a major concern. It was just that some people feel like they have a little territorial advantage if they keep performance data to themselves, on their desktop.

BPM: How did you come up with the blueprint?

Gorvett: We collated it centrally. And then it was a case of working with the businesses, iteratively ironing it out till we got to consensus and total agreement. So effectively it was a case of Pearson PLC, the head office, saying, "This is what we would like it to be." And then going to the businesses and saying, "This is how PLC'd like it. How do you do it? Do you do it differently? If so, why?" And having that dialogue and debate about which was the most appropriate for the whole group, and not just for a division or a person.

BPM: A pretty time-consuming process?

Gorvett: Nine months of 2002 was spent doing that exercise around the business.

BPM: Was it worth all the effort?

Gorvett: Absolutely. It's a document that seldom gets referred to now, but it was the way that we worked our program out and is a point of reference for future change. So the businesses knew what they were going to get was achievable.

In parallel with that, we also did a content program where we said to the businesses, "If you were to put in a completely new system, irrespective of all the information you currently gather, what would you put in it?" Each business gave us their proposed chart of accounts, their content requirement. We merged those together so we could see where were the commonalities and where were the exceptions. And then we worked through multiples of versions -- identifying why somebody calls something domestic and somebody else calls it international. We resolved the discrepancies in the charts of accounts and found where there were duplicates that had different names associated with them, and where accounts really were completely exceptional. The FT [Financial Times], for example, has circulation. None of the other businesses have that, so it's completely exclusive to the FT. Building this level of localization into the system became simple because we could isolate them; nobody else needs to use that information. That was an investment in improving the processes and the information that the businesses were getting.

BPM: What ROI analysis did you do before the initial purchase and implementation of HFM?

Gorvett: Well, from a perspective of quantifying the ROI, we actually offered to come up with a business case that justified the investment and the effort that this would take. Two big unknowns at that point in time were IFRS and Sarbanes-Oxley. There was unease about the current processes and data integrity, the fact that we were closing our books between 15 and 25 days after each month-end.

So there was an unquantifiable justification for developing better BPM processes. But also, all the CFOs and financial controllers were asked, "If we do this program, what savings can you find?" Savings came out of the faster close, but they also came out of situations where someone might say, "We've got five people doing data collection in the old system. If we go to this new Web-based system and we do automated integration with the ERP systems, that will free up three of those five people." So we actually got the businesses to justify and identify what savings they could make.

The other justification was the cost of the software and the cost of the legacy maintenance and support. How many people did we have supporting legacy tools? Well, the businesses had about 15 people supporting multiple environments. We had contracts with Hyperion in each of the divisions, where we were paying for maintenance and service, and we've consolidated that all into one head-office contract.

BPM: Have you realized benefits beyond the fast close and some savings?

Gorvett: Absolutely. Another benefit to spin out of PRIME (the BPM portal name) is that we're getting more information. For example, we're now in a multidimensional environment instead of the two-dimensional legacy system. We can now split our data out and analyze it by product, by region, by channel, which we couldn't do in the past without a lot of extra work.

BPM: Are people using HFM fairly extensively to go in and look at data themselves and do comparisons across the company?

Gorvett: Yes. Analysis is being done continuously. People in far-flung parts of the business -- India, South Africa, South America, Asia -- just log on to Internet Explorer and put their data in and get on with their daily jobs. They don't have to worry about "Do I have the right drivers of my machine for the right version of Excel? Do I have a printer that will print this stuff out?"

Additionally, I don't have to spend three or four weeks every month-end sending out patches and upgrades and updates and supplementary information. When we do a change to the system, whether that be just to add a new account or include a new business or new way of collecting IFRS data, we change the system once and everybody gets that information immediately. So the reduction in downtime and the efficiency of the standardization of the system are a complete win. In summary, this has moved from a very manual, reactive situation, to a controlled, reliable, and stable proactive solution with highly adaptable and agile opportunities.