Freudenberg
nicetec netinsight - Introduction of a globally standardized IT finance management system at Freudenberg Sealing Technologies
In 2013, the IT department of the largest of Freudenberg's 11 Business Groups worldwide was set up globally and the need arose to record costs worldwide, report them uniformly and allocate them to the services offered in order to bill them appropriately. The company also wanted to increase transparency and get out of the "tiresome discussion that IT is too expensive".
Increased transparency and global cost recording
Mostly invisible, but always indispensable, are the products and solutions from Freudenberg Sealing Technologies in Weinheim. The company is a supplier as well as a development and service partner for the global automotive industry and civil aviation. However, its customers also include the mechanical engineering and shipbuilding industries, the food and pharmaceutical industries, the wind energy sector, the railroads and many other sectors of the economy. Starting with the Simmering developed at Freudenberg in 1929, a wide range of seals has been continuously added to. 1997 saw the launch of the encoder, an integrated sensor system for cars that uses speed information to control a brake or engine management system.
Since 2008, the IT department of the largest of Freudenberg's 11 Business Groups worldwide, which also manufactures neck care products and offers software and IT solutions, has been organized across Europe. "In 2013, our IT was then set up globally and the need arose to record costs worldwide, report them uniformly and distribute them to the services offered in order to bill them appropriately," recalls George Molchan, Global Head of IT and CIO at Freudenberg Sealing Technologies in Weinheim an der Bergstrasse. The company also wanted to increase transparency and get out of the "tiresome discussion that IT is too expensive".
Replacing the manual planning of IT budgets
A service catalog was therefore developed that lists the services offered by the global IT department for internal customers. In this context, a tool for pricing and reporting was also sought. The aim was to streamline and largely automate IT cost management processes worldwide. The aim was to professionalize the planning of local IT budgets and replace the previous manual processes with Excel spreadsheets and emails that had to be sent back and forth.
As Freudenberg Sealing Technologies was not sure whether such comprehensive software was even available on the market, it looked for a provider to carry out a trial. For three months, a "proof of concept" was to be carried out to show whether the desired requirements could be covered and whether it would be possible to convert cost centers to transfer prices. Of the five providers approached, some had to drop out immediately due to the planned global deployment, while others were not prepared to carry out the required non-binding test.
In the end, nicetec was selected with its IT finance management solution netinsight. "It was the most attractive offer in terms of content and financially," says Kerstin Zeeb, Head of IT Services & Governance. She also liked nicetec's professional and pragmatic approach, which fitted in well with the way those responsible at Freudenberg Sealing Technologies work. The family-owned group places great value on "entrepreneurship". The individual companies in the group are responsible for their own results and active management of IT costs is also rewarded as a result. The tool should therefore also help to ask the relevant questions in order to be able to make the right management decisions on this basis.
When the proof of concept was presented to the company's management at the end of the test phase, they were immediately impressed by the concept and the functionalities that had already been implemented. "The added value for everyone involved was immediately apparent," emphasizes Molchan. The standardized reporting of IT costs despite the different systems and structures behind it was particularly impressive.
The self-service portal, which gives controllers and IT managers in the subsidiaries worldwide immediate access to current contracts, installed hardware, product catalogs and price lists, was also a major plus point. This "single point of truth", where all information comes together in one place, provides a constantly updated overview and a high degree of transparency.
Billing IT services according to consumption
The ability to mix different currencies in a budget plan and display prices for services in both euros and dollars played an important role for the globally active company. "netinsight already offers a multi-currency function as standard, which allows you to create different plans in different currencies. We then extended the existing functionality in the project in line with a special requirement from Freudenberg Sealing Technologies so that it is now also possible to use different currencies in just one single plan," reports nicetec Managing Director Ralf Meyer. The same applies to the "Own Cost Process", which allows budget planning to be handled much more conveniently and quickly with web support.
The modular IT finance management solution netinsight, which with over 220,000 licenses in Germany is one of the most successful standard platforms for IT controlling, IT cost allocation and corporate financial management, provides the appropriate components for all possible scenarios. The IT financial controlling module (ITFM) forms the basis as a powerful planning and calculation solution (cost/performance accounting).
Significant reduction in complexity
Seamlessly integrated with this are other elements from IT service billing such as SLA/contract management, product catalog, offer management, source-based acceptance of IT services and the results of IT service billing in the form of costs and revenues. In addition, there are various collectors and interfaces for integrating any data sources, reporting tools and the web portal for customer self-service. "All IT finance functionalities can thus be mapped centrally, which results in a considerable reduction in complexity," says Ralf Meyer.
It can be used for planning and costing, target/actual comparisons or simulations, as well as for cost allocation according to source in conjunction with SAP systems. For Freudenberg Sealing Technologies, it is particularly important to bill certain services according to consumption in the future - such as the processing of tickets subject to payment or the number of devices used by the respective area.
Convenient reporting makes the discussion about IT costs more objective
Once set up, the costs are passed on to the user via the service catalog and service prices in a fully automated process, as is the recording of consumption data and its allocation to services and customers.
At the same time, netinsight supports any billing method - both contract-based billing and usage-based billing.
Service usage is billed according to the source, individually and highly flexibly, even across national and currency borders and in compliance with the law.
With the "IT cost allocation" module, the solution is able to receive even extremely large transaction volumes from the operational IT systems, company-wide voice and data networks or asset management systems, for example, in the shortest possible time, process them in the cost allocation process and allocate them to the cost centers in the company according to their source.
"This allows the controllers in the subsidiaries to see in detail which services are currently being used and what is to be paid for them," says Kerstin Zeeb, looking to the future.
The clear presentation of services would allow a more objective discussion about IT costs.
This also applies to investments.
For example, if a division wants to purchase new printers.
As it has to pay for this specifically and is not generally involved in the IT costs via a levy, there is a need to think about the necessity and added value of such expenditure.
Kerstin Zeeb: "It is particularly important for the business units to feel that they can influence their own IT costs.
The powerful reporting with the help of netinsight also contributes to this.
In the past, the information required for regular IT finance meetings in the company, where budget control takes place, had to be extracted manually and therefore laboriously from various databases and systems and prepared in Excel tables and PowerPoint presentations.
Today, the software's reporting tool delivers graphically prepared reports and budget plans - including historical comparisons if required - without the need for manual preparation and follow-up.
Easier work and lower costs
"Our Reporting & Analysis module is a fully equipped, fully-fledged business intelligence solution," emphasizes Ralf Meyer.
It allows web-based, individually designed reports based on current data to be called up in real time by authorized persons or completely new reports and ad hoc queries and analyses to be created and published to colleagues and customers.
The reports can also be updated on a time-controlled basis and automatically sent to recipient groups by e-mail as a PDF document or Excel spreadsheet.
Once the "proof of concept" had proven its efficiency, the implementation phase began at Freudenberg Sealing Technologies.
A "mini-project team" led by Kerstin Zeeb very quickly managed to carry out global IT planning for 2014 using the new tool.
Further functionalities were then added step by step and all the necessary data was transferred to the system.
"The feedback from users is very positive, as they notice how much easier the work is," says the project manager.
At the same time, automation reduces sources of error and the time and effort required for implementation.
However, the main effect in the longer term is achieved primarily through increased transparency, which leads to greater cost sensitivity. In particular, the cost-by-cause billing of IT services leads to a change in usage behavior and thus "incidentally" reduces the IT costs of unused or non-value-adding services for the entire company. According to Kerstin Zeeb, a tool is now available that did not previously exist in this form: "We could perhaps have solved these tasks with SAP Business Warehouse, but that would have been a very large and complex development project with corresponding costs given the requirements. Instead, relying on a flexible standard solution with support from the manufacturer was the best decision for us.
Freudenberg Sealing Technologies, with sales of around 2 billion euros, employs around 17,000 people worldwide. In 2013, the IT department of the largest of Freudenberg's 11 Business Groups worldwide was set up globally and the need arose to record costs worldwide, report them uniformly and allocate them to the services offered in order to bill them appropriately. The company also wanted to increase transparency and get out of the "tiresome discussion that IT is too expensive".
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