REVIEWER: Domenico Alessio, demand manager for Mediaset.

BACKGROUND: Mediaset is the leading commercial television operator in Italy and Spain and one of the world’s largest media companies. It is part of the Fininvest Group. The business offers free analog generalist and digital terrestrial thematic as well as pay-per-view digital terrestrial television and multimedia services. Mediaset produces and broadcasts its own content, generating revenues through the sale of advertising time (a2,850 million revenue in 2006). The firm employs 5,800 people and generated a3,750 million revenue in 2006 with a net profit after taxation of a500 million.

PLATFORMS: Oracle database and Oracle application server.

PROBLEM SOLVED: In 2005, Mediaset was faced with the challenge of complying with new international GAAPs - International Financial Reporting Standards (IFRS)/International Accounting Standards (IAS). To be compliant, Mediaset needed an accurate, consistent and auditable new system capable of producing segment reports and conducting impairment tests on its cash generating units. Mediaset decided on an extensive corporate performance management (CPM) approach. It sets the following objectives for the CPM solution: introduction of a CPM system for management accounting and activity-based costing (ABC) modeling; budgeting; management financial reporting at company level; financial planning and reporting at Mediaset Group level; substitution of the obsolete systems; sharing of a common model for data analysis between the statutory and management system, with the guarantee of business peculiarities; and introduction of a specific management module compliant with new international GAAPs (IFRS/IAS) for the segment report and impairment test.

PRODUCT FUNCTIONALITY: Tagetik CPM’s budgeting and forecasting application allows Mediaset to manage the entire process of budget creation, distribution and approval. Mediaset uses the financial planning built-in process to produce quarterly balance sheets, income statements and cash flow statements. Tagetik’s ABC modeling application is a key process for Mediaset, allowing the company to map its control structure for cost objects, activities, resources and our relationships through a cost-allocation engine that allocates costs and revenues to resources and activities. Mediaset’s consolidation and reporting department uses Tagetik’s statutory consolidation application to comply with the new IFRS/IAS regulations. Not only does it provide Mediaset with a common shared language across its businesses but it also allows it to perform forward-looking assessments of its businesses. The application allows the processing of data from different sources while generating full data traceability. Mediaset’s planning and controlling department uses Tagetik’s Management Reporting application to process management data using a variety of accounting allocations, consolidated statistical data and aggregation for reporting.

STRENGTHS: A main strength is unification of all CPM processes within one single product using one single database. Tagetik CPM contains native functionalities easily adapted to customer needs. The built-in processes require no special programming, so the user can operate independently of the IT manager. Tagetik CPM ensures comprehensive auditability through data and process traceability, a double-entry accounting system and drill down to the lowest level. Tagetik CPM is a Web application developed in Java (J2EE compliant) and based on a service-oriented architecture that can work in multiplatform environments, leveraging existing infrastructure and legacy investments. Tagetik CPM easily adapts to existing IT infrastructures.

WEAKNESSES: Key performance indicator reporting and dashboarding did not completely fit with our requirements.

SELECTION CRITERIA: Mediaset chose Tagetik CPM because it is a single product with built-in functionalities for cash flow planning, and cost allocation and multiplatform technology.

DELIVERABLES: Deliverables include a quarterly balance sheet, income statements and cash flow statements as well as management and statutory consolidation.

VENDOR SUPPORT: Tagetik’s ability to provide timely technical support, required customization and training services was crucial to the success of the project.

DOCUMENTATION: The documentation was complete and easy to understand, even though Tagetik support is often required due to the complexity of the project.

Tagetik CPM
Tagetik
Via Farnesi, 141
55100 Lucca, Italy
+39 0583 96811
www.tagetik.com

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