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Telco Company Improves Budget Process and Performance Management

  • January 26 2009, 12:34pm EST

Cbeyond is a provider of integrated communications and IT services to more than 40,000 small businesses. As the only telecommunications service provider focused solely on serving small businesses, Cbeyond’s mission is to deliver "big business" communications services to small business customers at prices they can afford.

Cbeyond has grown dramatically in recent years and found that its system of using spreadsheets for reporting, planning and budgeting had become antiquated. We were dealing with over 50 cost centers, half of which had location designations, and we were collecting and aggregating hundreds of Excel spreadsheets for revenue planning; cost of goods (COGS); selling, general and administrative expenses (SG&As) and capital expenditures (CAPEX). It is estimated that 70 percent of our time was dedicated to checking, cross checking and validating the output, which didn’t allow us time for analysis. When we had the time, it was extremely cumbersome to get the data we wanted because we had to extract and then manipulate it in order to put it in a useable format.

Executive sponsorship came onboard early, and the finance team was tasked with exploring different performance management solutions. Our goal was to have a system in place that would provide sufficient time to do the company’s next budget, which needed to be completed in just a few months. After performing our due diligence, we chose IBM Cognos TM1 software and Revelwood, a business performance management solution provider, to implement it.

We really liked TM1 because it gave us flexibility and had the look and feel of a spreadsheet. As a spreadsheet-centric company, one of our primary concerns was adoption - getting people comfortable with the new solution. We also had a really good feeling about Revelwood and their capabilities. They had a clear sense of how they would manage the implementation and were really knowledgeable from both an application standpoint and a business perspective.

TM1 was active in just 10 weeks, and we completed our first budget a few weeks after that. Our approach for implementation was to initially work with simpler, “bare bones” tool. But we soon discovered additional functionality that would be extremely useful. Yet, we realized we needed to take incremental steps - to crawl before we could walk.

The implementation proved so successful in helping Cbeyond complete our budget, we began to explore other ways to integrate the application throughout our operations. We built rolling forecasts and worked with different groups within the organization to develop the processes needed for getting information back and forth between us. TM1 has since allowed us to revolutionize our budget and forecasting philosophy. Before, when we did the budget, we pushed it out and decentralized it. People would submit their numbers, and it was very fragmented. Now, we’re centralizing it, where finance does the budget and establishes a baseline. We then send out the budget information to the different budget owners. If they want to deviate from the baseline, then they provide an overlay with justification.

Our groups weren’t communicating clearly with each other before, and now everybody uses a single source to arrive at the actuals, the actuals to budget, and the actuals to forecasts. Where reports were once independent and separate, now the entire process is integrated.

We now use the solution in other functional areas, such as HR, operations and accounting. We can do analyses with head count and its impact on SG&As, COGS and CAPEX. By marrying up the statistical data, like head count or number of customers, with financial information, we can look at scalability and productivity in ways we never could before. It’s been a quantum leap forward. The OLAP database capability, the visibility into the data and the flexibility and ease to pull data and manipulate it for different types of calculations has been extremely helpful in our analyses. The data is accessible and we can now do all kinds of slicing and dicing. Since we’re very much a metric-driven company, this gives us the ability to play around with different statistics and compare them against the financial data to see how a certain metric looks.

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