Simpler consolidation process at Arlanxeo

Joint venture requires its own consolidation

Arlanxeo was established in 2016 as a joint venture. Until then, synthetic rubber production was part of LANXESS, using the parent company's reporting and consolidation tools. "The moment the joint venture was established, we knew we had to start building our own group functions," says Manfred Wicker, head of Finance & Controlling Platforms at Arlanxeo. The consolidation process became easier with the use of SAP BPC optimized for S/4HANA.

Although the company is relatively young, it has a long history: its patent for the production of synthetic rubber dates back to 1909. Today, the company has plants in nine countries and specializes in high-performance rubbers. The company, headquartered in Maastricht, employs more than 3,900 people.

Setting up a completely new IT architecture

Building a completely new IT architecture is a great opportunity to create a smooth consolidation process. "At LANXESS, we had some problems with the interface between ERP and the consolidation system. Building and maintaining this interface was time-consuming and expensive. Therefore, we wanted to significantly simplify the interface in the new situation," explains Manfred.

To get the most out of the new setup, the company also immediately took a critical look at its current processes. "We have built a new group chart of account, which is consistent with the transactional chart. We have also started to use the same reporting package for both actuals and planning. This is not only more efficient, but also makes it easier for users to compare the two reports," said Ingrid Fredrix, Head of Financial Accounting and Consolidation at Arlanxeo.

"Seize the opportunity to make a radical change. There are real benefits in unification that save time and effort in the final product."

First implementation of SAP BPC Optimized for HANA in Europe

The company had already chosen S/4HANA and was also looking at an SAP solution for consolidation. "After discussing the different BPC options, SAP recommended that we use SAP BPC Optimized for HANA," says Manfred.

The choice of this new technology makes the company a frontrunner: in Europe this is the very first implementation of SAP BPC Optimized for HANA, and one of the first worldwide.

Implementing a new technology demands great attention to detail. "We wanted to make sure that all processes are correct, maintainable and user-friendly. In the classic SAP BPC, for example, building input schemas was easy, but in the optimized BPC version we had to find a way to make it more user-friendly," says Bastiaan Sanders. As lead consultant at Plainwater, Bastiaan is closely involved in the architecture and implementation of the new system at Arlanxeo.

Agile project approach helps with major changes during the project

To ensure effective decision-making, the project team adopted an agile project approach. "Because we were building a completely new IT landscape, we did not yet have a complete picture of the details. In addition, SAP BPC Optimized was still so new that it was also not entirely clear what capabilities it would bring us," says Ingrid.

Two additional challenges arose during the project. First, the company became 100% owned by Saudi Aramco. This shortened the implementation timelines by as much as three months. In addition, during the implementation, the server was changed from on-premises to SAP's private cloud; the HANA Enterprise Cloud.

Despite these challenges, the new consolidation system was up and running within a few months. "The agile approach made it much easier for us to adapt to all these changes. If we would have used a waterfall method, such big changes would not have been possible or at least would have taken longer," explains Ingrid.

Faster and more flexible consolidation process with S/4HANA

Both Manfred and Ingrid are excited about the results of the new landscape: "We have simplified the processes and now use more standard functionality. This makes consolidation faster and gives us more flexibility to customize things," Manfred explains. "Once all entities are fully on S/4HANA, I expect closure to be 2-3 days faster," agrees Ingrid.

Another benefit is that the company has gone from three different profit and loss reports to one. "In the old setup, we had different p&l reports for legal, management and accounting purposes. Now we can answer all questions from one source. This makes day-to-day work in accounting much easier."

Instant access to real-time data

In addition, direct access to the data provides real-time insights. "We can use the data in real time for consolidation by accessing the data directly, without an interface or allocation tables. We used to pull data from the ERP system to the consolidation system once a day, now as often as we want," says Manfred.

The next step is a fast-close project, with the goal of going from 10 days to six. "We need to speed up our closing for Saudi Aramco," says Manfred. "First we need to standardize the closing steps in the ERP part, then we want to automate the steps in the closing bookings. We are also looking at different RPA solutions, for example to robotize the incoming invoices."

Seize the opportunity to make a radical change

When asked for advice for other organizations looking to implement a new IT environment, Ingrid says, "Use the opportunity to make a radical change. There are real benefits in unification that save time and effort in the final product. Even if you only change your ERP or consolidation system, going out of both systems lifts your overall process to the next level."

"Focus on the S of Simple,"

"Focus on the S of Simple," concludes Manfred. "It is really useful to follow the ideas of simplification by using the standard processes in the consolidation process with s/4hana as much as possible. This may not be easy at first, but in the future it will be much easier than adapting the tool to the process you currently have."