When Janice Milley arrived at Urban Outfitters, it didn’t take long to come to the realization that the company’s budgeting system was woefully out of date. Consider that the specialty retailer now encompasses some 143 Urban Outfitters stores in North America and Europe with a catalog and two websites; 123 Anthropologie stores with a corresponding catalog and website; the newly-launched Anthropologie wholesale concept Leifsdottir; Free People wholesale; 32 Free People stores with catalog and website; and a Terrain garden center. Together, they require enterprise-wide budgeting, forecasting and analytics capabilities.
During her first year with the company, the budget was produced “using the existing budgeting tool, but it was a fairly manual process that required linked Excel sheets to understand where we stood in total,” says Milley, the company’s director of budgeting and analysis. “Following that process, I talked to our controller and said, ‘This is old; this is antiquated. Things really shouldn’t be this hard.’
“It took quite a bit of persuasion, but ultimately, I was able to convince him” to upgrade systems, she says.
Before joining Urban Outfitters in 2007, Milley had worked with Breakaway Technologies to implement a solution known as OutlookSoft at Broder Brothers and Charming Shoppes. Since then, Breakaway became an SAP services partner and the OutlookSoft software was replaced by the SAP Business Planning and Consolidation application. It was this system that Milley chose for Urban Outfitters.
The SAP BPC implementation provides applications for finance, finance allocation, salary planning and vendor allocation, as well as data and logic processes. In essence, it allows Urban Outfitters to budget at “fairly detailed levels” for each arm of the organization — including en- tire profit and loss statements for each store — rolling out the results “pretty much instantaneously.”
Before, she says, “if someone asked, ‘Where do we stand?’ It would take two to three hours before we had an answer. It’s clearly a much more efficient process.”
The SAP BPC software isn’t tied to any particular enterprise resource planning (ERP) system, says Tom Rowland, president of Yardley, Pa.-based Breakaway Technologies. It can be “put on any one of them to pull data out. Planning applications are iterative, so the flexibility of systems makes a big difference.”
Another benefit is that those who work with the solution are still able to work in an Excel format — as many finance folks prefer to do — but “the information no longer lives in Excel,” Rowland says.
“We put in a back-end database,” he says, “so when I put those numbers in, they’re sent to that database. And you, as my manager, can open that up and see it in real time. We’re always staying in sync.”
In the case of Urban Outfitters, one of the biggest challenges was to integrate the salary planning application with expense inputs that come from a variety of sources. Employee information, for instance, was derived from ADP, but the financial information came from Island Pacific.
“There were just so many different sources,” Rowland says. “It really was about the length of time it took Janice to be able to pull together an income statement and balance sheet, as well as head- count and budget planning.”
But it’s not just about the preparation of budgets; it’s also about the ability to better analyze the results. An automated feed from the general ledger updates every hour. In addition, a salary planning application allows Urban Outfitters to budget by person and look at the supervision in each store.
Managing staffing needs
“One of the things we’ve been able to do is put together an analysis that showed us how many managers there were in each store against sales volume,” Milley says. “We could sort the information and look at why this one store has x number of manager, but all the rest, x minus one. Then it became a question of why the store needs that number. In some cases, we may need to spend more managers on a store; it may have longer operating hours. But it was the first time we could easily look at this and see that some things were inconsistent [and] what the right staffing levels should be.”
Since she had used the system previously, Milley was “fully aware” of what the benefits would be. Her biggest challenge was getting all of the solution’s users to adopt it as a reporting tool, and getting the accounting team to stop working out of the ledger system.
“At the point we implemented it, a number of the people in accounting were tasked with having to develop budgets,” Milley says. “At the first round of training, they all thought the tool was awesome. We took them through a variety of reporting that they could use, even though they were focused on ‘What do I need to get the budget areas I’m responsible for into this system?’”
An intriguing feature is the SAP BPC’s ability to drill down on different accounts. It gives users the ability to double click on particular details, Milley says, rather than running a number of different reports We all love that we can start at a high-level P&L and quickly get down to the lowest level account or store that may be causing a variance,” Miley says. “An additional feature called Drill Through can help the accountants move away from re- lying solely on the general ledger system for analysis.
If they are using BPC for a budget vs. actual report and see that store property tax, for example, has a significant variance, they can right click on Drill Through, and it will bring back all of the transactions so they can see what made up that balance. You can get explanations much more easily.”
Breakaway, says Milley, is “really good at looking at the source data and structure of your underlying financial system and determining how you should structure the new system in order to develop the best analytics for your business.
“It was a fairly seamless process,” she says. “It all went very smoothly.”
For those without prior experience with the system, Breakaway offers help. The Breakaway Learning Center, for example, trains people to use the various technologies from partners SAP, IBM and Microsoft. As in the case of Urban Outfitters, the SAP BPC system is most often used for budgeting and forecasting across different brands.
“But the big advice, if you haven’t purchased anything yet, is to go for proof of concept,” Rowland says. “Show me that you’re talking about the things I need. And the second piece of information to really think about is your total analytical needs for the company.”
Fiona Soltes, who splits her time between “retail therapy” and freelance writing, lives near Nashville, Tenn.