Video Networks Limited is a dynamic company at the leading edge of developments in video and television on demand services combined with telephony and broadband internet. Through its Homechoice brand, it offers broadcast and on-demand television programming including over 5,000 TV shows, movies and music videos. The £15m turnover company employs around 600 people.
Mid-market budgeting - FSN Case Study of Video Networks
Broadcast television is a fast-moving environment requiring the finance team to have their finger constantly on the pulse of the business and being able to respond to changed circumstances at short notice. Budgeting and forecasting accuracy are key to aligning business resources with the company's strategy and the constantly changing market.
After restructuring of the company in 2003, the Homechoice brand was re-launched in London region in 2004. Along with the re-structuring, the company took the opportunity to review all of its key finance processes. Tony McShane, the company's finance and systems analyst recalls that at that time the budgeting and re-forecasting processs involved around 1000 separate worksheets even though there was only one trading company and 80 cost centres.
"It came as a bit of a surprise to us to learn that there were so many worksheets being used in the business, but once you took into account all of the cost centres, and budget data entry for profit & loss, balance sheet, capital expenditure and headcount, plus all of the calculation and assumption worksheets, it added up to a big number," he says.
The company's ageing mid-market accounting package was particularly weak on management reporting and did not help the situation, but the company owned a license for Hyperion Enterprise, a group reporting package which had never been properly implemented and used. Following the re-structuring it was decided that Hyperion Enterprise should be 'dusted down' and re-implemented to provide the back-bone of a newly configured monthly management reporting process. Thought IT, a Hyperion partner specialising in mid-market systems was drafted in to help the company get its new process up and running.
Our first objective says McShane was to eliminate the vast number of uncontrolled spreadsheets and replace them with a central database for budget against actual reporting. The second objective was to use Hyperion Enterprise for collecting annual budgets and quarterly re-forecasts from cost centres using a fixed and protected Excel template.
McShane is particularly appreciative of Thought IT's approach to working with the company. "They drew up a project plan and defined our requirements at the start of the project but rather than executing the whole project themselves, they worked closely with us to ensure that skills were transferred and that we had the capability to operate and maintain the system. They put the customer's interest first and weren't solely guided by a profit motive."
"They would also suggest best practices and work-arounds that made us more productive and efficient, such as macros that enable us to load all of the budget and reforecast spreadsheets automatically into Hyperion Enterprise."
Now that the spreadsheets for data collection are standardised, there is much less scope for error and the company can place greater reliance on its monthly reporting. Each cost centre unit completes its budget and reforecast spreadsheet which is uploaded, validated and consolidated in Hyperion Enterprise. A trial balance from the accounting package is also uploaded into Hyperion Enterprise which then forms a reliable basis for monthly budget and actual reporting. Since the administration of the business is largely based in single location it is a simple matter for standard departmental reports to be generated and issued to cost centres.
Rob Lackey, Video Network Limited's, Financial Planning Manager believes that the new system is not only easier to maintain but the structured approach helps budget holders to better understand their performance. It has also saved a great deal of management time which can now be put to better use analysing variances and performance rather than sorting out data quality problems.
"We used to regularly burn the midnight oil to complete the budget before we had the system but now we save around half of the time that it used to take," says Rob Lackey, Financial Planning Manager.
The company makes extensive use of Hyperion Retrieve, the dynamic Excel reporting tool that comes with Hyperion Enterprise, to generate ad-hoc reports and enquiries. "A lot of people in the company use Hyperion Retrieve because it is easy to learn and everyone is familiar with Excel. The difference is that the reports are derived from a reliable database and the data can be trusted," says McShane. "The whole system is also cost effective to run."
The new process has been operational for about two years and has been invaluable during a period of rapid change. "We get lots of ad-hoc requests for information, for example looking more deeply at adverse variances or looking at specific cost lines across all of the cost centres. We are able to deal with these queries quickly – something that was virtually impossible using our accounting system alone," says McShane.
Rob Lackey agrees. "We're operating in a very fast moving environment and the Board is constantly asking for new information. Using the system we are able to give people exactly what they want."
The relationship with Thought-IT is now much wider than the initial brief around Hyperion Enterprise. The Hyperion partner offers advice about broader aspects of financial systems strategy, helping Video Networks Limited to prepare for the next stage of its growth. The company is considering Hyperion Essbase as a replacement for its budgeting system as the growth of the company is driving the need for more sophisticated multi-dimensional reporting. "We now need to report by different geographical regions, and phases of product roll-out so that we can assess the success of each phase. In essence we need to cut the numbers in a variety of new ways as the business develops," adds McShane.
The business also runs a number of other large spreadsheet models, for example, for managing contracts with content providers and it is hoped that these can be better codified and structured within Essbase to save time and effort.
McShane is particularly complementary about Thought IT's personal approach to service delivery. "They work for some pretty massive companies but we never feel that they are giving us any less commitment," he concludes.
