BI-based budgeting and forecasting system launched at Proton-Electrotex

2021: Start of budgeting and forecasting system

On August 11, 2021, it became known that the BI-based budgeting and forecasting system was launched at Proton-Electrotex JSC.

As reported, the project was implemented by FRONTSTEP experts as part of the expansion of the functional capabilities of the Proton-Electrotex JSC control system. The basis of the company's automated budgeting system was the budget model (FS Content) developed by FRONSTEP experts - a fully finished universal budgeting solution. The budget model can work both as part of the overall information environment of the organization, and completely autonomously. In this project, the model was fully integrated with the production ERP system and the 1C accounting system. The ERP system provides information on all main parameters: shipment, output volume, WIP, direct cost, purchasing, inventory, payments.

From the accounting system, information is received on overhead and other expenses: general production, general economic, commercial expenses, investments, loans. The solution was launched and began to work as part of the Proton-Electrotex general information system.

In the second stage, additional dimensions were added for planning, fact gathering, and analysis in business areas.

In the third phase of the project, a special analytics was added to reflect historical and planned data before the end of the year in a single time horizon. Thus, four versions of the budget are formed: the annual budget; monthly; fact and plan.

The budgeting model, as a comprehensive set of tools and technologies for data collection, analysis and processing, allowed you to configure the main functional blocks of the BI system:

• Planning. At this stage, plans are developed and resources are allocated. The main tool for financial planning is the budget.
• Monitoring and control of execution. To monitor the implementation of plans in practice, the tools of operational analysis of plan-factual deviations (PFD) are used. They compare the annual, monthly planned, and actual budget and KPI values. This information is reflected in analytical and reporting forms.
• Analysis and regulation. At this stage, the plans are brought into line with the real conditions of the company, and the cycle between the strategy and its practical implementation is closed. The main role here is played by business analysis tools, which provide information guidance for making decisions to respond to deviations. Based on this information, reporting is built for managers at different levels of management to make different management decisions.
• Forecasting. The forecast budgets are rescheduled by the end of the year on the basis of the actual data for the previous period. Forecasting is based on a multifactorial basis, and is formed in the analysis of Budgets: sales, procurement, inventory, production (including unfinished), overhead, cost, investment, loans, BDR, BDDS and Balance Sheet.
• Integration. The ETL tool contains the Import Master integration component for exchanging data with external sources and multidimensional cubes for storing loaded or manually entered information, its mathematical processing (information processing algorithms are configured in the ETL mechanism and cubes), as well as for synchronizing directories.

To form and calculate the main budgets, a model of operational, special and auxiliary budgets, calculation and analytical tables, forms for entering and storing information, conducting financial and economic analysis and reporting was built. The model includes all necessary budgets: sales, purchases, production and cost, warehouses, management and commercial expenses, investments, loans.

The basis of the solution is the company's budgeting system, which includes the main budgets - Income and Expenditure Budget (BDR), Cash Flow Budget (BDS), and Forecast Balance (BP).

The Revenue and Expenditure Budget (ERB) allows for:

• analyze the current structure of cost and profitability of products,
• Evaluate the efficiency of business activities for each group of products and the company as a whole,
• Analyse the structure of profits and the factors affecting their formation.

The Cash Flow Budget (CBS) shows:

• Possible (presumed on the basis of the terms of contracts or contracts) cash flows,
• delays in receipts for products shipped earlier,
• balance of income and use of the company's funds for the coming period.

The Forecast Balance (BOP) reflects:

• forecast of the ratio of equity to assets - and sources of equity - liabilities of the company;
• the most likely changes in the working capital and structure of the company's debt.

In the interim aspect, all budgets (as well as analytical and reporting forms) are presented in the following section:

• annual budgeting - forecasting, planning and development of a consolidated budget for the planned year with quarterly and monthly breakdown within the period, with the possibility of analyzing plan deviations.
• Quarterly Budgeting - Planning and development of a consolidated budget for the planned quarter with a monthly breakdown within the period, with the possibility of analyzing plan deviations.
• operational (monthly) budgeting - planning and development of a consolidated budget for the planned month, with the possibility of analyzing plan deviations.

The model contains various analytical and reporting forms for managers of any level, to which all the information they need on their business processes is displayed. The implemented KPI system allows you to evaluate the main parameters: profitability, liquidity, turnover, productivity, etc.

The main factors in the management of economic and financial processes achieved during the implementation of the solution:

• sequential (monthly) cycle of interactions between and within various levels of Proton-Electrotex JSC management, including activity assessment, task setting, planning of further work;
• updating of set tasks and KPI values at all management levels;
• Enhancing the skills of staff in the evaluation and planning cycle, i.e., their training and active support in achieving their objectives;
• analysis of factors of deviation of actual KPI values from planned values and analysis of work performed by employees and departments to achieve the set tasks;
• Integration of performance evaluation and task setting with all business processes in the company (main consolidated - production, sales, supply, management) so that this process becomes an integral part of the daily work of managers. The proposed system metrics can and should be used in production plant planning. It is important to correlate non-financial indicators with the financial goals of the company.

{{quote 'author
= told Irina Lisina, financial director of Proton-Electrotex JSC|The basis of effective business management is the accuracy of building plans and their implementation on all time horizons. In order to achieve the actual results outlined in the plans, the management relationship at the strategic and tactical level is necessary - we created such a solution together with colleagues from FRONTSTEP. The BI system of budgets, analysis and reporting combines modern Business Intelligence technologies and financial management tools. As a result, on the basis of a single data model, an integrated environment is formed for all levels of control of Proton-Electrotex JSC:

• for shareholders - tools for obtaining reports for monitoring and evaluating business performance;
• for top managers - the ability to carry out strategic planning and create strategic and tactical reports to transform global business goals into financial and non-value indicators;
• for mid-level managers - use of operational planning and management accounting, business analysis, modelling and forecasting tools in the complex.}}