Digital key factor

In its "Digital Strategy 2025", the German government writes that the central raw material of the digital transformation is Data. Dealing with them is a decisive factor in the success of modern business.

"The key competencies of successful Company in the long term will be in the capture, processing, linking and protection of Data lie - and in deriving concrete measures and methods."

According to a 2014 PwC study, 90 percent of all future Company convinced that the ability to efficiently analyze and effectively use big data will be critical to the success of their business model. Important elements of these big data sets are Master data.

As Master data is called static basic data or Reference data to objects relevant to operations, such as products, materials, suppliers, customers, employees and finances.

Merck is a leading science and technology company in the fields of healthcare, life science and performance materials.

Around 50,000 employees are working on this, Technologies that enrich life - from biopharmaceutical therapies for the treatment of cancer or multiple sclerosis, to pioneering systems for scientific research and production, to liquid crystals for smartphones or LCD televisions.

In 2015, Merck generated sales of EUR 12.85 billion in 66 countries.

Founded in 1668, Merck is the oldest pharmaceutical-chemical Company the world. The founding family is still the majority owner of the listed group today.

At Merck, a pyramid-shaped business segment or product structure is used for Group consolidation and external reporting.

Business Sector, Business, Business Unit, Business Field, Strategic Business Unit (SBU) form the so-called upper hierarchy. These are the Reporting levels, which are managed in Group Consolidation, down to Business, they are also used for external reporting. Below the Upper Hierarchy, further levels form the Lower Hierarchy, which extends down to the individual material.

The product hierarchy ensures that for a product defined in the ERP booked sales, the revenues (and also the costs) are allocated to the corresponding SBU. In the pharmaceutical sector, the pyramid structure exists only partially. The peculiarity here is that in some cases the same starting material flows into different business units.

For example, there are products that are available over the counter in some countries but require a prescription in others. Accordingly, this product then flows into the associated business areas.

Initial situation Master data management

In the context of Group consolidation and external reporting, Merck has a large number of Reference data under the link. Reference data are generally used for groupings, hierarchies and categorizations of Data used.

They exist both internally within a company - for example, company structure data - but also across company boundaries, for example, ISO country codes, ISO currency codes, postal codes.

Merck understands by Reference data Financial master data, but not those from the ERPsuch as cost center or profit center. The focus is decidedly on Consolidation and Reporting.

Examples of relevant Data are:

• the Upper Hierarchy, i.e. the upper part of the business segment structure described.

• Countries: Country hierarchies are used in external reporting or also - in different sorting - by individual Divisions for their internal Controlling used. Merck maps these sortings via different country hierarchies.

• so-called functions, for example HR. That's a corporate function that is billed to. Similar: IT, site management, infrastructure, in the broadest sense therefore internal service providers.

• Locations: It is about Locations, which is in the ControllingIn the reporting, this can be used to summarize certain expenses that cannot be allocated to one company alone because the company itself is too large. For example, stocks, inventories over Locations pictured.

• Group Chart of Accounts: The operating chart of accounts is located in the ERP and also in the MDGF (Master Data Governance for Finance - SAP) and is only mapped there in the standard. The group chart of accounts has a different focus and is not mapped by MDGF.

For the services provided within the scope of Consolidation and Reporting required financial master data before the introduction of a Master data management software purely manual processes.

For the mentioned Data existed Excel-based Listenwhich were distributed (imported) into a wide variety of reporting systems - associated with the problems of synchronization and the different technical capabilities offered by the systems.

Three main systems were relevant at Merck:

• the SAP Financial Consolidation system,
• IBM Cognos TM1 as a reporting system
• a classic SAP BW

These three pillars formed the consolidation and Reporting-landscape. Three products, three manufacturers, no compatible interfaces, different data models.

The consolidation system could not map time dependencies, TM1 just as little (or only very difficult). All in all: most different approaches in data management and data modeling.

For the Reference data (Reporting Unit Hierarchy, Country Hierarchy, Functions, Upper Product Hierarchy, etc.), there were different "leading systems" in each case. From these leading systems, the Data distributed to various subsystems.

Andreas Bieker, Manager MDM/User Management, Finance Operations - Group Standards & Systems of Merck:

"A completely heterogeneous approach, historically wild, with different responsibilities, difficult to align and coordinate."

The change process for a new item in the group chart of accounts had also proven to be too complex and too inflexible in practice.

For this reason, it was decided to streamline this process to a small number of decision-makers, to Governance- and guidance functions with the aim of being able to react quickly and flexibly to changing requirements.

Decision for SPoT

From 2010 to 2012, Merck initially made various attempts with SAP MDM and SAP MDG, but for various reasons these did not lead to the desired result.

The starting point for the subsequent optimization of master data management was then initially in the Investment Management.

In 2014, Merck had started to manage its investments via ZetVisions. CIM (Corporate Investment Manager) started.

It became clear that the underlying Technology also good for Master data can be used. "Investment Management is based on Master data of the company's shareholdings.

"CIM was the door opener"

says Bieker. After one with CIM saw that ZetVisions can map exactly the requirements that Merck also has for an MDM solution, they decided to also use the master data component of ZetVisions for managing the Reference data/Group financial master data.

In the first wave, Merck first processed the business segment structure and the country master data; in the second wave, which is currently underway, the Group chart of accounts and further Reference data on the agenda.

According to Bieker, it should be emphasized that the project was brought to go-live in three months. In a manageable amount of time, with a manageable amount of Effort achieve presentable results.

Single Point of Truth

With the introduction of ZetVision's SPoT, the various "leading systems" from the past have been replaced by a "Single Point of Truth".

Here the common data model is merged and only that is exported (Business Segments, Reporting units, location, etc.), which the respective target system (including SAP MDG, SAP ERP, SAP Financial Consolidation, Legal, Compliance) is required.

Excel-Listen with all the imponderables associated with manual maintenance - such as complex, cumbersome processes, high levels of time-consuming, manual Effort and susceptibility to errors - are a thing of the past.

Today the Master data are created and managed in one system and maintained directly in the hierarchies by those responsible for the divisions. An authorization concept ensures that everyone can only maintain the part for which they are responsible.

Clearly defined processes and dataGovernance-rules provide the necessary transparency, the Four-eyes principle minimizes errors.

In addition to the traceability of changes, the new ZetVisions SPoT solution also provides the previously missing time dependency and document management.

Input checks ensure plausibility controls; data derivations reduce complexity since only two Data must be entered, from which further Data be derived.

The User must only important Data maintain. That which can be logically derived is automatically added by the system using defined algorithms. This also reduces the susceptibility to errors, because where the User cannot make a manual entry, he cannot do anything wrong.

An important aspect of the new solution is visibility. The system is web-based and can be viewed via the intranet.

"In the past, the publication of the Business Segment Guideline was like getting presents at Christmas""Everyone jumped on it to see what was in it. Now we're online, everyone can look into it and see how the hierarchy changes across the processing steps. In what-you-see-is-what-you-get mode, online, real time."

Bieker tells us.

One major advantage is that there is no longer expert knowledge from a select few, but transparency and access for virtually everyone.

Some departments have commented positively that they are now in a position to track how processes are developing already in the change process.

This gives them a longer preparation time for the follow-up processes that build on the segment hierarchies.

In the old world of Excel-based Listen, in which Data historically developed "in the wild" and managed in several places, there were no validations and no data Governance.

Both ZetVisions CIM as well as ZetVisions SPoT offer the possibility to include validations via customizing. They give the User Error messages or warnings (for example, additional information is required, a certain combination of values is not allowed, certain values are set automatically).

Each step must be explicitly confirmed. This is to provide certainty that changes are actually intentional and not an oversight. At field level, "old value" and "new value" are documented: Who created what and when? Who approved it and when?

The current status is also visible, for example "in process" or "approved".

Here is initially no compelling Four-eyes principle to comply. The Divisions can first release their changes. However, there is always the final validation by Group Accounting.

For other more sensitive Data However, Merck has an explicit Four-eyes principle provided for, in which changes are maintained by one division and released by another.

Today, Merck benefits from a lean IT-workflow with only two participants - Group Accounting (GA) and Divisions–Controlling (DivisionCO) - and only very few processing steps.

This has significantly shortened the lead time for change processes. Adjustments to the segment hierarchy that used to take six to eight weeks are now expected to be completed in seven to fourteen days.

With the "effective date" changes can be predated arbitrarily into the future:

"We can already capture changes today that we know are coming and pre-date those changes. Changes required in the future are then already recorded in the system. When the key date arrives, the target systems are filled by data transfer/data replication. Especially in the case of changes at the turn of the year, for example, this is a considerable relief because known upcoming changes can be recorded early on"

Bieker says.

The benefits for the User are a WYSIWYG editor for hierarchies and Master data, transparency about changes in process, close collaboration across numerous departments, and traceability of master data changes.

The fluctuation of the people involved should not be underestimated. Employees. They change jobs and responsibilities quickly.

So there must be regularly other Employees have to be retrained. It is of course very helpful that the system implemented by Merck is user-friendly and can be learned quickly.

The easier a system is to operate, the more tolerable it is if Know-how-carriers change, and the faster new Know-how-carrier can be built up.

A key aspect of a master data management project is change management.

"That's the name of the game, because any introduction of a new IT-system is associated with changes"

Bieker emphasizes.

Especially in larger Company the structures have grown over time and become entrenched ("We've always done it this way," etc.). Convincing is therefore necessary - if possible already in the run-up.

The change from Excel-based master data management to a system-based one was experienced by some areas, some Employees as a cultural change. This would have to be accompanied and cushioned; those involved would have to be picked up and involved in order to avoid a defensive attitude arising from ignorance or fear.

"Change Management incl. early communication and involvement of all stakeholders cannot be taken seriously enough".

Bieker's concluding advice.