Finance Transformation at Pella – Transcript
Kayla Flanders:
That single source of truth concept is really critical. In some of our old tools, you could have two people try to pull the same thing, but they’d get different answers. And that becomes a credibility challenge for the finance team. And having that one source has really reduced the error or the risk. We have really been able to demonstrate from a finance business partnership perspective an enhanced level of confidence just in the data that we’re providing and the speed at which we are able to provide it.
Announcer:
Welcome to The Hackett Group’s “Business Excelleration™ Podcast.” Week after week, you’ll hear from top experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to Digital World Classâ performance.
Tammy Norton:
How has Pella – one of the nation’s premier manufacturers of windows and doors – transformed its finance operations, creating one source of the truth for budgeting, forecasting and other financial packages? I’m Tammy Norton, a principal in the OneStream practice at The Hackett Group. And on today’s Business Excelleration™ Podcast, we’ll be talking with Pella Director of Finance Kayla Flanders about what they’re doing and what they’ve been able to accomplish with the help of OneStream Software and The Hackett Group. Kayla, welcome to the podcast.
Kayla Flanders:
Thank you, Tammy. Great to be here.
Tammy Norton:
Kayla, I’d love to start with just a background of how Pella has some high-level strategic objectives set forth in the last few years. How has OneStream been helping with that?
Kayla Flanders:
As our leadership team looked at 2025, it’s the 100-year anniversary of Pella being in business, and we set some really aggressive growth goals in front of the organization of doubling the size of the business by that landmark year. And as a finance team, when we took a step back and looked at our function and how we were supporting the business at that time, we knew we wouldn’t be able to support that strategic business objective in the appropriate way and really decided at that point we needed to really enable the team to move forward in a much more efficient and effective way, and we ended up selecting the OneStream technology platform to develop our business processes around and obviously worked with The Hackett Group to enable that transformation to happen.
Tammy Norton:
Excellent. Take us through a little bit of the Pella road map. We’d love to hear about some of the old systems that maybe weren’t working for Pella, what you went through with The Hackett Group in making a selection process, and were there any limitations or hesitations with reporting tools and the reasons that OneStream stood out for the Pella team?
Kayla Flanders:
When we started our journey for enterprise performance management, we really wanted to develop that road map, and that’s when we first engaged The Hackett Group to help us with that. We wanted to make sure that we had a good line of sight to where we were going and what we wanted to try to get accomplished. And we knew it was a lot. We knew we were trying to take a significant step forward in that transformation journey, so we built a multiyear road map of what the complete transformation would look like, starting with close consolidation, thinking of budgeting and forecast, financial reporting, and really moving, I’d say, even beyond the finance function.
We say a lot that this was not a finance project. This was an enterprise transformation project that really was enabled by the finance team. So our old tools that we were using – we were a legacy HFM and SASE organization, and we had implemented those two tools probably about 10 years before this journey started. And they had served us really well up until this point, but they had become slow and bogged down with the complexity of the business, and we knew we really needed to increase the speed and effectiveness of those tools that we were using. So after we did the road map with Hackett, it really helped us define what we wanted to achieve and what success looked like.
And then we went on our selection journey from a technology perspective and ended up selecting OneStream through that process. What really led us to OneStream and why they came out on top of that process was the ability of the technology to be a platform. We knew it could solve the business problems that we had in front of us today, but we had the flexibility and the capability to continue to develop and solve business problems of the future that we may not even have on our radar right now. So that was really important to us to have that platform approach where we could continue to build multiple solutions within the tool versus being boxed in with a set script of distinct processes, more point solutions versus the comprehensive approach.
Tammy Norton:
And I will say, I know from an implementation partner, Pella and you and the team have done an amazing job taking advantage of that single platform and continuing to grow it. I’d like to turn the focus now and talk a little bit about your data lake. I know a lot of people out there would be interested in something like this from an implementation standpoint. Once we got that connection figured out, it was really easy for the team to pull in a lot of different tables and lots of sets of data from just one place. I know this is a shift from what folks have done in the past, so we’d appreciate your perspective on it.
Kayla Flanders:
I understand that this is a really unique solution that Pella went forward with, and at the same time, we were working through our finance transformation process. Our information technology group had just launched a master data management strategy group or process as well, and our goal is that all of the data is mastered and funneled through a single data lake, and in essence, really wanting to get to supporting that single source of truth that you mentioned before. So we were able to build a single pipeline between our data lake into OneStream. So all of the data flows through that data lake other than some, I’d say, right now, minor ad hoc data loads that once that data is mastered, will also go through the data lake as well.
So I know that was not the traditional setup, and OneStream has the capability to connect to multiple different general ledger packages and ERP systems and other technology solutions to bring data together. But for us, getting our data mastered using the data dictionaries and other tools that our information technology team is implementing was really important. So we know we have clean data coming in and then the feedback out of OneStream into the data lake for other purposes as well is also a single road. So we’ve been very successful – very happy with the speed and the agility that has given us – and it has worked really well.
Tammy Norton:
We’re seeing a lot more of it. So you are a trendsetter. Our Phase 1 of the implementation was focused on the close and consolidation budget, and our favorite topic of profitability. I know you ran with three months at Pella. Can you tell us a little bit about the journey and, honestly, include any growing pains that you had in the new system?
Kayla Flanders:
With change, it’s always hard. And even when the team is really excited about the benefits that they see the new technology is going to bring to us and they know the vision of what we’re trying to accomplish, it’s still hard. We were a very heavy power user of those old tools. People were comfortable with them. They knew where to get the data, so working through just that change, it was hard. Change is always hard. I will say the tools and the training that The Hackett Group provided and that OneStream has as well really helped enable us on that journey and accelerated the speed of acceptance of using that new technology.
The three months at Pella were also really key to us. It gave the team time to really watch the new process in conjunction with the old – really see the speed by which the new technology was going to accelerate our processes around month end, especially around profitability. We saw almost a 90% improvement in processing time going down from four to six hours every month end to about 40 minutes. So we just saw so many improvements. It got the team really excited. So that investment of time, one, just from a data integrity and tile and confirmation that the processes were built, how we intended them to be, but also just seeing it was a little bit of the proof points that the team needed. So when we cut over, it felt very seamless and the team was ready to accept that.
Tammy Norton:
I do know there’s a lot of finance and FP&A folks out there that would love to have a 90% reduction, especially during the close process. One version of the truth – that is one of the main goals of this OneStream. Was that accomplished and do you feel that’s helping the business?
Kayla Flanders:
I do. That single source of truth concept is really critical. When you have multiple finance teams who support multiple lines of business and they’re providing reports in some of our old tools because of the way that the data was mastered and the hierarchies were set up, you could have two people just inadvertently, they’d try to pull the same thing, but they’d get different answers. And that becomes a credibility challenge for the finance team. So having that one place, the one source, the common hierarchy, a master dimensionality that we’re all speaking the same language has really reduced the error or the risk that the reports are pulled incorrectly.
And also, just enabling the enhanced reporting functionality within OneStream itself. We just didn’t have that in some of our older technology. So we’ve set up a lot of standard QVs and reports where people don’t have to do them themselves anymore. The technology is able to do that work for them. We have really been able to demonstrate from a finance business partnership perspective an enhanced level, again, of confidence just in the data that we’re providing and the speed at which we are able to provide it to our business partners. So we’ve been extremely successful in managing that and really setting the system up and the team for success.
Tammy Norton:
I know as an implementation partner, one source of the truth is an amazing way to not have to move data back and forth. Let’s talk a little bit about Phase 2, which I know included forecasting, expansion of your profitability, leases and tax. This was the very first forecast. It was done for Pella. How’s the process been going with all those additional work streams being added to your OneStream footprint?
Kayla Flanders:
It has been in this year two – this Phase 2 implementation year – so exciting to continue to build our capabilities within the tool and even enhancing the existing processes. Our previous forecasting process was extremely high level. It was all done in Excel. We didn’t have the ability to do monthly reporting and really get down to the level of dimensionality that we needed. Our business is primarily custom-made to order, so getting a really good line of sight to our mix of brands and products and material types is really, really critically important to understand profitability.
And when we were forecasting, we were just not able to get down to that granular of a level. It was just too hard. And now with OneStream, we’ve been able to do multiple forecast cycles. We can do a 24-month ruling forecast. We can do a forecast every month if we wanted. It has just provided a lot more flexibility to the team to get information faster in order to make better business decisions, which again from a business partnership perspective has been critical. We’re also able now to do standard monthly reporting against the forecast, do better analytics and comparisons against our budget – against the prior year. So we have really, really enhanced that capability across the team that we just would not have been able to do without this technology.
Tammy Norton:
The question everybody loves to ask at the end of a journey – if you were to do these phases again, would you have structured them differently? Did you feel it was too much for the team? Was it not enough? I know currently as you continue to expand your footprint, Pella and the team has taken on a lot of that work without having to rely on consultants. Can you share your thoughts there?
Kayla Flanders:
Yeah. When you look back, it’s amazing to see how far we’ve come and yet think about all of the capabilities and really the art of the possible with the tool and how many things we still want to enable. I don’t think I would’ve structured the phases any differently, starting with close and consolidation with actuals really being the backbone of all the financial reporting and the springboard for your budget for forecasting. So I don’t think we would’ve architected it differently. I’m not sure we could have gone any faster. Sometimes I wish we would have or could, but we’ve taken some really big bites and some big swings at some comprehensive process transformation, and it has been really successful, and really, at the speed I think that we’ve gone has worked really well for us over this two-year period. And I don’t think it was too much for the team.
It definitely is a lot. As I mentioned before, change is hard, and even when the team is ready for it and asking for it, that doesn’t make it any easier necessarily just to work through all of the nuts and bolts of the changes, but they’ve been excited. I think one of the maybe key recommendations for the audience that I would have is the more that you can have a team focusing on this transformation and dedicate some resources to more focusing on the run the business aspect as well because that doesn’t stop. Unfortunately, the business doesn’t pause while you’re trying to transform. So the more you can segregate the two, the better off it is for the team and just their ability to absorb all of the work that’s in front of the group. But now with The Hackett Group and the partners that we’ve had and our ability to do that over the last couple of years, we’ve been really, really happy with what we’ve accomplished.
Tammy Norton:
I’d like to shift now to the current thought process you and the Pella team are having focused around sensible machine learning, IBP, and sales planning. Can you share your insights about Pella’s starting to think about the future of how we’re going to integrate that within the OneStream footprint?
Kayla Flanders:
Again, we continue to look at OneStream and the art of the possible, and how we can continue to leverage the investment that we’ve made in different and unique ways. And we’ve just been wrapping up a pilot with the OneStream team and with the assistance of the Hackett team too on sensible machine learning and using artificial intelligence to really take a look at our forecasting, specifically focused on our demand signal, and how do we try to get that as accurate as we can by bringing in that machine learning and artificial intelligence capability. We’ve been really pleased with the outputs that we’ve seen so far from that pilot, the user interface, the speed by which the software performs, and really the improved accuracy from some of the preliminary work that we’ve seen. So it’s really exciting to potentially bring that into the fold as well. And as you mentioned, one of the big benefits of having this platform approach is not having to move data around.
So the more that we can get to that single source of truth by having that integrated business planning – if you think from demand signal through constrained supply – that feeds right into the financial forecast. So if we can encapsulate the entirety of that process in a single solution, it is a consistent user experience. There’s no data movement. There’s integrity of the hierarchy dimensionality. So there’s a lot of benefits that we can see by potentially bringing all of this into a single solution like OneStream. So we’re excited to continue that pilot and at least see where sensible machine learning can take us.
Tammy Norton:
It is an exciting time. Well, I know I speak on behalf of the entire Hackett Group OneStream team, what an amazing partner and leader you have been through this project and the journey that OneStream and Pella have been on has been pretty amazing, and I want to thank you for sharing your story with us, Kayla. Listeners can find more information on The Hackett Group’s OneStream practice on our website. We’ll include a link in the show notes. Thank you for listening.
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