Skanska about cooperation with JCommerce – interview with Péter Béres24 November 2016
The rapid growth of the economies of Central and Eastern Europe is largely based on modern technologies and advanced business services. As a byproduct of this success, these industries generate huge demand for office space. Skanska has long been aware of the investment potential of this market. Poland, Hungary, the Czech Republic and Romania are responsible for over 50% of the entire Skanska group’s global revenue from the sale of office space. In Poland, the company not only builds offices, but also roads, bridges, residential developments, conference venues, and cultural and sports facilities, and employs 8000 people. In 2014, Skanska commenced cooperation with JCommerce in the framework of solutions which support the building of office space and monitoring the profitability of investing in this region of Europe. The system has been operational for a year now, and so we conducted an interview with Péter Béres, BU Controlling Manager at Skanska Commercial Development Europe, to mark the occasion.
530,000 m2 of office space completed, 170,000 m2 under construction and 320,000 m2 planned, according to data from 2015 for Central and Eastern Europe. This makes a total of over one million square meters of existing and planned offices spread over several cities. Managing such a rich portfolio must be a huge challenge?
Indeed, we realized that without a sophisticated controlling application it is not feasible to prepare high quality timeliness forecasts, as we are not only dealing with huge areas in terms of square meters, but the hundreds of assumptions behind every project. In our business we need to look a minimum of 5 years ahead in every forecasting period for each project, preparing several scenarios with different assumptions and combining such project scenarios in different project plan versions, resulting in huge complex calculations which are almost impossible to follow in Excel. Shifting forecasting into such an application clearly saved time without compromising on quality.
How did cooperation between Skanska and JCommerce come about?
Our cooperation started off with a project to optimize the ERP Microsoft Dynamics AX system in the Polish branch of the company, Skanska Property Poland. The system which was previously in use within the company no longer met expectations, and so, in 2012, JCommerce specialists became involved in the development of the system and its adaptation to the needs of the company. After this initial modernization of the system, JCommerce also proposed the creation of a Web application using .Net technology, which has enabled our users to enter and view data without licensing restrictions to access. This solution was highly popular, and from there new ideas came up for additional modules, such as Rent Roll, a list of lease agreements, and Gain on Sales Calculation, which is a tool for recording the profits associated with these projects.
The system implemented at the Polish division of our organization by JCommerce was presented in such form during the CEE Commercial Property Development meeting, and received wide acclaim. The decision was therefore taken to extend its operation to other markets in the region and integrate it with our internal Korab II system. JCommerce specialists have also assumed responsibility for those stages of the project.
What is Korab II?
Korab II is our own ERP system, which Skanska uses in the CEE (Central / Eastern Europe) countries. Its integration with the solution created by JCommerce enables the flow of data between systems, both in terms of vocabulary data, such as country names or service codes, and financial data. Changes made in one system will be automatically updated in the other.
What were the main problems which you wanted to solve?
Before the implementation of the system we had huge issues with the consistency of the data: the lack of a unified data structure, different units, different currencies and different formulas for calculating the same parameters, depending on the methodology in use in that country. In individual countries, the same parameters or indicators often differed greatly from one another, due to legal, tax, or economic differences. As a result, the company had problems with standardizing indicators that are vital for development project management, such as the market value of the project, the value of land, costs, inflation, or lease profitability.
The situation was further complicated by the fact that data was entered into a number of different systems simultaneously, and was therefore often different – errors came up, and we sorely lacked a singular database for analytical processes. The preparation of reports was highly onerous under such conditions.
Can you give us the main advantages of the system and the benefits which have resulted from its implementation?
The system records all leases, rents, discounts, and annual profits, using the data warehouse. With a significantly improved speed of data entry, users do not have to enter data in different databases; we have direct access to current information and transparent reports. With the web application data being available in all locations at the same time, information is consistent and orderly, without errors resulting from incorrect data entry. Scalability is also a considerable advantage, as is the ease of adaptation to the increased needs of our company, thanks to the technologies used as well as licensing models.
Are you able to name any key performance indicators which you have managed to improve by implementing the system? Can you give us any specific numbers?
I can’t talk about financial KPIs, but can confirm that we have already reduced the reporting consolidation process by one day, which we can “give back” to the operating countries so they now have an extra day before the deadline of their reporting process. It results in better quality that can be seen in the number of questions that need to be asked and the number of revisions that any of the countries need to submit. We foresee that the forthcoming new modules which connect the application directly with HFM, the consolidation tool used by Skanska worldwide, will result in a similar saving of one extra day in 2017.
Skanska and JCommerce continue to work together on the development of the system. What is the current priority?
At this point we are working on the addition of other data grids which we would like to process and analyze; and we plan to extend the range of functionality of the system, for example the Land Valuation tool which analyzes changes in the reported book value of land compared to market value. We also plan to connect up our new CRM system and are considering storing some external market data.
What is the future of the system?
The system has been presented in all of Skanska’s business regions, meaning Scandinavia, the UK, and the United States, and there is a desire to roll out the system in all locations. This is obviously another big challenge that requires the adaptation of the system to local conditions, such as different accounting systems, or changing the metric system to the imperial system in the United Kingdom and the United States. But before that happens, we want to tidy up all processes and implement all planned functionalities in the system currently operating in the CEE region, using it as something of a pilot study.