TeliaSonera makes business decisions like never before with SAS® Activity-Based Management

When fast-growing TeliaSonera reorganized operations, it replaced its traditional information systems with an activity-based accounting system. Now, the Finland-based communications service provider uses SAS Activity-Based Management to support operational and strategic business management.
 
TeliaSonera serves 135 million subscribers in the Nordic and Baltic regions, in Spain and in emerging Eurasian markets like Russia and Turkey. 

Accounting no longer on hold
The group's Finnish Broadband Services business – which incorporates three independent, product-based profit centers: B2B, B2C and B2O, – is responsible for TeliaSonera's fixed transport and access network, accounting for 40 percent of net sales in TeliaSonera Finland.

Because these profit centers use the group's common production and product-development resources, TeliaSonera's organization-based old systems could not accurately allocate cost and profits.
 
"They didn't give us the results we needed for managing the business," says Tarja Leikas, CFO TeliaSonera Finland and Broadband Services Finland. "As far as the old systems go, our new profit centers did not exist."

"SAP produces the raw material for the activity-based management calculations (in SAS)," Leikas notes. "For (business management), we use the SAS results."

Dynamic decision support
Today, using SAS, TeliaSonera produces dynamic income statements to view trends in the structure of costs in profit centers. Findings support operational and strategic decisions.

Before implementing SAS Activity-Based Management, TeliaSonera could not spot and act on these insights.

"I'm not interested in snapshots, but in understanding the change, the delta," Leikas says. "We make changes in our operations constantly, so the accounting needs to be dynamic, too. The delta is the thing."

Pure financial management
In addition to calculating profitability, SAS supports pricing and regulatory accounting as well as ad hoc tasks and reports, Leikas says. Clients include the head of each profit center and the entire Broadband Services management, plus the controllers, product managers and production- line management.

"Is it any more operational than having a result for each month, and is it any more strategic than having a five-year business projection? Well, it's all about pure financial management enabled by the new system," she says.

Match made in heaven
TeliaSonera acquired its activity-based accounting solution to meet pressing needs in the midst of a business restructure.

"SAS Activity-Based Management was a match made in heaven for us," Leikas recalls. "We got a whole lot more than we asked for."

Broadband Services employees worked in a range of functions for a variety of products. Perhaps a dozen employees worked under a particular manager's domain, and their efforts generated €100 million. In reality they actually needed efforts from 100 other employees across the company. So management needed an accurate, automated way to ascertain and evaluate contributions -across functions and products.
 
Another challenge: Multiple functions across the organization use TeliaSonera's back-bone network infrastructure and IT systems – its actual production machinery.

"SAS Activity-Based Management allows us to see how much work the staff members in each unit have performed under which function and the extent to which each function has used the network and IT systems," explains Leikas.

Using SAS, TeliaSonera generates a dynamic income statement that contains "considerably more valuable information" than previous accounting systems could provide. And, Leikas says, SAS provides results almost in real time -- if the source systems are closed in the morning, she still can still get updated profit-center figures in the afternoon.

"Things happen quickly in this business," Leikas says. "We live in a dynamic world, and we need dynamic tools. That's why SAS is the right solution for us. I'm happy to see that already 3 other business units within TeliaSonera have chosen to follow us and are implementing SAS ABM."

Unexpected findings
To keep its "basic machine" in order, TeliaSonera has run a cost-efficiency program for years. SAS has proven invaluable to the company's efforts, Leikas says.

Although Broadband Services had a good idea where business was going, the group discovered a few different, and unexpected, realities using SAS, Leikas says.

"The financial situation varied greatly across the different profit centers, and the consumer broadband business was in much deeper water than we had assumed," Leikas explains. "SAS helped us target our actions effectively."

Rather than debate the accuracy of the cost accounting figures, the company's skilled business managers trusted the numbers, rolled up their sleeves and took action, Leikas says.
 
"The view of our business certainly changed, and of course you can only improve things once you've acknowledged the facts," she says. "That is essential if we are to succeed."

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