CASE STUDY - Rohm and Haas: One Company, One Measure
- By Mike Masciandaro
- October 18, 2007
Commentary by Mike Masciandaro, Director, Business Intelligence, Rohm and Haas Company
The Company
Rohm and Haas serves a broad segment of dynamic markets, including building and construction, electronics, food and retail, industrial processes, packaging, transportation, and water. We have operations with approximately 100 manufacturing and 35 research facilities in 27 countries with 16,500 employees.
Rohm and Haas has relied on its business intelligence program to guide and track its transformation—in eight years—from a $3.5 billion organization to an $8+ billion enterprise. Each year, Rohm and Haas purchases 3.5 billion pounds of raw materials, mostly petrochemicals, and 23 million BTUs of natural gas—commodities with dramatic price increases and frequently subjected to disruption and shortages. During this transformative period, the company divested more than 45 units and acquired many more. We maintained profits by making good procurement decisions, by making timely pricing decisions, and by closely watching our businesses in near real time.
None of this would have been possible without our BI program.
Our executive council—seven senior executives—visibly supported this project, was actively involved in developing the first metrics, and continues to support and use the program. We were able to provide BI functionality to the CEO and people on the shop floor with the same schema, data, tools, and metrics.
Because we operate so many businesses in so many countries, it was important that we develop a “one company, one measure” discipline in order to minimize time spent discussing the meaning of data, and to foster agility. We can move across the hall or the world and still track business with the same tools and semantics.
At the project’s outset, we had more than 300 disparate IT systems, with IT costs accelerating at an alarming pace. Our 13 businesses, each operating in four separate geographic locations, were operating largely independently of one another.
Our challenge was to remain geographically diverse and have extraordinarily efficient and robust business processes while being flexible enough to meet local customers’ needs and expectations. This was the perfect environment for IT, finance, and business collaboration.
The Solution
The tools we chose, an all-SAP implementation, inherently solved some of the linkage issues between strategy and implementation because the enterprise resource planning and BI facilities are tightly bound. If we are agile in ERP, we inherit this agility in BI. We frequently change reporting hierarchies—a fluid process that requires little to no attention. Because our business is dynamic, the tight connection between our ERP and BI systems eliminates handoffs that could adversely affect our goals for accuracy and agility.
The selection of SAP tools let us quickly roll out BI capabilities to a wide audience because there was one tool for both training and support. Upgrades are synchronized and tested by one vendor, avoiding the integration complexities with tools from multiple vendors.
We had a data warehouse before, but we saw clearly that it could be improved with a more complete architecture. The advantages of moving to SAP NetWeaver BI were too obvious to ignore. About 90 percent of our data is now in SAP, so it was an easy decision.
Once we implemented NetWeaver BI, we used BEx Web for reporting and dashboards to drive usage at higher levels of the organization. Everyone now gets a direct information pipeline.
Business Benefits
The executive council describes our BI program with words like “sea change,” “pricing power,” and “confidence,” and cites dramatic increases in the speed and quality of decision making.
Business performance accountability accelerated our decision making involving critical business risks. Enterprisewide objectives successfully translated into actions at the business level. Raw material cost increases now are tracked in near real time. Gross profit is protected by better pricing decisions, materials sourcing, and timing. Managers now track results from the first day of the month, rather than 40-50 days late, and finance and IT costs have dropped from 5 percent of sales to 2.75 percent.
We have moved Rohm and Haas into an environment in which we leverage information for faster and more accurate decision making. Our high-efficiency operating platform is now the foundation for innovative worldwide growth of our businesses, organically and through acquisition.