Revitalizing Financial Modelling at GHD
GHD, a global company operating in over 135 countries, faced significant challenges with its financial modelling system, TM1, which had been in use for approximately 15 years. Despite the company's growth, the model failed to evolve, becoming cumbersome and inefficient due to a lack of skilled personnel and accumulated technical debt. Temporary fixes were frequently applied, but these did not address the underlying issues.
Upon joining GHD, Anne-Marie Rodd, a seasoned professional with over 20 years of experience in financial modelling, identified critical deficiencies in the existing models. The support team was spending 90% of their time on maintenance and error correction, indicating a pressing need for a complete rebuild. The outdated model was too flawed to salvage, necessitating a fresh start.
A decision was made to rebuild the model from scratch. The new model significantly improved performance, with the standard Profit and Loss (P&L) report updating in just 2.5 seconds, compared to the previous 90 seconds. This efficiency gain was well-received across the organization, including by the CEO. The new model provided a consolidated view of data, which had been lacking for five years, and integrated financial reporting and key performance indicators (KPIs) across multiple currencies and ERP systems.
The rebuild process was completed in approximately 8 to 10 weeks, with the majority of time spent reconciling data from various ERPs. The actual model construction took only four to five weeks. GHD employed several tools and best practices, including Pulse for monitoring and documentation, Arc as a development tool, Bedrock and Apliqode to expedite the process.
The new model has been a resounding success, enhancing performance and providing a comprehensive overview of the business. However, Anne-Marie acknowledges that further work is needed, including developing a budgeting model, statutory reporting, and automated cash flow forecasting. The current team is focused on ongoing maintenance and documentation to prevent the recurrence of past issues.
This case study underscores the importance of proper system maintenance, thorough documentation, and skilled personnel in maintaining effective and relevant financial models. GHD's experience highlights the benefits of a strategic rebuild and the use of modern tools and practices to achieve significant improvements in financial modelling.