In his three years at plumbing and cabinetry products maker Elkay Manufacturing Co., VP of finance John Hrudicka has harnessed a wide range of enterprise intelligence systems, including BPM, profitability analytics, and the Balanced Scorecard. In a recent interview with Business Finance blogger Steve Player, he explained how Elkay forged these components into a coherent whole.

Steve Player: Tell me a little about the Elkay management system.
John Hrudicka: It consists of four primary components and related business practices which, when integrated, provide for greater transparency, knowledge and guided analytics.

It starts with our strategy framework; we have adopted the Balanced Scorecard.  We’ve also implemented a Balanced Scorecard best practice by formalizing an office of strategy management to ensure our commitment to strategy execution.  The core of the Elkay management system is our strategy, with emphasis on monitoring and measurement to ensure execution.  

The second component, business performance management (BPM), describes the business planning application we utilize to plan our business and monitor and measure our performance against our objectives, allowing us to identify change relative to our initiatives and desired outcomes in order to develop the appropriate actions to achieve our goals.  

The third component is what we call discrete product costing (DPC) — its foundation being time-driven activity-based costing.  We utilize Acorn Systems for our application.  It’s a cost assignment methodology that produces very rich profitability analytics.  It has been an integral component for us in terms of driving behavior and creating a culture of awareness and understanding around the profitability profile of our customers, segments, products and activities.

The fourth component is customer relationship management. CRM provides a holistic view of our customer in terms of what they buy, how they buy, their customer care issues, and their profitability to Elkay.  It provides a formal guide to help track our selling processes in real time with complete transparency. We’re in the midst of implementing phase one, which will be completed soon, and we plan to complete our companywide implementation later this year.
 
SP: How does it integrate? Is it all one big system?
Hrudicka: Relative to the existing technology platforms, it's a bit disparate. The technology pieces we’re building into the system tend to be best-of-breed. We believe technology has matured to the point where you don't need to buy a fully integrated suite that possibly forces you to sacrifice the functionality that’s necessary to meet a business need.

SP: How did you get interested in the technology of finance?
Hrudicka: My first throw at this, which probably fueled my passion, was when I was a director of finance for a small, $200-million division within Paging at Motorola. At that time the paging sector was about $2.5 billion, so we were very small, and our processes around planning and reporting were very manual. We had a reporting system and the ability to produce reports, but they were canned reports and everybody wanted something different. So we would print the reports and input the data into the formats that people really wanted, creating wasted activity. We had people doing that at the sacrifice of value-add activities to meet business needs.

We did some research and discovered a tool called Essbase.  With it, we could produce a financial reporting package at the end of the month in the formats people wanted. In fact, it took more time to print the package than build the reports. The Paging sector liked it so much that it was implemented across that $2.5 billion business. From that point forward I’ve been diligent in pursuing technology solutions to increase the productivity and value output of the finance team.

SP: What challenges do you still have?
Hrudicka: I think continuous planning is going to be a challenge, not from the standpoint of buy-in, but in how effective we are, the pace at which we develop the implementation plans, and how well we influence on some of the more challenging aspects — incentive compensation is a prime example.

Another area of contention is that I’m constantly challenged to lead with process and then select and apply technology.  I have a strong belief that you should do this in parallel, because sometimes you’ll choose technology or implement in such a way that enables process elements or innovative capabilities that you wouldn’t have thought of otherwise.

To read more of this interview with John Hrudicka, click here.