Due to a spate of acquisitions, metals distributor and processor Ryerson Inc. is running four different general ledger systems. It's moving toward a consolidated global ERP platform, but in the meantime the company has implemented a business performance management (BPM) application to gain a consistent view of how it's performing.

BPM Magazine: I understand that Ryerson has grown dramatically through acquisitions over the past several years. How does budgeting work in the combined company?

David Shaw: It starts with the sales process. Upper management determines the goals for the whole company, then they determine how much revenue they expect from each division. Our divisions are divided into markets, and the divisional vice presidents determine what each market's goal should be. Each market consists of customers, so then the field salespeople go in and forecast revenues for the individual customers. They are provided annualized current year values to give them a base, then they project what they are going to do for the next year. We budget tons, sales dollars, and what we call "price margin dollars."

BPM: What does the price margin dollars budget look like?

Shaw: Price margin dollars represents a calculation of sales, less cost of goods sold. It's generally just material, though there are some freight components that are taken into consideration.

BPM: Is that a figure that individual salespeople come up with as they look at each customer?

Shaw: Yes. Because they have the historical information from the current year at a customer level. They're also given some projections as to where corporate expects the various metals to be. For example, this year the cost of stainless steel was on an upward trend until this month; now it's on a downward trend. So we provided projections to the salespeople explaining where we thought things were going to be. And they would then base their customer-level price margin dollars budget on that knowledge.

BPM: How are the corporate goals and the sales targets by customer communicated between senior management and salespeople in the field?

Shaw: We use Web-based software, which was created in-house by Ryerson, for that. It is called the "Sales/Marketing Dashboard" or just "the dashboard." It keeps track of sales by customer and by line of business (we have 15 lines of business, or product groupings). An individual salesperson can go in and see their inputs, the general manager can look in and see it, the divisional vice president can go in and see what's going on, and so can upper management.

BPM: Does the same dashboard tie in actuals to the budget targets?

Shaw: Yes, it does. So users have the ability to see their actual revenue numbers versus budget on a monthly basis or a quarterly basis.

BPM: Does all of Ryerson's budgeting take place within the dashboard, or do you have a method for more detailed expense planning?