Balancing the Books

The HARTING Technology Group, manufacturers of connectors and electromagnetic components, used the German Accounting Law Modernization Act (BilMoG) as an opportunity for implementing SAP’s new general ledger. Above all, the global enterprise wanted to raise its internal reporting practices to a new level. Now even its smallest corporate unit can take stock of its performance.

HARTING went live with the new general ledger on Easter day in 2012, the air charged with nervous anticipation. The Group supplies the electronics industry the world over with connectors and connection technology. Together with the IT service provider Lynx Consulting, it spent a good year preparing itself to enter this new age of reporting. With subsidiaries in 30 countries, the company had in previous years built up a sophisticated accounting and reporting system comprising 50 company codes. It was unwilling to abandon the characteristics – and least of all, the data quality – of this system. As a result, the new general ledger and reporting solution had to meet much higher demands at HARTING than is normally the case.

The company’s most important goal was to be able to present a complete balance sheet and a complete profit and loss statement (P/L) for each of its corporate units. This was not possible with the old version of the general ledger. HARTING’s galvanics division, for example, supplies the company’s different production lines internally and needs an exact cost-benefit statement. But the old general ledger was unable to satisfy this requirement. “In the past, we could compile only rough estimates and record approximate values for certain parts of the organization. Reporting for individual business units was impossible, because there was always some data missing. It was an unsatisfactory situation for all of us,” explains Jürgen Olesch, the SAP specialist at HARTING.

Being able to control the business better across all business units and international subsidiaries in the future depended on a better statistical basis and improved analysis of the numbers. Profit center accounting, an essential part of HARTING’s controlling and management for many years, was to be retained at all costs and fine-tuned.

Country-specific requirements complicate matters

Given the global reach of the company, its goal proved to be quite challenging: HARTING needed to comply with great number of special, country-specific accounting regulations. The Brazilian and Russian governments, for example, both stipulate that the fiscal year must be the calendar year. However, the fiscal year of the parent company, which operates under German commercial law and applies group rights globally, begins on October 1. The final impetus for the project came from outside the company: The BilMoG states that companies must in future prepare separate balance sheets for commercial and tax purposes, so in effect, HARTING was more or less forced to depict a parallel accounting.

It chose Lynx Consulting, an SAP partner, to guide it through the project. According to Claus Hilger, head of IT at HARTING, “A major factor in our decision was the geographical closeness coupled with the good reputation that Lynx has earned in other HARTING business units.” But it was the overall package – free of additional charges and travel expenses – that appealed to HARTING’s financial officers.

On the next page: The road to successful implementation

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