Roche Group Reporting Process

Systems at a glance

Alexandre Mary – Group Reporting & MIS

April 11th, 2013

Overview & background

Local closing process

Headquarters closing process

From theory to practice: system implications

Current projects & next challenges

3

Fast Close

Project Objectives

Speed up the close process

• From 20 work days to 5 work days

• Accelerate external reporting by 3 weeks

Improve data quality

• Right first time

Implement for all reporting events by early 2003

• Monthly, quarterly, year-end

Improve knowledge transfer throughout global finance network

• Best practice sharing

4

Fast Close

Business Benefits

Facilitates fast response to business developments

• Provide better and more timely information to management throughout

the company

Strengthen business support from Finance

• Free up resources for more value-adding analysis and support

A necessity, not a luxury

• Better data quality at source and all aggregated levels

• Streamline and reduce cost of finance systems and processes

Strengthen reputation with the finance community

• Satisfy expectations of the capital markets (investors, analysts)

• Demonstrate disciplined financial management

5 Cut-Off Month End

Previous

Process

New

Process

Key

features

of the

new

Process

WD 8 WD 20

WD 3 WD 5

Preparation Local

Close Consolidation

Data

• Standardised

monthly

data set

• Additional

quarterly data

for external

reporting

• No „early close‟

Quality

• Strict adherence to

Group guidelines

• „Right first time‟

• Quality

Management

• Training

• New concept

External Audit

Systems

• Web-based system

for Group reporting

and consolidation

• Automatic interface

from local SAP

systems

• Automatic

inter-company

matching

Process

• Transmission WD 3

6 p.m. local time

• Rules for holidays

• Discipline

• New HQ process

• Monthly process

reviews

• Best practice sharing

Late

Transmissions/

Corrections

Fast Close

Key features of the new process

Fast Close

Key principles

No early close

Right first time

Extra day for public holidays in 6 key countries

Strict adherence to due dates

19 April 2013 6

WD 3 Block A Balance sheet

Income Statement

Movements

IC relations

WD 3 Block B Credit & liquidity risks

WD 4 Block C Supplementary year-end disclosures

J F M A M J J A S O N D

A A A A A A A A A A A A

B B B B

C C C

B

Fast Close

One standard reporting package

7

Group Reporting Process Flow

One-step consolidation

Group Consolidation

(SAP FC - Magnitude)

Group Executive

Information System

Divisional reporting

system(s) Divisional

information

Accounting

Data collection &

validation

Consolidation

Reporting

Core data

Group Finance data

ODG data (on request)

ODG data

(Core data)

Local transaction systems

(mostly SAP R/3)

Interface (SAP R/3)

19 April 2013 8

Overview & background

Local closing process

Headquarters closing process

From theory to practice: system implications

Current projects & next challenges

Roche Finance Core Standardization of master data

• Ensures that FGA (Financial Group Accounting) rules and accounting principles

(IAS, IFRS) are implemented in SAP systems, by translating them into SAP rules

and definitions.

• Ensure efficient reporting of financial data, by enabling the extraction of reporting

data from local SAP systems through the SAP GRC interface

• Provide sound basis for further initiatives, support global group wide or cross

divisional processes, a fundamental basis for further standards (Pharma and

Diagnostics Core, Treasury Core)

• Ensure consistency of widely used Finance master data

• Ensures implementation of the same solution for the same problem

• Compliance through quarterly central reviews and local self assessments

10

Group Reporting of Actual Data

Separate events

Balances in ICMS (Inter-Company Matching System): due at 5 pm on

WD 1

Monthly Flash Sales: due at 6 pm on WD 1

Financial Reporting: due at 6 pm on WD 3 (WD 4 YE)

IC

MFS

FR

Narratives Reporting: due at 6 pm on WD 4 (WD 5 YE), only selected companies for Dia division, quarterly basis

NAR

Deadlines based on local time

11

12

• Available for monthly actual reporting in Magnitude (FR & ICMS)

• Covers about 80% of the requirements

• Mandatory for all Roche affiliates with SAP ERP in place

• ABAP coding, developed and maintained centrally by Group Functions IT

• Roche Core compliance is a pre requisite

• The extraction does not manipulate or change the data

• The local company remains responsible for the data

Automated extraction from SAP

Characteristics

Overview & background

Local closing process

Headquarters closing process

From theory to practice: system implications

Current projects & next challenges

198

companies

report;

~50,000

data

6 August, 6pm 8 Aug, 2pm

Consolidation

meeting

Translation to CHF

Inter-company elimination

Group entries

Data validation

Consolidation

8 Aug, 5pm

Executive

Information

System;

HQ reports &

presentations

14

Fast Close

Roche’s state-of-the-art monthly process

days 4/5 day 11 day 3

16 Aug

Reporting

Quality

(traffic

lights)

Process

dashboar

d

Post

closing

meeting

Process monitoring

220 tasks

15

Fast Close

Roche’s state-of-the-art year end process

Process monitoring

~1,500 tasks

198

companies

report;

~65,000 data

7 January, 6pm

day 7 day 11 day 16 day 20 day 9 day 19 day 4

Translation to CHF

Inter-company elimination

Group entries

Data validation

Consolidation

10 Jan

Consolidation

meeting 1

Audit

P&L, B/S

C/F

12 Jan

Consolidation

meeting 2

14 Jan

Executive

Information

System;

HQ reports &

presentations

21 Jan

Finalise external report

including audit

CEO/CFO sign off

Audit Clearance

Prepare draft

external

report

Review by

Audit

Committee/

BoD

24 Jan

Audit Comm/

BoD

25 Jan

Reporting

Quality

(traffic

lights)

Process

dashboar

d

Post

closing

meeting

16

Process Monitoring

Runbook –live since July 2010

Good monitoring capabilities for

department heads

Tailored views per department/user

Easy ticking-off of tasks (also called

steps)

Multi user capabilities (including refresh

function) and real time information

Easy to maintain step list

Change log for every step

ICFR control descriptions attached to

steps

Fast Close

What gets measured gets done

Timing - Monthly Financial Reporting

- Monthly Inter-Company Reporting

- Monthly Flash Sales

Data - Re-Transmissions

Quality - Corrections

- Matching of Inter-Company

Balances - Roche Core Compliance

- Use of SAP/GRC Interface

Quality

Metrics

Monthly

Financial

Reporting

Good

Fair

Not acceptable

Need to improve

Overall

Score %

2010

100

2009 2003 2002 0

17

Overview & background

Local closing process

Headquarters closing process

From theory to practice: system implications

Current projects & next challenges

System landscape

Global architecture overview – relevant systems

Frontend

BI

Reports/

Data Mart

Data

Warehouse

Layer

Informatio

n Source

Layer ERP / SAP

Environment

Non SAP

CPM

Appli

-cations

TM1

Pharma+Grou

p

SAP BOFC Magnitude

EIS ROFIS

IPE

CEMA

I

Commercial

s COGNOS

Custom

Extraction

Lifecycle DW

Commercials

Dia Dashboards

Business plan

DIS

DIS

FGA

R

COCO

S

Planet

HQ BW P74 Group

COP

A

SPRIN

T

FRAM

E MO

Royalty

Perform

MGR

TM1

Dia

IDW: Integrated DataWarehouse (BO reporting) CPM: corporate performance management IPE= intercompany profit eliminations

Regional

BWs

Regional

BWs

IDW MIP

GCM

R

Financial Group closing and reporting in a nutshell…

• We make sure that fast close remains a success by providing:

– A standard SAP extraction tool to all our SAP sites

– A specific support to non SAP site to provide group data

– A central web based consolidation tool to collect financial data for about 200 affiliates WW (SAP BOFC= Magnitude)

– A global support on a 24 hours basis during reporting (Basel, Australia, SSF)

– A robust and flexible reporting & consolidation engine that supports all management needs (i.e. deconsolidation, M&A, simulations, new IS presentation,…)

– Easy ad-hoc access to data for power user (Excel)

– An integrated BI platform for top managers currently mainly developed in the Executive Information System (EIS)

– Consultancy services to our finance business partners for new initiatives, changes and projects where our solutions or others could help ( incl. customisation, maintenance & training)

We are currently 6 experts managing 3 applications.

We support approx. 860 users (of which 700 are local and 160 are headquarter users) 20

MS SQL Server 2005

Reporting tools

- EIS (internal) + ROFIS (external)

- Arcplan Special Analysis

- power users’ Excel analysis

- NEW: BO Enterprise tools

•Cube Analysis

Power Users

Reports

•Pivot Table

Other Systems:

Divisional SAP-BW, Excel

Magnitude

GRC

SAP BOFC

SSAS

Cube

Arcplan special

analysis

and downloads

Cockpit

Dynasight

EIS

Magnitude Internal Interface:

- cube creation

- partition creation

(one partition / consolidation)

- data transfer

Financial Group closing and reporting Fast Close in 5 days powered by high-performing applications

xll

Standard

Reports

SAP

R3

SAP

R3

Non

SAP

Cut-Off Month

End

WD 3 WD 5

BOFC Extended

Analytics (EA) Universes

Infoview, Webi, Xcelsius,

LiveOffice + ROAMBI (mobile)

21

All Group Finance Reporting is currently collected and processed using Magnitude

Abr Name Due When Data Entry

MFS Flash Sales Reporting M WD1 Sales by ODG

IC Intercompany Reconciliation M WD1 IC by CP by TC

FR Monthly Financial Reporting M WD3 Full Actuals group + sub consolidations

NAR Narratives for FR Q WD4 FR Comments

RF Rolling forecast (incl. FF, STA & NAR)

Y Target confirmation T0

MO Monthly outlook M WD-2 Only ODG and PU entries – no local affiliates

STA Statutory fiscal reconciliation Q

TAX Tax reporting Y

INS Insurance reporting Y

US US IFRS reporting Y RHI US consolidation

SUST Sustainability reporting Y Information on donations, sponsorship

OCC Occupancy cost reporting Y Information on buildings

RO Data repository Y Data storage for external publications

BP Business Plan Y In migration to TM1

Finance reporting events hosted on Magnitude One platform for all group data…

This helps to maximise efficiency and ROI of our current platform

Data is also available on our Microsoft cubes for ad-hoc analysis 22

Information systems to visualise data

Roche Finance System & the EIS in brief

The Roche Finance Information System (ROFIS)

• interactive tool that enables investors interested in Roche to

access and download key financial data easily.

• ROFIS is public and is accessible on internet.

• ROFIS is also mobile

The Executive Information System (EIS)

• reserved to Roche Top Executive Management (70 users)

• offers a broad range of financial figures and qualitative data

• helps managers in their financial review

• covers different modules like Sales, Financial results, a

dashboard and a value creation section.

• provides global picture on group financials on intranet. 23

Overview & background

Local closing process

Headquarters closing process

From theory to practice: system implications

Current projects & next challenges

Management information systems

Vision & goals

Management information is distributed over several systems

No capabilities for mobile reporting

Limited usage of Single Sign On

Constant push for efficiency

Single landing page for

- Finance information Group and

Divisions

- Homogeneous frontend

- Seamless information integration

Mobility

- Management report on common

mobile devices (iOS + Blackberry)

Leverage

- Integration of management

information systems in BO architecture

- common approach btw. divisions

- Possibility to integrate further Group

finance reports, e.g. Treasury, Taxes etc.

- Optimise disclosure management

processes.

Current situation Several projects will enable

25

Short term perspective

26

Integration to SAP portals is in progress…

Objective:

• One central source of

information for our

finance end users

• Maximise usability for

end user

27

Management information systems

Mobility concept

Goals

– Enable reporting on mobile devices (iPad, iPhone,

Blackberry)

– Enhance flexibility and accessibility of management

information

Content

– Sales and Results Information (Actuals, Forecast and

Monthly Outlook)

– Competitor data

Approach

– Joint approach with Pharma Medicines

– Business Objects and ROAMBI used as system

environment

– Roll-out started in 2012

– SAP Mobile will be looked at in 2013.

28

How it works…

Mobility concept

• Create

• Customize

• Publish

•Distribution

• Integration

• Security

• View

• Interact

• Share

Your Existing Enterprise BI System

The Roambi Publisher The Roambi Server The Roambi

Views

Existing BI Systems

• Create

• Customize

• Publish

• Distribution

• Integration

• Security

• Interact

• View

• Share

29

V10 migration project: a first step to the future

Macro plan

1. Find out if we can get a virtual environment April 2012

– @ SAP or

– @ Roche (Vmware)

2. Get support of SAP and clarify roadmap for EPM suite May 2012

3. Analyse the benefits of new functionality in V10 May 2012

4. Analyse integration capabilities with BW and SAP (eg FIM is now part of the offer if you

connect exclusively to SAP products) August 2012

5. Analyse BO Xi 4.0 vs 4.1 FGI decided 4.0

6. PoC V10 and FIM 10 August 2012

7. Decide on Migration in 2012 with STC Dec 2012

8. Migrate to V10 if tests successful March 22nd, 2013

30

V10 migration: Define an architecture mapping

31

V10 migration

Introduce an agile server architecture

Server role

Total sum of current resources

Productuon only)

Total sum of target resources

Production only) Total number of

concurrent

users Cores RAM (GB) Number of

servers

Server

type Cores RAM (GB)

Number of

servers

Server

type

Terminal Services

8 8 2 Virtual

8 24 2 Virtual < 40

8 4 1 Phyical

Application BFC 16 56 4 Physical 16 64 4 Virtual < 100

Web BFC 8 8 2 Physical 8 16 2 Virtual < 100

Microsft SSAS 12 16 1 Physical 24 52 2 Physical < 50

Microsoft SQL Server/SSAS 16 52 2 Physical NA NA NA NA NA

Microsoft SQL Server NA NA NA NA 48 104 4 Physical

Application & Web DS/FIM NA NA NA Physical 16 32 1 Virtual < 50

BFC Application & Web Development 4 4 1 Physical 4 8 1 Virtual < 20

CtBroker BFC, BOE or BI 8 12 2 Physical 8 16 2 Virtual < 100

TOTAL 80 160 15 NA 132 332 18 NA < 100

29 servers will be decommissioned

First time usage of virtual environments to enable better agility 32

V10 migration: Target landscape

KAISERAUGT Site (RECOVERY)

S

2 Terminal Services

Servers, SAP BFC 10.0,

CDC Designer 10.0 & MS

Excel 2010, EPM Addin

for Office 4 VPCPU 3

GHz RAM 12 GB

FW

S

S

R LAN/WAN

R

TS Citrix clients

512 MB of RAM IE 7.0

BASEL Site (PRODUCTION)

S: Switch,

R: Router,

FW: Firewall

Web and Excel Users

1 GHz 512 Mo RAM

R

S

AUDITPROD

CMSPROD

FIMPROD

SAP BO FIM 10.0 & DS

4.0 (Production) 4 VCPU

3 GHz RAM 8 GB

2 serveurs SAP BFC 10.0 CtBroker (Cluster MS), IPS

Native SAP Cluster), Files Share, EA Plugin, DS Plugin

4 VCPU RAM 8 GB

SAP BFC 10.0

(Development)

4 VCPU 3 GHz RAM

8 GB

SAP BO FIM 10.0 & DS 4.0 (Test)

4 VCPU 3 GHz RAM 8 GB

3 Application servers in Load balancing mode, SAP BFC 10.0, ActivePDFServer 2009 R2 SR3

4 VCPU RAM 16 Go (Production)

4 Physical servers MS SQL Server 2008 R2 SP1 Standard Edition US Version in Geo Cluster mode 2 CPU (6 Cores) RAM 26 GB each

2 Physicalservers MS Analysis Services 2008 R2 SP1 Enterprise

Edition US Version in Geo Cluster mde, EA UDF For Security,

MS Datapump, EA Deployer 2 x CPU (6 Cores) RAM 26 GB

BFCPROD TopParam DSPROD CMSTEST

AUDITTEST

BFCEST

FIMTEST

BFC Databases

FIM Databases

DS Databases

1 server SAP BFC 10.0 CtBroker (Cluster

MS), IPS, Files Share, EA Plugin, DS Plugin

4 VCPU RAM 8 GB

1 Cisco Web Load

Balancer for FC & FIM

2 Web servers

SAP BFC 10.0 ,

IIS 7.5 , 4 VCPU 3

GHz RAM 8 GB

2 Terminal Services

Servers, SAP BFC 10.0,

CDC Designer 10.0 & MS

Excel 2010, EPM Addin

for Office 4 VCPU 3 GHz

RAM 12 GB

2 Web servers

SAP BFC 10.0 ,

IIS 7.5 , 4 VCPU 3

GHz RAM 8 GB

All servers will use Windows 2008 R2

Server Standard Edition US Version

unless the clusterised ones that will use

tehEnterprise Edition (Serveurs SQL

Server, SSAS & CtBroker servers). The

other exception is on the Terminal

Services servers that remain on

Windows 2003 Standard Edition

1 Cisco Web Load

Balancer for FC & FIM

IPS Databases

3 Application servers in Load balancing mode, SAP BFC 10.0, ActivePDFServer 2009 R2 SR3

4 VCPU RAM 16 Go (Test)

33

Why do we want to use FIM?

Leverage new capabilities of our SAP landscape

• TODAY we are using a custom interface to retract data from local SAP

• TODAY we extract data from Magnitude in flat files and transfer data via ftp to both

DIS and FGAR cubes.

• TOMORROW we could use a native interface from SAP to extract data from local

SAP.

• TOMORROW we could feed data from Magnitude directly to BW without

cumbersome files transfers.

• TOMORROW we shall have a better integration and overview on the extraction,

transformation and loading of the actual data.

• TOMORROW these interfaces are fully insourced and part of the SAP suite (no

additional costs anymore as free of charge if connecting to SAP data sources) 34

FIM 10 Proof of Concept

What did we do with SAP?

Support

We got 3 days of support from SAP to:

1. Establish the “INPUT” connection to an ERP system (e.g. TOP)

2. Establish the “OUTPUT/INPUT” connection to a BW cube

3. Understand how we could potentially replace / enhance our SAP Magnitude Interface

4. Understand how we can replace our current FTP process with a direct link to BWs

TO DO for us:

Define plan of the SAP intervention

Who is going to work with SAP?

Which time?

How do we organise ourselves?

35

FIM 10 PoC: Target Landscape

S

1 Terminal Services Servers, SAP

BFC 10.0 , CDC Designer 10.0 &

MS Excel 2010, EPM Addin for

Office 4 VCPU 3 GHz RAM 8 GB

FW

S

S

R LAN/WAN

R

TS Citrix clients

512 MB of RAM IE 7.0

S: Switch,

R: Router,

FW: Firewall

Web and Excel Users

1 GHz 512 Mo RAM

R

S

AUDITPOC

CMSPPOC

FIMPOC

1 Server

SAP BFC 10.0 CtBroker (Cluster MS), IPS ( Native SAP

Cluster, Files Share server, SAP BO FIM 10.0 & DS 4.0, EA

Plugin, DS Plugin

4 VCPU RAM 8 GB

1 application server, SAP BFC 10.0,

ActivePDFServer 2009 R2 SR3

4 VCPU RAM 8 GB

2 existant MS SQL server 2005 SP4, MS Analysis Services 2005 SP4, Enterprise Edition US Version in crossed mode cluster, 2 x CPU (4 Cores) RAM 26 GB

GRC_PROD

GRC_DEV

DSPROD

BFC Databases

FIM Databases

DS Databases

1 Web server

SAP BFC 10.0 ,

IIS 7.5 , 2 VCPU 3

GHz RAM 4 GB

All servers will use Windows 20 08 R2

Server Standard Edition US Version

unless the clusterised ones that will use

tehEnterprise Edition (Serveurs SQL

Server, SSAS & CtBroker servers). The

other exception is on the Terminal

Services servers that remain on

Windows 2003 Standard Edition

IPS Databases

1 Server

BFC 10.0 CtBroker (Cluster MS), IPS ( Native SAP Cluster,

Files Share server, EA Plugin, DS Plugin

4 VCPU RAM 8 GB

36

FIM 10 today

Open items & planned deployments

• Install BFC 10, BOE Xi4.0 and FIM 10

• Install client tools for BOE Xi 4.0

• Install client tools for BO Data Services and FIM

• Go live new platform V10 March 25th

• Integration steps with Pharma BW P74 team April –June

– Redefine process of extraction and mapping

• For local data AS IS versus TO BE scenaris

• For consolidated postings AS IS versus TO BE scenaris

– Establish recommendation of new process

– Build & test processes

• Integration steps with Dia BW DIS team Q4 2013

• Integrarion with SAP R3 Interface Q3 2013

37

Disclosure management

The last mile we need to close…

38

39

Addressed pain points

• Consistent conventions, design, layouts and formats

• Rounded financials transparent for all involved

• Availability of rounded numbers in financial reports

• Ticking effort to decrease significantly

Process improvements

• Elimination of iterations, reconciliations and manual process steps between FCM

and FCAC

• Opportunity to streamline, reorganize and optimize FCAC report.

• One source of truth

• Elimination of most of the manual populating steps in the financial review,

financial statements and notes

Disclosure management

Phase 1: where we started and first benefits

40

• Phase I, i.e. the redesign of the Finance Report Excel module and the data repository,

is the pre-requisite for phase II of the “last mile”

• Phase II comprises the steps from consolidated financial figures to the printed

finance report

• Next steps

– Explore alternatives to fully resolve the “last mile”

– Explore possible disclosure management solutions (incl. SAP Disclosure Management 10)

– Explore collaboration with Group Communications (NS.Publish in use)

– Propose approach in next SC meeting in December postponed !

Disclosure management

Next steps

Local close Consolidati

on

Design,

printing

The “last

mile”

Long term perspective

Perspectives: HANA and Magnitude

A brief overview of our expectations

• Content and benefits :

– Virtual cubes allows major performance improvements in the data retrievals

– Performance improvements in the consolidation processes

– Less performance gains on the data collection part to be expected

– Technology will allow to build views directly accessible in BWs running with

HANA without replicating data in separate BW cubes.

– Avoids creation of redundant data in multiple cubes

• Our position:

– Continue to get regular updates on progress made

– Proposed to participate to tests as soon as package is ready

this PoC will be included as a follow up to V10 migration project

42

Summary: Delivering the performance

management promise by…

• Simplified & harmonized IT landscape with single point of maintenance – SAP Financial Consolidation

• High flexibility and reactivity to new business needs thanks to internal expertise

• Better data quality

• Objectives given by Roche Management to FAST CLOSE were achieved

Earlier information delivered to management: WD 6

Quicker management response to changing market (e.g. Opex reporting or global issues)

Earlier information to the market: we are in the top tier of global healthcare companies in term of reporting speed

• Closer integration to SAP environment thanks to future FIM and HANA projects

43

Doing now what patients need next