This "case study" is the latest in a series of articles aimed at helping public companies understand how other organizations are using technology to comply with new regulations and standards. These are not advertisements or marketing vehicles for the companies mentioned; Compliance Week's editorial staff speaks with the public company that has deployed the technology, and the article is written without the input—and in many cases the knowledge—of the vendor.

DETAILS

THE COMPANY

Company

Viasys Healthcare

HQ

Conshohocken, Pa.

Employees

1,859

Industry

Medical equipment

'03 Rev.

$395 million

'03 Net

$21.6 million

THE CHALLENGE

Cobbled together in 2002 from 23 business units spun out of Thermo Electron, Viasys needed a single financial reporting system worthy of a publicly traded company, and the system needed to meet the challenges of Sarbanes-Oxley compliance.

SOLUTION CHOSEN

Financial and business performance solution from Cartesis, a software company originally spun out of Vivendi and later acquired by Pricewaterhouse-Coopers. In late 2003, the company—headquartered in France but with offices around the world including the United States—was acquired by Apax Partners and a syndicate of other private equity firms.

New Requirements

In late 2001, well before Thermo Electron completed the spinout of Viasys Healthcare, John Imperato began pondering financial reporting systems for the nascent company. As Viasys’ vice president of corporate finance, Imperato knew he would face “huge” reporting requirements, well beyond what any of the business units reported under the Thermo regime. Viasys was a subsidiary of Thermo Electron until November 2001, when the company spun off its interest in Viasys by distribution of a dividend to its stockholders.

Imperato

While at Thermo Electron, the business units had used software from Hyperion for consolidated reporting, “but it was not even close to what we needed to support stand-alone operations even in a pre-Sarbanes world, let alone post,” Imperato says. The units reported results as legal entities only, with data that often had to be entered into spreadsheets manually and then emailed to appropriate supervisors; profit-and-loss statements had no drill-down capabilities. “We realized right away that we didn’t have tools to support all that would be required from us,” Imperato recalls.

As a new company, Viasys had no IT department large enough to handle such a formidable challenge itself.

Imperato had prior experience developing consolidating reporting systems, so he decided to assemble a short list of financial software vendors quickly. He considered Hyperion and Cognos, and a colleague recommended Cartesis Corp. as well.

Getting Comfortable

Due to Imperato's experience with financial systems, he knew with some certainty what he needed, and had several requirements for his system. Above all, he wanted to be able to report results on a management basis, rather than a legal entity basis. That's because some of Viasys’ units worked in the same markets, and he wanted to collate those activities under one management system.

Imperato also needed a "closed data loop," rather than one that required employees to key data into spreadsheets multiple times. He also wanted to close the books monthly, and needed the ability to drill down several layers into the financials. And the level of detail needed to be scrubbed for multiple "views"; for example, with units overseas, Imperato wanted to be able to view results with—or without—the effects of currency exchange.

While Cognos, Hyperion and Cartesis each gave demonstrations to him and the company's chief financial officer, Imperato notes that Cartesis immediately stood out from the crowd. That's partially because its Magnitude system was fully Web-enabled.

In fact, Cartesis' strong feature set so impressed Viasys that functionality trumped other weaknesses, including a small domestic presence. “They were strong in Europe," says Imperato of Cartesis, "so they had a good track record, but had not yet started coming to the U.S.—that made us an extremely important client. Once we got comfortable with the system, that promise and expectation of service from them were very important to us.”

Design And Implementation

One of Imperato’s first hires was a financial systems administrator, who led the project implementation; Cartesis supplied three employees. The project started in mid-2002 and took eight months, at a cost of approximately $1 million.

The largest step, according to Imperato, was the first: designing the application and developing finance department procedures to create a strong system and solid operations. A critical part of implementation was, “defining accounts, and the structure, and the output we’d be looking for," says Imperato. "We did a lot of that with Cartesis’ help, especially on documentation and the design.”

Once the system was built at Viasys headquarters, the affiliates helped as the work shifted to data mapping and data input.

Fortunately, Imperato says, the emerging Sarbanes-Oxley standards did not complicate the project much. That's partially because, during 2002, most of the requirements on controls and testing had not yet been codified by the Securities and Exchange Commission or the Public Company Accounting Oversight Board, and there was still little regulatory guidance. “But we certainly knew it was coming, and every step along the way we had documentation and could validate everything that we were doing.”

No Question About Integrity

Viasys began trading on the NYSE at the start of 2002, and fully implemented its new financial reporting system in early 2003. Imperato achieved both of his top two objectives: a closed data loop, and management of financial reporting on a business perspective rather than a legal-entity perspective.

The closed data loop “was very important with the internal and external auditors in the last year, that we have a seamless integration out of our various general ledgers,” Imperato says. “There’s no question about the integrity of the data, and we’re able to do it quicker than we’ve ever been able to do it before.”

Viasys also can now establish "hubs" of business in overseas offices, which can provide central management a single snapshot of how much business is conducted in each nation. For example, the company has one legal entity in Germany, but now all transactions that happen in Germany—even if conducted through other Viasys operating units—can be lumped under that one German entity. The old reporting system could only assign one business unit to each legal entity.

So far, Viasys uses the Cartesis system only for historical reporting. But Imperato says he is so pleased with the results that he plans to implement more modules this year that will enable executives to plan better by building forecasting models. Among other features, managers will be able to upload or download data into Excel spreadsheets to tinker with various business scenarios.

Lessons Learned

Viasys’ biggest challenge, Imperato says, came when the company tried to tackle the cleansing and integration of all the data in the 23 business units remotely. Imperato had budgeted one month to complete the task, and it ultimately took three.

To those ends, Imperato recommends that companies make sure they're allocating the proper time to meet deadlines. In addition, he advises, pay attention to the handling of data. “Put a lot of focus on the data integration and conversion,” he says. “Do that locally, and fully resourced.”

And a final bit of wisdom from Imperato: Strive to find a software vendor that needs you as much as you need them. Viasys certainly needed Cartesis, but Cartesis also needed Viasys as it sought to strengthen its positioning in the United States. “Partnering with a company that’s truly interested in being a partner," says Imperato, "that’s critical.”

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