Finding a Cure for Global Complexity

April 3, 2021
3 Minute Read

With locations in the US and Canada as well as Europe, a global Fortune 500 healthcare technology and pharmaceutical distribution company faced multifaceted challenges in adopting the new lease accounting standards. We brought in a robust team of experts to manage the implementation—and maintain ongoing compliance.

Our client not only had to account for regulatory differences in each country, but also organizational and cultural differences. The company’s European locations have to comply with both ASC 842 and IFRS 16. All 13 countries had at least one general ledger to feed into, and everything was different, including country codes and journal entry formats. And even though our client is a global corporation, each region operates fairly independently with their own processes and communication channels.

In addition to global complexity, the sheer scale of this initiative was enormous, with more than 12,000 leases comprising a lease portfolio valued at $2.2B. “At the beginning, we really struggled with getting people to understand what the scope was,” says our client, the senior strategic director in the controller’s office. “People are very used to just kicking the can down the road. And we really needed to be able to get in front of people, put a plan together, and say, ‘this needs to be done on a certain date. And here’s the plan to do it.’”

How do you get everybody in the company who’s involved in lease accounting to change how they currently work and do it on time?”

Sr. Strategic Director in the Controller’s Office

RGP brought in a team of more than 250 people to support the massive effort, supported by Cindy Dailey, an experienced accounting systems program manager with CPA background and a well-honed knack for building positive working relationships. Cindy was in a key position as Project Lead for the Technology Implementation. And our client credits her leadership with bringing people along on a successful journey. “It was really good to get somebody like Cindy in who can not only go into the detail, but also be able to connect with people on that human level, to be able to say, ‘this is how we can do it.’”

To put the scope into further perspective: just two months into the transition, our client has 750M journal entries captured in the lease accounting software platform—that’s 100M more than the company with the next-highest volume. “At one point, we had 30 people on the project, including approximately 20 people just to review all the contracts and gather the right information,” Cindy says.

We used an AI solution to automate that process. A team member could scan the contract in, and the AI tool would detect the relevant information. When a data point was not detected, the consultant would highlight where the data was in the contract, and then the tool would learn the key phrases around that data element for use in the next contract.

Building a Strong Partnership for Success

That combination of human and technology capabilities, backed by extensive testing and diligence paid off, with over 99% financial accuracy. Cindy credits that partnership and our client’s executive leadership with setting the stage for a successful implementation, saying, “Top-level management support from the get-go is critical, especially with such a complex project when you have so many different offices and teams, each with their own way of doing things.”

“Nobody wants to do this type of project,” our client says, emphasizing that change management is critical, especially with something like lease accounting standards, which is an unforeseen yet required project. “It’s a disruption of their current processes. It takes additional effort to make it happen. So, for the most part, people are resistant to the change.”

Another key factor comes down to building personal relationships with our clients and having that one-on-one connection on a daily basis. “Honestly, it’s friendships,” Cindy says. “Once people get to know you, they start trusting you.”

That’s the art of running large projects—getting hearts and minds to come along the journey is the hard part.”

Sr. Strategic Director in the Controller’s Office

Our client agrees, recalling that while some people were engaged in the process and were willing adopters, others were very resistant. “A lot of people think that when a compliance project comes down, and the executive table says, ‘you have to get this done,’ it just magically happens. But it doesn’t. That’s the art of running large projects,” he says. “Getting hearts and minds to come along the journey is the hard part.”

Reaching the End of the Beginning

As our client wraps up their second fiscal year since adopting the new lease accounting standards, this partnership built on trust has continued. As part of the post-implementation transition Cindy stayed on for another year to make needed updates, document processes, and train and share knowledge with the individuals who are responsible for maintaining the company’s lease accounting and administration activities over the long term.

There’s nothing simple about implementing standards across a global organization, but with the right team, technology and processes in place, it’s possible to weave complex threads into a cohesive whole to ensure sustainable success.

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