How an innovative approach modernised KCOM’s finance function

First-time visitors to Kingston upon Hull in Yorkshire are often struck by an odd detail: cream telephone boxes. They are the most visible sign of the remarkable success of telecoms business KCOM, launched in 1904 as the municipal telephone company for the Kingston upon Hull area and still proudly independent today.

Over the past 120 years, KCOM has built a reputation for innovation in communications; for example, in 1989 it launched the first all-digital telephone network in Europe. However, telecoms is a highly competitive sector and companies can’t afford to be complacent; for a business to be successful, it needs to have confidence at all times that its systems are as efficient as they can be. In recent years, KCOM embarked on a new strategy, carving out parts of the business so it could focus on its position as the leading provider of fibre communications in the East Yorkshire region. At this point, the company contacted EY teams for help mapping out how its technology systems would need to change as it transformed into a more agile, digital-focused, fibre-only business.

A key aspect of that project involved reviewing KCOM’s enterprise resource planning (ERP) systems and particularly the technology that supported the finance function. But, as KCOM CEO Tim Shaw explains, “it wasn’t only about systems; it was also about process and the way we were organised.” The leadership team was keen to build a culture within the finance team that would embrace change, to foster continuous improvements.

They needed a finance transformation, but this had to be achieved without a high capital investment. The question the EY team had to answer was: How can we upgrade KCOM’s finance function without the cost of investing in a completely new ERP system?

Having gained an in-depth understanding of KCOM’s objectives and key challenges, the EY team saw an opportunity to set the company up for greater success in the future without undertaking an expensive technology implementation. The innovative solution they devised involved making smart use of both KCOM and EY capabilities by deploying a managed services approach.

Once this was agreed, there was an urgency to the next steps. KCOM’s financial year runs from April to March; therefore, the managed service had to be ready for 1 April in order to provide the benefits the company was looking for. This left just nine months to implement a technology solution, a tight deadline for a project of this scale, bearing in mind that a full ERP implementation typically takes two years.

The deployment of an EY Managed Services solution was crucial to the success of the project. Julie Hadfield, Partner, UK&I Finance Operations, explains that “our strength lies in the fact that we have deep sector experience, and we also have the breadth of technical knowledge that means we can support our clients across the whole finance transformation landscape.”

Working with EY Managed Services meant that KCOM could access the full spectrum of services and skills across accounting, finance, tax, data and technology, as well as mitigating the costs associated with the recruitment and training of internal teams. Moreover, EY teams have invested in a range of technologies and tools that support finance functions, and have a connected ecosystem of strategic alliances and partnerships with technology companies such as Microsoft – all of which benefit clients like KCOM.

An additional benefit is that the solution is flexible, future-proofed and configured in such a way that it would be easy to transition it back in-house if that is required in the future.

A collaborative approach to finance transformation 

The process the EY teams put in place to achieve KCOM’s objectives was highly collaborative from the outset. The EY Managed Services team ran a series of workshops with KCOM finance personnel to look at the end-to-end technology requirements and explore what the future finance team should look like.

The project drew on the EY team’s technical knowledge and capabilities, as well as its experience of working with private equity-owned businesses. Hadfield also believes a key factor in the success of any transformation project is the way the organisation works with clients. “We build really strong partnerships, we work in collaboration, and our teams feel like one team, not a service provider and a client,” she says.

KCOM CFO Carrie Hutchison confirms this. “The biggest factor was the relationships we built,” she says, “it really felt like one team who were all focused on delivering. This wasn’t an EY team and it wasn’t a KCOM team, it was the finance migration team that was doing it.”

This teamwork, allied to a pragmatic approach to problem-solving, enabled the project to be completed on deadline, ready for the first day of the new financial year.

The end-to-end business transformation had two main components: the development of a new technology platform that facilitates quicker reporting and easier access to financial data through bespoke Microsoft Power BI dashboards, and the EY Managed Services deployment that gives KCOM access to the breadth of EY accounting and tax knowledge.

The result is that the finance team can spend more time on value-added tasks and less on reporting, whilst management have faster access to reliable data to empower them to make strategic decisions. “What we have gained is that we’re now using a system that is accessible from across the business,” Hutchison explains. “Our business unit users can go directly into the system and see their own numbers.”

This improvement in reporting capability is a key benefit; the month-end figures are now available after working day six, a significant improvement on the previous ERP system. Shaw explains why this is so important. “My team can now get data at the click of their fingers on month end; they’re not waiting for a team to run a report,” he says, “teams are more accountable for their own numbers, which was always one of the key outcomes we wanted to get to. I’m getting accurate numbers quicker, so I can see things quicker and make quicker decisions.”

Hadfield says that adopting the managed services solution has enabled KCOM to save around £4mn worth of upfront capital expenditure, while Hutchison estimates that the project has achieved roughly £1mn of savings in total for KCOM through a combination of lower finance operating costs and lower technology costs. But she stresses that, whilst the money savings is significant, “it’s also about the capability improvements. We now have our finance team concentrating on the added-value part and not on the creation of the numbers. That’s really important for me – that we’re paying them for their thinking and their development.”

All of this means that KCOM’s leadership can now get more value from their financial reporting, with the confidence that they are leveraging the full potential of their teams and technology. As a result, the company, already a regional success story, can continue to provide consumers and businesses in Hull and the surrounding area with innovative communications solutions. With the EY team’s help, KCOM’s proud history looks set to continue well into the future.