Case Study

Valagro - Case Study

Transforming business planning and analytics: the innovation pathway taken by Valagro

The Company: Sustainable production, research, and innovation at the service of nature

Valagro is a market leader in the production of biostimulants and fertilizers. Since being founded in Italy in 1980, Valagro continues to bring the world the same passion for nature that lies at the root of its solutions for plant care and plant nutrition.

Today, the company has the ability to respond globally to specific customer requirements, which reflect new and growing needs against a backdrop of increasingly limited and precious resources. It is for this reason that the Valagro group decided to set itself the challenge of delivering development and wellbeing while using fewer resources and using less land, water, and technical equipment. In other words, producing more and producing better to help meet world demand. To achieve this, the business puts research and innovation at the service of nature, in the knowledge that taking care of the future means working together with respect for the environment and human health.

Valagro covers the worldwide market with an extensive sales and distribution network, and operates through its direct subsidiaries in Italy, Spain, Greece, Mexico, Colombia, Brazil, the United States, the United Kingdom, Norway, France, Turkey, China, and India.

Brief company profile

Main product lines: Biostimulants, micronutrients, and water-soluble fertilizers

Number of product lines: 20+

Subsidiaries: 15

Countries in which the group operates: 80+

Net revenue: €130+ million

Staff: 600

The Challenge: Move beyond the group’s “comfort zone” in order to develop planning capabilities that keep pace with its global growth

The challenge facing the Valagro group lay in reviewing and defining the relationships between strategy and planning (multi-year, annual, and interim) and between the economic, financial, and capital-related aspects of planning.

The solution that Valagro’s management was looking for needed to equip the business with an effective tool for designing a new planning and control model. Like all change processes, this too required a willingness on the part of the company to move out of its comfort zone.

The underlying idea is that a detailed plan without an enterprising business strategy – in other words, one that embraces risk – is certainly safe and more familiar, but inhibits growth and stops businesses competing to the best of their potential. A change of mindset was therefore necessary within the organization, so the company needed a vendor, an analysis and planning product, and a partner capable of supporting, realizing, and promoting this change through agile development, implementation, and delivery. 

For a full understanding of the scale of the challenge facing Valagro, it is also worth considering the market in which the company operates and the particular conditions that prompted it to look for a new Business Intelligence and Performance Management tool. This is best summed up by Antonino Volpe, Valagro’s CFO:

“At a certain point in our history, the increasing size and revenues of the organization naturally prompted us to look to international capital markets for financial opportunities that would support the growth potential that we felt both our standard and non-standard lines had. On at least a couple of occasions, however, the right conditions for implementing our planned flotation did not arise. In the meantime, the group continued to grow, as can be seen from the fact that export markets currently account for 88% of our revenues and our scope of consolidation is continuously expanding.

"Driven by these experiences, between 2014 and 2015 we decided to upgrade the company’s organizational and IT network, and the technological infrastructure underpinning it. To respond effectively and appropriately to the demands of international capital markets and to excel in a competitive arena, where reactivity and proactivity are a must and where you need to know how to measure and direct performance at a global level, it became essential to put the Controlling Department back at the heart of the business. It was equally important to support it with flexible technological infrastructure that was business-oriented, user-friendly, and capable of ensuring accuracy, completeness, and collaboration, with short deployment times. One solution that we really felt was capable of doing all this was the Board decision-making platform, which went on to become the group’s holistic information platform.”

Another key factor in the success of this ambitious project was the company’s alignment with the philosophy of K.Group, Board International’s strategic partner responsible for implementing the Board solution at Valagro. The technological and functional skills of K.Group, and more specifically their agile design approach aimed at designing the most appropriate solutions in partnership with the customer, have helped speed up the development and release of versions that are closely matched to the continuous evolution of Valagro’s requirements.

The Project: A holistic information platform designed to support decision-making processes

With Board, Valagro is able to meet all of its administrative and operational reporting, planning, and forecasting requirements in one solution.

The diagram below shows the distinctive features of the planning model and the dates of their release:

The Planning Model
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The Board platform was implemented to support all the company’s economic, financial, and capital-related planning for the medium term (three-year plan), short term (annual plan) and very short term (interim forecasting). This interconnection between three-dimensional performance analysis and a range of different reference periods gives rise to the concept of a holistic information network. Furthermore, the planning model is still collaborative, with both Top-Down and Bottom-Up processes, of varying degrees of complexity, and a high level of variability in the number of people involved and the granularity of the information handled.
 
It is immediately clear that flexibility is one of the system’s strengths and that it maximizes the possibility of alignment and consistency between the strategy (general framework), the high-level objectives of which it comprises, and the underlying operational plans.  It also offers the scope to add levels of detail on the basis of the gradual addition of new planning variables, by following an “Adaptive Planning Model” approach.
 
“We started with the implementation of Top Line planning and analysis models, and gradually refined the KPIs and drivers of strategic planning” explains Mila Miscia, Controlling Manager at Valagro. “We reread, rewrote, redesigned, and reengineered all our planning processes, from economic budget operational plans up to financial and capital-related plans. We started with an analysis by silos (individual legal entities) until we attained a group-level vision by consolidating the individual plans. It was a bit like taking a large jigsaw puzzle apart and putting it back together again, by looking for the right pieces in an array of micro-puzzles.”
 
Overview of the Board project at Valagro Group
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The degree of complexity is very high because a large number of parties are involved, located in different geographical areas of the world and belonging to different levels of the organizational pyramid. On top of this, the objective was to integrate the annual plan with the three-year plan, and the three-year plan with the ten-year plan. 

“The connection between the different kinds of planning is a very important phase for Valagro," explains Mila. "We have established a set of “Coherence Check Points”, and created a reporting system specifically designed to support the meetings held for the purpose of discussing and approving the planning steps. By comparing the various possible scenarios, these meetings can approve what was proposed at the contribution stage and allow teams to move on to the next step, or withhold approval and take them back to the previous step."

The Coherence Check Points represent a circular approach to decision-making guided by the workflows, where general objectives and results are transposed into a virtuous cycle of strategy formulation, medium-term, annual, and interim planning, and comparison with current performance, aimed at bringing about continuous improvement. The degree of dimensional detail available at the various planning levels varies significantly, in such a way as to adapt the individual process both to the information requirements to be met by the contributors involved and to the time available for the process itself. Mila continues:

“Once we have tabulated the results of the first year, we compare the three-year plan with the annual plan to check for any deviations reasonably likely to arise as a result of events concerning the company which pan out differently to what was planned.

"Whereas the annual plan is generated in detail from the outset and distilled into basic guidelines, the three-year plan is generated directly by more aggregated drivers (e.g. the priority of the geographical area, products, and crops - drivers typically used by companies operating in sectors that serve agriculture) without losing the ability to drill down to the finest details.”

The Benefits for Valagro: Board as an innovation facilitator

Within the Valagro Group, Board has been a facilitator of innovation, capable of generating creative disruption in relation to the rigidity of conventional analysis, reporting, and planning tools. It has also supported the pursuit of consistency across the various levels - organizational and temporal - between defining strategic objectives and actual operation:

“Thanks to Board we have strengthened the link between strategy and operational planning, in a new and extremely significant way,” stresses Paolo Marino, Controller at Valagro.

 “With Board we can compare different levels of spatial and temporal detail and focus on the significance of the data, rather than being swamped by an excess of information. This is very important in our industry, where changes in demographics, cultivatable areas, and agricultural technologies are easier to understand in medium/long-term scenarios and are of a more qualitative than quantitative nature."

To reach the point where Valagro could have confidence in the significance of data, manage the entire multi-year planning model systematically within appropriate timeframes, and respond proactively to the continuously evolving organizational demands of a growing business, it had to implement a process of cultural change. This began in the finance area, was then rolled out to senior management before being extended to the base layers of the organizational pyramid.

All the users involved in generating the data that feeds the information system had to be aligned with the new planning and general management logic of their own activities, by adopting as far as possible the three pillars identified during the design of the entire planning system:

  1. Keep it simple: divide your daily tasks into simpler sub-processes and look for the connections between them to help discern cause-and-effect relationships and identify what really is significant and efficient
  2. Don’t look for perfection: the choice between data that is extremely detailed but not promptly available and the significance and timeliness of such data plays a key role in suitably supporting the many complex decisions that need to be taken in the planning process
  3. Make the logic explicit: when they are modeled, all complex systems need assumptions that guide cognition and interpretation. To ensure that the entire planning system yields consistent, rational information, you need to share these assumptions and base every step on the same logic

Thanks to Board's high levels of flexibility and the rationality of thought that the system transmits during its implementation and everyday use, it has been possible to form these three pillars on an ad hoc basis for each organizational level/function, while respecting their distinctive features and specific objectives.

The result was that each person involved in the process of data generation/use started operating according to a common logic, which was essential to making the Coherence Checks effective. The paradigm “Multi-dimensional-Temporal Planning/Performance Measurement/Planning Accuracy/Corrective Actions” has begun to permeate the organization from top to bottom. This has led to the development of a structure made up of individuals who have made the transition towards becoming 'managers of their own part of the process' while at the same time fitting into a complex body guided by the logic of common performance.

Ever since the start of the project, the use of Board at Valagro has continued to grow and has created increased granularity within the planning and analytics models, transforming the large volume of data accumulated over a number of years into insights on which to base prompt, effective decision-making. As a result, the company’s ability to respond appropriately to business requirements has increased, and so too has people’s confidence in and appreciation of the software. In the words of Antonino, 

"By acting as a ‘cultural emancipator’ at Valagro, the Board platform has given rise to a kind of ‘Centre of Excellence’ built on the synergy between the people who ‘design’ the application and those involved in everyday operations.

“Board has enabled us to introduce a Design Thinking type of design methodology at Valagro. With the support of Marco Tricase, the K.Group Project Manager, we listened to the needs of the various departments, we proposed solutions, and we assimilated their proposals for change. The continuously incremental approach has enabled us to establish a virtuous circle of sharing that helps develop alternative versions which draw ever closer to the ‘ideal standard’ structure.” 

Mila concludes:

"Valagro’s employees now use this agile approach in their everyday work because it helps them to measure design steps easily, adjust the company’s trajectory towards targets quickly, and, most importantly, face up to the unknown (whether in the form of a project or planning scenario) with less fear. Freed from the paralysing fear of getting things wrong, users can pursue those small or large daily changes that enable the business to learn, understand, and improve."