Planning Your Budget and Reducing Cycle Time - IBM Your Budget and Reducing Cycle Time Rajesh...

Planning Your Budget and Reducing Cycle Time

Rajesh Shewani, Pre-Sales Leader

IBM Business Analytics – India/SA Cognos & [email protected]

What’s Important to the CFO? Everything.

2

Source: IBM Global Business Services, The Global CFO Study 2008

ImportanceEffectiveness

57%

55%

61%

62%

63%

64%

66%

70%

76%

80%

63%

68%

70%

67%

71%

73%

71%

73%

77%

86%

Unified Communication

SOA/Web Services

Business Process Management

Application Harmonization

Self-Service Portals

Customer and Partner Collaboration

Mobility Solutions

Risk Management and Compliance

Virtualization

Business Intelligence and Analytics

And to the CIO?

Ten Most Important Visionary Plan ElementsInterviewed CIOs could select as many as they wanted

High growthLow growth

Source: IBM Institute for Business Value, The Global CIO Study 2009

Why is this Significant?

2008 BOOK OF NUMBERS™ Research Series: Aligning Forecasting Practices with Market Dynamics

Extent of variance between forecast and actualresults for earnings two quarters out, 2007

0-5%variance

17%

6%-10%variance

38%

11%-20%variance

26%

21%-30%variance

11%

>30%variance

8%

Research by The Hackett Group shows that 83% of firms are unable to provide an accurate earnings forecast

The Challenge with Decision-Making Today:Elevated Finance & IT Demands

5

FINANCE FINANCE EXECUTIVESEXECUTIVES

Inform, engage, and align the business user community in PM process to drive better

business outcomes

ITITEXECUTIVESEXECUTIVES

Empower the business users while cost-effectively meeting

requirements for performance, conformance scalability and

compliance.

Finance Function Faces Challenges

Spreadsheets Failing“there have been well-documented cases of errorsand losses resulting from spreadsheetmanipulation errors and accidents.”Source: Gartner, August 2007

Disparate Systems“Average finance organizations operate11 finance systems per billion dollarsof revenue.”Source: Hackett Group, 2007

Business Risks“62 percent of enterprises …encountered a major risk event … 42 % of theseenterprises were not well prepared for the event.”

Source: IBM Global CFO Study 2008

CFO

ControllerTax/Treasury

FP & A

IT

Finance Function Makes a Difference

Driving Performance“68% anticipate serving as the performance

management experts for the rest of the company.”Source: CFO Research, Feb 2008

…Enterprise Rewards“ World-class EPM organizations

deliver 2.4 times the equity market returns of industry-peers companies.”

Source: Hackett Group, 2008

…with Professional Upside“Corporate performance and CFO performance are

inextricably linked; CFOs that deliver shareholder value are most likely to achieve the next career step

they desire.”Source: CFO Executive Board, Strategies

for Inflecting CFO Performance, 2004

CFO

ControllerTax /Treasury

FP & A

IT

New Areas

• GAAP, IFRS

• XBRL

• Fast Close

• Scenario Planning

• Rolling Forecasts

• Actuals v Budgets

• Management Reporting

8

9

The Decision Making Challenge

• Is everyone in the organization getting the reports they need?

• Are decisions made with benefit of all the information?

• What is typical turnaround time for a report request?

• Are your business users able to create their own reports?

• Are current reports actionable?

• Are you able to report off of any data?

PAIN: IT needs a better way to satisfy information needs of business users to drive more informed decisions.

Report backlog. Takes too long to create

reports.

Report backlog. Takes too long to create

reports.

Lots of reports but not the reports needed

Lots of reports but not the reports needed

Key decisions made using personal spreadsheets

Key decisions made using personal spreadsheets

Business can’t get the information they need

Business can’t get the information they need

ITITBUSINESSBUSINESS

Business Intelligence

10

The Planning & Budgeting Challenge

PAIN: Inability to deliver timely, reliable forecasts & plans that align operational tactics with financial targets.

PLANS & FORECASTSInfrequent Unreliable Forecasts

Weak Top-Down& Bottom-up Coordination

DisconnectedPlans

• Do you rely on Excel for creating budgets and reports?

• How long does the budgeting process take?

• Are you using spreadsheets to manage the planning process?

• Are your budgets and forecasts as reliable for decision-making as you would like?

• Is planning and budgeting an exercise to be endured rather than a strategic corporate tool?

The Closing Cycle, Financial Consolidation Challenge

• Financial and management data collection is difficult

• Data quality/error checking

• Lack of audit ability

• Lack of visibility

• Difficult to produce GAAP and management reports

• Hard to manage business and accounting changes

IncompleteFunctionality

Business Changes

Disparate Data

12

The Solution - Business Intelligence & Performance Management

Financial Management

Expense

Revenue

Asset Management

Scorecard or dashboard shows Branch Profitability for current

quarter is below plan

Report shows Branch XYZ is unprofitable due to a particular customer segment and product

combination

Plan is updated to adjust for new targeted marketing programs which

will alter the expenses and profit

Identify IssuesExplore and Understand Issues

Resolve Issues and Plan for the Future

A complete platform to Plan, Understand & Optimize Performance

Updates are delivered to the appropriate people via the Mobile

device so they have immediate insight to the new plan

13

Solution - Single Platform for Performance Management

Single Platform for Decision MakingSingle Platform for Decision Making

Enterprise PlanningPlan, Understand & Optimize Performance

PLANNING

CustomerService

Sales MarketingHuman

ResourcesProduct

DevelopmentOperations IT/Systems

Incentive Compensation

Unit Volume Forecast

Campaign Planning

Pipeline Coverage

Initiative Planning

Staffing

Expenses

Revenue

Capital Expenditures

New Product Introduction

Investment Funnel

Production Planning

Capacity Planning

Inventory Planning

Compensation Planning

Workforce Planning

Service Level &Capacity Planning

Initiative Planning

Finance

Challenges with Plans and Forecasts

15

PLANNING

CustomerService


ResourcesProduct




Campaign Planning

Pipeline Coverage

Initiative Planning

Staffing

Expenses

Revenue



Investment Funnel

Production Planning

Capacity Planning

Inventory Planning


Workforce Planning


Initiative Planning

Finance

Infrequent Unreliable Forecasts

Weak Top-Down& Bottom-up Coordination

DisconnectedPlans

PAIN: Inability to deliver timely, reliable forecasts & plans that align operational tactics with financial targets

Data governance risk of spreadsheet ONLY

based systems in Finance

Increased support compliance-driven Finance initiatives

Financial Statements

16

PLANNING

CustomerService


ResourcesProduct




Campaign Planning

Pipeline Coverage

Initiative Planning

Staffing

Expenses

Revenue



Investment Funnel

Production Planning

Capacity Planning

Inventory Planning


Workforce Planning


Initiative Planning

Finance

Timely, ReliableForecasts

Top-Down& Bottom-Up

Alignment

ConnectedPlanning Models

Improved data governance with replacement of

spreadsheet ONLY based systems in Finance

Increased support compliance-driven Finance initiatives

Financial Statements

Benefits of a Enterprise Planning SolutionIMPACT: Timely, reliable forecasts & plans that align operational tactics

with financial targets. Better, confident resource allocation decision-making.

Planning, Budgeting and Forecasting:Determining What you “Should be Doing”

Replaces spreadsheet based, manual budgeting and planning

Connects operations and finance

Engages the whole organization to make better informed decisions

Replaces rigid, annual budgeting with continuous planning for higher responsiveness

Supports best practices (e.g. driver based planning, rolling forecasts)

Offers packaged best practice Blueprints for processes inside and outside of Finance across industries

Rich client for improved user experience and personalization, and simplified deployment

IBM Cognos Solutions for Enterprise Planning

18

PLANS & FORECASTSPre and Post-PlanningAlternative hierarchies, Allocations, Reporting and Analysis

CollaborativePlan & ForecastEmphasis on user experience; workflow; auditability and process control

IBM Cognos Solutions for Enterprise Planning

Post-PlanningGoal seeking, Allocations

High Participation Plan & Forecast

Pre-Planning AnalyticsAlternative hierarchies, trending

Planning Areas

Primary Use Horizon/Frequency Who?Strategic Plan Define vision, SWOT, high level

corporate goals and objectives and strategies for how to attain them

Horizon: 3-5, sometimes 10 yearsFrequency: 1/year

Corporate ExecsSenior Mgmt. StrategyFinance

Budget/ Annual Operating Plan

Financial guide for the current year: control expenses, evaluate performance and determine bonus compensation

Horizon: 1 year, across months, Qtrs, weeksFrequency: 1/year Infrequently updated

Corporate Planning LOB Managers Cost Center mgrs

Forecast Provides the most current estimates for the balance of the year/horizon

Horizon: Balance of the year or Rolling week, month, quarter, Annual. Frequency: Refreshed often

Corporate Planning LOB Managers

Modeling What-If AnalysisAcquisition modelingScenario AnalysisDefine contingency plans

• Ad-hoc Corporate Planning StrategySales/HR/IT

Reporting Comparison with actualCause & effect Analysis

Horizon: Various Frequency: Monthly, Qtrly, Annual, Ad-hoc

Corporate PlanningReviewed at all levels

20

Performance Management Roadmap

Visibility

• “Spreadsheet Hell”

Cycle Time

• Plan cycles exceed business cycles

21

Accountability

Debating the numbers

Predictability

Owned by Finance

Embrace and Extend Your Existing Infrastructure

ADDRESSInitial Needs1

EXTENDEnterprise-

Wide

ADVANCEPerformanceManagement

AUTOMATION ---------------------------------- TRANSFORMATION ----------------------------

DRIVE Best

Practices2 3 4

Performance Management Roadmap

22


EXTENDEnterprise-

Wide



DRIVE Best

Practices2 3 4

Cognos Innovation Center Performance BlueprintsSupport Best Practices

Driver based Planning

Rolling Forecasts

Timeframe appropriate Plans

A Wider and deeper view

Performance Blueprints: Functional Solutions

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FUNCTIONAL SOLUTIONS

• Strategic Financial Planning & Forecasting

• Strategic Long Range Planning

• Risk Analysis

• Sales Planning& Forecasting

• Sales Compensation Planning

• Workforce Planning

• Expense Planning & Control

• Allocations

• Capital ProjectPlanning

• Discretionary Capital Expenditure

• Initiative Planning

Pre-configured solution building blocks that:

• Pool collective best-practice knowledge

• Accelerate time-to-value• Increase project success rate

WORKFORCEPLANNING

SALESPLANNING &

FORECASTING

STRATEGICFINANCIAL

PLANNING &FORECASTING

EXPENSEPLANNING

& CONTROL

CAPITALEXPENDITURE

PLANNING

HUMANRESOURCES

SALESFINANCEFINANCE

OPERATIONS,MARKETING,

ETC.

DepreciationExpenses

Reports• Income Statements

Balance Sheet• Cash flow• Financial Ratios

Cap

Ex

Ope

rati

ngEx

pens

es

Headcount& CompensationExpenses

Reve

nue

Plan

Mar

ketD

eman

d

Financial Services Blueprints

• The IBM Cognos Branch Performance Blueprint

• The Retail Banking Customer Segment Performance Blueprint

• The Business Banking Customer Performance Blueprint

• The IBM Cognos Client Servicing Blueprint

• Relationship Pricing Blueprint for Commercial Banking

• Product Cross Sell Analysis

• The Insurance Product Performance Blueprint

• Investment Banking Customer Profitability

• The Risk-Adjusted Return on Capital (RAROC)

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Cognos Strategic Finance Performance Blueprint

• Complete PM framework for strategic financial planning

• Supports a web-based process for the systematic evaluation of long-range plans and strategies

• Additionally, it...... – Facilitates long-range strategic planning – Evaluates the impact of multiple strategies– Allows for comparison & analysis of what-if growth scenarios – Facilitates evaluating internal or external growth opportunities– Enables divestitures, mergers & acquisition (M&A) planning– Provides an assessment of the current portfolio - allowing for

analysis and impact of divestitures– Includes tax, funding, and credit rating impacts– Includes a full set of consolidated financial statements with

distinct views for base growth, acquisitions, and divestitures.

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Financial and Legal Consolidation Performance Blueprints

Group Consolidation and Corporate Reporting Blueprint

Best practice template and reports for delivering IFRS and Group reports in IBM Cognos Controller

Deloitte Close, Consolidate, Report Blueprint

Best practices for internal controls and financial consolidation

Management & Financial Reporting Blueprint

Best practice examples and templates for reports, scorecards & dashboards in Cognos 8 BI

IBM Cognos & SemansysPartner Blueprint for XBRL

Partner solution for delivering XBRL reports with Cognos Controller

Deloitte & IBM CognosInternal Controls Blueprint

Integrated internal controls assessment and reporting in IBM Cognos Controller

EXTEND Enterprise - Wide

27

Link operational plans

to financial plans

Increase forecast reliability

Performance Blueprints

accelerate implementations




DRIVE Best

Practices

2EXTEND

Enterprise-Wide

3 4

Cognos Solution Map Industry Performance Blueprints

Model the Whole Business

Financial Services

Life Sciences

Retail

Public Sector

Manufacturing

Advance Performance Management



DRIVE Best

Practices

2EXTEND

Enterprise-Wide

3ADVANCE

PerformanceManagement

4

Cognos Performance Management Platform

Continuous Business AlignmentPervasive Performance Management

Applications & Blueprints

Access & Interactivity

Universal Capabilities

Business Modeling

Performance Management Platform

Information Infrastructure

Real World Benefits: Efficiencies

2 to 3 weeks2 to 3 weeks2 to 3 weeks2 to 3 weeks

3 to 4 days

3 to 4 days

3 to 4 months3 to 4 months

3 to 4 weeks3 to 4 weeks

3 to 4 months3 to 4 months

Today-1Q +1Q +3Q+2Q-2Q-3Q

Financial ConsolidationFinancial Consolidation Planning, Budgeting & ForecastingPlanning, Budgeting & Forecasting

Real World Benefits: Effectiveness

30

Today-1Q +1Q +3Q+2Q-2Q-3Q

REPORTING, ANALYSIS, AND SCORECARDINGREPORTING, ANALYSIS, AND SCORECARDING

Financial ConsolidationFinancial Consolidation Planning, Budgeting & ForecastingPlanning, Budgeting & Forecasting

Top-Down& Bottom-Up

Alignment

Timely, ReliableForecasts

Complete,Auditable System

Adaptable &Finance Owned

Uniform,Consistent Data

ConnectedPlanning Models

Complete, Consistent View

Example – High Frequency

Process

Annual Operating Plan

Quarterly Forecast

Monthly Estimate

Forecasting Process

Before After

Could not do

6 days

4 weeks

Replacedby

monthly

9 mos. 1.5 mos.

18 MoRollingAnnual

Before After

Could not do

4 days

6 weeks 1 week

18 mos. 2 mos.

Quarterly RollingAnnual

Before After

4 mos. 2 mos

18 MoRollingAnnual

~ 3 wks < 1 wk.

Replacedby

monthly

Before After

3 mos. 6 weeks

Monthly RollingAnnual

Didnot do

< 1 wk.

Replacedby

monthly

Marico• Brief profile

– Present in almost every FMCG market segment – hot oils, hair, skin, weight management, beauty and wellness amongst others

– Marico has also been rated one of India’s ‘Top 8 Global Challengers’ by Standard & Poor

Challenge Solution Results

Inflexible planning through spreadsheets

Seamless integration across multiple data sources including mySAP and SAPBW

Cognos TM1 Reduces the time required for budgeting, planning and reporting.

Increases flexibility, accuracy and efficiency.

Easy to use and maintain.

“IBM Cognos TM1 has helped usstreamline and take our planningand budgeting processes to a newlevel. This tool has enabled us toshift our focus from data crunchingto data analysis.”Girish Rao, IT Head , Marico

HDFC Bank Objectives of B&P solution• The broad objective of the software implementation is as follows:

– To automate the current process and make it more process driven and efficient without compromising on any current functionalities budgeting methods, granularity of our existing process.

– Standardization of data and creating a workflow in the budgeting process.

– Real time submission, consolidation and review of all plans across business divisions, branches/ locations, Cost centers etc.

– Handle Cost Allocations, apportionments effectively.– Reducing the current planning time and associated costs including

manpower.– Simulating the process with various scenarios, including comparison of

Budget V/s Actuals on a real time basis across a distributed environment. – Scenarios will be built only at the to level and Budget v/s Actuals variance check was decided as being a separate application given the data volumes

– Arrive at a Budgeted Income Statement (P&L) / Balance Sheet by business divisions and Bank Level. Client Profitability across Revenue Modules, CAPAD Summary

In Summary - IBM Cognos Financial Performance Management

Strategy Management and Scorecarding

• Strategy Communication• Strategy Execution• Strategy Measurement

Enterprise Planning and Analysis

• Strategic Finance• Revenue Planning

and Forecasting• Expense Planning

and Control• Workforce Planning • Capital Planning

Financial Analytics• Financial Performance

Analysis• Profitability analysis• Product, Operations,

Customer, Channel, Market analysis and optimization

Financial and Management Control

• Financial Consolidation• Financial Reporting• Corporate Reporting

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© Copyright IBM Corporation 2008 All rights reserved. The information contained in these materials is provided for informational purposes only, and is provided AS IS without warranty of any kind, express or implied. IBM shall not be responsible for any damages arising out of the use of, or otherwise related to, these materials. Nothing contained in these materials is intended to, nor shall have the effect of, creating any warranties or representations from IBM or its suppliers or licensors, or altering the terms and conditions of the applicable license agreement governing the use of IBM software. References in these materials to IBM products, programs, or services do not imply that they will be available in all countries in which IBM operates. Product release dates and/or capabilities referenced in these materials may change at any time at IBM’s sole discretion based on market opportunities or other factors, and are not intended to be a commitment to future product or feature availability in any way. IBM, the IBM logo, Cognos, the Cognos logo, and other IBM products and services are trademarks of the International Business Machines Corporation, in the United States, other countries or both. Other company, product, or service names may be trademarks or service marks of others.

Thank You

Finance Functions Faces Challenges

37

Need for Efficientand Sustainable

Compliance

Insatiable Drivefor Predictable, Profitable Business Performance

CFO’s Perspective

38

Forecast

Enterprise Planning Solution• Cognos 8 Planning• Cognos TM1• Cognos 8 BI• Performance Blueprints

Financial Consolidation Solution

• Cognos 8 Controller• Cognos 8 BI• Performance Blueprints

Actual BudgetFinancial AnalyticsSolution

• Cognos TM1• Cognos 8 BI• Performance

Blueprints

Variance AnalysisController-ship

Financial Planning & Analysis (FP&A)

Strategy Management & Scorecarding Solution

• Cognos 8 BI – scorecarding• Performance Blueprints

Targets

What‘s holding Finance back today?

• Business processes under tremendous stress

– High business volatility

– Fast pace of business

• Technology is straining:

– Spreadsheets: 60-70%

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.....90 percent of the spreadsheets analyzed contained significant errors.“ -PriceWaterhouse Coopers

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