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* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
* Dimension Data 2 Absa Vehicle
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* Dimension Data 2 Absa Vehicle

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  • Strategic – Executive managers and strategic analysts responsible for strategy formulation Operational – Business unit managers responsible for executing against corporate goals Transactional – Employees carrying out day-to-day activities
  • Transcript

    • 1.  
    • 2. Absa Vehicle & Asset Finance a Division of Absa Bank Ltd <ul><li>A presentation to the </li></ul><ul><li>Corporate Performance Management </li></ul><ul><li>User Conference </li></ul><ul><li>Presented by: Roy D Martine </li></ul><ul><li>General Manager Finance - ABSA </li></ul>The use of Extensity Planning in streamlining and improving the AVAF Financial planning process
    • 3. The use of Extensity Planning in streamlining and improving the AVAF Financial planning process “ The path to our destination is not always a straight one. We go down the wrong road, we get lost, we turn back. Maybe it doesn’t matter which road we embark on. Maybe what matters is that we embark.” -- Barbara Hall, Northern Exposure, Rosebud, 1993
    • 4. Background & Objective <ul><li>ABSA Vehicle and Assets Finance (AVAF) has undergone significant structural and organizational changes in recent years. To meet the changing needs of business, the Finance department embarked on a project to improve their current planning process. </li></ul><ul><li>This presentation covers the financial planning process within the organization, the challenges being experienced and the opportunities presented to address some of their requirements using the Extensity Planning tool. </li></ul>
    • 5. Presentation Content <ul><li>SA Banking industry and ABSA Vehicle and Asset Finance </li></ul><ul><li>Approach and methodology currently used in the AVAF financial planning process </li></ul><ul><li>Stakeholder expectations and challenges </li></ul><ul><li>Finance department structure to support the reporting and planning process </li></ul><ul><li>Requirements of a Financial Planning process </li></ul><ul><li>Conceptual solution </li></ul><ul><li>Impact of Extensity Planning to support and manage the financial planning process </li></ul><ul><li>Concluding statements </li></ul>
    • 6. The South African Assets Finance Industry FNB 34% Nedcor 18% Standard Bank 20% ABSA 25% Other Institutions 3%
    • 7. Core Activities ABSA Group Ltd ABSA Bank Ltd Retail Banking Commercial Banking Wholesale Banking Other ABSA Vehicle and Assets finance is a product SBU providing assets based finance products to ABSA Customers. It is a division within Commercial Banking but provides assets finance products to all customer segments within the bank
    • 8. Core Activities <ul><li>Aprox 75,000 Applications </li></ul><ul><li>Monthly business (R 2.8bn) </li></ul><ul><li>General Ledger </li></ul><ul><li>800 Ledger Accounts </li></ul><ul><li>3960 Units </li></ul><ul><li>Aprox 600,000 Customer </li></ul><ul><li>Accounts (R 60bn) </li></ul>22 Alliances Suppliers & Motor Groups Requiring Ring fenced accounting & reporting 3 Joint Finance Companies Requiring separate accounting & reporting with different financial years
    • 9. The AVAF Business Operating Model Joint Finance Companies Office Automation Processing Centres Trade Centres Recovery Services Floor plans Dealer Academy VAPS Internal Sales Head Office Small Business Medium Business Large Business Suppliers & Manufac turers Commercial Sales Dealers Personal Sales Credit Leasing Services SPV’s Group Support Functions
    • 10. Idiosyncrasies in Banking that impact upon financial planning and reporting <ul><li>Both month-end balances and average balances on balance sheet </li></ul><ul><li>Direct relationship between average balances on balance sheet and revenue on income statement </li></ul><ul><ul><li>Modelling of advances growth & related revenue </li></ul></ul><ul><ul><li>Linking revenue forecast to interest rate forecasting </li></ul></ul><ul><ul><li>Linking bad debt forecasting to credit behaviour </li></ul></ul><ul><ul><li>Internal matched funds transfer pricing for funding the process </li></ul></ul><ul><li>Central Bank regulatory requirements </li></ul><ul><li>Norms driven management (Ratios) </li></ul><ul><li>High proportion centralised costs that has to be re-allocated </li></ul>
    • 11. Presentation Content <ul><li>SA Banking industry and ABSA Vehicle and Asset Finance </li></ul><ul><li>Approach and methodology currently used in the AVAF financial planning process </li></ul><ul><li>Stakeholder expectations and challenges </li></ul><ul><li>Finance department structure to support the reporting and planning process </li></ul><ul><li>Requirements of a Financial Planning process </li></ul><ul><li>Conceptual solution </li></ul><ul><li>Impact of Extensity Planning to support and manage the financial planning process </li></ul><ul><li>Concluding statements </li></ul>
    • 12. Overview of planning process <ul><li>Develop high level financial targets (aspirational) </li></ul><ul><li>Fine-tune using more accurate economic parameters </li></ul><ul><li>Mechanistically forecast on a Business-as-Usual basis (BAU) </li></ul><ul><li>Identify and quantify projects and initiatives </li></ul><ul><li>Adjust BAU for projects and initiatives (projected) </li></ul><ul><li>Gap analysis between aspirational and projected </li></ul><ul><li>Re-visit projects and initiatives </li></ul><ul><li>Finalise plan </li></ul><ul><li>First year of plan becomes the budget target </li></ul>
    • 13. Details of the current Planning Process
    • 14. MTP Process Timeline (Example)
    • 15. Characteristics of the Process <ul><li>Follows Group planning timetable </li></ul><ul><li>Moving from high level plans to detailed budget </li></ul><ul><li>Check-points for approval during the process </li></ul><ul><li>Establishing authority levels and mandates </li></ul><ul><li>Adjust for new information </li></ul><ul><li>Final plan is a performance contract </li></ul>
    • 16. Financial planning / management design philosophy <ul><li>Decompose the balance sheet and income statements of existing branches into :- </li></ul><ul><ul><li>Specialized cost centers per activity for cost management </li></ul></ul><ul><ul><li>Restructure balance sheet and revenue items into manageable components – related to business drivers </li></ul></ul>
    • 17. Tools/ Systems used in the current Planning Process High Level Strategic Financial Plan Forecast Middle down allocation to Business Units Bottom Up Input & Contracting Middle Up submission to Group Board Presentation Annual Budget Excel environment Prism MPC Prism
    • 18. Challenges <ul><li>No automatic link between processes (strategy, high level 5Yr plan, budget, forecasting) </li></ul><ul><li>Unable to effectively spread high level targets </li></ul><ul><li>Organization structure too complex </li></ul><ul><li>One size does not fit all (large number of specific rules in models) </li></ul><ul><li>Difficult to apply constant change to different applications (time consuming) </li></ul><ul><li>Large volumes of data to manage and control </li></ul><ul><li>Usual risks associated with spreadsheets </li></ul><ul><li>Changes in line management roles & responsibilities </li></ul>
    • 19. Challenges (Continued) <ul><li>Number of entities growing </li></ul><ul><li>Meeting group deadlines whilst simultaneously setting detail budgets </li></ul><ul><li>Need to shorten & Streamlining the planning cycle </li></ul><ul><li>Need to improve efficiency and manage costs </li></ul><ul><li>Existing “dated ” planning tool (Prism) </li></ul>
    • 20. Presentation Content <ul><li>SA Banking industry and ABSA Vehicle and Asset Finance </li></ul><ul><li>Approach and methodology currently used in the AVAF financial planning process </li></ul><ul><li>Stakeholder expectations and challenges </li></ul><ul><li>Finance department structure to support the reporting and planning process </li></ul><ul><li>Requirements of a Financial Planning process </li></ul><ul><li>Conceptual solution </li></ul><ul><li>Impact of Extensity Planning to support and manage the financial planning process </li></ul><ul><li>Concluding statements </li></ul>
    • 21. Stakeholder expectations and requirements place pressure on the system SBU Finance Department Group Finance Planning Office Business Unit Ultimate Holding Company
    • 22. Expectations from our stakeholders <ul><li>Ultimate Holding company </li></ul><ul><li>Realistic medium & short term goals </li></ul><ul><li>Support the overall process </li></ul><ul><li>Supply relevant required information </li></ul><ul><li>Ability to predict business as usual and impact of initiatives on results </li></ul><ul><li> </li></ul>
    • 23. <ul><li>Group Finance Planning Office </li></ul><ul><li>Deliver results within the timeline </li></ul><ul><li>To cope with multiple parameter changes </li></ul><ul><li>Multiple iterations of interdivisional recoveries </li></ul><ul><li>Late Adjustments following executive review and approval </li></ul>Expectations from our stakeholders
    • 24. Expectations from our stakeholders <ul><li>Business Unit </li></ul><ul><li>Direction and guidelines </li></ul><ul><li>Relate strategic objectives of business to strategic financial plans </li></ul><ul><li>Prepare financial plans for evaluation </li></ul><ul><li>Convert strategic financial plans into detail budgets for business unit </li></ul><ul><li>Intellectual involvement rather than process administration </li></ul><ul><li>Determine impact of changes in macro-economic environment </li></ul>
    • 25. Presentation Content <ul><li>SA Banking industry and ABSA Vehicle and Asset Finance </li></ul><ul><li>Approach and methodology currently used in the AVAF financial planning process </li></ul><ul><li>Stakeholder expectations and challenges </li></ul><ul><li>Finance department structure to support the reporting and planning process </li></ul><ul><li>Requirements of a Financial Planning process </li></ul><ul><li>Conceptual solution </li></ul><ul><li>Impact of Extensity Planning to support and manage the financial planning process </li></ul><ul><li>Concluding statements </li></ul>
    • 26. AVAF Finance Structure AVAF Finance Department Statutory Reporting Management Planning & Control Joint Ventures & Alliance Reporting Investment & Subsidiaries Pricing & Sales Support
    • 27. AVAF Finance Planning & Control Structure Management Planning & Control Financial Consultant Retail Sales Financial consultant Corporate Sales Activity Based Costing MPC administration Financial consultant Commercial Sales
    • 28. <ul><li>Enable a small team of staff to manage large volumes of data with a high degree of complexity </li></ul><ul><li>Simulate the complexity of the lower level detail in a summarised environment i.e. results are more realistic </li></ul><ul><li>Planning models that meet unique need of different parts of the business </li></ul><ul><li>Centralised version control of planning components </li></ul><ul><li>Alignment of the various planning components </li></ul><ul><li>Shorten the planning process by generating first cut for review, eliminating initial data capture at cost centre level </li></ul>To meet expectations, our main requirements are ….
    • 29. Presentation Content <ul><li>SA Banking industry and ABSA Vehicle and Asset Finance </li></ul><ul><li>Approach and methodology currently used in the AVAF financial planning process </li></ul><ul><li>Stakeholder expectations and challenges </li></ul><ul><li>Finance department structure to support the reporting and planning process </li></ul><ul><li>Requirements of a Financial Planning process </li></ul><ul><li>Conceptual solution </li></ul><ul><li>Impact of Extensity Planning to support and manage the financial planning process </li></ul><ul><li>Concluding statements </li></ul>
    • 30. <ul><li>Generally, the financial planning process should : </li></ul><ul><li>Link top down strategies and targets with bottom up operational plan </li></ul><ul><li>Convert high level strategic financial statement projections into quantifiable units to measure and manage performance. </li></ul><ul><li>Present a realistic view of the future to support decision making </li></ul><ul><li>Provide a bench-mark for measuring performance </li></ul><ul><li>Provide aspirational targets for continued improvement </li></ul>Requirements of the financial planning process
    • 31. Components of effective CPM Strategy Formulation: Enterprise Goals and Strategies Execution: Operational Targets & Budgets Transaction Systems: Process Transactions Communication Correction Improvement Feedback Performance Measurement
    • 32. <ul><li>To position ourselves in order to fulfil all the stakeholders needs </li></ul><ul><li>Support the operating model </li></ul><ul><li>Streamline the planning process </li></ul><ul><li>Easily control & manage data (multiple version control) </li></ul><ul><li>Fully integrated planning application </li></ul><ul><li>Multiple models to support the complexity of different business units </li></ul><ul><li>Improve and shorten the planning process </li></ul>
    • 33. AVAF Components of effective CPM High Level Strategic Planning MPC Data-base Actual/Budget /Forecast Seeding Chart of Accounts Seeding Branches Sales Analysis Database Cost Center Budget Review Gap Analysis Target Setting Marketers
    • 34. Process flow of planning components High Level Mechanistic Plan Strategy & Initiatives Trend Analysis/ Action Plans Rolling Forecast Bottom Up Inputs Detailed Budget Monitoring & Control Actual/Budget Official Forecast Seeding Gap Seeding Bottom Up Input Operational Plan Bi Monthly
    • 35. Presentation Content <ul><li>SA Banking industry and ABSA Vehicle and Asset Finance </li></ul><ul><li>Approach and methodology currently used in the AVAF financial planning process </li></ul><ul><li>Stakeholder expectations and challenges </li></ul><ul><li>Finance department structure to support the reporting and planning process </li></ul><ul><li>Requirements of a Financial Planning process </li></ul><ul><li>Conceptual solution </li></ul><ul><li>Impact of Extensity Planning to support and manage the financial planning process </li></ul><ul><li>Concluding statements </li></ul>
    • 36. From this….. General Ledger Prism Group Reports MPC Planning Excel Services Funding Module Data Warehouse Existing Data Flow between different systems
    • 37. To this ! Group Reports General Ledger MPC Planning Data Warehouse
    • 38. Of all the features of planning, the main ones we identified were… <ul><li>Integrate with MPC’s and strategy Management’s Structure and data with two-way transfer </li></ul><ul><li>Combine MPC functionality and power with Excel functionality and ease </li></ul><ul><li>Use a dimension in multiple places and only update it in one using Model Manager </li></ul><ul><li>Combine data from multiple sources without recapture </li></ul><ul><li>Respond quickly to updates from higher levels in the company </li></ul><ul><li>Quickly build models based on other models </li></ul><ul><li>Real time multidimensional database with Excel front end </li></ul><ul><li>Goal seek as well as lock and spread functionality </li></ul><ul><li>Ability to seed the detailed budget from the high level financial plan </li></ul>
    • 39. High Level Strategic Planning MPC Data-base Actual/Budget /Forecast Seeding Chart of Accounts Seeding Branches Sales Analysis Database Cost Center Budget Review Gap Analysis Target Setting Marketers
    • 40. New Data Management Multiple Versions MPC Data Base Planning Multiple Users Multiple Users Detailed Sales Targets per Marketer Web based Inputs
    • 41. Presentation Content <ul><li>SA Banking industry and ABSA Vehicle and Asset Finance </li></ul><ul><li>Approach and methodology currently used in the AVAF financial planning process </li></ul><ul><li>Stakeholder expectations and challenges </li></ul><ul><li>Finance department structure to support the reporting and planning process </li></ul><ul><li>Requirements of a Financial Planning process </li></ul><ul><li>Conceptual solution </li></ul><ul><li>Impact of Extensity Planning to support and manage the financial planning process </li></ul><ul><li>Concluding statements </li></ul>
    • 42. Support the operating Model <ul><li>Re-organise the duties & responsibilities of Finance staff </li></ul><ul><li>Investigate variances of monthly results </li></ul><ul><li>Predict future trends (Rolling Forecast) </li></ul><ul><li>Engage in action plans/corrective measures </li></ul><ul><li>Gather bottom up inputs to adjust anomalies of rolling forecast </li></ul><ul><li>Prepare and discuss high level financial plans with business partner </li></ul><ul><li>Spread financial plans as detailed budgets and manage gap discrepancies </li></ul>
    • 43. Streamline the planning process <ul><li>Focus </li></ul><ul><ul><li>Sales staff focus on market potential, sales targets and cost of sales </li></ul></ul><ul><ul><li>Back office/Operations focus on productivity and cost efficiency </li></ul></ul><ul><li>Set targets by spreading forecast & budget data </li></ul><ul><ul><li>Determine operations capacity requirements from sales activities </li></ul></ul><ul><li>Focus on controllable items </li></ul><ul><li>Reduce the level of detail input </li></ul><ul><li>Focus on drivers to calculate budgets </li></ul>
    • 44. Streamline the planning process Performance monitoring Variance Analysis Rolling Forecast “ What If” Final Forecast Publish Strategy Set Strategic Goals Evaluate options Scenario Modelling Operational Management Strategic Planning Target Setting
    • 45. Ease of Control & management of Data <ul><li>Snapshot versions on MPC </li></ul><ul><li>Write back access controlled centrally </li></ul><ul><li>Control over submissions & approvals </li></ul>
    • 46. Fully integrated planning application <ul><li>Business drivers and rate views managed centrally on MPC </li></ul><ul><li>Centrally managed schedule & unit rules on MPC </li></ul><ul><li>Planning models linked to MPC with version & periodic control </li></ul><ul><li>Reports based on central data base </li></ul><ul><li>Group “Excel” submissions dynamically linked to MPC data base (CBR) </li></ul><ul><li>Funding process done simultaneous while modelling data </li></ul><ul><li>Single version of the truth </li></ul><ul><li>Monitor individual progress of budget submissions </li></ul><ul><li>Ensure completeness of budget components </li></ul>
    • 47. Multiple Models to support the complexity of different business units <ul><li>Organisational structure grouped to support generic and non generic business entities </li></ul><ul><li>General rules applied to models for generic business units </li></ul><ul><li>Unique rule used in specific models for non generic business rules </li></ul><ul><li>Different funding models for different business rules </li></ul>
    • 48. Improve & Shorten the Planning Process <ul><li>Link strategic planning / feasibility studies with budgets and forecasts </li></ul><ul><li>Development rolling forecast and dynamic planning methodology </li></ul><ul><li>To manage & Control middle-up/middle-down budgets & forecasts (multiple versions) </li></ul><ul><li>Gap analysis between different versions </li></ul><ul><li>Allow data input from spreadsheets </li></ul><ul><li>Centralised monitoring of the process. </li></ul><ul><li>Centralised budget drivers to accommodate economic and rate view changes </li></ul><ul><li>Easy Top/Down adjustments if necessary </li></ul>
    • 49. Presentation Content <ul><li>SA Banking industry and ABSA Vehicle and Asset Finance </li></ul><ul><li>Approach and methodology currently used in the AVAF financial planning process </li></ul><ul><li>Stakeholder expectations and challenges </li></ul><ul><li>Finance department structure to support the reporting and planning process </li></ul><ul><li>Requirements of a Financial Planning process </li></ul><ul><li>Conceptual solution </li></ul><ul><li>Impact of Extensity Planning to support and manage the financial planning process </li></ul><ul><li>Concluding statements </li></ul>
    • 50. Obstacles and Considerations <ul><ul><li>Where do we start </li></ul></ul><ul><ul><li>Defining perfect solution vs getting started </li></ul></ul><ul><ul><li>Consider company technology policies </li></ul></ul><ul><ul><li>Technical support requirements </li></ul></ul><ul><ul><li>Hardware and software capability </li></ul></ul><ul><ul><li>Computer Literacy </li></ul></ul><ul><ul><li>Specialised Training </li></ul></ul><ul><ul><li>Resistance to change </li></ul></ul>
    • 51. Benefits – our highlights <ul><li>Data stored in a controlled server environment </li></ul><ul><ul><li>Improved data integrity </li></ul></ul><ul><li>Setting of budget targets at various levels </li></ul><ul><ul><li>Change in budget approach - setting of targets </li></ul></ul><ul><li>Web-based delivery of reports </li></ul><ul><ul><li>immediate availability of actual results after month-end closure to all users </li></ul></ul><ul><li>Ease of data integration to Excel for fine tuning </li></ul><ul><li>Simultaneous existence of alternate reporting structures </li></ul><ul><li>Ease of comparison of units in the same business unit </li></ul><ul><li>Eliminate manual re-capture and balancing between sheets </li></ul><ul><li>Ease of top down adjustments when necessary </li></ul><ul><li>Focus on analysis and planning rather than admin functions </li></ul>
    • 52. Our Future Intentions <ul><li>Executive Dash Board </li></ul><ul><li>Drill through facility to identify detailed transaction per account balance </li></ul><ul><li>Automated executive management financial reports </li></ul><ul><li>Automated executive management presentations </li></ul><ul><li>Enhance automated alerting ability </li></ul><ul><li>Expand web based analysis capability </li></ul><ul><li>IFRS Requirements </li></ul>
    • 53. Conclusion <ul><li>Planning together with MPC provides us with the ability to integrate Strategy, Budgets and Forecasts, whilst simultaneously combining financial and non-financial reporting into the same data-base. </li></ul><ul><li>This project is not an event, but rather as a journey to improve the financial reporting and planning process until such time as the Business Unit is able to operate dynamically re-plan on a continuous basis. </li></ul><ul><li>Past Performance + Strategic Objectives + Initiatives + Market Conditions ===> Business Plans </li></ul>
    • 54. Thank You <ul><li>Questions ? </li></ul>Don’t be afraid to take a big step if one is indicated. You can’t cross a chasm in two small jumps. -- David Lloyd George

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