A Corporation Analyzes the Pros and Cons of Hyperion Strategic Finance in the Evolution of Long-Term Planning
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A Corporation Analyzes the Pros and Cons of Hyperion Strategic Finance in the Evolution of Long-Term Planning

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Ellen and Ryan guide attendees through a case study of how CHS, Inc. transformed from decentralized strategy discussions and individual spreadsheet-based financial models to a leading edge, ...

Ellen and Ryan guide attendees through a case study of how CHS, Inc. transformed from decentralized strategy discussions and individual spreadsheet-based financial models to a leading edge, long-range planning process. With Hyperion Strategic Finance (HSF) being a key component to the overall process change, Ellen and Ryan discuss both the opportunities and the challenges identified during the implementation, as well as the tools available for modeling, analysis, and reporting.

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A Corporation Analyzes the Pros and Cons of Hyperion Strategic Finance in the Evolution of Long-Term Planning Presentation Transcript

  • 1. z al R an t erA Corporation Analyzes the Pros and Cons of ain the Evolution of ewHyperion Strategic FinanceLong-Term Planningf E dg rt yo ro peEllen Scipta P Ryan Meester October 15, 2012CHS Inc. Edgewater RanzalFinance & Business Strategic PlanningPlanning Practice
  • 2. Agenda Introductions z al an Long-Term Planning Overview R at er CHS Study g ew f Ed o ty er High Level Demonstration rop P Q&A
  • 3. Planning for Any Environment z al R an at er g ew f Ed rt yo ro pe P
  • 4. How Confident are You in Developing theCorporate Strategy? al CFO z R an Corporate at er ew Treasury M&A Finance E dg y of e rt P rop
  • 5. Traditional Long-Range Planning Challenges  Complex spreadsheet models al  No consolidated or nz Raintegrated models Banks Investors Acquisitions consistent view er Divestitures  Lack of at scenario analysis w make ge cumbersome Ed  Limited history or of rty Board of Directors pe Senior Management documentation P ro  Version control and security  Duplicative efforts Treasury Long-Term Corporate Planning Development
  • 6. Hyperion Strategic Planning Overview Economic Shifts Predictive Modeling & Simulation z al anCapacity Planning Growth Initiatives rRLong-Term (3-5 Year) Discounted Cash FlowFull Financial Statement Long-Term Financial e atValue Economic Value Added wManagementProjections Liquidation Value geKey Performance Metrics Planning d fE o What-if e rty AnalysisNew Product Offerings PAcquisitions / Divestitures rop Corporate Treasury Capital Requirements Development Strategies Reserve RatiosProduct Pricing Debt Issuances/PaymentsCommodity Pricing Cost Cutting
  • 7. CHS Inc.  The nation’s leading cooperative, owned by farmers, ranchers and co-ops across the al United States z an  A diversified energy, grains and R foods business committed to at er providing the essential ew resources that enrich lives g Ed around the world f rt yo Business Divisions ro pe  CHS Grains, Crop NutrientsP and Retail  CHS Energy  CHS Foods and Processing  CHS Business Solutions
  • 8. CHS Ownership 62,000 individual 1,100 locally owned 10,000 preferred producers (through cooperatives stockholders company-owned serving about (CHSCP on al facilities) 300,000 producers NASDAQ Exchange) z an Voting Equity 30% Voting Equity 70% Non-voting owners R at er g ew f Ed rt yo ro pe P
  • 9. CHS Recent Highlights  2012 Fortune #78  Fiscal 2011 Net Income $961.4 Million  Fiscal 2011 Net Revenues $36.9 Billion  Fiscal 2012 Q3 YTD Net Income $899.7 Million z al Earnings History R an er $ in millions at g ew f Ed rt yo ro pe P
  • 10. Creating Value for Owners – Cash Returns z al R an $ in millions at er g ew f Ed rt yo ro pe P
  • 11. New Leadership and Vision New CEO & Key Leadership Retirements/Changes, Jan 2011  Updated Guiding Principles al • Not a holding company z • Not a speculative buyer and seller of businesses an • Leveraging the diverse CHS enterprise to enhance R producers‟ profitability at er g ew Ed  Focused on Growth • Strategic expansion f rt yo • Balanced business portfolio • Aspirations ro pe P CHS Finance Department Created, February 2011
  • 12. CHS Finance Team Challenge: Process & Content Quarterly forecasts  Reduce Annual CEO/CFO Board Budgeting Efforts approval of budget approval of Consolidation of Plans through ongoing budget and Presentations Forecast and Corporate Corporate al Forecast Strategy Budget Refresh Submission discussions z an  Drive Consistency Forecast Divisional Operating & Forecast rR Submission Submission &Rollup Capital Budgets &Rollup Annual and long te wa Q4 Q1 range planning Corporate  Vary drivers/growth e Forecast dg Submission rates by line of E Bank business Q3 Q2 of Meeting  Analyze and set rt y Corporate top down‟s annual Forecast budget targets by e Corporate Budgets and Submission rop Allocations line of business Reset Long Drive Consistency Forecast P  Range Plan Aspiration Submission Refresh  Assess patron &Rollup equity options and allocations Forecast Identify base and Submission  &Rollup incremental Corporate Forecast funding needs Submission  Aspirations
  • 13. Aspirations z al R an at er g ew f Ed rt yo  ro pe P Optimize current portfolio and playbook over next 5 years  Scenario Analysis: Include/Exclude Aspirations  Value acquisitions/divestitures d integrated within portfolio  Model Range of Risk/Uncertainty  Analyze funding scenarios and capital needs by year  Connect treasury / corporate development with corporate FP&A functions  Funding routine to define cash balancing process13
  • 14. Aspirations: From Concept To Tactical Plans ToStrategic Financial Models CHS 5- YEAR CHS STRATEGIC STRATEGIC FINANCIAL GROWTH ASPIRATIONS IMPERATIVES OBJECTIVES MERITS & PLAN z al• Producer – • Business Units Defined Actions an • Unbiased Validation of Plays aka R er PassTime to Scale Focused Required to Remain Relevant And “The Aspirations”• Global Grow Organically In Current Space t • First Financials: EBITDA, a CAPITAL, ew Commodities • Aggregated Customer, Operational,• Energy g Ed Regional, and Enterprise Leader POVs • Objective Scoring: Prioritizing A• Food and Food f on Future Incremental Opportunities Playbook yo Ingredients • Score each Play Based on: rt• Enhance/ • Outcome: Tactical Playbook for Next  Relevance to the pe Leverage 5 Years By Business Aspirations ro Enterprise  Risk in Execution Value P The result of our work was a Strategic Growth Plan that carves the  Reward Potential path of CHS for the next 5 years This is a key component of our planning process going forward as it defines where our growth will come from
  • 15. A Unique and All Encompassing Solution:Hyperion Strategic Finance (HSF) Independent of ERP system  Data Home, Data can be imported via Excel, Essbase / Planning, HFM, etc al  Can leverage the strengths of other Hyperion products (i.e. Essbase for z an reporting) R Speed of Implementation at er ew  Fully Integrated Financial Statements g Ed  Customized Drivers and Metrics for Individual Business Units f rt yo Ease of Use ro pe  Time spent on analysis and recommendations not development P  Ability to solve or allocate targets  Scenarios in a cinch, base case simplified  Reduces hours spent budgeting annually
  • 16. HSF Implementation Lessons Learned Spend the Time on Model Design  Business team awareness, partnership, and buy-in  Capture the “right” details, build „placeholders‟ as needed  Know the constraints of the tool and your IT systems up front al  Don’t underestimate the effort to gather / validate data z R an er Keep it Simple and Strategic  Manage operational plans outside of HSF at ew  Focus on primary business drivers, manage # of inputs g Ed  Use historic trend as available, play via scenarios f yo  Spend the time: Run the data to find the Optimal solutions rt ro pe Train the Team on the Functionality of the Tool P  Get your hands dirty on reporting, scenarios, updates, formula changes etc.  Manage access effectively  Document religiously  Continuous improvement
  • 17. z al R an at er g ew Ed Demof Screen Shots o e rtyP rop
  • 18. Pre-Built Accounting Integrity • Pre-built, fully integrated financial statement foundation • Pre-built forecast methods and formula al functions z an • What-if Analysis toolkit R at er g ew f Ed rt yo ro pe P
  • 19. Powerful Scenario Capabilities z al R an at er g ew f Ed rt yo ro pe P
  • 20. Easily Analyze Various Combinations z al Mix and Match R an er Scenarios at ew Capital Projects included g f Ed rt Acquisition yo pe excluded P ro
  • 21. World Class Treasury Analysis• Calculates net cash surplus or deficit from al multiple models and scenarios z R an• Funding Options tool to re-allocate surpluses and at er fund deficits g ew f Ed yo• Debt scheduler rt• ro pe User-defined reports to P monitor covenants, credit ratings, and earnings per share
  • 22. Acquisition / Divestiture Modeling z al R an at er g ew f Ed rt yo ro pe P
  • 23. Set Strategic Targets in HSF z al R an at er g ew f Ed rt yo ro pe P
  • 24. Seed Budgets With Strategic Targets From Strategic Plan z al R an at er g ew f Ed rt yo ro pe P
  • 25. Tweak Budget with Targets In Mind z al R an at er g ew f Ed rt yo ro pe P
  • 26. Update Targets with Latest Forecast z al R an at er g ew f Ed rt yo ro pe P