Ben lamorte asmi san diego 9 21-11v2

632 views
545 views

Published on

San Diego Sep 21 was a huge hit.

For event attendees, simply download the slides - I am including all those "other slides" in the appendix...

Contact me directly to experience the interactive elements that will not come across in these slides. 415-456-8528

Published in: Technology, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
632
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Ben lamorte asmi san diego 9 21-11v2

  1. 1. September 21 ASMI SummitThe Planning Maturity Curve: Where are you? Where do you want to be? Ben Lamorte, VP Marketing, Alight Planning © 2011 Alight Planning Slide 1
  2. 2. Key ContributorRand Heer Business Activities  CEO, Alight Planning (Planning software)  Co-Founder, Aspirity (Microsoft BI consulting)  Founder, FP&A Train (Essbase training)  Founder, Pillar Corporation (Enterprise budgeting)  CFO for 2 public companies  Rockwell Int‘l, Biz Unit CFO and Corporate Publications  Coauthor: “Business Intelligence: Making Better Decisions Faster”  Author of 10 white papers on planning/reporting topics Education  MBA degree Harvard Business School © 2011 Alight Planning Slide 2
  3. 3. Today‘s SpeakerBen Lamorte Business Activities  Vice President, Marketing & Sales, Alight Planning  Principal, Decision Consulting (Adobe, Kaiser)  Manager, Business Intelligence, planetrx.com  Management Consultant, APM/CSC Healthcare Publications  Author of 2 research papers, American Mathematics Society  Co-author of planning white papers  Editor of Alight Planning Blog Education  Doctoral Candidate, Management Science, Stanford University  MS Engineering, Stanford University  BS, Engineering & Math, UC Davis © 2011 Alight Planning Slide 3
  4. 4. Fun Agenda Part 0: Quick Simulation and Warm Up  1: Sensitivity Analysis for the Consulting Model  2: Do we hire more consultants? Part 1: The Planning Maturity Curve Part 2: Why 1/3 Software Fails and How to Avoid Part 3: Fun Stuff  Guidelines for Agile Planning  ROI of Budgeting Software: Vendor Vs User  RAFFLE: Submit business card to front row and write  ―FREE ASMI PASS‖ or ―Free Assessment‖ on the back  2 WINNERS TODAY (Each Prize is approx $1,750 value) © 2011 Alight Planning Slide 4
  5. 5. Part 0: Quick Simulation CASE 1: So, are those consultants spending too much on travel? What is it that really drives profits and what can we do about it? CASE 2: Consulting Margins were supposed to be 40% but are down. Why? What do we do to bring that back up? © 2011 Alight Planning Slide 5
  6. 6. Business Value from Planning Insights  Understanding things we didn‘t see before Actionable Knowledge  Understanding and acting upon operational drivers Decisions  Planning scenarios gives us the financial impact of choices  Having choices sets up decision making © 2011 Alight Planning Slide 6
  7. 7. The Planning Maturity CurveEffort Forecasting Reporting Agile Planning Budgeting Scenario Analysis Budgeting Forecasting & Reporting Business Value © 2011 Alight Planning Slide 7
  8. 8. Planning Maturity—Budgeting The Happy Accountant © 2011 Alight Planning Slide 8
  9. 9. Planning Maturity—Reporting The Reluctant Managers © 2011 Alight Planning Slide 9
  10. 10. Planning Maturity—Forecasting The Grumpy CFO © 2011 Alight Planning Slide 10
  11. 11. #4: Introducing Agile Planning Agile Planning Team © 2011 Alight Planning Slide 11
  12. 12. 2-Minutes: Turn to Your NeighborEffort Forecasting Reporting Agile Planning Budgeting Scenario Analysis Budgeting Forecasting & Reporting Business Value © 2011 Alight Planning Slide 12
  13. 13. The Need for Real Time The Excel PowerPoint Cycle © 2011 Alight Planning Slide 13
  14. 14. Agile Planning Example CFO at Pittsburgh Mercy Health  Financial Results  $600K+ in documented revenue increases and cost cuts from MET goals  Process Results  No budgeting  Forecast Accuracy within 2%  Manager commitments based on demonstrated best practices  Model Status  Now on third model iteration built from scratch © 2011 Alight Planning Slide 14
  15. 15. Part 2: Why Budgeting Software Fails?  Research Brief:  www.focus.com/briefs/why-budgeting-software-fails- and-what-do-about-it/  Podcast Featuring Sid Ghatak:  www.focus.com/roundtables/avoiding-business- performance-mangement-software-failure-4-t/ © 2011 Alight Planning Slide 15
  16. 16. #0 Software on the Shelf Problem: The software company wants to sell as many seats as possible. This is a recipe for buying TOO MANY SEATS! Solution: Remind the vendor of the Buttonwood Group Survey that examined 100 companies who deployed budgeting software to replace spreadsheets:  The study examined what percent of non-finance employees who received a license to use the budgeting/planning application actually logged into the system in the past year.  44% of companies reported complete failure to get anybody outside of Finance to actually log into the system in the past 12 months.  Looking across the board, on average 2/3 of all seats purchased for non- finance managers go unused. © 2011 Alight Planning Slide 16
  17. 17. #0 Buying too many Seats! Source: Planning Software Usability Survey By Buttonwood Group © 2011 Alight Planning Slide 17
  18. 18. #1 Going Over Budget: Problem: Our software will be just $2,000. We forgot to tell you it costs $10,000 for consulting help to build your model – oh yeah, it‘s really easy to use. Of course, that‘s just to get you going, it could take $12,000 for it to be fully deployed. Solution: Ask for a ridiculously low bill-rate once the total project cost hits a certain number. For example, if the vendor estimates you will need 50 hours at $200/Hr which is $10,000. Then say: ―Great! So, if we do in fact pay $10,000 upfront for the 50 hours, can we get a bill- rate of $100/Hr thereafter if additional consulting is requested? After all, it is unlikely we will need more than 50 hours.‖ © 2011 Alight Planning Slide 18
  19. 19. #2: The Problematic Consultant Problem: A month after you buy software, you find out you‘ve been assigned to a consultant who turns out to be a 3rd party partner whos built one model as practice and recently completed an MBA degree Solution Do not agree to purchase any software until you’ve at least met the consultant assigned to your project. If you don‘t click with your consultant, the project is doomed, and in this case, you should either  1) ask for an alternate consultant  2) simply choose not to make the software purchase. The bottom line here is that you are better off building your model in Excel with a top-notch consultants help than building a model in some budgeting tool with a second-rate consultant © 2011 Alight Planning Slide 19
  20. 20. #3: Project Takes Too Long Problem: ―They said it would take 4 weeks, but 6 months later, we‘re still not done!‖ The software vendor has case studies featured on their website that say ―I was up and running in just 4 weeks!‖ What actually happened was the customer paid for 160 hours of consulting by the time the project was considered complete. Since 160 hours divided by 40 hours per week amounts to 4 weeks, one way to break this down is that "...it took 4 weeks." Solution: Ask for a project timeline with key milestones defined prior to making the purchase decision. Review this project timeline with your boss and get a sign off and ensure there are no questions from your management team prior to the software purchase. © 2011 Alight Planning Slide 20
  21. 21. Fun Stuff: 3 Steps to Positive Change Step 1: Awareness  Where are you in the Planning Maturity Curve?  Rate your planning process across 4 planning activities Step 2: Critique  Where do you want to be?  Define what the improvement looks like and prioritize which planning area to improve Step 3: Realign  In Spreadsheets or leverage Dedicated Solution?Source for 3 steps: Critical Reflection Process inspired by J. Habermas © 2011 Alight Planning Slide 21
  22. 22. ROI of ―Planning‖ SoftwareEffort All Planning Software Claims Every Vendor Says They Do Budgeting & Reporting Reporting Every Vendor Claims: • Saves Time • Adds Business Value Budgeting Business Value © 2011 Alight Planning Slide 22
  23. 23. ―Actual‖ ROI ―Budgeting & Reporting‖Effort Budgeting & Reporting Software ―What FP&A Customer Says‖ about Impact of Dedicated Reporting Budgeting & Reporting Tool: • Saves Time But… • No Added Business Value Budgeting Just Doing Budgeting is Not Enough Business Value © 2011 Alight Planning Slide 23
  24. 24. THE BIG ROI – Agile PlanningEffort Alight Customers: ―Our overall planning process is a bit streamlined; however, The Big ROI is Added Business Value” Forecasting Reporting Only Alight Does Agile Planning Budgeting Only Alight Does Scenarios this Budgeting Forecasting effectively & Reporting Adds Real Value In Alight Business Value © 2011 Alight Planning Slide 24
  25. 25. Fun Stuff: Guidelines for Agile PlanningTM1. Move Out of Excel  Deal with structure issues  Deal with modeling issues2. Reduce Level of Detail  Plan the way managers think; not the Happy Accountant  Reduce detail to better integrate strategy3. Implement Driver-Based Planning  Reduce direct input data volumes  Increase ‗modeled elements‘—operational/driver based planning4. Integrate (Don‘t Just Import) Actuals  ―Rolling over‖ actuals in plan files—apples to apples  Using actuals to understand trends—focus on rates5. Implement Scenario Analysis  You can‘t predict the future, but you can construct scenarios  You‘re looking for easy maintenance and comparisons at all levels © 2011 Alight Planning Slide 25
  26. 26. Driver-Based Planning: URA © 2011 Alight Planning Slide 26
  27. 27. Object-Based Linking • No more spreading formulas to the right • Much easier to audit •Robust line items: No more broken formulas since impossible to ―hardcode‖ over formulas) © 2011 Alight Planning Slide 27
  28. 28. Integrated Actuals: Back-Calc © 2011 Alight Planning Slide 28
  29. 29. Scenarios: Change multiple in 1 step © 2011 Alight Planning Slide 29
  30. 30. Scenarios: Compare Side by Side © 2011 Alight Planning Slide 30
  31. 31. So, what about tomorrow?2-Minutes Talk to your NeighborStep 1: AwarenessRate your planning process across the 4 planning activitiesBudgeting:Reporting:Forecasting:Agile Planning: © 2011 Alight Planning Slide 31
  32. 32. Will the Sun Come Out Tomorrow? Step 2: Critique  Where do you want to be?  Define what the improvement looks like and prioritize which planning area to improve Step 3: RealignHOW ARE YOU GOING TO DO IT? © 2011 Alight Planning Slide 32
  33. 33. Oct 27th ASMI Webinar with CFO Best (and Worst) Practices in Budgeting and Forecasting: The story of a successful CFO. Arlin Hall, Chief Financial Officer at The Blood & Tissue Center, will reflect on his real-world experience moving out of spreadsheets into Prophix and MS Forecaster which did not work out Arlin attended an ASMI Budgeting and Forecasting Conference in San Diego in 2010, and ended up installing Alight Planning. ―Finally, I‘m a happy camper after years of searching for the right planning solution.‖ © 2011 Alight Planning Slide 33
  34. 34. Follow Up with Alight Follow up with Alight  BLamorte@AlightPlanning.com  Telephone: (415) 456-8528 Resources  Transforming Planning at Pittsburgh Mercy:  www.Alightplanning.com/Webinars/PM/Video.html  Application Requirements for Rolling Forecasts  www.AlightPlanning.com/Workshop/Requirements-for-Rolling- Forecasts/Video.html  Focus Expert Podcast:  Google ―How to Avoid BPM Software Failure‖ © 2011 Alight Planning Slide 34
  35. 35. APPENDIX © 2011 Alight Planning Slide 35
  36. 36. 1. Out of Excel Structure Issues  Bound by templates: can‘t add line items on-the-fly  Rollup structures with dimensions are difficult to create and maintain  No multi-user security/process controls  Importing (rekeying) actuals is error prone/cumbersome Structure problems Save As relate to budget templates where you need to build in structure and financial intelligence from scratch. Version A Version N… © 2011 Alight Planning Slide 36
  37. 37. 1. Out of Excel Modeling Issues  Formula and structure errors—aka #Refs  Dependency on key individuals—Lone Ranger Syndrome  Line manager spreadsheet skills are limited; untrained/dangerous. Modeling problems: cell- based linking which discourages driver-based planning which is the source of most errors. © 2011 Alight Planning Slide 37
  38. 38. 1. Out of Excel What to Look for in Planning Applications  You can build rollup structures with multiple dimensions/attributes  Application incorporates multi-user security and process controls  Users can create line items on-the-fly without breaking things A fundamental deliverable of a Planning Application is user security and process controls. © 2011 Alight Planning Slide 38
  39. 39. 1. Out of Excel What to Look for in Planning Applications  You can build rollup structures with multiple dimensions/attributes  Application incorporates multi-user security and process controls  Users can create line items on-the-fly without breaking things  Importing capabilities—aka ETL (Extract, Transform & Load)  Object-based linking with audit trails Object-based linking is critical for implementing driver-based planning. © 2011 Alight Planning Slide 39
  40. 40. 2. Reduce Level of Detail Plan at the Right Level  Lowest level natural class accounts create too much detail  Let managers plan the way they think  Set the stage for driver-based planning It‘s the data that‘s the killer 7 T&E accounts * 100 cost centers * 12 months = 8,400 © 2011 Alight Planning Slide 40
  41. 41. 2. Reduce Level of Detail Guidelines for ―Right Level‖  Plan/report at a higher level—especially for natural accounts; or  Set up a dual system: traditional budgeting plus forecast at higher level.  Do the math for various alternatives; test imports for a ‗visual picture‘.  Go step-by-step: not everything need be done all at once.  The planning application must have line item detail Example of an account structure at a higher level with line items created by managers. © 2011 Alight Planning Slide 41
  42. 42. 2. Reduce Level of Detail Benefits of Reducing Level of Detail  Better operational connection for line managers  Reduces overall data volumes; better visibility  Set the stage for driver-based planning Reducing level of detail along with moving out of spreadsheets reduces Effort and enhances Business Value. © 2011 Alight Planning Slide 42
  43. 43. 3. Driver-Based Planning What Is Driver-Based Planning?  A series of sub-models for revenues and expenses based on drivers  Drivers are typically units of things: unit sales, customers, transactions  The fundamental structure is: Units * Rate = Amount  The spending focus is on big ticket items and large departments Example of a driver model that calculates amount of explosives for a gold mining operation. © 2011 Alight Planning Slide 43
  44. 44. 3. Driver-Based PlanningSoftware Conversion # Services Hours Per Billable Bill Rate BillableLicenses rate Customers Customer Services Services Sold Hours Revenues Predictive logic diagram for a software/services business It’s about Activities & Rates © 2011 Alight Planning Slide 44
  45. 45. 3. Driver-Based PlanningSoftware Conversion # Services Hours Per Billable Bill Rate BillableLicenses rate Customers Customer Services Services Sold Hours Revenues Staff Utilization Predictive logic Rate diagram for a Services Hours Per Services Staffing Month Staffing software/services Hours Heads business Services Expenses  Salaries It’s about  PR taxes/ benefits  Supplies Activities & Rates  Travel  Recruitment Training  Etc. Services Profitability © 2011 Alight Planning Slide 45
  46. 46. 3. Driver-Based Planning Benefits of Driver-Based Planning?  Tight turn-around for forecasting has a chance  Enforces focus on important operational drivers  Visibility into the numbers—allows meaningful causal analysis of variances  Sets up ―real time planning‖ for scenario analysis Driver-based planning delivers a significant increase in Business Value © 2011 Alight Planning Slide 46
  47. 47. 4. Integrate Actuals Import Actuals  Metadata and data imports based on chart of accounts structures  Monthly updates from the general ledger  Automated with ―connectors‖ or semi-automated with ETL tools Integrate Actuals  Any source—GL,HR, CRM, RDBMS, OLAP  Any data type—text, number, currency, percentage, currency  Any level—line item, natural accounts, cost center, etc.  Any modeling—simple of complex linking, back calculate rates © 2011 Alight Planning Slide 47
  48. 48. 4. Integrate Actuals Integration Issues  Data spread across multiple sources  Actuals and Plan at different levels  No underlying activity drivers  Actual and plan structures out of sync © 2011 Alight Planning Slide 48
  49. 49. 4. Integrate Actuals Integration Issues  Data spread across multiple sources  Actuals and Plan at different levels  No underlying activity drivers  Actual and plan structures out of sync © 2011 Alight Planning Slide 49
  50. 50. 5. Implement Scenario Analysis Deliverables  Insights: What‘s Going On with the Numbers  Actionable Knowledge: What Are Our Choices Between Things To Do  Decisions: ―OK gang, here‘s what we‘re going to do!‖ About the Future “Trying to predict the future is like driving down a country road at night with no lights while looking out the back window.” Peter Drucker “The future ain’t what it used to be…” Yogi Berra © 2011 Alight Planning Slide 50
  51. 51. 5. Implement Scenario Analysis Types of Scenario Analysis  Manage Resource Allocations: Adjust Short Term ―Who Gets What‖  Strategic Planning: Extend Time Frames; Same Model As Short Term © 2011 Alight Planning Slide 51
  52. 52. 5. Implement Scenario Analysis Types of Scenario Analysis  Manage Resource Allocations: Adjust Short Term ―Who Gets What‖  Strategic Planning: Extend Time Frames; Same Model As Short Term  Black Swan Planning: Understand Improbable Events [Nassim Taleb] © 2011 Alight Planning Slide 52
  53. 53. 5. Implement Scenario Analysis Implementation Guidelines  Easy to Create: On-the-Fly; No IT; Selectively Include Line Managers  Easy to Maintain: Change Data and Structure in Near Real Time  Scenario Drill Down: Comparison & Analysis at All Levels  Real Time Feedback: The Planning Tool is the Presentation Tool © 2011 Alight Planning Slide 53
  54. 54. Spreadsheet Issues Spreadsheets Don‘t Do the Job  Not multi-user: security and process control issues  Not a database: consolidation and reporting issues  Not multi-dimensional: reporting and analysis issues  Cell based modeling: limitations on driver-based planning  Save As for versions and scenarios: just not viable! Scenario A Scenario B Scenario C © 2011 Alight Planning Slide 54
  55. 55. Case Study: Pittsburgh MercyRay Wolfe Business Activities  Chief Financial Officer, Pittsburgh Mercy Health System 2006-present  Director of Fiscal and Information Systems– Mercy Behavioral Health 1996-2006  Chief Fiscal Officer, Summit Center for Human Development, 1988-1996  St. Francis Medical Center, Patient Account Manager, 1986-1988 Awards: Ventana Leadership 2010 Education  Juris Doctorate, West Virginia University 1977  BA, Marshall University, 1974 © 2011 Alight Planning Slide 55
  56. 56. Case Study: Pittsburgh Mercy Community Mental Health and Health Care Related  Mental Health, Mental Retardation, Drug/Alcohol, Homeless  Prevention Services and a Private Foundation  Serving Southwestern Pennsylvania Business Metrics Pittsburgh Mercy Health System has  3 subsidiary corporations  60 community locations  27 major programs  260 revenue/cost center  1,700 employees; 106 Managers & Supervisors  Funded through traditional insurance billing, government grants and capitation contracts, Private Foundations © 2011 Alight Planning Slide 56
  57. 57. Case Study: Pittsburgh Mercy Demographic Problems  Managers with only clinical backgrounds/ no business skills  60 sites yielded communication barriers and no common language Excel based —  Overload mode of worksheets with link and formula errors  Too much time to maintain and no certainty of integrity  No way to import and compare actual data to the budget design Budgeting became a ritual without meaning  Budgeting full year totals with no seasonality  Tops down budgets w/o manager buy in  No P&L visibility by critical factors  No operational integration © 2011 Alight Planning Slide 57
  58. 58. Case Study: Pittsburgh Mercy Organization of Forecast Groups and Processes  Group managers by functional areas—e.g.  Community Treatment Teams  Outpatient Clinics  Child Services  15 Groups each meet once a quarter  3 to 12 managers per group  4 members from accounting/finance  Real time process elements  Alight Planning displayed on Overhead Projector with Smart Board  CFO is facilitator; Alight Admin on the mouse and keyboard  Review/ make changes in real time  Everyone sees everything! © 2011 Alight Planning Slide 58
  59. 59. Level of Detail Technical Issues  What level of detail? Actuals and plan  Transportation example © 2011 Alight Planning Slide 59
  60. 60. Using Actuals to Drive Plan Technical Issues  Visibility into Units/Rates/Amounts  Revenue and Allowance Rate Example © 2011 Alight Planning Slide 60
  61. 61. Change is not rapid, business stable The Happy Caveman © 2011 Alight Planning Slide 61
  62. 62. Agile Planning Simulation Background  Wombat, Ltd: mid market ERP for verticals: healthcare, manufacturing, technology  Bongo is main competitor in manufacturing  Event driver: Bongo cuts prices 30% in manufacturing The Players  Ben, Sales Guy  Rand, Finance Guy  Sid, Services Guy  Phyllis, CEO (not present) What You‘ll See  Real Time Collaboration  Driver-Based Financial Model  Scenario Planning © 2011 Alight Planning Slide 62
  63. 63. The 4 Planning Activities © 2011 Alight Planning Slide 63
  64. 64. The 4 Planning Activities © 2011 Alight Planning Slide 64
  65. 65. The 4 Planning Activities © 2011 Alight Planning Slide 65
  66. 66. Where Are You on the Curve? © 2011 Alight Planning Slide 66

×