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Financial Planning Best Practices and IBM Cognos TM1 Demo

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Senturus experts address key elements of financial planning best practices that are software platform independent, and explain how your organization can implement them. Gain insights and …

Senturus experts address key elements of financial planning best practices that are software platform independent, and explain how your organization can implement them. Gain insights and recommendations based on Senturus’ extensive experience implementing financial planning solutions across hundreds of clients. Plus learn about IBM Cognos TM1, an IBM Cognos planning software for budgeting, forecasting and analysis.

This slide deck is part of a recorded Senturus webinar, "Financial Planning Best Practices.” To view the free recording of this entire presentation and download the slide deck, plus a log of more than 30 questions raised by participants at the webinar, visit www.senturus.com<http: />. You will find this and many other webinars and resources about IBM Cognos TM1 and related topics.

Senturus designs and builds Business Intelligence systems to enable executives to better run their businesses. Since 2001, Senturus has been an IBM Cognos Premier Business Partner and delivered over 1400 projects to 650+ clients in a breadth of industries and applications.


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  • 1. IBM Cognos TMI Demo and Financial Planning Best Practices 09/15/2011 www.senturus.com Helping Companies Learn From the Past, Manage the1 Present and Shape the Future
  • 2. This slide deck is part of a recorded webinar. To view the FREE recording of this entire presentation and download the slide deck, go to www.senturus.com/recorded-webinars.php You will find this—and many other recorded webinars-- under the “IBM Cognos Office of Finance Solutions: TM1, EP, Controller, FSR”2
  • 3. Agenda • Introductions • TM1 Demo • 12 Elements of Financial Planning Best Practices • Q&A3
  • 4. Welcome and Introduction • Senturus – Greg Herrera, Co-Founder, CEO – Steve Chapman, Management Consultant – Chris Fargo, Office of Finance Account Manager • IBM Cognos – Michael Mackevicius, Technical Manager4
  • 5. Who is Senturus ? • Consulting firm specializing in Corporate Performance Management – Business Intelligence and Enterprise Planning & Budgeting – Platform-independent – San Francisco Business Times Hall of Fame -- Four consecutive years in Fast 100 list of fastest-growing private companies in the Bay Area • Experience – 11-year focus on performance management – More than 1,000 projects for 450+ clients • People – Business depth combined with technical expertise. Former CFOs, CIOs, Controllers, Directors...5
  • 6. A few of our 450+ Clients6
  • 7. The Best Financial Performers: “Value Integrators” High 32% 23% FinanceEfficiency 33% 12% Low Low High Business InsightSource: IBM Institute for Business Value, The Global CFO Study 20107
  • 8. Their Financial Results Efficiency + Business Insight Contributes to Outperformance Value Integrators > 20x 49% 30% more 14.0% more more All other enterprises 12.1% 11.3% 9.4% 9.3% 0.5% EBITDA Revenue ROIC 5-year CAGR, 2004-2008 5-year CAGR, 2004-2008 5-year average, 2004-2008 Value Integrators also have an almost 20% better operating efficiency ratio than all other companies examined.Source: IBM Institute for Business Value, The Global CFO Study 20108
  • 9. What do Value Integrators do differently? % More Data and Streamlined information delivery 32% Analytics Electronic data capture at the source 35% Systematic data cleansing and auditing 31% Business Risks in Performance Reporting 22% Process Employed Functional Best Practices 31% Utilized automated workflow tools 25% Measurement & monitoring of processes 41% Technology Common reporting platform 31% Common planning platform 22% 0% 20% 40% 60% 80% 100% Percent Adopted Disciplined Operators Value Integrators Constrained Advisors ScorekeepersSource: IBM Institute for Business Value, The Global CFO Study 20109
  • 10. Foundation for improved performance IBM COGNOS TM1 DEMONSTRATION To view a free recoding of this demo, go to www.senturus.com/recorded-webinars.php You will find this recording under the IBM Cognos Office of Finance Solutions: TM1, EP, Controller, FSR section. It is entitled IBM Cognos TM1 Demo and Financial Planning Best Practices.10
  • 11. Based on experience across hundreds of clients 12 ELEMENTS OF FINANCIAL PLANNING BEST PRACTICES11
  • 12. 1. Use one planning process for periodic, rolling plans / forecasts • Don’t: Use one, long annual “budgeting” process; and a different, infrequent (or no) reforecasting process . . . • Do: Use one, efficient rolling reforecast process • BENEFITS: – One process for managers to learn (and remember) – An efficient planning process should complete in a few days at most – More accurate projections due to frequent reviews and updates – Continual management actions are based on better trend information and accurate, timely actual-to-plan variances12
  • 13. 1. Planning for Employees13
  • 14. 1. Planning for Cap Ex14
  • 15. 1. Planning for Expense Line Items15
  • 16. 1. Expense Summary16
  • 17. 2. Provide bottoms-up and top-down planning capabilities in the same model • Don’t: Limit planning managers to only a bottoms-up planning model . . . • Do: Provide top-down change and adjustment capability • BENEFITS: – Goal and target setting can be done very efficiently at the company, division, department or account levels using “spread” or “breakback” techniques – Only forecast (non-actual) months and open (“unheld”) accounts are adjusted to achieve the target amount17
  • 18. 2. Top-down planning / forecasting example18
  • 19. 2. Top-down planning / forecasting example19
  • 20. 2. Top-down planning / forecasting example20
  • 21. 2. Top-down planning / forecasting example21
  • 22. 3. Maintain central control over drivers, assumptions, parameters, and versions • Don’t: Assume that distributed Excel workbooks will use the correct drivers . . . • Do: Use drivers wherever possible and secure drivers, conversion factors, and versions centrally • BENEFITS: – All planning managers, executives and reports will refer to the “live” scenario / version – No confusion about what version is active – Up-to-date global and department drivers / assumptions22
  • 23. This slide deck is part of a recorded webinar. To view the FREE recording of this entire presentation and download the slide deck, go to www.senturus.com/recorded-webinars.php You will find this—and many other recorded webinars-- under the “IBM Cognos Office of Finance Solutions: TM1, EP, Controller, FSR”23
  • 24. 3. Planning drivers example24
  • 25. 3. Planning drivers example25
  • 26. 4. Integrate planning solution security with company security systems • Don’t: Assume that data in the distributed Excel workbooks will be secure . . . • Do: Use company Active Directory and LDAP to integrate security, preferably with single sign-on • BENEFITS: – Secure company confidential data – Minimize redundant maintenance of security files – Aid end user solution adoption by eliminating separate sign-on’s for transaction vs. planning vs. reporting systems (Note: Combined, comprehensive web portals are even better!)26
  • 27. 4. Integrated security example27
  • 28. 5. Use a centralized planning data base for consolidation and workflow management • Don’t: Waste time manually tracking distributed Excel workbooks and manually consolidating them . . . • Do: Manage plan submittals and their reviews with real-time status and consolidate results with no latency (CFO study corollary: “automated workflow tools”) • BENEFITS: – Better accountability and adherence to planning timetables – Frequent and accurate roll-ups and reports on evolving plans and forecasts leads to early feedback and adjustments28
  • 29. 5. Workflow status example29
  • 30. 5. Workflow status example30
  • 31. 5. Planning solution examples • Sales and Revenue, OpEx and CapEx • Headcount and Personnel Costs (by employee) • Inventory (company-wide (“OTB”) or for distribution centers and stores) • Production • Factory Capacity • Marketing Programs • Logistics31
  • 32. 6. Leverage planning solutions and integrate planning data across multiple business areas • Don’t: Build planning silos or only install planning solutions in finance or a few functional areas . . . • Do: Leverage your industrial-strength planning solution with its centralized data base across the enterprise, replacing Excel-based processes, and sharing plans (CFO study corollary: “common planning platform”) • BENEFITS: – Integrated and timely plans between sales, marketing, production, inventory planning, finance, tax and H/R32
  • 33. 6. Planning solution examples33
  • 34. 7. Use the centralized planning data base for uniform, timely updating of actual data • Don’t: Distribute actual data extract files or dozens of Excel workbooks . . . • Do: Leverage the centralized planning data base and distribute actual updates often and instantly to all users in a structure that matches the planning models and after any necessary mappings and reclassifications • BENEFITS: – Integrated and timely actual updates, enterprise-wide with centrally controlled, consistently applied organizational changes and historical restatements – “Single version of the truth” / “Common reporting platform”34
  • 35. 7. Remapping / reclassification examples35
  • 36. This slide deck is part of a recorded webinar. To view the FREE recording of this entire presentation and download the slide deck, go to www.senturus.com/recorded-webinars.php You will find this—and many other recorded webinars-- under the “IBM Cognos Office of Finance Solutions: TM1, EP, Controller, FSR”36
  • 37. 7. Remapping / reclassification examples37
  • 38. 8. Distribute monthly pre-close reports for feedback on accruals and variances • Don’t: Close the month without line management input, nor blind-side them with untimely variances . . . • Do: Leverage real-time reporting capabilities to seek input on needed accruals and to support variance research (CFO study corollary: “common reporting platform”) • BENEFITS: – Shorter, more accurate financial closes – Line management is prepared for timely, knowledgeable executive review of results38
  • 39. Integrated Information = Integrated Business Process Dimensional Models “Single Version Planning Planning Solutions of the Truth” Data Solutions Planning Actual Data Self-service Reporting Querying ERP Data Data Warehouse Ad hoc & AnalysisSource Systems of Record Slicing & Dicing G/L Data Standard Reports Data Abstraction Model Dashboard Data Integration Authoring Web Portal Dashboards/ Scorecards Labor Data Conforming Authoring Report Business Process Dimensional Models Threshold-based Alerts Information Security Other Sources CFO study corollary: “common reporting platform”39
  • 40. 9. Distribute month-end Budget vs. Actual reports the day after close (and close a few days after period-end) • Don’t: Take a week or two to close each financial period • Do: Leverage timely report distribution capabilities • BENEFITS: – Actionable, timely BvA reports in the hands of line management [ There is clearly bottom-line impact to timely management reporting followed by timely actions. ]40
  • 41. 9. Distribute month-end Budget vs. Actual reports the day after close (and close a few days after period-end)41
  • 42. 10. Automatically update planning model structures from source systems • Don’t: Allow planning dimensions to get out of date; and don’t waste time manually updating lists of accounts, departments, products or their hierarchies. • Do: Leverage automatic links and scheduled processes to ERP tables, Systems of Record (SOR’s), and/or data warehouse / mart data for dimension updates • BENEFITS: – Less data management and more analysis time for FP&A staff – Uniformly accurate structures across all planning models and planners42
  • 43. 10. Automatically update planning model structures from source systems43
  • 44. 10. Automatically update planning model structures from source systems44
  • 45. 11. Centrally control planning model formulas and methods • Don’t: Allow distributed Excel workbooks to introduce errors to the methods and calculations used in planning • Do: Leverage a centrally controlled planning model and data base (CFO study corollary: “common planning platform” / “common reporting platform” and data base) • BENEFITS: – Guaranteed adherence to and consistent interpretation of company financial policies and definitions (e.g., Exactly what accounts define Gross Margin and Net Margin? Consistently how are key metrics calculated?)45
  • 46. This slide deck is part of a recorded webinar. To view the FREE recording of this entire presentation and download the slide deck, go to www.senturus.com/recorded-webinars.php You will find this—and many other recorded webinars-- under the “IBM Cognos Office of Finance Solutions: TM1, EP, Controller, FSR”46
  • 47. 11. Centrally control planning model formulas and methods47
  • 48. 12. Use all appropriate company business dimensions for planning models • Don’t: Limit planning models and methods to only the segments available in the General Ledger’s Chart of Accounts • Do: Build planning processes to utilize all the business dimensions needed to model each business area For example, where appropriate: – Plan sales and revenue by region, by product, by sales rep, and by customer – Plan inventory by product and by store – Plan factory capacity by material category and by construction type – Plan capital expenditures by asset class – Plan marketing by program and/or brand – Plan travel by country, by region and/or by trip • BENEFITS: – More accurate plans – Better alignment between finance and business operations – Better integration between planning and enterprise data and reporting48
  • 49. 12. Use all appropriate company business dimensions for planning models49
  • 50. Summary of Do’s 1. Use one planning process . . . and reforecast frequently 2. Provide bottoms-up and top-down capabilities in planning models 3. Maintain central control over drivers, assumptions, and versions 4. Secure planning data by integrating security systems 5. Use a central planning data base for instant consolidation 6. Leverage and integrate planning across business areas 7. Provide timely actual data to all planners 8. Distribute pre-close reports to improve accruals, shorten close cycles and explain variances 9. Distribute actionable, final BvA reports within days of month-end 10. Automatically link account, department and product structure changes to planning models (via ERP’s, SOR’s or DW’s) 11. Centrally control all formulas and models used for planning 12. Utilize all appropriate business dimensions in planning models50
  • 51. Summary of Don’ts 1. Use only one, annual, lengthy budgeting process 2. Provide only a bottoms-up planning method or model 3. Distribute Excel workbooks and loose control over driver values, financial assumption values, and plan versions 4. Risk unauthorized access to planning data due to insecure files 5. Waste time chasing and consolidating distributed Excel workbooks 6. Risk silos of planning data 7. Take days or weeks to distribute actual data to planning models 8. Close financial periods without line management input 9. Wait two or three weeks to distribute final BvA reports to line management 10. Rely on manual maintenance of planning solution structures 11. Loose control of distributed formulas and planning models 12. Limit planning model dimensions to General Ledger segments51
  • 52. Recommended Next Steps 1. Nail the basics . . . by re-engineering the financial planning processes using most if not all of the 12 best practices and a common planning platform with a centralized data base. 2. Expand performance management’s reach . . . by going beyond basic financial data, statements and BvA reports to ad hoc user analytics that look at operational measures that are integrated with financial information using a common reporting platform and an enterprise data warehouse*. Top priority target: product and customer profitability ! * Incrementally-built52
  • 53. Effectiveness across the full CFO agenda Value Integrators Scorekeepers Disciplined Constrained Value Constrained Advisors (Baseline) Operators Advisors Integrators Disciplined Operators 0% 19% Better 33% Better 59% Better Scorekeepers Driving integration of information across the enterprise Measuring / monitoring business performance Developing your people in the Finance organization Providing inputs into enterprise strategy Executing continuous Finance process improvements Supporting / managing / mitigating enterprise risk Driving Finance function cost reduction Driving enterprise cost reduction Strengthening compliance programs and internal controls 0% 20% 40% 60% 80% 100% 120% 140% Percent more effective than baseline Source: IBM Institute for Business Value, The Global CFO Study 2008, 201053
  • 54. This slide deck is part of a recorded webinar. To view the FREE recording of this entire presentation and download the slide deck, go to www.senturus.com/recorded-webinars.php You will find this—and many other recorded webinars-- under the “IBM Cognos Office of Finance Solutions: TM1, EP, Controller, FSR”54
  • 55. Contact Senturus Senturus, Inc www.senturus.com sales@senturus.com 888-601-601055
  • 56. 5656 56