Business Performance Management in Technology

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Business Performance Management in Technology

  1. 1. Business Performance Management in Technology Real World Technology Stories
  2. 2. It goes without saying that business performance has become critical to today’s public and private organizations. Corporate scandals from many years ago created a level of skepti- cism that has left shareholders and the government eyeing every financial and operational move a company makes. It is no longer sufficient for a company to simply comply with today’s standards - investors and shareholders are demanding that corporate executives find new and innovative ways to improve their operational and financial performance. Forward Relieving the Pressure So what are companies doing about these new demands? Many are turning to Business Performance Management software to achieve improved growth and profitability more quickly, while others are apprehensive about what the software can actually do for them. The believers have taken a leap of faith and are investing in portions of Business Performance Management software such as Web-based budgeting and planning to help bridge the gap between long-term strategic plans, and shorter-term budgets. Others have started with corporate scorecards to uncover, measure, and monitor their key perform- ance indicators to create a more performance-accountable organization. Then there are those who wish to delve into the sea of analysis to uncover the key drivers for growth and profitability. Those companies are taking advantage of business intelligence tools that tap into previously-hidden data in transaction systems such as ERP and CRM. The starting point is unique to each organization, but many companies start with the area of the busi- ness that will move the organization closer to its strategic performance objectives. Business Performance Management—Just a Buzz Word? Business Performance Management has been around in different forms since the begin- ning of time. Historically, it was much clearer how an asset created value—e.g. how a piece of machinery contributed to producing a specific kind of product, at a specific cost, which was sold for a predefined price. Today things are much more complex—it is more difficult to establish that link when it comes to intangible assets. Today, there is no direct, one-to-one relationship between an asset, an intangible asset, like the knowledge of a worker, and a financial outcome. Today’s environment is more dynamic, and Business Performance Management plays a critical role in helping companies make sense of their operational and financial performance in a very complex environment. Host Analytics 3
  3. 3. From Unstable to Steady—The Aftermath In the wake of the dot com boom, the financial and operational performance of technolo- gy companies is under the microscope. It is no longer sufficient to have a good idea and go public on that idea. Investors are scrutinizing every new idea that walks through their doors for viability and long-term steady growth potential. For existing technology compa- nies, shareholders are demanding better corporate governance and steady profitable growth. So how are companies competing and excelling? Many are turning to Business Introduction Performance Management software to help them better budget and strategically plan, accurately forecast, and monitor their key performance indicators. Specifically, technology companies are challenged with: I Reducing operating expenses without sacrificing customer service or research and development I Efficiently using human capital and planning workforce needs I Modeling different business scenarios which may include new pricing structures, outsourcing options, new product development and acquisitions or mergers I Determining and monitoring key performance indicators such as growth of a specific product line or in a specific geography, workforce retention, or increasing revenue and earnings per share by x amount I Creating accurate forecasts based on meaningful information To gain and maintain a competitive advantage, technology companies are turning to Business Performance Management software. Reducing Operating Expenses A Web-based budgeting and planning system is a powerful tool which provides finance and operations personnel with unprecedented insight into expenses vs. actuals, budgets against forecasts, and other information to support the creation of a long-term, corporate plan. As the door to the budget process opens for more and more individuals within technology companies, it is important to have a single, centralized repository for budget information. It is no longer sufficient to consolidate hundreds of spreadsheets from multi- ple departments. Giving more people access to the budgeting process in a centralized repository gives finance and operations the ability to see detailed budget information and adjust accordingly to improve performance numbers. Host Analytics 5
  4. 4. Workforce Management and Planning Monitoring Key Performance Indicators As departments from within a technology company request additional personnel to When the company’s goals and objectives are clearly articulated to employees, and their research and develop new products, market those products and support the entire organ- strategies and tactics are monitored against the corporate objectives, you are on the ization, it becomes critical to clearly understand how each new hire or existing employee road to improving your performance. If your key performance indicators are to increase contributes to revenue or adds to the cost of sales. With a Web-based budgeting and marketshare by 10%, the employees in each department should have supporting per- planning application, HR departments can more effectively manage and plan for future formance goals that they are tracking regularly. If your goals include reducing customer growth, or understand how downsizing will impact the business. Finance departments are service costs, having a clear understanding of each of the costs associated with cus- able to ensure their hiring plans reflect the resource requirements of their projects, and tomer service allows you to determine where positive changes can be made. You may that the budgeted costs for those resources are accurately reflected in both plans. Host employ a scorecard on each customer service representatives desktop in which they are Budget contains both detailed workforce planning and project budgeting capabilities held accountable for meeting specific levels of customer service while reducing costs. using standard costs and actual costs from an HR plan. The “to be hired” headcount Marketing professionals may have a scorecard that tracks how well their campaigns requirements from a project plan can seamlessly integrate with the HR plan. Many budget are performing and whether sales forecasts are being met. Host Scorecard enables environments plan projects and their required resources as a separate and disjointed executives to clearly articulate key performance indicators and monitor each employees function from their human resource planning. This leads to disjointed budgets. Host progress toward those goals. Analytics enables HR departments to better forecast future staffing needs, create “what if” scenarios for executive management and drive position requirements and “To Be Accurate Forecasting Hired” positions based on revenue drivers, budgeted service levels or volumes. The end As you know, stated revenue projections are key for today’s technology companies. If result is that HR has the opportunity to play a more important role in improving business you project a certain number in license revenue or product sales for a given quarter, you performance. As technology companies work to improve their overall business and corpo- better meet that number. Shareholders want to see that you can do what you say. Host rate performance, the budgeting process continues to play a critical role. Forecaster gives you the ability to more accurately forecast based on budget information from Host Budget. This in turn provides you with the mechanism to improve your corpo- Modeling Different Business Scenarios rate governance and more accurately state your projected earnings to Wall Street. Business Performance Management software plays a critical role in improving business performance by allowing users to model different business scenarios. Whether you are focused on mergers and acquisitions, or implementing a new pricing structure, Host Budget allows you to model “what if” scenarios and clearly understand the impact of your business decisions. For example, if you are interested in increasing revenues with pricing changes, Host Budget enables you to model different pricing structures to determine the best scenario—what the market will bear in terms of higher prices and if customer serv- ice levels need to improve to support the higher costs. If you are considering a merger or acquisition, you can plug in revenue, expenses and workforce costs from the company you wish to acquire, and determine the best purchase price for the company and their products/services. 6 Host Analytics Host Analytics 7
  5. 5. SigmaTel Summary As one of the fastest growing companies in the semiconductor space, SigmaTel’s goal was to create a streamlined, global budgeting, planning and consolidation model. Host Analytics has improved the top-down and bottoms-up budgeting and planning process, Real World Scenario eased global financial consolidations, and provided employees with visibility to their performance against strategic corporate goals. Prior to Host Budget, SigmaTel pieced together hundreds of independent spreadsheets for budgeting and forecasting. Consolidating spreadsheets was cumbersome and compromised the integrity of the process. Forecasts were created based on high-level summary data with no drill down capabilities. The company required a Web-based solution that mimicked Excel for ease of adoption, accommodated multiple planning scenarios, closed loop planning, rolling forecasts, multi-dimensional reporting capabilities, integrated workforce planning, and ability to support multiple currencies. About SigmaTel, Inc. Founded in 1993, SigmaTel (NASDAQ: SGTL) designs, develops, and markets analog intensive, mixed-signal semiconductor solutions for a wide range of digital multimedia products in the consumer electronics and computing markets. The $325 million dollar company saw growth in upwards of 67% in 2005. Outcome Host Budget provides SigmaTel with a Web-based, Excel user interface, where managers of profit and cost centers can view their budgets, route proposed changes to upper management, and view actual-to-budget variances in real-time. The company now has a quarterly budgeting process where managers have full accountability and control with an audit log generated each step of the way. Prior to implementing Host Consolidator, multi-dimensional and ad-hoc reporting was cumbersome for SigmaTel. The company now uses Host Consolidator for inter-company eliminations and routine allocations which will free valuable resources from keying information into the general ledger system. Host Analytics 9
  6. 6. Conclusion Many companies have asked why they should look at new software and process today. We answer with a question—can you afford to wait? Aren’t you ready to improve your business performance today? Your shareholders are demanding it and Host Analytics offers the most cost-effective path. One of the key values that no other Business Performance Management Software vendor can offer is the option to have your solution hosted (software as a service or SaaS), meaning there is little disruption to your business and IT resources. Host Analytics has a unique implementation methodology to get an organization up and running quickly. With the hosted model, if the software doesn’t work, the customer doesn’t pay. It’s that simple. Lastly, the solution is cost-effective—it is 1/5 that of the other vendors offering the same robust solutions. Host Analytics, Inc. 911 Washington Avenue Suite 615 St. Louis, MO 63101 USA Phone: 314-588-2121 Fax: 314-588-7394 Toll Free: 866-853-HOS T (4678) E-mail: info@hostanalytics.com If you are ready to change the way you budget, plan, forecast and monitor your performance, contact us at Additional Resources Host Analytics at Toll Free: 866-853-HOST (4678) or Events: www.hostanalytics.com/events.html E-mail: info@hostanalytics.com White Papers: www.hostanalytics.com/resources.html#wpapers 10 Host Analytics

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