Asmi san diego slides april 2012 by ben lamorte

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  • Asmi san diego slides april 2012 by ben lamorte

    1. 1. The Planning Maturity Curve Where Are You? Where Do You Want to Be? Ben Lamorte VP Marketing, Alight PlanningAGILE
    2. 2. I want to be in San Diego! Quick Reminder: Why Rolling Forecasts & Agile Planning? 3-Minute OverviewAGILE
    3. 3. The Value of Traditional Planning Over Time But ROI diminishes quickly over time. VALUE High ROI at the early stages of planning… TIME Source: The Agile Planner BlogAGILE
    4. 4. The Value of Agile PlanningTM Over Time Long-term VALUE value from planning increases significantlyROI remainshigh in theearly stagesof planning… TIME Agile Planning Defined: Impactful planning that addresses the right business issues at the right time with the right people. Unlike budgeting, it is a continuous process that adds increasing value over time. Rolling Forecasts SHOULD ENABLE Agile PlanningAGILE Source: The Agile Planner Blog
    5. 5. The Subtle Message 1: Is it EVEN worth it to replace spreadsheets with a planning tool? 2: If you already bought software, was it worth it? 3: Either way, how do we make planning ADD VALUE?AGILE
    6. 6. The Subtle Message 1: Is it EVEN worth it to replace spreadsheets with a planning tool? 2: If you already bought software, was it worth it? 3: Either way, how do we make planning ADD VALUE?AGILE
    7. 7. The Subtle Message 1: Is it EVEN worth it to replace spreadsheets with a planning tool? 2: If you already bought software, was it worth it? 3: Either way, how do we make planning ADD VALUE?AGILE
    8. 8. Rand Heer (He‘s ―Heer‖ In Spirit)  Business Activities  CEO, Alight Planning (Planning software)  Co-Founder, Aspirity (Microsoft BI consulting)  Founder, FP&A Train (Essbase training)  Founder, Pillar Corporation  CFO for 2 public companies  Rockwell Int‘l, Business Unit CFO and Corporate  Publications  Author: The Planning Maturity Curve: Where Are You? Where Do You Want to Be?  Author: How Agile is Your Planning: Find out by Measuring the ROI of Your Planning Software  Coauthor: “Business Intelligence: Making Better Decisions Faster”. Published by Microsoft Press.  EducationAGILE  MBA degree Harvard Business School
    9. 9. Ben Lamorte (He‘s a Talker)  Business Activities  VP Marketing, Alight Planning  VP Business Development, Alight Planning  Principal, Decision Consulting (Adobe, Kaiser)  Manager, Business Intelligence, planetrx.com  Management Consultant, APM/CSC Healthcare  Editor of “The Agile Planner” Blog  Yes! Planning can be a Positive Experience  Why Financial Reporting Software Delivers No Value?  The Value of Agile Planning Over Time  Driver Based Planning: How is it Defined?  Education  MS Management Science & Engineering, Stanford University  BS Mechanical Engineering, UC DavisAGILE
    10. 10. Day 1 Agenda: Take a step back! The Planning Maturity Curve  Level One: Seat of the Pants  Level Two: Budgeting  Level Three: Reporting  Level Four: Forecasting  Level Five: Agile Planning Case Study in Agile Planning: Pittsburgh Mercy 5 Steps to Rolling Forecasts & Agile Planning  Out of Excel  Level of Detail  Driver-Based Planning  Integrating Actuals  Scenario Analysis Agile Assessment + Free ASMI Event Winner? Cocktails Day 2 Before Lunch: Best Practices for Rolling Forecasts DemoAGILE
    11. 11. Stuff for After this Presentation -- Slides Coming inEmail and posted to SlideShare Follow up with Alight  BLamorte@AlightPlanning.com  Telephone: (415) 456-8528  Join us! The Agile Planner Blog  Blog.alightplanning.com Webinar 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 Podcast Featuring Sid Ghatak & Ben Lamorte  http://www.focus.com/roundtables/avoiding-business-performance- mangement-software-failure-4-t/  6% is not enough! The Case for Driver-Based Planning in 2012 with Rob Kugel, Ventana Research and John Miller, Arkonas moderated by Ben LamorteAGILE
    12. 12. Business Value from Planning Insights Actionable Financially- Understanding things Knowledge Sound Decisions we didn‘t see before Understanding and Scenario analysis gives us acting upon the financial impact of choices operational driversAGILE
    13. 13. KEY POINT: TYPE 1 & TYPE 2 Benefits Effort Type 2: Introduce New Forecasting Processes to Add Value Reporting Budgeting Type 1: Streamline Existing Processes Reduce Effort Business ValueAGILE
    14. 14. Type 1 Benefits of Planning System Finance  No more consolidation errors; formulas don‘t break  Slice and dice the data with dimensions versus pivot tables  Automate data integration—e.g. actuals  Automate security/process Line Managers  Add line item detail  Document assumptions C-Level  CFO Audit  Automated ReportingAGILE
    15. 15. Type 2 Benefits of Planning Systems Insights (I)  The numbers help us understand things we didn‘t see before Actionable Knowledge (A)  The numbers to tell us what to do, or more importantly, what our choices are Decisions (D)  Having financially backed up choices sets up decision makingAGILE
    16. 16. What “They Say” All Planning Software ClaimsEffort Every Vendor Says They Do Budgeting & Reporting Reporting Every Vendor Claims: • Saves Time • Adds Business Value BudgetingAGILE Business Value
    17. 17. Question! For those who SUCCESSFULLY replaced spreadsheets with a financial reporting solution, what best describes your success: 1. Saves time BUT does not add Business Value 2. Saves time AND adds Business Value 3. Adds Business Value BUT does not save timeAGILE
    18. 18. ―Actual‖ Value of Budgeting & Reporting Typical Budgeting & Planning SoftwareEffort ―What FP&A Customer Says‖ about Impact of Dedicated Budgeting & Reporting Tool: Reporting • Saves Time • BUT DOES NOT ADD Business Value Budgeting Just Doing Budgeting is Not EnoughAGILE Business Value
    19. 19. The Big ROI – Agile PlanningEffort THE BIG ROI COMES FROM ADDED BUSINESS VALUE Forecasting Reporting Agile PlanningTM Budgeting Real-Time Scenario Comparison Budgeting Forecasting & Reporting Adds Real ValueAGILE Business Value
    20. 20. Planning Maturity—Seat-of-Pants The Happy CavemanAGILE
    21. 21. Planning Maturity—Budgeting The Happy AccountantAGILE
    22. 22. Planning Maturity—Reporting The Reluctant ManagersAGILE
    23. 23. Planning Maturity—Forecasting The Grumpy CFOAGILE
    24. 24. Where Are You on the Curve?AGILE
    25. 25. Planning Maturity—Agile Planning The Happy TeamAGILE
    26. 26. The Need for Real Time The Excel PowerPoint CycleAGILE
    27. 27. Let‘s Hear from You!Turn to your neighbor for the 3-minute drillIs your management prioritizing Type 1 or 2 Improvements in budgeting & forecasting? Type 1: Do what we‘re already doing, but do it more efficiently Type 2: Introduce new planning processes that enable better business decisions throughout the year Please report back a Type 2 Benefit that is important.AGILE
    28. 28. Examples of Type 2 Benefits Specialized Functionality  Roll the Forecast  BS/Cash Planning  Integrate Short/Long Range Operations Integration  Integrate Drivers  Volume/Rate Causal Analysis  Capture/Calculate KPIs Profitability Analysis  Complex Allocations  Analyze Customer Profitability  Analyze Product Profitability Decision Support  Interactive Dashboards AND Real-Time Planning  Scenario Analysis On-the-Fly  Strategy AnalysisAGILE
    29. 29. Planning Maturity—Agile Planning Planning Maturity Curve (PMC)Effort Forecasting Implement driver-based planning Integrate (don‟t just import) actuals Reporting Implement scenario analysis Forecasting/Agile Planning Move out of Excel Reduce level of detail Budgeting Seat of PantsAGILE Business Value
    30. 30. Case Study: Pittsburgh Mercy Ray Wolfe, CFO (now CEO)  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  Awards: Ventana Leadership 2010  Education  Juris Doctorate, West Virginia University 1977  BA, Marshall University, 1974AGILE
    31. 31. 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 product lines  260 revenue/cost center  1,700 employees; 106 Managers & Supervisors  Funded through traditional insurance billing, government grants and capitation contracts, Private FoundationsAGILE
    32. 32. 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 integrationAGILE
    33. 33. Agile Planning 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!AGILE
    34. 34. Level of Detail (from 10k to 3k line items) Technical Issues  What level of detail? Actuals and plan (STARTED AT „DEFAULT LOW LEVEL” Moved to:AGILE
    35. 35. Using Actuals ―Rates‖ to Drive Plan ―Rates‖AGILE
    36. 36. Case Study: Pittsburgh Mercy Progress to Date  Financial Results  $600K annual savings in revenue increases and cost cuts  Process Results  No budgeting  Global updates twice a year – detailed updates quarterly  Forecast accuracy to 2%  Manager commitments based on demonstrated best practices  Understanding the business as an operating entity  Reaction to issues on a two year horizon, e.g. present cut plan  Model Status  Now on third model iteration built from scratchAGILE
    37. 37. Rolling Forecasts & 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 levelsAGILE
    38. 38. 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…AGILE
    39. 39. 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.AGILE
    40. 40. 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.AGILE
    41. 41. 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.AGILE
    42. 42. 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 = 8,400AGILE
    43. 43. 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.AGILE
    44. 44. 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.AGILE
    45. 45. 3. Driver-Based PlanningAGILE
    46. 46. 3. Driver-Based Planning Software Conversion # Services Hours Per Billable Bill Rate Billable Licenses rate Customers Customer Services Services Sold Revenues Hours Staff Utilization RatePredictive logic Services Hours Services Staffingdiagram for a software Hours Per Staffing Heads Month& services business Services Expenses  SalariesIt‟s all about Activities  PR taxes/ benefits  Supplies  Travel& Rates  Recruitment Training  Etc. Services ProfitabilityAGILE
    47. 47. 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 ValueAGILE
    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 syncAGILE
    49. 49. 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  Any level—line item, natural accounts, cost center, etc.  Any modeling—simple of complex linking, back calculate ratesAGILE
    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 BerraAGILE
    51. 51. 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  Real Time Feedback: The Planning Tool is the Presentation Tool  Scenario Drill Down: Comparison & Analysis at All LevelsAGILE
    52. 52. Planning Maturity—Full MatrixAGILE
    53. 53. Stuff for After this Presentation -- Slides Coming inEmail and posted to SlideShare Follow up with Alight  BLamorte@AlightPlanning.com  Telephone: (415) 456-8528  Join us! The Agile Planner Blog  Blog.alightplanning.com Webinar 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 Podcast Featuring Sid Ghatak & Ben Lamorte  http://www.focus.com/roundtables/avoiding-business-performance- mangement-software-failure-4-t/  6% is not enough! The Case for Driver-Based Planning in 2012 with Rob Kugel, Ventana Research and John Miller, Arkonas moderated by Ben LamorteAGILE

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