Download to read offline
![Finance on ―Agile Planning over the Web‖
“I have used SaaS [Requires Web Forms] planning programs - and
dislike them for a few reasons:
1. Latency
2. They can be ‘squirrely’- in terms of saving/not losing entered
data (notably copied and pasted)
3. File access without having to be connected”
-Stu Abrams, CFO/Controller, Magnet Systems
(Former User of Cloud-Based Planning App)
Source:
http://www.capterra.com/budgeting-software/reviews/52811/Alight%20Planning%20Enterprise/Alight
AGILE](https://image.slidesharecdn.com/asmidallasslidesmarch2012bybenlamorte-120323122134-phpapp02/85/ASMI-Dallas-March-2012-by-Ben-Lamorte-59-320.jpg)
Uploaded byBen Lamorte
ASMI Dallas March 2012 by Ben Lamorte
The document discusses the planning maturity curve, emphasizing the transition from traditional budgeting to agile planning, highlighting the increasing value of continuous planning over time. It provides insights into the benefits of agile planning through case studies, particularly focusing on how organizations can enhance decision-making and operational efficiency by implementing driver-based planning and integrating actuals. The presentation outlines practical steps for achieving agile planning, including reducing detail level, fostering real-time collaboration, and incorporating scenario analysis.
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ASMI Dallas March 2012 by Ben Lamorte
- 1. The Planning MaturityCurve Where Are You? Where Do You Want to Be? Ben Lamorte VP Marketing, Alight Planning AGILE
- 2. Why Agile Planning? 3-Minute Overview AGILE
- 3. The Value ofTraditional Planning Over Time But ROI diminishes quickly over time. VALUE High ROI at the early stages of planning… TIME Source: The Agile Planner Blog AGILE
- 4. The Value ofAgile PlanningTM Over Time Long-term VALUE value from planning increases significantly ROI remains high in the early stages of planning… TIME 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. AGILE Source: The Agile Planner Blog
- 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. 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. 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. 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. Education AGILE MBA degree Harvard Business School
- 9. Ben Lamorte (He‘sa 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 Davis AGILE
- 10. Agenda The PlanningMaturity 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-Minute Break 4 Steps to Agile Planning Out of Excel Level of Detail Driver-Based Planning Integrating Actuals Scenario Analysis Agile Assessment + Free ASMI Event Winner? Cocktails AGILE
- 11. Stuff for Afterthis Presentation -- Slides Coming in Email 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 Lamorte AGILE
- 12. Capability Maturity Modelfor FP&A Seat of Pants Budgeting Reporting Forecasting Agile Planning Goals Why Do It? Effectiveness Key Process Areas The Capability Maturity Model Who Drives Carnegie Mellon University Who Participates First described by Watts Humphrey Frequency Cycle Time Capability Maturity Model applied to financial Features planning and analysis. Data Type Data Entry Level of Detail Practices Modeling Data Integration Iteration Tools Presentation AGILE
- 13. Business Value fromPlanning 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 drivers AGILE
- 14. KEY POINT: TYPE1 & TYPE 2 Benefits Effort Type 2: Introduce New Forecasting Processes to Add Value Reporting Budgeting Type 1: Streamline Existing Processes Reduce Effort Business Value AGILE
- 15. Type 1 Benefitsof 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 Reporting AGILE
- 16. Type 2 Benefitsof 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 making AGILE
- 17. What “They Say” All Planning Software Claims Effort Every Vendor Says They Do Budgeting & Reporting Reporting Every Vendor Claims: • Saves Time • Adds Business Value Budgeting AGILE Business Value
- 18. Question! Forthose 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 time AGILE
- 19. ―Actual‖ Value ofBudgeting & Reporting Typical Budgeting & Planning Software Effort ―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 Enough AGILE Business Value
- 20. The Big ROI– Agile Planning Effort THE BIG ROI COMES FROM ADDED BUSINESS VALUE Forecasting Reporting Agile PlanningTM Budgeting Real-Time Scenario Comparison Budgeting Forecasting & Reporting Adds Real Value AGILE Business Value
- 21. Planning Maturity—Seat-of-Pants The Happy Caveman AGILE
- 22. Planning Maturity—Budgeting The Happy Accountant AGILE
- 23. Planning Maturity—Reporting The Reluctant Managers AGILE
- 24. Planning Maturity—Forecasting The Grumpy CFO AGILE
- 25. Where Are Youon the Curve? AGILE
- 26. Planning Maturity—Agile Planning The Happy Team AGILE
- 27. The Need forReal Time The Excel PowerPoint Cycle AGILE
- 28. Let‘s Hear fromYou! Turn to your neighbor for the 3-minute drill Is 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
- 29. Examples of Type2 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 Analysis AGILE
- 30. 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 Pants AGILE Business Value
- 31. Case Study: PittsburghMercy 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, 1974 AGILE
- 32. Case Study: PittsburghMercy 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 Foundations AGILE
- 33. Case Study: PittsburghMercy 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 AGILE
- 34. Agile Planning CaseStudy: 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
- 35. 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
- 36. Using Actuals ―Rates‖to Drive Plan ―Rates‖ AGILE
- 37. Case Study: PittsburghMercy 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 scratch AGILE
- 38. Advantage from responsivenessand adaptability rather than scale ―It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.‖ AGILE Source: Commonly misattributed to Darwin, this quote was actually written/said by Clarence Darrow
- 39. Guidelines for AgilePlanningTM 1. Move Out of Excel Deal with structure issues Deal with modeling issues 2. Reduce Level of Detail Plan the way managers think; not the Happy Accountant Reduce detail to better integrate strategy 3. Implement Driver-Based Planning Reduce direct input data volumes Increase ‗modeled elements‘—operational/driver based planning 4. Integrate (Don‘t Just Import) Actuals ―Rolling over‖ actuals in plan files—apples to apples Using actuals to understand trends—focus on rates 5. 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 AGILE
- 40. 1. Out ofExcel 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
- 41. 1. Out ofExcel 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
- 42. 1. Out ofExcel 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
- 43. 1. Out ofExcel 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
- 44. 2. Reduce Levelof 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 AGILE
- 45. 2. Reduce Levelof 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
- 46. 2. Reduce Levelof 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
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- 48. 3. Driver-Based Planning Software Conversion # Services Hours Per Billable Bill Rate Billable Licenses rate Customers Customer Services Services Sold Revenues Hours Staff Utilization Rate Predictive logic Services Hours Services Staffing diagram for a software Hours Per Staffing Heads Month & services business Services Expenses Salaries It‟s all about Activities PR taxes/ benefits Supplies Travel & Rates Recruitment Training Etc. Services Profitability AGILE
- 49. 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 AGILE
- 50. 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 AGILE
- 51. 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 rates AGILE
- 52. 5. Implement ScenarioAnalysis 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 AGILE
- 53. 5. Implement ScenarioAnalysis Types of Scenario Analysis Manage Resource Allocations: Adjust Short Term ―Who Gets What‖ Strategic Planning: Extend Time Frames; Same Model As Short Term AGILE
- 54. 5. Implement ScenarioAnalysis 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 Levels AGILE
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- 56. Agile Planning: Howto do it 5-Minute Overview AGILE
- 57. The 4 Stepsto Agile PlanningTM 4. Implement Scenario Analysis 2. Implement Driver-Based Planning 3. Integrate (Don‘t Just Import) Actuals 1. Reduce Level of Detail AGILE
- 58. Agile Planning inthe Cloud WEB FORMS? Planning Objective Private Cloud Public Cloud NO YES Annual Budget Agile Planning AGILE Source: The Agile Planner Blog
- 59. Finance on ―AgilePlanning over the Web‖ “I have used SaaS [Requires Web Forms] planning programs - and dislike them for a few reasons: 1. Latency 2. They can be ‘squirrely’- in terms of saving/not losing entered data (notably copied and pasted) 3. File access without having to be connected” -Stu Abrams, CFO/Controller, Magnet Systems (Former User of Cloud-Based Planning App) Source: http://www.capterra.com/budgeting-software/reviews/52811/Alight%20Planning%20Enterprise/Alight AGILE
- 60. Follow Up withAlight Planning 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 Lamorte AGILE
- 61. Why 1 in3 Budgeting Software Solutions Fail, What to do about it! A 5-Minute Overview AGILE
- 62. Worst Practice #1:Software on the Shelf Situation: Management thinks buying software licenses for everyone will somehow get everyone more involved and create a culture of collaborative budgeting. Problem: Buttonwood Group Survey examined 100 companies who deployed budgeting software to replace spreadsheets: 44% of companies reported complete failure to get anybody outside of Finance to actually log into the system in the past 12 months. How to Avoid: Start with a ―Minimal Configuration‖ ADD Non-Finance USERS LATER! NOTE: Get a analysis of % users of ALIGHT who actually use it AGILE
- 63. #1 Software onthe Shelf Source: Planning Software Usability Survey AGILE By Buttonwood Group
- 64. Worst Practice #2:Go over your budget! Problem (Quote below from real customer interview!) “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 $18,000 for it to be fully deployed.‖ How to Avoid (Send me an email with other ideas) Build discounts into pricing if vendor goes over the price! Example: ―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.‖ THINK OF HOW TO DEAL WITH TOC and POSSiBLY INCOLVE DON BEFORE GETTING INTO THIS AGILE
- 65. Worst Practice #3:Wrong Consultant Problem A month after you buy software, you find out you‘ve been assigned to a consultant who's built one model as practice and recently completed an MBA degree! How to Avoid 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 may be doomed from the start . AGILE