In today's fast-paced world companies need to be able to respond rapidly to market, economic, and environmental changes. Using a Driver Based Forecasting model enables companies to adjust forecasts quickly and easily to provide more accurate strategic plans. Join Carla Cwiertnia from Finit's Hyperion Planning team as she discusses the benefits of Driver Based Forecasting. During this webinar we will review: What is a Driver? How do we use Drivers? What exactly is Driver Based Forecasting? What are the benefits of Driver Based Forecasting for a company? Will using Drivers make financial forecasting more accurate? We will also go over key steps in creating a Driver Based forecast such as: Identifying key metrics that drive Revenue and Costs Creating metrics to plan for overhead (IT, Finance, HR, etc.) Applying rates and caps to more accurately predict headcount related expenses Implementing brackets to determine which rates to apply to certain measures Standardizing the forecast process Driver Based Forecasting Brochure Presenter: Carla Cwiertnia Date: 02/12/2016 Catagory: Hyperion Planning, Essbase

1. Driver Based Forecasting
February 12, 2016
Carla Cwiertnia
©2016

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9. Upcoming Webinars
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February 19th - What would happen if I did...in
HFM: greatest hits and disasters
– Chris Barbieri
February 26th - Intro to Planning Part II
- Cindy Eichner

10. ©2016
About the Presenter
Page 10
Carla Cwiertnia
ccwiertnia@finitsolutions.com
• 15 + Years Experience with
Hyperion Planning and Essbase
• Member of Planning and Essbase
Practice Team
• Member of Finit Answers Team
• Oracle Hyperion Planning and
Essbase Certified Consultant
• Loves Hawaii!

11. ©2016
Agenda
Page 11
• Driver Based Forecasting
• Challenges and Types of Drivers
• Key Steps in Creating a Driver Based
Forecast
• Driver Based Forecasting Examples
• Contact Information and Future Webinars

12. Driver Based Forecasting

13. ©2016
What is a driver?
• Cause and effect
• What an organization does
• Align with business processes
• Inputs – not outputs
• May not be controllable
Page 13

14. ©2016
How do we use drivers?
• Budget / Plan / Forecast
• Revenue Analysis
• Cost Analysis
• Profitability and Pricing
• Risk Analysis
• Strategic Decisions
• Process Improvement
Page 14

15. ©2016
What is driver based forecasting?
• Identifying key metrics
• Global Drivers
• Local Drivers
• Model impact of variables
• Focus on areas that drive success
Page 15

16. ©2016
What are the benefits of driver based forecasting?
• ‘What if’ Scenarios for changing drivers
• Focus on what drives the organization
• Standardize forecast process
• Predict labor expenses more accurately
• Create forecasts more easily
Page 16

17. ©2016
How will Drivers Improve Forecast Accuracy?
• Manage changes efficiently
• Provides consistency
• Update forecasts quickly and more often
• Strategic advantage
Page 17

18. ©2016
Challenges and Types of
Drivers

19. ©2016
Challenges to Driver Based Forecasting
• Identifying key drivers
• Differing Opinions
• Determining the number of drivers needed
• Identifying the level of detail required
Page 19

20. ©2016
Types of Drivers
• Labor Cost Drivers
• Headcount
• Tax Rates
• Benefit Rates
• Unit Drivers
• Pounds
• Units Sold
• WIP Units
• Volume
• Sales Drivers
• Gross Sales
• Price
• Revenue %
• Net Sales
• Margin %

21. ©2016
Types of Drivers (cont’d)
• Occupancy Drivers
• Square Footage
• Price per Square Foot
• Financial Drivers
• # of Transactions
• Market Share / Attrition
• Technology Drivers
• Headcount
• Licenses
• # of Computers
• # of Servers

22. Key Steps in Creating a
Driver Based Forecast

23. ©2016
• What drives revenue and cost
• Metrics for overhead
• Apply rates and caps
• Use brackets to apply rates
• Standardize the forecast process
Key Steps in Creating a Driver Based Forecast
Page 23

24. ©2016
• Price
• Units / Volume
• Supply & Demand
• Margin
• Inventory
• Fixed Cost
• Variable Cost
• Labor
• Material
Key Drivers of Revenue and Cost
Page 24

25. ©2016
• Key areas of overhead
• IT
• Finance
• Human Resources
• Overhead often gets allocated by these methods:
• Headcount
• FTE
• Units Sold
• Labor Hours
Drivers to Plan for Overhead
Page 25

26. ©2016
• Overhead expenses are often associated with headcount
Drivers to Plan for Overhead (cont’d)
Page 26

27. ©2016
Travel Driver Examples
• Travel Expense Drivers
• Type – Domestic, International, etc.
• Average Cost per Flight
• Average Cost per hotel night
• Average Cost per rental car day
• Airfare Expense = Average Cost per Flight * number
of flights
• Hotel Expense = Average cost per hotel night *
number of nights

28. ©2016
Travel Driver Examples (cont’d)

29. ©2016
Travel Driver Examples (cont’d)

30. ©2016
Using Drivers to Apply Rates and Caps
• Labor Drivers
• Benefits Rate
• 401K Rate
• Merit Increase Rate
• Payroll Tax Rate
• Medicare Tax Rate
• Social Security Tax Rate
• Social Security Tax Cap
• Medicare Tax Cap
• Unemployment Tax Rate
• Unemployment Tax Cap

31. ©2016
Using Drivers to Apply Rates and Caps
• Social Security Tax = If YTD Gross Income <= Social
Security Tax Cap, Then (Gross Income * Social Security
Tax Rate)

32. ©2016
• Income Tax Brackets – Salary Cap and Rate Drivers
• The Income Tax Rate applied depends on Base Salary
Driver Brackets

33. ©2016
• Proactive vs. reactive
• Align drivers with actual processes
• More efficient and quicker to make
changes
Standardizing the Forecast Process
Page 33

34. Summary

35. ©2016
Summary
Page 35
• Drivers are what the organization does
• Identify key metrics and get consensus
• Model how processes are impacted by
variables
• Standardize

36. Contact Information &
Future Webinars

37. ©2016
Thank You for Attending!
Page 37
Today’s Presenter:
Carla Cwiertnia
ccwiertnia@finitsolutions.com
General Questions:
Greg Barrett
gbarrett@finitsolutions.com
Joe Mizerk
jmizerk@finitsolutions.com
Copy of the slides or
Recording:
Email us for a copy of the slides or a
link to the recording
insights@finitsolutions.com
Past webinars:
www.finitsolutions.com/webinars
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updates:
@Finit_Solutions

38. ©2016
Upcoming Webinars
Page 38
What would happen if I did...in HFM:
Greatest Hits and Disasters
Friday, February 19th, Noon EST
Chris Barbieri
Intro to Planning Part II
Friday, February 26th, Noon EST
Cindy Eichner