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© 2014 IBM CorporationIBM Confidential
Realizing Benefits While Transforming Governments
and Business – Conflicting Priorities?
Of Course!

Presentation Objectives
 Challenges facing Finance professionals
 The journey for creating value
 Finance Transformation in Practice
–IBM’s Transformation Story
–Public Sector Finance Transformation
 Next Steps – Your Action Plan
 Lessons learned

We have been there… IBM’s Finance Transformation

We have been there… IBM’s Finance Transformation
But… more
about this
later

The Challenges Facing Government CFOs - Does this sound
familiar?
The Finance organization needs to
adjust to a budget cutting culture vs a
culture of 10-15 yrs of growth.
Demand for transparency is
increasing, but it brings about
other problems.
It will be necessary to change the
present rigid human resources structure
to address the future challenges.
Regulatory concerns are the
number one important external
forces.
We expect an increased mandate and
budget cuts - we will be expected to
do more for less.
Canadian CFO Canadian CFO
Spanish CFO US CFO
UK CFO
We need to focus on using
technology to deliver services and
drive costs down.
Australian CFO
Source: IBM Institute for Business Value, The Global CFO Study 2010

Finance executives report that almost all aspects of their role have
increased inimportance over the past three years
 The 2013 CFO study found that finance executives are increasingly focused on:
– Measuring and monitoring their company’s performance
– Providing strategic input
– Finding and developing people with the right financial skills
– Managing enterprise risk
– Integrating different sources of information to generate meaningful business insights
Areas of importance–historical
Measure/monitor business performance
Provide inputs into enterprise strategy
Develop talent in the financial organization
Optimize planning, budgeting and forecasting
Drive enterprise cost reduction
Support/manage/mitigate enterprise risk
Drive integration of information across the enterprise
Execute continuous finance process improvements
Strengthen compliance programs/internal controls
Manage investor/stakeholder relations
Process transactions
60
%
50% 80%70% 100
%
90%
Importance 2010 Importance 2013

The CFO Study identified 4 Finance profiles - Where do you fit?
Value
Integrator
Performance optimization
Predictive insights
Enterprise risk mgmt
Business decision making
Disciplined
Operator
Finance operations focused
Information provision
Performance Interpretation
Scorekeeper
Data recording
Controllership
Multiple version of the “truth”
Constrained
Advisor
Analytics focused
Sub-optimal execution
Fragmented date
Low
High
High
Business Insight
Operational planning and forecasting capability
Finance talent development
Common planning platform
Finance Efficiency
Enterprise-wide information standards
Standard financial chart of accounts
Common finance data definitions
Common data governance
Standard/common finance processes

Where doglobal governments fit?
Value
Integrator
Government
22%
Disciplined
Operator
Government
39%
Scorekeeper
Government
31%
Constrained
Advisor
Government
8%
Low
High
High
Business Insight
Operational planning and forecasting capability
Finance talent development
Common planning platform
Finance Efficiency
Enterprise-wide information standards
Standard financial chart of accounts
Common finance data definitions
Common data governance
Standard/common finance processes

Three key themes emerged from examining the four profiles
Delivering efficiency through standards
matters more than ever
Providing business insight drives
performance improvement beyond
Finance
The greatest rewards come from doing
both well
1
2
3

1. Delivering efficiency through standards matters more
than ever
Finance continues to struggle with structural complexity due to issues
related to automation and standards
Nearly 40%
of Enterprises
produce financial
metrics manually
(50% in Canada)
Over 35%
lack a common
reporting platform
Finance continues
to spend nearly
50% of time
on transactional
activities
Over 25%
lack the necessary
common data
definitions and
processes

2. Providing business insight drives performance
improvement beyond Finance
Rear View Forward-Looking View
 What happened?
 How many, how often?
 Where exactly is the
problem?
 Why is this happening?
 What actions are
needed?
 What will happen next?
 What if these trends
continue?
 What are the risks or
opportunities?
Key
Business
Questions
Examples
of Business
Insight
Current View
 Balance sheet, gain and loss,
and cash flow statements
 Revenue and cost variance
analysis
 Customer, product and
market cost
 Spend optimization
 Working capital analysis
 Market, customer and
channel pricing
 Sales and supply chain
effectiveness
 Cash forecasting
 Scenario-based planning and
forecasting
 Strategic investment decision
support
 Volatility and risk-based
predictive and behavioral
modeling
But what is Business Insight?

The majority of enterprises are not able to effectively deliver
business insights
“I live in a data-
free zone.”
CFO, Canadian Healthcare
Provider
55% not satisfied with their operational planning
and forecasting analytical capability (60% in Canada)
44% are poor to average at anticipating
external forces (55% in Canada)
53% manually producing operational metrics
(67% in Canada)
Almost 50% lack a common planning
platform (61% in Canada)

3. The greatest rewards come from doing both well
BeaValueIntegrator
Finance Efficiency + Business Insight = Outperformance
You are a Value Integrator if you:
• Have implemented common
process and data standards
across your organization
• Depend on reliable, integrated
information as your springboard
• Perform proactive analysis to
drive future improvements
• Have developed the talent,
technology and analytical
capabilities to proactively
uncover and communicate
business insight.

But how...Whatis finance’s role increating value for the organization?
Demands on Finance
Provide performance
insight
Help drive enterprise
cost reduction
Support risk
management
Provide transparency
and accountability
Finance Capabilities
Needed
Integrate information
Partner in strategy and
value creation
Finance Efficiency
Business Insight
In order to provide greater
insight and more value to
the organization and to the
public
 Finance organizations
need to be more agile,
efficient and effective
 Finance professionals
must innovate,
transform and seek
continuous renewal
 Finance must align to the
business objectives and
look for innovative ways
to support them
Creating Value

Create Value By Operating More Efficiently
Simplify and
Standardize
 Forge seamless links between
the different parts of the
business
 Common technologies and
processes
 Develop common financial data definitions,
processes and reporting procedures to deliver a
single version of truth
 Automate wherever possible
 Use a shared services center
 Encourage a culture of continuous improvement
 Create a single global operating
model
 Establish centers of excellence to
ensure a consistent approach
and generate economies of scale
Go
Enterprise-
Wide
Integrate

Create Value By Generating Deeper Business Insight
Integrate Data
 Use advanced analytical
techniques to predict future
trends
 Analyzing all the variables
 Analyze resulting options
 Integrate financial and operational data
 Employ common analytical platforms
 Align your data platform with
your business priorities
 Embed analytics in every process
 Automate recurring analytical
processes
Analyze
Data Faster
Predict the
Future

Don’t forget about the people –Increasing value creation willresult in
changing focus of Finance’s jobrequirements and skills
Skills need to evolve from Core to Consultative
Skills
StrategicInsight
Quantitative Qualitative
Core Leadership
ConsultativeAnalytical
Pulling
Reports
Performing
Ledger entries
Accounting
Principles
Reconciling
Data
Project
Management
Building Trust
Data Modelling
Trend Analysis
Forecasting
Statistical
Techniques
Packaging &
Presenting
Negotiating
Problem
Solving
Listening
Business
Acumen
Partnership
Influencing
Risk Management
Invoicing
Financial
Concepts
Insight
Generation
Change
Management
Scenario
analysis
Business
Ethics
Persuasive
Communication
Competence / Skill Level
Trusted Advisor
Gather Data – What happened?
Administrative
Report – How many, how often, where?
Analysis – Why is this happening?
PredictiveWhat will happen next? –
What‘s the best that can happen? –
CompetitiveAdvantage

Value Creation in Practice
No transformation story is
complete without talking
about our own

What we did?Why?
 IBM Finance was highly decentralized
 14K finance employees was 2 times competition
 High percent of time spent on administrative
tasks
 Lack of integration and unique measurement
systems led to inconsistent data
 Finance viewed as low value add
Case Study: IBM Finance Transformation
Setting the stage for IBM’s Finance Transformation
 Single source of truth – one ledger; one financial
data warehouse; common definitions
 Introduced enterprise-wide processes – owners
responsible for technology and data quality
 Created Centers of Excellence providing
financial skills and standardized support

The Finance technology architecture wasa maze of financial
systems
IBM Financial systems built on commonality,
in support of an integrated management system
Became a Disciplined
Operator
 Drove a 3-prong approach:
process, data, IT
 Formed 8 process teams,
driven by external
benchmarks and best
practices
 Created common chart of
accounts, information
warehouse and productivity
workbench
 Standardized controls,
reduced data centers and
key applications
What we did
Financial
Planning
Corporate
Whse
Geo
Whse
Acctg
Whse
Ledger
Employee
Disbursements
Accounts Payable IntercompanyAssets
Accounts
Receivable
Common data definitions and processes
Corporate data standards-financial elements
Single worldwide chart of accounts
Finance lead client
Financial Information Strategy
Business
Management
Info
Treasury
Management
Info
Common Worldwide
Planning System
Single worldwide
consolidation system
Single worldwide
financial information
warehouse (FIW)
Common
Geographics mega-
centers
Common
Information
Common
Ledger
Common
Transaction
Applications
Common
Data
Definitions

Capturing the benefits of centralization (shared services) for
transactional activities and decentralization of decision support
IBM's Finance Model
 Units control
priorities
 BU's have
ownership
 Responsive
 Scale
economies
 Control of
standards
 Critical mass
of skills
 Excessive
cost
 No standards
 Reinvention
of wheel
 No synergy
or integration
 Unresponsive
 No BU
ownership
 No BU
control
 Vision and leadership
 Corporate-wide strategy & architecture
Centralized
Finance
Decentralized
Finance
 Common Standards
 Synergy
Transactions Decision Support

The results of transformation on the Finance Function
ImpactHow we have evolved?
 Focused on the basics (’94 – ’98)
 Standard / Common Process
 Automation
 Functional Best Practices
 Financial Reporting
 Integrated the Enterprise (’98 – ’02)
 Shared Services
 Web Enablement
 Core Competency
 Decision Support
 Moved to globalization (’02 – ‘10)
 Process Outsourcing /Global COEs
 Technology Exploitation
 Rationalized ERP
 Information On Demand
 Making things smarter (‘10 – present)
 Predictive and forward-looking insights
 Performance optimization
 Automated production of key metrics
 Analytics to enable self service
 Optimized global capability
 Increased use of global support from
12% in ’05 to 50% in ’12
 Shift to higher value work
 Increased decision support work from
30% in ’94 to 70% in ’12
 Lowered expenses
 Lowered expense to revenue share
from 3% in ’94 to 1% in ’12
 $5.3B spending reduction in Shared
Services from 2005 through 2011
 Improved Productivity
 $2.8B productivity improvement from
End-to-End Process Transformation
and Integrated Operations
 Focused on employee development
 New career paths inside and outside
of Finance organization
Case Study: IBM Finance Transformation

IBM has been a part of
many government
transformations

Case Study – Government of Saskatchewan
Decentralized payables across 20 ministries, each with its own
processes and technology
 Over 500K invoices are being
processed annually by 40 less
FTEs
 All invoices can be
electronically monitored and
tracked
 Consistent approach for
employee expense processing
across the Province
 Recipient of the Premier’s
Award for Excellence in the
Public Sector for innovation
Centralized AP processing unit
Technology for invoice imaging, electronic invoice approvals
Oracle iExpenses for employee expense claim processing
Business Model: In-house
Business Areas: Finance, Payroll, Change Management
Challenges
Solution
Expected Benefits

Case Study – Government of Alberta
The Government of Alberta (GOA) needed a way to increase the
availability of information to better manage their $22 billion in
expenditures and take advantage of financial and HR systems that are
more cost effective.
 Consistently stable
production environment at a
predictable fixed cost
 Increase availability and
quality of information to
support decision making in
a timely and cost effective
manner
 Awarded Gold medal for
Government transformation
excellence.
Implementation of a common platform:
 SAP – Finance and HR
 Workbrain - Payroll and Rostering
Business Model: In-House
Business Areas: Finance, Procurement, IT, HR, Payroll
Challenges
Solution
Expected Benefits
 RecruitASP – Recruitment
 SABA - Learning & Knowledge

Case Study – Province of Nova Scotia
The province of Nova Scotia wanted to implement common business
processes and system platform to better facilitate management of all
business/operational functions and decision making across the Gov
Departments & Entities.
 Significant cost savings
consolidating one support
organization
 Increased efficiency of core
process
 Using savings to help fund
transformational initiatives
 New technology
 Standardized business
processes
 Awarded Premier’s Award
for Excellence in the Public
Sector for innovation
 The Ministry of Finance consolidated the accounts payable
functions from 11 ministries into a single shared-service unit.
 Single SAP instance
 The project was complex involving such work as business process
redesign, technology enhancements, transferring 37 positions into a
new service centre, along with providing training and support for
9,500 ministry clients on new technology and standardized
processes.
Challenges
Solution
Expected Benefits

Case Study – US Agency for International Development
Disparate financial systems and fax-based data calls from missions
worldwide resulted in a manually intensive process for the annual
reporting cycle and the inability to provide transaction-level data to
support auditable financial statements.
 USAID has now achieved
seven years of unqualified
audit opinions from USAID’s
Office of Inspector General
 Year-end reporting is now
done 75 percent faster, and
data transparency has
increased by 50 percent
 Common accounting processes governed by global process
owners.
 New financial system – common platform for more than 50
overseas missions
 New standardized financial processes
Challenges
Solution
Expected Benefits

Transformation is a journey…

Transformation Framework
Business
Process Excellence
Organizational &
Culture Change
Information Technology
Enablement
Strategy Guided by the
organization’s strategy
and values
Enable transformation at
the intersection of
business process,
technology and culture
Values
Proven principles from
IBM’s own experience
and our experience with
clients
5 Principles of Smarter Transformation
Create a
movement
Build a platform
for continuous
improvement
Pursue growth as
well as
productivity
Apply technology
for smarter
transformation
Establish an
enterprise change
capability
…. and one size does not fitall

Depending on where you are, there are things
you can do….. and you may already be doing it
Call to Action

RECALL – Where doyou fit?
Government
39%
Government
22%
Government
31%
Government
8%

Value
Integrator
Disciplined
Operator
IBM’s Finance Transformation Strategy offering helps CFOs to
identify the path tohigher value
Corporate
philosophy of
information
standards
Standard
Chart of
Accounts
Standard
processes
Standard
data
definitions
Operational
planning and
forecasting
capability
Finance
talent
development
Common
planning
platform
Finance
Efficiency
Business
Insight
Low High
Low
High
12%
33%
Scorekeeper Constrained
Advisor
Value
Integrator
 Predictive insights
 Enterprise risk management
 Business decision making
Disciplined
Operator
 Finance operations focused
 Information provision
 Performance interpretation
Constrained
Advisor
 Analytics focused
 Sub-optimal execution
 Fragmented data
Scorekeeper
 Data recording
 Controllership
 Multiple versions of the “truth”
Source: IBM Institute for Business Value, The Global CFO Study 2010. Percentages relate to global sample of almost 2,000 enterprises, cross-industry.

Value
Integrator
Disciplined
Operator
IBM’s Finance Transformation Strategy offering helps CFOs to
identify the path tohigher value
Corporate
philosophy of
information
standards
Standard
Chart of
Accounts
Standard
processes
Standard
data
definitions
Operational
planning and
forecasting
capability
Finance
talent
development
Common
planning
platform
Finance
Efficiency
Business
Insight
Low High
Low
High
12%
33%
The most prevalent
transformation path
Scorekeeper Constrained
Advisor
Value
Integrator
 Predictive insights
 Enterprise risk management
 Business decision making
Disciplined
Operator
 Finance operations focused
 Information provision
 Performance interpretation
Constrained
Advisor
 Analytics focused
 Sub-optimal execution
 Fragmented data
Scorekeeper
 Data recording
 Controllership
 Multiple versions of the “truth”
Source: IBM Institute for Business Value, The Global CFO Study 2010. Percentages relate to global sample of almost 2,000 enterprises, cross-industry.

The Scorekeeper ischaracterized by lowefficiency and business
insight capabilities, suggesting three possible paths toValue
Integrator
The Paths Forward
 Establish process owners and drive to process commonality
 Benchmark processes to identify underperforming areas and redesign
 Rationalize and deploy a common Finance technology platform
 Increase automation of data acquisition and integration
 Drive error processing and reconciliation functions close to the source
 Consider accelerating the journey with less risk and cost by migrating to an established and proven
platform
 Build upon improved Core Finance infrastructure to deploy leading analytical capabilities
Call to Action - Suggested Focus Areas

The Constrained Advisor has low efficiency and highbusiness
insight, so the focus should be onstandards and efficiency toreach
Value Integrator
 Drive data standards for financial and operational
metrics and analysis models
 Leverage commonality to automate more with
technology
 Establish process owners for core Finance and
decision support processes
 Target core Finance processes to improve efficiency
and speed
The Paths Forward

The Disciplined Operator ischaracterized by high efficiency but low
business insight, so the focus should be on business insight driving
toa Value Integrator
 Apply process ownership and standards to decision
support processes
 Apply data ownership and standards to analytical
data and operational metrics
 Attract and retain higher order talent and deploy
decision support COEs
 Drive commonality into the decision support
technology platform
 Deploy advanced analytical models such as
predictive modeling as deeply into operational
systems as feasible
Call to Action – Suggested Focus Areas
The Paths Forward

The Value Integrator ischaracterized by both high efficiency and
business insight capabilities, so the focus should be on capitalizing
ondata
The Paths Forward
 Adopt a continuous improvement program to sustain
and expand current capabilities
 Deploy a robust governance and succession
program for process and data management
 Increase focus on attracting and retaining talent
 Expand focus on value creation analysis to drive
further performance improvements
 Protect from downside performance by embedding
risk into performance analytics
 Embed risk measures and predictive analytics into
operational systems and processes

Lessons Learned

Finance Transformation Lessons Learned
Strong executive support and governance
Clear targets and measurable objectives
Set priorities and apply laser focus
Broad enough scope to deliver clear value
Foster trust and collaboration in order to
work horizontally effectively
Continuous effort – need to dedicate
resources to get results
Workforce impacts
Communicate, communicate,
communicate…
Standardizing Data and Systems
Reengineering Common Enterprise-
Wide Processes
Consolidating Core Functions into
Shared Services
Establishing Centers of Excellence
Implementing and Promoting Self-
Service
Exploiting Business Analytics
To look at Data, Processes and
Tools and balance across all three
with a focus on the cost of delivery
Transformation has been, and is, an
Evolutionary process…
Transformation requires…

Dare toimagine….
You….Chief Financial Officer of the Future
Bringing the pieces of the puzzle together

Dare toimagine….
Performance
Accelerator

Dare toimagine….
Performance
Accelerator
Support
Business
Decisions

Dare toimagine….
Anticipate
the
Future
Performance
Accelerator
Support
Business
Decisions

Dare toimagine….
Single
Version
Of the
Truth
Anticipate
the
Future
Performance
Accelerator
Support
Business
Decisions

Dare toimagine….
Single
Version
Of the
Truth
Anticipate
the
Future
Minimize
Enterprise
Risk
Performance
Accelerator
Support
Business
Decisions

Dare toimagine….
Single
Version
Of the
Truth
Anticipate
the
Future
Minimize
Enterprise
Risk
Performance
Accelerator
Strong
Fiduciary
Controls
Support
Business
Decisions

Dare toimagine….
Steer
Business
Performance
Single
Version
Of the
Truth
Anticipate
the
Future
Minimize
Enterprise
Risk
Performance
Accelerator
Strong
Fiduciary
Controls
Support
Business
Decisions

Dare toimagine….
Steer
Business
Performance
Single
Version
Of the
Truth
Anticipate
the
Future
Minimize
Enterprise
Risk
Performance
Accelerator
Transform
the
Enterprise
Strong
Fiduciary
Controls
Support
Business
Decisions

Dare toimagine….
Steer
Business
Performance
Single
Version
Of the
Truth
Anticipate
the
Future
Minimize
Enterprise
Risk
Performance
Accelerator
Transform
the
Enterprise
Strong
Fiduciary
Controls
Drive
Enterprise
Agility
Support
Business
Decisions

Dare toimagine….
Steer
Business
Performance
Single
Version
Of the
Truth
Anticipate
the
Future
Minimize
Enterprise
Risk
Performance
Accelerator
Transform
the
Enterprise
Lead
Business
Model
Innovation
Strong
Fiduciary
Controls
Drive
Enterprise
Agility
Support
Business
Decisions

Dare toimagine….
Steer
Business
Performance
Single
Version
Of the
Truth
Anticipate
the
Future
Minimize
Enterprise
Risk
Performance
Accelerator
Transform
the
Enterprise
Lead
Business
Model
Innovation
Strong
Fiduciary
Controls
Drive
Enterprise
Agility
Support
Business
Decisions
Standardize
Processes
Common
Data

Dare toimagine….
Steer
Business
Performance
Single
Version
Of the
Truth
Anticipate
the
Future
Minimize
Enterprise
Risk
Trusted
Advisor
Performance
Accelerator
Transform
the
Enterprise
Lead
Business
Model
Innovation
Strong
Fiduciary
Controls
Drive
Enterprise
Agility
Support
Business
Decisions
Standardize
Processes
Common
Data

Thank you!
For additional information and support, please contact:
 Beth Bell – Partner, Government Transformation and Growth Initiatives, IBM
Global Business Services
– bethbell@ca.ibm.com
– (204) 938-7948
 Kim Butler – Associate Partner, Strategy & Analytics, IBM Global Business
Services
– kbutler@ca.ibm.com
– (613) 249-2273

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