Presentation on budgeting and financial reporting made at 2106 CPA Week covering key limitations of traditional budgeting approaches and the top 10 practices of leading enterprises in Australia and globally

1. FUTURE
DIRECTIONS IN
BUDGETING
Greg Clarke, CEO, ABM Systems

2. Introducing ABM
We focus on Improving Enterprise Performance
 Strategic planning & performance management
 Budgeting & forecasting
 Costing & profitability
 Reporting & analytics
 Process improvement
Our Products – Global Leading Solutions
 proDacapo: Balanced Scorecard, ABC & Process Management
 Adaptive: Planning, Budgeting & Reporting
 Qlik: Business Intelligence
 IFS: Asset, Project & Financial Management/ERP
Our Services – Focus on Problem Solving & Skills Transfer
 Training & Workshops
 Project Management & Facilitation
 Systems Implementation & Integration
 Management Accounting Services
 Personnel in Sydney, Melbourne, Perth, Brisbane

3. Some Clients
Department of
Defence
VHA

4. Performance Management MaturityValue
Maturity
Standard
Reporting
Ad Hoc
Analysis
• Financials
• Flat reports
• Historic focus
• Function focus
• Variances
• Queries
• Dashboards
• Alerts
• Hard wired
• Top scorecard
• Driver based
• User driven
• Goal oriented
• Process aligned
• Predictive
• Collaborative
Dynamic
Reporting
Islands of
Excellence
Strategy
Integrated

5. 5
Budgeting : The bane of managers
“The budget is the bane of managers. It never should have existed.
A budget is this: if you make it, you generally get a pat on the back
and a few bucks. If you miss it, you get a stick in the eye or worse …
Making a budget is an exercise in minimisation. You’re always
getting the lowest out of people, because everyone is negotiating to
get the lowest number.”
Jack Welch, CEO, General Electric

6. The traditional budgeting process
6
… Around 85% of costs are designed in to a business using this approach.
… And performance is controlled against such a budget throughout the year.
Last
year
This
year
Next
year
5.
Budget
agreement
4.
Uneven
contest
3.
Iterations
& cuts
2.
Dept.
budgets
1.
Goals &
forecasts
10%

7. The “heart” of management systems
7
Financial
pressures
Financial
pressures
Objectives &
incentives
Resource
allocation
Budget
Monthly
reviews
Vision &
strategy

8. What leading organisations are doing
8
Source: Adapted from CAM-I, Advanced Budgeting study
Goals
Initiatives
PerformanceResourceProcess /
Output
Strategy Innovation
54321

9. 9
MY KEY INITATIVES:
X Branch
Activity $ Output Volume Unit $ FTE Variability Volume Activity $ FTE Volume Efficiency
Change %
Unit $ Activity
$
M/D
Sales & Receipting
Handle new member enquiries $34,323 Enquiries 820 41.86 0.12 100 902 $37,755 0.13 1,200 10 38.05 $45,663 M
Join Up new member $22,345 Applications 651 34.32 0.09 100 716 $24,580 0.10
Receipt contributions $28,474 Receipts 7,207 3.95 0.15 100 7,928 $31,321 0.17
Cross-sell existing member $11,432 Applications 412 27.75 0.05 100 453 $12,575 0.06
Upgrade existing member $21,111 Applications 333 63.40 0.06 100 366 $23,222 0.07
Sell Insurance Product X $23,491 Applications 276 85.11 1.20 100 304 $25,840 1.32
Sell Insurance Product Y $11,905 Applications 221 53.87 0.04 100 243 $13,096 0.04
$153,081 1.71 $168,389 1.88
Service - Account Maintenance
Handle membership enquiries $65,444 Queries 16,787 3.90 1.26 100 18,466 $71,988 1.39
Telephone Enquiry - Service $22,557 Enquiries 98 230.17 0.00 100 108 $24,813 0.00
$88,001 1.26 $96,801 1.39
Process Claims
Process Claim type X $121,888 Claims 28,383 4.29 1.78 100 31,221 $134,077 1.96
Process Claim type Y $37,227 Claims 4,848 7.68 0.28 100 5,333 $40,950 0.31
Claims audit $24,818 Claims 4,368 5.68 0.19 0 4,368 $24,818 0.19
Telephone Enquiry - Claims $15,151 Enquiries 48 315.65 0.03 100 53 $16,666 0.03
$199,084 2.28 $216,511 2.49
Administration
Membership audit $9,433 Members 1,525 6.19 0.14 0 1,525 $9,433 0.14
Management Reporting $3,537 Report 249 14.20 0.03 0 249 $3,537 0.03
Branch Balancing & Banking $8,842 Days 249 35.51 0.07 0 249 $8,842 0.07
Attend training $15,341 Staff 24 639.21 0.12 0 24 $15,341 0.12
$15,341 0.43 $15,341 0.12
Grand Total $455,507 5.68 $497,042 5.88 MY PLANNED FTE
ACTUAL FY05/06 MY PLAN FY06/07SCENARIO FORECAST FY06/07
Activity Based Budgeting/Rolling Forecast

10. Output Budgeting & SLAs
10
I8290 IT - Support - Help Desk
Assist Users to use Software Programs 26,325 Users Helped 1,823 14.44
Facilitate Help Desk Process Improvement 17,600 Improvements 7 2,514.23
Handle Ad Hoc Requests 18,600 Problems Resolved 888 19.82
Initiate On-Line Support Messages 35,049 OnLine Messages Sent 2,045 17.14
Level 2 Support Escalations 52,499 2nd Level Support Area Fixes 4,481 11.72
Manage Knowledge Base 26,325 Updates 48 548.43
Prepare Management Reports 35,049 Reports 12 2,920.77
Provide After Hours Support 17,600 After Hours Calls 1,776 9.91
Provide eHelp (OnLine Help) Training 17,600 Staff Trained 120 146.66
Reset Passwords 52,499 Resets 11,948 4.39
Resolve LAN/M-Frame Printing Problems 26,325 Problems Resolved 2,064 12.75
Resolve other Hardware Problems 17,600 Problems Resolved 2,256 7.80
Resolve Portal Problems 19,600 Problems Resolved 2,377 8.25
Resolve Server Problems 17,600 Problems Resolved 809 21.75
Resolve Software Problems 35,049 Problems Resolved 10,341 3.39
Restore Lost/Damaged Files 8,875 Recovery Attempts 357 24.86
Support Production Systems (X,Y) 17,600 Production System Calls 8,240 2.14
439,393
Shared Services Costs - SLA View
Unit $ Total $
Provide & Support Networked PCs
Desktop with MS Office 3,538.67 7,222,425
IBM Notes 2,955.78 6,032,747
Internet / Intranet 3,173.97 6,478,073
HelpDesk Services 127.87 260,983
9,796.29 19,994,228
Provide Comms Services
Voice Services 1,315.00 2,683,915
Mobile Services 434.76 887,345
1,749.76 3,571,260
Provide & Support Specialist Applications
BDM Link 1 6,139.53 3,935,439
BDM Link 2 84,778.54 4,323,706
Product Mgt App 1 17,123.84 5,839,229
Product Mgt App 2 27,543.21 4,930,235
SAP ERP 9,931.11 923,593
Web Site Services 2.59 460,349
Client Portal 326.70 7,527,495
Provide Development Services
Project X 950.00 228,950
Project New Start 950.00 19,950
Work Flow Mgt 950.00 76,950

11. 75%Effort is wasted
rekeying and
manually
rolling up data
90%Spreadsheets
contain data
and formula
errors
64%Annual plans are
out of date by
the time they are
put into effect
Barriers to excellence
Source: Ventana, ACCA, BBRT

12.  Time consuming / unproductive
 Low Participation / Frequency
 Inaccurate and error-prone
 Poor accountability / misalignment
 Error prone links and formulas
 Consolidation challenges
 Change management & Version control
 Comparative analysis / Scenario modelling
 Lack of drill-down
The Problems with Spreadsheets
Great personal productivity tool, poor collaborative business application

13. Free Reporting is Actually Costly
Time Spent
Average User: 12 hours/month
Finance User: 18 hours/month
Actual Expense
Sources: Ventana Research – Spreadsheets in Today’s
Enterprise cfo.com Fixing the Financial Close Process
*not including management reports
typical company $100M revenue
spends annually on reporting
$60KLabor related costs
financial reporting alone*

14. Executives Finance Planning Services
Plans Models Dashboards ReportsForecast
s
Barriers to excellence
IT

15. Marketing
Planning
Profitability
Planning
IT
Planning
Regulatory
Services
Planning
Quota
Planning
Revenue
Forecasting
Production
Planning
Facilities
Planning
Headcount
Utilization
Metrics
& KPIs
Standard
Costs
Workflow
Manager
Engagement
Funds &
Grants
LT & ST
Planning
Rolling
Forecasts
Executive
Dashboard
M&A
Financial
Close
BS/CF
Personnel
Financial
Reporting
Expense
Revenue
Capital
CPM System

16. CPM Systems
User Survey Analysis: Customers Rate Their CPM Vendors
22 August 2015

17. CPM: Integrated Planning & Reporting

18. CPM: Enable Rolling Forecasts
Do top-line adjustments

19. CPM: Flexible and Centralized
 Data
 Calculations
 Security
 Formulas
 Allocations
 Multi-Currency

20. CPM: Collaborative &Workflow
 Organizational Approvals
 Accountability
 Task Management
 Budget Submissions
 Audits & Notes

21. Transparency Analysis & Audit
 Compliance
 Analysis with Cell Explorer
 Track Changes with
Audit Trail
 Automatic Timeout of
Inactive Users
More Insights

22. CPM: Self-Service Reporting
 Drag-and-Drop
 Slice and Dice
 Cell Level Detail
 Custom Calculations
 Real-Time Drill-Down
 Formatting Control
 Automated Report Books
DynamicDashboards

23. Better Planning, Budgeting, Reporting
1. Share the Vision – Scorecard/Dashboard Goals, KPIs & Initiatives.
2. Use Drivers – Define Core Process Outputs, Enable Rolling Forecasting.
3. Focus – Vary approach to suit e.g. ZBB, ABB, PBB, League Tables, Exec Review,
Discretionary Spend, Shared Services, Project, Top-Down v. Bottom Up etc.
4. Collaboration – Enable people to work (flow) together integrating strategic to
operational plans, budgets, forecasts and performance monitoring.
5. Visibility – Drill into formulae, variable origins, transactions, audit trail, service levels
6. Frequency – Enable frequent (re)forecasting; system integrated and statistically
automated & with key driver collaboration
7. What-If – Enable simple to complex scenario planning
8. Incentivise – Provide financial and non-financial incentives for KPI attainment
9. Technology – Enable integration to GL and other source systems, workflow, auto-
consolidation, real-time reporting to actual, self-service, alerts etc. to drive the budget
and reporting cycles down from months to weeks and forecast in days or hours
10. Learn – BBRT, Vendor Case Studies, Workshops

24. Further Information
Contact Greg Clarke via
greg@abmsystems.com
0418614620
www.abmsystems.com