White Paper: Predictability Through Planning Agility

STRATEGIC REPORT | JULY 2014
PREDICTABILITY
THROUGH PLANNING AGILITY
Best Practices in Collaborative Budgeting and Continuous Business Rebalancing

Introduction
Best Practices
Conclusion
Executive Perspectives
Host Analytics Perspective
About the BPI Network
About Host Analytics
CONTENTS
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4
10
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© Copyright BPI Network. All Rights Reserved. 2014 3
PREDICTABILITY THROUGH PLANNING AGILITY | STRATEGIC REPORT
INTRODUCTION
Companies are dealing with more complexity than ever before. Competition and mar-
kets are no longer local, but global in nature. Supply chains are far flung and require the
precise orchestration of many moving parts. Businesses are confronting many more
variables that can change at a moment’s notice. And economic uncertainty continues to
hamper many firms. Achieving continued and accelerated growth requires business lead-
ers to master complexity as part of their daily operations.
The role of the CFO and the finance organization is central to providing the insights
needed to steer the company forward and deliver bottom-line value. To do so, finance
professionals must rethink their way of operating to provide not only a historical snap-
shot of business performance, but also predictability about future growth opportunities.
The finance department has a company-wide view of the many activities taking place
every day. Predictability in finance helps planners transfer their knowledge and insights
throughout the organization. Predictability also helps companies continue to improve
operations, reduce costs and mitigate against the risks that result from disruptive market
conditions.
And to help drive business agility, finance teams must streamline their processes and
implement new best practices that stress flexibility and continuous improvement to keep
pace with the rate of change. Finance pros must also evolve from being tacticians who
generate monthly reports to become strategic members of the decision-making team.
The Business Performance Innovation (BPI) Network has undertaken this study to
examine how finance executives are changing their business processes and systems to
improve the accuracy and timeliness with which they deliver much-needed information
to their business counterparts. In this report, we will share with you the insights we
gathered from finance experts and budgeting and forecasting professionals. We will also
look at the roles that modern budgeting and forecasting play in helping companies spot
new opportunities, such as mergers and acquisitions, and anticipate potential problems,
such as shortfalls, to which businesses need to respond quickly. This study includes
the insights and opinions of a number of finance practitioners who embrace agile busi-
ness practices and the latest finance technologies to deliver value-driven insights and
increased predictability to their organizations.

BEST PRACTICES IN COLLABORATIVE BUDGETING AND CONTINUOUS
BUSINESS REBALANCING
Executives who embrace business agility are making operational changes in their
businesses to accelerate decision-making in response to rapidly changing market con-
ditions. These changes enable executives and business heads to transform intent into
action. The need for speed and flexibility has never been more critical, and in today’s
complex environment, the lack of agility can be fatal to a business.
Still, many companies have not updated their budgeting and forecasting processes and
continue to rely on annual budgets that are set in stone and never modified to reflect
changing business conditions. These outmoded processes are keeping companies from
being as effective as they otherwise could be. Rigid business processes, outdated tech-
nology and poor data sharing between critical business stakeholders all take their toll
on a company’s ability to embrace change and react quickly. These and other deeply
ingrained business processes and organizational roadblocks keep financial profession-
als from delivering greater business and decision-making value to their organizations.
Top-performing companies are doing away with traditional budgeting and forecasting
in favor of implementing flexible processes that can be updated on a regular basis. One
of the best examples of this is Statoil, a $1.5 billion, multinational energy company that
eliminated the monolithic budget and replaced it with separate instruments to set tar-
gets, allocate resources and forecast business outcomes. According to Bjarte Bogsnes,
Vice President of Performance Management at Statoil, the static budget is not an
effective yardstick for evaluating business performance.
B U D G E T I N G & F O R E C A S T I N G
D R I V E R S
ACCURACY TIMELINESS ALIGNMENT FLEXIBILITY DATA
ACCESSIBILITY

Rolling forecasts and budgets are more flexible and responsive to changing business
conditions. Systems that can be frequently updated with the latest data provide finance
and business groups with greater visibility into their performance and the ability to act
quickly in response to challenges and opportunities. Accurate forecasts also have a
direct impact on how Wall Street investors and individual shareholders view a company.
When a company is forced to amend its forecast and provide guidance to Wall Street,
the effect can be a loss of confidence in the company and stock sell-off.
Studies show a strong relationship between the mastery of budgeting and forecasting
functions and overall business performance. Top finance executives who continually
push for greater productivity tend to achieve better results. These leaders reinforce a
value-driven mindset among their staff in order to deliver new and evermore valuable
insights that drive innovation throughout their organizations.
Thrillist Media Group grew from $6 million to $83 million over the past four years. This
growth came not only from adding new lifestyle websites to its offerings, but also from
getting its financial house in order. The company threw out its simplistic budgeting
software and opted for a modern, cloud-based system that provided a unified view of
its performance data across all properties. The new system also allowed the company
to update its reporting processes, thereby reducing the 45-day process to one week.
A small manufacturing company in the Midwest continues to use 20-year-old account-
ing software. The company’s CFO has no plans to upgrade to a more modern version or
cloud-based service. The reason he stated is that his accountants were reticent to learn
a new application. His perception is that the existing software continues to meet the
company’s needs.
This CFO would probably be loath to change his budgeting process as well. The classic
corporate budgeting process is a study in spreadsheet version control otherwise known
as “Excel hell.” Business department heads produce their budgets in Excel, document-
ing their best guesses about what they will need in 18 months’ time. This process is
repeated dozens of times throughout the organization. It is then the thankless job of
the finance department to assemble these budgets and create something for executive
approval. The process is time consuming, inefficient and lacking in flexibility. Data exists

in multiple places, and unifying it and providing all stakeholders with a complete view
is nearly impossible. By the time the fiscal year begins, those 18-month-old “guessti-
mates” often no longer apply—that’s how rapidly business is changing.
External Forces and Unanticipated Consequences
Another problem with traditional budgets is that they’re based on assumptions about
external forces, over which a company has little or no control. When these assumptions
turn out to be wrong, the plans based upon them are wrong as well. Without sufficient
planning and forecasting agility, companies will be unable to respond to these forces
and will ultimately falter.
Government regulations, for example, can have a widespread and unexpected impact
on businesses and market conditions. Early results of the Patient Protection and
Affordable Care Act indicate that previously uninsured patients are putting great-
er-than-expected pressures on the healthcare system. More than a quarter of those
who are newly enrolled in insurance plans have significant healthcare issues, which is
drastically higher than last year before the law went into effect. This new data suggests
that insurance companies will have to re-evaluate their assumptions and forecasts, and
insurance premiums will likely rise as a result.
MASTERS OF THEIR DESTINY
HERE’S WHAT SAVVY FINANCE DEPARTMENTS
ARE DOING TO DRIVE BUSINESS PERFORMANCE
Deliver valuable
insights to business
decision-makers
Respond to
changing
conditions
Reallocate resources
to emerging
opportunities
Automate budget
setting and
monthly close

The good news is that insurance companies are among the most aggressive adopters
of new forecasting and analytics technologies. Unfortunately, that’s not the case across
all business sectors. According to studies, almost all companies use Excel spreadsheets
for some form of budgeting, and more than 40 percent use Excel as their primary
budgeting tool. Finance experts say Excel should not be the only technology used for
budgeting. Spreadsheets lack the budgeting automation, change management flexi-
bility and analytics capabilities needed by rapidly changing businesses. Modern EPM
systems have built-in databases to centralize all essential financial information. These
systems also have analytics capabilities that enable companies to perform advanced
modeling of their key business indicators.
Business transformation requirements are causing many finance groups to upgrade
their systems and processes. While many companies continue to use Microsoft Excel
spreadsheets for some basic budgeting activities, forward-looking companies must
adopt modern and nimble systems that that enable users to automate the rote tasks
of producing budgets and distributing monthly reports. About a quarter of mid-size
and large companies are moving to rolling forecasts and budgets that enable them to
make weekly or monthly changes to their plans. Businesses and market conditions are
changing so rapidly that an annual budget produced a year or even several months in
advance of the fiscal year is often outdated. Companies need to constantly assess the
relevance of their spending and investments to ensure budgets reflect current business
imperatives.
Improved Visibility on the Horizon
Modern financial systems are giving finance professionals the flexibility they need to
respond to rapidly changing business conditions by helping finance teams streamline
the many steps of the budgeting process, from monthly close and consolidation to
reporting and analysis. Analytics give forecasters the ability to model their key business
indicators and deliver greater predictability over business outcomes. Most importantly,
these tools help finance departments produce driver-based forecasts that can help
turn data into actionable insights.
Parsons, a non-residential construction company, found that using Excel was an
impediment to managing its increasingly complex business. Parsons implemented an
EPM system for accounting and budgeting, thus shortening its budget cycle by weeks.
This freed the finance team to focus more time on analysis, modeling and strategic
planning. Parsons has 16 operational groups and continues to grow through acquisi-
tions. With construction projects, overhead costs begin before revenue starts coming
in. In some cases, planning begins up to 18 months prior to construction. Financial and
business managers need accurate forecasts to manage overhead costs, and the EPM
system allows financial planners to see the big picture and avoid overextending their
resources before projects begin.

Many companies report increased retention of talent in the finance department as a
result of improved processes and advanced planning and forecasting tools. The elim-
ination of manual budgeting with spreadsheets frees up the creative talent of freshly
minted MBAs and allows them to focus on more challenging and business-driven activ-
ities, such as analysis and scenario planning.
Leading organizations widely acknowledge that forecasting is the heart of performance
management and a significant driver of business value and investor confidence. The
better the forecasts, the better the strategic decision-making.
Companies that had forecasts that came within 5 percent of actual results saw their
share prices increase by more than 40 percent in a three-year period. But more half of
the firms surveyed said their forecasts were off target by more than 5 percent.
The effective forecasting of business results can help companies:
•• Identify and act on acquisitions and other growth opportunities
•• Identify and prioritize risk
•• Set meaningful milestones for business groups
•• Identify process improvements that affect the bottom line
•• Improve relationships with customers and business partners
Jazz Pharmaceuticals, headquartered in Dublin, Ireland, is the result of a merger and
series of acquisitions over the past four years. This growth probably would not have
been possible without agile accounting and forecasting. Jazz spends a lot of time on
analysis. “We look at where we are and what’s changed dramatically since our last
forecast. We poll all of our business partners in various regions to understand what’s
happening,” says Tami Gordon, Senior Director of Financial Planning at Jazz.
Jazz implemented a cloud-based EPM system from Host Analytics that helped with the
onboarding of newly acquired companies. It also enabled Jazz to automate the budget-
ing process and unify its disparate data into a single system. “We want to spend our
time on analytics and not on getting data because data is not super meaningful until
you turn it into something of value to the business,” Gordon says.
Cloud-based systems are designed to bring business managers into the planning
process with dashboards that let them pull the departmental data specific to their
operations. In the case of Parsons, departmental managers are more engaged with
analysis because they can access information close to the time that events occur. And
they are more interactive with their finance counterparts, seeking input about how they
can do a better job of running their business units.
Cloud-based financial management software has many benefits to business and
financial managers, as well as corporate IT departments. With on-premise software, IT
teams spend about 80 percent of their time managing the infrastructure, servers and

other hardware that run those systems. That leaves a scant 20 percent of their time to
focus on managing and optimizing business processes associated with the on-premise
software. With cloud systems, the ratio is reversed because the cloud service provider
manages the infrastructure, servers and even software. In the case of many of the
newer EPM suites, IT management is minimal. The financial users can maintain and
evolve the application as business needs change.
In addition, the heavy-duty capital equipment costs, such as servers, go away—busi-
nesses no longer have to deal with software licenses, system integration or consulting
fees. In addition, cloud services make it much simpler to make changes in the financial
processes without having to make changes to everything the process touches. All data
and all rules live in the same database. In financial terms, the cost of finance technol-
ogy is transformed from expensive, upfront capital costs into less expensive, recurring
operational costs.
Cloud EPM solutions enable vendors to deliver the latest enhancements automatically,
so IT departments don’t need to be involved in assessing the value and appropriate-
ness of a software upgrade. With cloud technology, the enhancements are part of the
package and users can avoid the complex, disruptive and expensive upgrades asso-
ciated with traditional software. Cloud services make it easy for companies to adopt
continuous process improvement into their budgeting and forecasting processes.
Cloud systems are becoming one of the biggest enablers of change within finance
departments.
In addition, cloud services make it easy to integrate data across EPM, ERP, CRM and
sales force automation. Increasingly, we are seeing explicit agreements from cloud
service providers to provide interfaces that support the exchange of data across sys-
tems. Cloud financial management systems also do away with the data silos that have
existed for so long and obscured visibility into all aspects of the business.
The Value of Informed Decision-Making
But the job of good decision-making can still be arduous, according to Stanford
University Graduate School of Business Professor Jonathan Berk. “You don’t make
money by making easy decisions. Anybody can make an easy decision. The only way
you have a competitive advantage is if you’re making the difficult decisions. The fact
that a decision is difficult is why it’s so valuable,” he says.
Making tough decisions requires alignment between financial and business groups.
Each department needs to be on board with corporate-wide business goals. And finan-
cial and business groups need to be in possession of the same data and a common
understanding of what it means. At many leading companies, the finance group has
evolved from distributors of reports to active partners and expert advisors.

Part of the job of achieving mastery over finance operations is recasting the budget-
ing and forecasting process to put greater emphasis on being predictive rather than
reactive. It is no longer acceptable in today’s hypercompetitive environment to create a
static annual budget and forecast.
At medical device manufacturer Welch Allyn, Inc., each financial planner is assigned to
a particular business group, such as R&D, marketing or sales, says Rick Odom, Senior
Manager for Financial Planning and Analysis at Welch Allyn. This brings a level of mas-
tery to the financial function that other companies lack. The finance professionals
develop a deep understanding of how their business unit operates and are able to pro-
vide valuable insights into what the numbers are saying about the business.
Welch Allyn implemented a modern EPM system for budgeting and forecasting. The
cloud-based technology enables the finance team to run the system without interven-
tion by corporate IT, which represents a considerable cost savings since Welch Allyn has
outsourced the majority of its IT operations.
Embracing change is difficult but essential to becoming an agile enterprise. Accounting
departments have been reticent in the past to change their processes and systems, but
many are realizing that change management is an essential part of continuous process
improvement and driving newfound value to the bottom line.
Undertaking this level of change is no mean feat. It takes courage to break from the
past and undertake organizational and process changes. This requires agile business
structures that can, devise more efficient business processes that eliminate redundant
activities, and integrate new business models with speed. Doing all of these things
in a rational order is somewhat akin to turning a supertanker around. Some of these
changes are tactical and need to be implemented in short order. Others are game
changing and require more long-range planning. But both operational and strategic
effectiveness hinge on this level of transformation.
Conclusion
The need for speed and agility in business has never been more critical. In today’s com-
plex environment, the lack of business agility can be detrimental to a business. The role
of corporate finance professionals is critical to delivering accurate forecasts that can
drive crucial insights that enable corporate managers to quickly spot new opportunities
and quickly reallocate resources. The corporate budgeting and forecasting group must
embrace business transformation in the form of new processes, new technologies and
new strategic roles, and they must automate the activities that do little other than pro-
vide a historic picture of past performance. For all parts of the company, the focus must
be on the future. Mastering business agility and transformation will prove to be key for
long-term growth and success.

LEADERSHIP COMMITTEE
Kevin O’Hare
Chief Financial Officer
AIS Data Centers
Chris Staines
Director of Corporate Finance
Grant Thorton
Tami Gordon
Senior Director of Financial Planning
Jazz Pharmaceuticals PLC
John Burger
IT Director for Finance
Kaiser Permanente
Monica Ross
Director of Strategic Projects
Parsons Corp.
Gary Fuchs
Powerlinx, Inc.
Raymond Lowe
Vice President of Finance
SciClone Pharmaceuticals, Inc.
Jonathan Berk
A.P. Giannini Professor of Finance
Stanford University Graduate School of Business
Glen Ceremony
Travelzoo, Inc.
Rick Odom
Senior Manager for Financial Planning and Analysis
Welch Allyn, Inc.

Kevin O’Hare
AIS Data Centers
The cloud services space is a competitive market, and mid-size incumbents are facing fierce com-
petition from bigger providers like Amazon Web Services, Google, and Microsoft. To maintain their
edge, IT service providers like AIS Data Centers must be constantly vigilant to the needs of custom-
ers. To do that, Chief Financial Officer Kevin O’Hare says they have to have visibility into all aspects
of their business operations.
AIS Data Centers is a San Diego-based IT infrastructure service provider. It provides enter-
prise IT services including cloud, colocation, network connectivity, storage, security and other
managed services. AIS was founded in 1989 and is privately held. It serves companies in the
life sciences, technology and financial industries throughout the Southwest.
“We like to distinguish ourselves in the market by offering a high-value cloud platform with
redundancy between our San Diego and Phoenix data centers,” O’Hare says. “Our value
proposition compared to other cloud service providers is that we can tailor a broad bundle
of services specific to the customers’ unique needs due to our full-service organization
throughout the Southwest.”
AIS Data Centers is a growth company that focuses on its business agility. From a financial
point of view, that translates into accuracy and reliability of the information they provide to
stakeholders, department heads and executive management in engineering, facilities and
client services.
The San Diego firm has a monthly budgeting process, and O’Hare is
a strong believer in forecasting.
“We see the need to provide spur-of-the-moment data so that we
can react quickly to address market challenges and growth areas,”
he says. “We’re always on the clock 24/7 and need to perpetually
upgrade and retrofit, as well as expand our data center capacity
and invest in new customer opportunities.”
The company deals with the high cost and high consumption of
electric power in the Southwest. These issues are compounded by
regulatory, tax and environmental issues imposed by the California
state government. AIS Data Centers constantly debates whether to
draw power from local utility San Diego Gas & Electric (SDG&E) or to take on the responsibil-
ity of generating power itself.
“AIS is a growth company
that focuses on its business
agility. From a financial
point of view, that
translates into accuracy
and reliability of the
information we provide to
our stakeholders.”

In addition to dealing with its own regulatory requirements, AIS Data Centers must support
the compliance issues its customers face as the holder of, for example, encrypted patient
data coming from life sciences companies.
And while cloud technology can be a business disruptor, it has also posed opportunities for
AIS Data Centers to operate nationally and even globally. This puts even more pressure on
the company to provide time-sensitive financial information so that it can make competitive
decisions regarding the margin impact of new projects in new markets as it expands its base
of business customers.

“It sometimes feels like a
supertanker going through
the ocean and no matter what
you do, there’s no way you can
change direction fast enough.”
Chris Staines
Director of Corporate Finance
Grant Thorton
Grant Thornton is one of the top accounting firms in the world, with offices in most major cities.
Chris Staines is the Director of Corporate Finance at Grant Thornton in Cape Town, South Africa,
and serves as an advisor to many companies, focusing on mergers and acquisitions, as well as
strategy and business planning.
In his interactions with many companies, Staines sees a big disconnect between the actual
business units and financial management.
“The whole budgeting process can be a huge waste of time because it takes months to
resolve the differences between the bottom-up forecasts of business managers and the
top-down expectations of executives,” he says.
Instead, Staines suggests more attention needs to be paid to
the gap between what was forecasted and what actually hap-
pened in terms of business results.
“The same energy that’s applied to budgeting needs to be
applied to understanding the variances and why they occurred,”
he says. “There’s an analysis paralysis to produce the budget,
but then there’s no analysis of what the numbers actually mean
once they’ve been compared to actual results.”
In addition, the accounting people and business people have completely different skills and
often don’t speak a common language.
“The finance guys don’t always understand business operations, but they’re going in and
trying to help the business guys produce their budgets. Conversely, the business opera-
tions folks are not always as financially astute as they should be,” Staines says.
The answer to this quandary, according to Staines, is to appoint financial executives who
reside within the business units. This way, they gain the operational expertise needed and
can educate the business groups on the ways and means of finance.
Another problem with budgets is that they often become out of date before the new fiscal
year even begins.
“It sometimes feels like a supertanker going through the ocean, and no matter what you
do, there’s no way you can change direction fast enough,” Staines says. “Once a plan is
written into the budget, it becomes sacrosanct, and the ability to change is lost. When
all is said and done, people look back and say, ‘That didn’t achieve what we wanted,’ or ‘It
took too long and cost too much.’ The ability to stop those activities when someone first
starts suspecting they won’t deliver is incredibly difficult, but the lack of business agility is
simply fatal.”

The answer is better data, better analysis of the data and the ability to change directions
more quickly. Fortunately, there are a number of new financial technologies that can drive
business agility.
“We use a system that lets us look at the ratios in a business and compare that to how
other similar businesses are doing,” Staines says. “Clients are amazed to see how other
companies compare and what they are doing to outperform them. The data is there. The
ability to analyze the data is available. In many places, it’s just not being done. Interpreting
the data and understanding the trends is so vital to being agile and achieving better
results.”

Tami Gordon
Senior Director of Financial Planning
Jazz Pharmaceuticals PLC
The pharmaceuticals industry is facing multiple challenges in creating sustained profitability and
growth due to downward pricing pressures in what some people have dubbed the “post-block-
buster drug era.” As a result, many pharma companies are turning to mergers and acquisitions
to improve cost structures while striving to increase financial visibility across regions and
functional areas and to enhance planning and execution on a global basis. Tami Gordon, Senior
Director of Financial Planning for Jazz Pharmaceuticals explains that cloud-based enterprise
performance management can be an essential platform to enable this transformation.
Jazz Pharmaceuticals is an international specialty biopharmaceutical company that
addresses patients’ unmet medical needs by identifying, developing and commercializing
differentiated products in areas of unmet medical needs, including narcolepsy, oncology,
pain and psychiatry. Its treatments provide clinical benefit to patients impacted by serious
conditions who have limited treatment options. Jazz Pharmaceuticals has grown rapidly
over the past four years based on its strategy of expanding the reach of its commercial
products and of M&A and product acquisition.
“Jazz is a different company today than it was four years ago – even two years ago,” says
Gordon, who is based in Jazz Pharmaceuticals’ Palo Alto office. “Our rapid growth presents
tremendous opportunity for the patients that we aim to help,
for our stakeholders, and for our shareholders.”
Because it focuses on highly differentiated products in areas of
high unmet need, Jazz does not have many direct competitors,
so challenges come more from the need to act quickly to market
opportunities.. This requires the finance teams and other busi-
ness unit leads to closely collaborate in managing the budget
and producing forecasts that are as accurate and timely as pos-
sible. It also demands real-time visibility into the state of the business and the flexibility
to reallocate resources as business requirements change.
“Because of our need to react quickly and have a real-time window into the state of the
business, Jazz adopts financial systems that ensure budgeting and financial flexibility.
Gordon says. “This flexibility and visibility leads to more rapid business innovation.”
In Gordon’s opinion, it is essential to have financial agility and predictability. Gordon’s team
produces an annual budget, rolling quarterly forecast updates, and high-level variance
analyses to determine where they stand and to identify any changes from previous fore-
casts. Gordon says they also poll business partners in all of their regions and then report
to senior management, which enables them to react quickly. If sales figures are stronger
than forecasted, this represents an opportunity to invest in new initiatives.
“Jazz produces an annual
budget, but like many
things—such as buying a
computer—the day after you
get it, it’s decreased in value.”

“Our approach is based on accuracy and fluidity,” says Gordon. “Forecast accuracy allows
us to make decisions about reallocating funds. We can see that spending is a little slow in
some areas, so we can move money to an area where we have an opportunity. These allow
us to make strategic investment decisions as they arise.”
To assist in creating more nimble financial processes and improving M&A integration, Jazz
has adopted a cloud-based enterprise performance management platform from Host
Analytics. The finance department revised its chart of accounts and implemented the Host
Analytics platform, which allows Jazz to scale its data and slice and dice it to adapt to the
changing enterprise. The chart of accounts includes all of the data that goes into the gen-
eral ledger accounting system: accounts, products and regions.
The new system allows the FP&A group to focus on delivering
value to the business units and executive management.
“Data is essential to our business. We want to prioritize our time
on analytics of data to understand the value of this information
to our business,” Gordon explains.
Initially, the new cloud platform was used by financial analysts in
the company’s Dublin and Palo Alto offices. Despite some of the
groups at Jazz using different planning tools, the Jazz finance team efficiently rolled all units
onto the same platform in a short time frame and without the need to devote IT resources.”
Gordon added, “With the new cloud platform, we were able to bring all of the data into one
place, regardless of the accounting and planning systems being used.”
“We want to spend our time
on analytics and not on
getting data, because data
is not super meaningful until
you turn it into something of
value to the business.”

John Burger
IT Director for Finance
Kaiser Permanente
Health care is under incredible pressure and is always in search of innovative practices to address
skyrocketing costs and increased regulation. So obviously, when looking at forecasts and bud-
gets—especially capital budgets—there’s an intense need for agility. Kaiser Permanente’s IT
Director for Finance, John Burger, says that in order to be successful, they need to be as efficient
and cost-effective in their processes as possible.
Kaiser Permanente is the largest healthcare provider in the country, with $53 billion in
annual revenue and $2.7 billion in profits. But it had humble origins. It began as a 12-bed
hospital in the middle of the Mojave Desert at the height of the Great Depression, treating
injured workers who were building the Colorado River Aqueduct.
“As you can imagine, in the healthcare industry, building hospitals is a very capital-intensive
initiative,” Burger says. “To be able to remain competitive in this
environment, we have to continuously look at how we invest
our capital and the return on that investment, and we have to
be sure we’re identifying the most effective and efficient way of
deploying healthcare services.”
Kaiser has a fairly robust infrastructure around finance for evalu-
ating new projects that come into the pipeline.
“We use standardized ROI metrics that align with our strategic
objectives,” he says. “We look at direct profit and loss implications—either the increase
of revenue or reduction of cost—and indirect P&L implications, like redeployment of
resources to other areas in the organization.”
For Kaiser, major IT projects are ranked against major infrastructural projects. For example,
decisions must be made around whether to invest $1 billion in a new hospital or in several
major IT projects. When it comes to major projects, these decisions happen at the board
level.
“Anything above $50 million goes through various levels of scrutiny and review, and then
the board weighs in during the final funding phase,” he says. “Once a project is funded,
there are quarterly reviews to make sure it is tracking against the forecast and agreed-
upon business case. At that point, there’s an opportunity to adjust a business case as the
environment or circumstances change, and then there could be a reassessment of how
“Once a project is funded
there are quarterly reviews
to make sure it is tracking
against the forecast and
agreed-upon business case.”

those funds are designated.”
The reallocation of funds happens on a regular basis in response to changing business con-
ditions and opportunities. And at times, the decisions are difficult.
According to Burger, there could be $100 million on the line, $30 million of which is spent.
Then, through no fault of the program sponsors, the business case could fall away or prove
to not be relevant anymore. The tough question is whether to walk away from $30 million
and redirect the other $60 million toward a new project or to continue down the same path.
Burger says Kaiser does a good job of being very logical and identifying when a business

case is no longer valid.
Monica Ross
Director of Strategic Projects
Parsons Corp.
Non-residential construction is continuing to grow at a stable rate, spurred by increasing
commercial property values. The American Institute of Architects predicts that spend-
ing in this area will increase by 5.8 percent in 2014 and 8 percent in 2015. For Parsons,
an 85-year-old commercial electrical and technologies construction company operating
throughout North America, keeping pace with the opportunity and enabling better business
decisions requires moving away from rigid spreadsheet processes and toward a more flexi-
ble budgeting and planning solution.
Parsons has annual revenues of $200 million, and last year it
secured work on the new Minnesota Vikings stadium. The com-
pany has grown through both acquisitions and organic means.
It has three major business groups and 16 operating divisions.
The key success factor for any growing business is for the finance
team to focus on business issues, first and foremost. That’s why
Monica Ross, Director of Strategic Projects, undertook a rewrite of
her department’s business processes and financial systems start-
ing in 2011. These actions automated much of the routine budgeting process and enabled
financial professionals to look more closely at the business drivers affecting the business.
The increasing complexity of the business prompted the finance group to update its budget-
ing and forecasting processes and to move away from Excel as its main analytis tool.
Parsons chose the Host Analytics cloud-based financial platform and shortened the
budgeting and forecasting cycle by weeks. The new technology also enabled business man-
agers to see their own information in discrete terms.
“In the past, managers were confronted with big blocks of data,” Ross says. “Now, they see
what’s specific to the business they’re running and feel more in control.”
These changes have enabled the finance group to automate many of the tactical chores
and focus more on analysis, modeling and strategic planning.
“Our business managers and executives are more engaged with the analytics now because
they feel they get access to information closer to when events are actually occurring,” she
says. “They can drill down more easily than with Excel. They ask more questions about how
“In the past, managers were
confronted with big blocks
of data,” Ross says. “Now,
they see what’s specific to
the business they’re running
and feel more in control.”

they can do a better job of running their business units.”
Speed is a driving force in the construction business. About 75 percent of Parsons’ electric
business is based on long-term contracts. They face a great deal of pressure to perform
and meet estimates during the design, planning and construction phases of the contracts.
In some cases, overhead costs accrue up to 18 months ahead of the actual work and
on-the-job billing cycle. Because of this, Parsons needs to be mindful of how it spends its
overhead resources so that it doesn’t overextend itself before payments start to come in.
The budgeting team is comprised of the CFO, Controller, Ross and the heads of the compa-
ny’s 16 business divisions. Through the changes made in budgeting and forecasting, Ross
says they are able to have more of a dialogue as they filter through the information so they

spend more time thinking about the business and less time consolidating data.
Gary Fuchs
Powerlinx, Inc.
The cloud services business is a dynamic and rapidly evolving area. That’s why companies
such as Powerlinx need to be agile at their business operations and adept at embracing
change.
Powerlinx is a New York company that offers B2B matchmaking services via a cloud appli-
cation platform. Its mission is to enable growing companies to be more successful as a
result of their ability to quickly identify prospective partners.
The Powerlinx mission is to connect businesses globally to give them access to strategic
partners, new markets, growth opportunities, capital and connections that ensure compa-
nies meet their business objectives and drive innovation.
As a startup, Powerlinx must identify its near-term priorities, and communicate that
throughout the organization. Since it’s in a fast moving industry, it must constantly monitor
how the business is performing and reallocate resources when new opportunities and chal-
lenges arise.
The budget of a startup is fluid and always changing. “We review
it constantly; probably weekly,” says Gary Fuchs, Powerlinx CFO,
COO and co-founder. “We watch what’s being spent and how
that corresponds to what’s happening in the various depart-
ments and what might be coming up that we didn’t anticipate,”
he adds.
In today’s hypercompetitive marketplace, it’s important to be able to change on the fly, says
Fuchs. It takes courage to say, “I’ve gone in this direction and spent X amount of dollars but
now there’s a better way to go, and we need to change direction,” he says. “You have to be
able to make that decision as opposed to saying ‘No, this what we said we were doing, and
we’re staying the course.’ That’s like driving off a cliff.”
Even though CFOs tend to be conservative, they must be proactive. “You have to constantly
observe what’s happening in the company as a whole and not just the numbers because
“It takes courage to say I’ve
gone in this direction and spent
X amount of dollars but now
there’s a better way to go.”

you don’t want to be reactive to results,” says Fuchs. “You want to be proactive to what’s
coming your way. That’s the key.”
The role of the CFO in driving company value is essential in a
startup. “It’s one thing to project where you want to go, it’s
another to project with knowledge and understanding so that
your numbers come in where they need to be,” says Fuchs. The
CFO is also a key advisor to the business heads. “You can have
a good entrepreneur, a good scientist, a good marketing person,
but they don’t necessarily have the financial savvy to decide how
to spend the money. They just know they need to grow.”
In addition, the CFO at a startup can help drive everybody on the staff toward innovation.
He or she can be the chief agent of change. This is in contrast to the CFO at a mature com-
pany, where change is a major challenge because all activity is focused on the bottom line
and not necessarily on innovation.
The CFO also helps bring a sanity check to the dreamers. When the great idea is in align-
ment with the numbers, the CFO can help drive the attainment of that dream better, faster
and stronger, Fuchs says.
When it comes to financial software, Fuchs says the right tools along with knowledgeable
people who can extract value from the numbers are essential. “Tools by themselves only
“The CFO at a startup can
help drive everybody on the
staff toward innovation.
He or she can be the chief
agent of change.”

“Finance VP Raymond
Lowe works closely with
the sales teams and the
board of directors to track
sales force effectiveness.”
take you so far. But tools plus people with experience - - this is what enables the finance
team to be proactive, to anticipate change, and to advocate the needed decisions that will
deliver on the dream.”
Raymond Lowe
Vice President of Finance
SciClone Pharmaceuticals, Inc.
The Chinese market for prescription drugs is skyrocketing, largely due to the govern-
ment’s increased emphasis on public health. The pharmaceutical business in China is
growing by 22 percent annually compared to 3 percent in the U.S. and other devel-
oped markets. China is also the third largest market for prescription drugs, and that is
expected to increase over the next seven to eight years. SciClone, a U.S.-based specialty
drug manufacturer, is heavily focused on the Chinese market.
Some 93 percent of SciClone’s revenue comes from China, and
its top seller is the proprietary drug Zadaxin used in treating
hepatitis. Due to its strong market presence in the country, drug
makers such as Baxter International and Pfizer contract with
SciClone to market their products in China as well.
The Chinese government not only approves drugs for sale,
but also sets the prices. Hospitals throughout China who buy
SciClone’s products all pay the same price, and this provides a level of predictability for
SciClone that drug manufacturers in other markets don’t have.
But being so heavily invested in a single product and one primary market has its risks.
That’s why Vice President of Finance Raymond Lowe works closely with the sales teams
and board of directors to track sales force effectiveness.
SciClone does not use rolling budgets. Instead, the company creates an annual budget but
revises it quarterly since its drug distributors in China place their orders in the third month
of every quarter.
“We look at three-month actuals and nine-month forecasts, then six-month actuals and
six-month forecasts,” Lowe says.
However, the forecast did not foretell the loss of business in 2014. Partner Sanofi did
not renew its drug promotion contract with SciClone, according to its 10-K filing with the
Securities and Exchange Commission. And putting a new partner in the pipeline can take up

to nine months, so that’s likely to create a revenue shortfall in 2014.
Still, demand for the Zadaxin drug is growing by 30 percent annually, and the opportunity in
the Chinese pharmaceuticals market is just getting started.
Jonathan Berk
A.P. Giannini Professor of Finance
Stanford University Graduate School of Business
According to Professor Jonathan Berk at the Stanford University Graduate School of Business, the
rise of finance is really the rise of good decision-making. Rather than being a question of keeping
track of money, it’s a matter of focusing people’s attention on the problem that’s most important:
Is the decision that’s being made going to make the company money or not? To him, the rise of
finance is the rise of that kind of formal decision-making.
Berk says that business managers struggle with how to evaluate
whether an idea is good or not, as well as how to put it into prac-
tice on a specific project. Being able to do these things effectively
can provide enormous business value. Corporations that do it
well are successful organizations. Those that don’t are failures.
“To me, this is the real competitive advantage: carefully making
decisions, doing it in a formal way and doing it strategically,” Berk
says. “Companies that come up with new ventures and get business managers enthused
about them need to apply some strategic analysis. You don’t just say, ‘Oh, we love this
opportunity. Let’s do it.’ That’s how bad corporations operate. Good corporations take the
idea and ask important questions. ‘Is it a good idea? Yes. But can we succeed at it? What’s
the probability of making money?’
“When I teach students, we say is this a positive net present value opportunity. I can’t
emphasize enough the importance of having a formal methodology for analyzing every-
thing that drives value to the company.”
These questions aren’t easily answered. Berk says that students will say a question is too
subjective, and they can’t apply a formal analysis to it. Berk, however, says this is abso-
lutely incorrect.
“It may be difficult to formalize the answers to these questions of value, and it may be
difficult to make the decision in a way where you’re not letting your emotions govern the
decision-making process,” he adds. “But you don’t make money by making easy decisions
“The only way you have a
competitive advantage is if
you’re making the difficult
decisions.The fact that
a decision is difficult is
why it’s so valuable.”

because anybody can make an easy decision. The only way to get a competitive advantage
is if you’re making the difficult decisions. The fact that a decision is difficult is why it’s so
valuable.”
He also stresses the importance of having alignment between the people developing new
products and the people overseeing the financial results.
“If people figure out that a new product will not be profitable, someone needs to say, ‘Sorry
we’re not using this product,’ but that can lead to friction between the finance people and
the developers,” he says.

However, Berk asserts that what’s really happening is that the company is being well run.
It’s not wasting time on products that won’t make money. It’s a focused organization,
making the right decision at all levels.
Glen Ceremony
Travelzoo, Inc.
The online travel business is a highly competitive environment with new entrants joining the fray
at an astonishing rate. Online travel companies must constantly expand their offerings and part-
ner with an ever-widening array of travel and leisure providers to keep their customers engaged.
According to Glen Ceremony, Chief Financial Officer for Travelzoo, the job of managing and
accounting for these complex value chains is getting increasingly challenging.
Travelzoo is a 15-year-old Internet media company that pub-
lishes travel-related promotions, with more than 27 million
subscribers in North America, Europe and Asia and revenues of
$160 million. The company’s budgeting is fairly complex because
of the global scope of the business and the different business
models employed by its three major business lines: vacation
packages, vouchers for entertainment venues and search.
Travelzoo works with a wide variety of travel operators to provide enticing promotions to
its millions of members. The job of accounting for revenue-sharing arrangements with
partners and calculating foreign exchange rates with overseas partners further complicates
this process.
Ceremony is working to streamline the budgeting process and automate their forecasting
with a new enterprise resource planning (ERP) system. The job of budgeting has been a
time-consuming and manual process of using Excel spreadsheets, and he is looking for-
ward to the increased efficiency.
“The less you rely on spreadsheets, the fewer inconsistencies you have,” he says. “The need
to deliver accurate and transparent reports to the business heads is essential to establish
trust and win a seat at the strategy-setting table.”
This transition to a new financial platform should leave Ceremony and his team with more
time to focus on strategic growth issues. He updates the forecasts on a weekly basis and
looks at the key business drivers for each quarter, along with historical trends for the sea-
sonal business that peaks around the holidays.
“The less you rely on
spreadsheets, the fewer
inconsistencies you have.”

One of the things he’s tracking fairly regularly is the North American search business
coming from its mobile app users. About a quarter of this region’s business is coming from
mobile, and that’s only expected to increase.
Moving ahead, Ceremony is looking forward to shifting resources away from accounting’s
manual processes and providing deeper and more meaningful insights. The new financial
system will provide business heads with their own dashboards through which they can
access their financial data.
“By doing this, we’re giving our business groups the information they need to be creative
and find new opportunities,” Ceremony adds.

“We broke out Excel and
created some really large
spreadsheets. After a year
of doing that, it began to get
really unmanageable.”
When asked if he plans to implement any cloud-based systems, Ceremony notes that the
human resources department is already on a cloud-based platform and is having great suc-
cess with it, so as his financial application vendors roll out cloud options, he’ll likely move in
that direction as well.
Rick Odom
Senior Manager for Financial Planning and Analysis
Welch Allyn, Inc.
The medical device business, like many industries, has gone from being a relatively stable
business to one that is driven by technology disruptions and global competition.
Welch Allyn, Inc. is a 100-year-old American manufacturer of medical diagnostic devices
and patient monitoring systems. It is a private, family-owned company with over $600 mil-
lion in sales.
The business has come under increasing costs pressures due to low cost competitors.
“The medical device business used to be very predictable,” says
Rick Odom, senior manager for financial planning and analysis.
But now the competition is global in nature. In addition, new
regulations, such as the Affordable Care Act, are expected to
introduce many more patients into the healthcare system. “But
we’re not seeing hospitals and medical practices investing in new
equipment at an accelerated rate,” he says. In fact, doctors and
hospitals often belong to buying groups that are able to negoti-
ate deep discounts based on their purchase volumes.
Welch Allyn has cost and margin pressures commonly found in manufacturing companies,
which are compounded by the need for product innovation and the advent of technology
disruption as well. Devices that were once mechanical now involve electronic circuitry, soft-
ware, sensors and networks.
So the need to align costs with revenues is acute. “We’ve really put a lot of effort into that,”
says Odom. “We pay a lot of attention to forecasting because we need to look forward and
anticipate opportunities and challenges,” Odom says.
Welch Allyn appointed a new chief financial officer in 2010 “who got us into the forecasting
business. ‘Let’s look out 18 months,’ she said. So we required our managers to look beyond
the traditional 12-month horizon and began forecasting sales, margins and expenses by
region. We broke out Excel and created some really large spreadsheets. After a year of
doing that, it began to get really unmanageable. So we looked for a new platform that

“Welch Allyn’s financial
planning and analysis team
work closely with business
groups. Each planner is
assigned to a functional
area such as R&D,
marketing and sales.”
would make it easier to do 18-month rolling forecasts that are updated quarterly.”
The finance group selected a modern, cloud-based tool designed for budgeting and fore-
casting. The platform made it easier for the group to compare forecasts to the actuals.
“We also looked at our forecasting processes to see if we were off due to faulty assump-
tions we made or some outside force that we hadn’t anticipated.”
Welch Allyn has outsourced most of its IT operations to IBM, so it wanted a platform that
the accounting could manage on its own. “Every time we need IT support, we need to pay
IBM. So it was important to find a tool that we could implement and manage on our own.
We’ve been pretty happy with that,” Odom says. Another plus
to the cloud-based application is that any software update that
made by the vendor automatically flow to us. It’s seamless. We
don’t have to stop everything for a software upgrade. There’s no
disruption,” he adds.
As the actuals come in each month, Welch Allyn constantly eval-
uates and updates its forecasts. “We operate on an inter-month
basis now. We keep the forecast for the quarter the same, but
we add the actual financial results into each month in prepara-
tion for the next quarterly forecast,” Odom says.
If there is an unforeseen change in the business or market; or if “we need to put more
emphasis on a certain area of the business, such as product development, we are able to
reallocate resources, reassessing the budgeting needs and allocations,” he adds.
These new forecasting processes and the computing tools lets the finance team and busi-
ness heads refine their roadmap and adjust for new opportunities such as a corporate or
technology acquisition or a change in the market. “Then we can right size either our reve-
nue or expenses to handle that,” Odom says.
Welch Allyn’s financial planning and analysis team work closely with business groups.
Each planner is assigned to a functional area such as R&D, marketing and sales. Our goal
is to ensure they have the information they need to achieve their goals.

Finance is also a key driver of business value and continues to grow in importance within
the company. “We’re the people who have to reach out to our business groups and look
at our spending and see where we can become more efficient, whether it’s spending
on travel expenses or mobile phones or on the revenue side, trying to model the cost of
acquisitions or new products,” Odom adds.
Dave Kellogg
Chief Executive Officer
Host Analytics
ATTRACT AND RETAIN TOP TALENT BY KEEPING IT REAL
Embracing best practices and the latest technologies can keep talented workers engaged
It’s a familiar refrain often heard from CFOs—there’s a war on to find and retain
top finance talent and it’s an ongoing challenge. Talent is an essential element of a
top-performing finance organization. Once a company identifies and recruits finance pro-
fessionals, they need to continue developing their skills beyond budgeting in the areas of
analytics and business expertise. They also need to encourage their finance professionals
to become good business partners.
This means having an overall understanding of the business, its key markets, customers
and the competitive landscape. Finance team members also need to gain an understand-
ing of the functions and key drivers within the various business units. Savvy CFOs will
assign team members to work within or directly with particular business units to gain
a meaningful understanding of how they operate. Through this type of collaboration,
finance pros can win the trust of their business counterparts and provide financial coach-
ing and other advice to make things run smoothly. In addition, many companies rotate
finance pros through different groups to ensure they gain a 360-degree view of the overall
business.
But less forward-looking finance organizations have not yet achieved this level of busi-
ness agility and business engagement. They continue to produce manual budgets and
forecasts. Their focus is annual, top-down, budget-driven and in large part, disconnected
from the business groups they serve. These outmoded practices make the finance groups
and the overall business less effective than they can be.
But top performing finance chiefs are implementing the latest best practices to make the
entire process more iterative and responsive to changing business conditions. They’re
automating the budgeting process and making it continuous and tightly integrated into the
daily and weekly activities of business heads. By simplifying rote budgeting procedures
like the rollup and close procedures, they’re freeing their finance teams to focus on activi-
ties that deliver more meaningful data and insights.

Top finance leaders are also implementing modern cloud-
based systems that automate many of these routine
procedures to both reduce the time it takes to reconcile the
books but also to automate many activities that in the past
were time-consuming and inefficient. In moving to these
new systems, budgeting and forecasting pros have more
time to focus on more challenging tasks that have a direct
correlation to overall business performance.
This includes modeling the key business indicators, helping
business unit heads better understand their cost and reve-
nue drivers. This transformation can also help finance pros
achieve previously unrecognized growth opportunities and
possible problems that can and should be addressed quickly
before serious setbacks occur.
The same can be said for the planning process. If it takes
weeks to bake a plan because finance is collecting and col-
lating spreadsheets, double-checking for errors manually
and then sending these reports to the business groups
for review, a lot of valuable time and resources are being
wasted. It is infinitely more useful to have the finance team
focus on understanding how the business units are going to
effectively execute against this plan and what it will take to
achieve it.
Every month, the books get closed. Every quarter the 10-Q
is produced. Every year a 10-K gets put out. Every quarter,
publically traded companies give Wall Street investors earn-
ings guidance. It’s very calendar-driven, with a lot of cycles
and that’s time that a company cannot recoup.
Many finance organizations hire freshly minted MBAs and
have them spend a couple of years on manual budgeting.
In some organizations, it’s viewed as a rite of passage. But
that’s a big mistake. Companies should take their high-value
resources and have them apply their expertise at high value
work.
ACCOUNTING PROFESSIONALS ARE MAKING A
OUTDATEDB U D G E T I N G P R O C E S S E S
MODERNB U D G E T I N G P R O C E S S E S
ANNUAL
TOP-DOWN
DISCONNECTED
BUDGET-DRIVEN
INFLEXIBLE
CONTINOUS
BOTTOM-UP
INTEGRATED
MODEL-DRIVEN
AGILE
EMBRACED
TO ACHIEVE GREATER BUSINESS INSIGHTS
RADICAL TRANSFORMATION
UNIVERSALLY
DISLIKED

Companies are not going to meet their staffing needs if they hire a talented finance person
who wants to be a business partner and a strategic thinker, and make them spreadsheet
proofreaders.
Modern, cloud-based solutions can help make the job interesting by integrating data from
disparate sources. And then, you can give business managers access to report via dash-
boards and scorecards so you take accounting people out of the job of generating and
distributing reports.
Beyond automating, modern cloud systems help companies react quicker to competition,
unexpected economic downturns and changes in consumer behavior. A plan shouldn’t
be something that’s etched in stone. It should be agile and adjustable in response to the
unexpected. As the German military strategist Helmuth von Moltke said, “No battle plan
survives contact with the enemy.”
Cloud technologies also empower finance to meet their changing needs. In the traditional
IT model, when finance wants to make a change in its business processes or its systems,
it needs to get in line and wait for assistance from the IT department. Our customers tell
us they love the Host Analytics solution because they “own it.” They don’t mean that in a
software licensing sense. They mean that when they want to make changes to the system
and adapt the way it works to keep up with the way their finance department works, they
can do it on their own. They don’t need to wait for support from IT.

The Business Performance Innovation (BPI) Network is a peer-driven thought leadership and
professional networking organization dedicated to advancing the emerging roles of the Chief
Innovation Officer and Innovation Strategist within today’s enterprise. The BPI Network brings
together global executives who are champions of change within their organizations through
ongoing research, authoritative content and peer-to-peer conversations.
We are advocates for Innovation as a fundamental discipline and function within 21st
Century organizations and seek to demonstrate where and how new inventive solutions and
approaches can advance business value, gratify customers, ensure sustainability and create
competitive advantage for companies worldwide.
For more information about Host Analytics, please visit www.bpinetwork.com
Host Analytics is the leader in cloud-based financial applications for planning, close
management, reporting, and analytics. Host Analytics Enterprise Performance Management
(EPM) customers benefit from improved business agility, lower total cost of ownership, faster
time to value, increased security, and a faster pace of innovation compared to traditional
on-premises alternatives. World-class companies like NEC, Burlington Coat Factory, and
Sanmina trust Host Analytics to power their strategic financial processes. Host Analytics is
a fast-growing, private company backed by leading venture capitalists and is headquartered
in Silicon Valley with offices around the globe.
For more information about Host Analytics, please visit www.hostanalytics.com
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White Paper: Predictability Through Planning Agility

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