Making Financial Performance Management Real Greg Ferenc Nagy

Making Financial Performance Management Real Greg Ferenc Nagy Solution Specialist IBM Cognos, AT/EE, CIS/Russia

Session Objectives § After this session, you will be able: • To discuss the role of Financial Performance Management in today‘s business environment • To identify the value that Financial Performance Management can bring to the organization • To obtain insights into how to structure a Performance Management program and how to leverage the right Cognos resources

Does this sound familiar? Spreadsheets Failing “there have been well-documented cases of errors and losses resulting from spreadsheet manipulation errors and accidents. ” Source: Gartner, August 2007 Disparate Systems “Average finance organizations operate 11 finance systems per billion dollars of revenue. ” Source: Hackett Group, 2007 Business Risks “ 62 percent of enterprises … encountered a major risk event … 42 % of these enterprises were not well prepared for the event. ” Source: IBM Global CFO Study 2008

The Monthly Maze F A ore cc c ur as ac t y y tor ce ula ian g Re mpl Co tor s ve iny In ut r Sc e at r pa ms s Di ste Sy s et e sh g ad lin e pr fai S IF RS Mo Rep nthly o Pac rting kag e Ma nag Ris ing k

FPM as the GPS y tor ce ula ian g Re mpl Co tor s ve iny In ut r Sc t isk en R em g na Ma e at s ar m p is ste D y s S et e sh ad e pr S F A ore cc c ur as ac t y IF RS Mo Rep nthly o Pac rting kag e Ma nag Ris ing k

Finance Function Makes a Difference Driving Performance “ 68% anticipate serving as the performance management experts for the rest of the company. ” Source: CFO Research, Feb 2008 …Enterprise Rewards “ World-class EPM organizations deliver 2. 4 times the equity market returns of industry-peers companies. ” Source: Hackett Group, 2008 …with Professional Upside “Corporate performance and CFO performance are inextricably linked; CFOs that deliver shareholder value are most likely to achieve the next career step they desire. ” Source: CFO Executive Board, Strategies for Inflecting CFO Performance, 2004

Finance Function Makes a Difference The majority have already started to enjoy practical rewards 68% have started to automate Question: How automated is your company's management of business performance? HIGHLY AUTOMATED 14% PRIMARILY MANUAL 32% PARTIALLY AUTOMATED 54% Source: CFO Research, February 2008

Finance Function Makes a Difference The majority have already started to enjoy practical rewards Highly automated companies report higher levels of satisfaction with their performance management data C-SUITE EXECUTIVES Highly Automated Question: How satisfied are each of these constituencies with the amount, utility, and timeliness of performance management available to them? BOARD/ INVESTORS Partially Automated FINANCE Primarily Manual BUSINESS UNIT/ LINE MANAGERS OTHER STAFF/ EMPLOYEES 0% 10% 20% 30% 40% 50% 60% PERCENTAGE OF RESPONDENTS SAYING “VERY SATISFIED” Source: CFO Research, February 2008 70%

Folksam Insurance Performance Pain § 750 daily users with access to market trends, scenario planning and forecasting, revenue and cost statements, and sales planning; § New insight into operating costs per cost center and product, sales relative to budget, and premiums paid and disbursed insurance sums § 60% of planning time spent collecting and consolidating from SAP R/3 and other sources § 40% of planning time spent using information for planning Cognos Impact § Reduced time spent collecting and consolidating data to 15% § 85% of effort spent on productive, future-oriented work Nucleus Research www. nucleusresearch. com

Performance Management Roadmap AUTOMATION TRANSFORMATION Performance Management Processes • • Enterprise Planning Financial Consolidation and Corporate Reporting Financial Analytics, Reporting, and Profitability Management Scorecarding and Strategy Management

Address Initial Needs Move Beyond Spreadsheets People § Free up experts § Engage casual users Cognos Advantages Process § Structures and automates all key financial PM processes § Eliminate re-keying § Enable process visibility § Delivers systems “driven” by finance Technology § Leverage familiar user interfaces (Excel, Web) § Implement workflow

Drive Best Practices People § Redeploy experts § Rethink user communities Process § Rethink the horizons § Drive Faster cycles Technology § Leverage common data architecture § Model non-financial measures and metrics Cognos Advantages § Offers flexible systems that support best practices § Provides know-how and resources to support transformation

Drive Best Practices RESEARCH, CASE STUDIES, ARTICLES David Axson President, The Sonax Group Jeremy Hope, BBRT ASSETS, RESOURCES, EVENTS Innovation Roundtables Member Communities Best Practices Performance Blueprints Wilfried Lux, FH Sankt Gallen Steve Lukens Global Leader, Financial Management, IBM MEMBERS AND PEER NETWORK / COMMUNITY

Drive Best Practices Blueprints § Pre-defined data, process and policy model § Reflecting Best Practices § Integrated and aligned § Enables rapid time-to-value § Tried, Tested, Validated § Flexible, open, smart

Drive Best Practices Project Accelerator Smart Guide & Head Start Tangible Best Practices Benchmarks

Drive Best Practices PERFORMANCE BLUEPRINTS BY FUNCTION Best-practice blueprints use planning, analytics, consolidation and BI capabilities to address recurring financial and operational planning and management processes § NEW! Strategic Finance § Expense Planning & Control § Management and Financial Reporting (MFR) § Revenue Planning & Forecasting § Close, Consolidate, Report (CCR) § Workforce Planning § Capital & Initiative Planning § NEW! Group Consolidation and Corporate Reporting (GCCR) §… §…

Extend Enterprise-Wide Financial Management Beyond Finance Updated P&L Adjusted Budget Cognos Advantages Inventory Management Customer Profitability Revenue Management Expense Management New significant customer Capital Expenditures New Headcount Long Term Asset Management § Easily models and links operational plans, analytics, and metrics § Supports rapid prototyping § Provides know-how and resources to support transformation

Extend Enterprise-Wide Top Planning Areas From A Survey of 75 Cognos Customers Financial Statements Expense Planning Capital & Initiative Finance 33% Beyond Finance 67% Human Resources Sales Planning Prod. & Distrib. Marketing Other

Extend Enterprise-Wide PERFORMANCE BLUEPRINTS BY INDUSTRY Best-practice blueprints that leverage PM capabilities by design to address industry-specific performance management processes linked to competitive advantage Financial Services § Branch Performance § Retail Banking Customer Segment Performance § Corporate Banking Customer Segment Performance § Product Performance for Insurance § Risk-Adjusted Profitability for Banking (IBM) Life Sciences § Clinical Trial Planning § Sample Optimization Manufacturing § Sales & Operations Planning § Trade Promotion Management § S&OP Executive Review Retail § Store Operations (P&L) § Store Development § Merchandise Planning Government § Program Objectives Mgt

Advancing Performance Management Drive Performance People § Lead culture change § Develop competency Process § Improve process linkages Technology § Span enterprise systems; reconcile “differences” Cognos Advantages § Provides all PM capabilities § Leverage all PM data sources § Supports development of competency centers

Performance Management System Requirements TRANSFORMATION AUTOMATION Performance Management Requirements • • Structure and Automate Core Processes Drive and Sustain Best Practices Report, Analyze, Model, Plan, and Score Enterprise-wide Performance Span all systems and connect management decision-making

Wrap Up and Next Steps Get Started § The Performance Manager Book § Innovation Center for Performance Management • Hackett • David Norton • David Axson • Brett Knowles • Deloitte • Jeremy Hope • Larry Maisel • Accenture • IBM § Cognos Discovery and Validation Workshop

Why Cognos? § Leader in Performance Management • Focus and expertise • Independent system • Customer success § Global Innovation Center for Performance Management § Functional and Industry Performance Blueprints § Global Services, Support, and Partner Network § Global reach and resources of IBM