Business PerformanceManagementin Technology

Real World Technology

Stories

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It goes without saying that business performance has become critical to today’s public and

private organizations. Corporate scandals from many years ago created a level of skepti-

cism that has left shareholders and the government eyeing every financial and operational

move a company makes. It is no longer sufficient for a company to simply comply with

today’s standards - investors and shareholders are demanding that corporate executives

find new and innovative ways to improve their operational and financial performance.

Relieving the PressureSo what are companies doing about these new demands? Many are turning to Business

Performance Management software to achieve improved growth and profitability more

quickly, while others are apprehensive about what the software can actually do for them.

The believers have taken a leap of faith and are investing in portions of Business

Performance Management software such as Web-based budgeting and planning to help

bridge the gap between long-term strategic plans, and shorter-term budgets. Others have

started with corporate scorecards to uncover, measure, and monitor their key perform-

ance indicators to create a more performance-accountable organization. Then there are

those who wish to delve into the sea of analysis to uncover the key drivers for growth and

profitability. Those companies are taking advantage of business intelligence tools that tap

into previously-hidden data in transaction systems such as ERP and CRM. The starting

point is unique to each organization, but many companies start with the area of the busi-

ness that will move the organization closer to its strategic performance objectives.

Business Performance Management—Just a Buzz Word?Business Performance Management has been around in different forms since the begin-

ning of time. Historically, it was much clearer how an asset created value—e.g. how a

piece of machinery contributed to producing a specific kind of product, at a specific cost,

which was sold for a predefined price. Today things are much more complex—it is more

difficult to establish that link when it comes to intangible assets. Today, there is no direct,

one-to-one relationship between an asset, an intangible asset, like the knowledge of a

worker, and a financial outcome. Today’s environment is more dynamic, and Business

Performance Management plays a critical role in helping companies make sense of their

operational and financial performance in a very complex environment.

Forward

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From Unstable to Steady—The Aftermath In the wake of the dot com boom, the financial and operational performance of technolo-

gy companies is under the microscope. It is no longer sufficient to have a good idea and

go public on that idea. Investors are scrutinizing every new idea that walks through their

doors for viability and long-term steady growth potential. For existing technology compa-

nies, shareholders are demanding better corporate governance and steady profitable

growth. So how are companies competing and excelling? Many are turning to Business

Performance Management software to help them better budget and strategically plan,

accurately forecast, and monitor their key performance indicators. Specifically, technology

companies are challenged with:

n Reducing operating expenses without sacrificing customer service or research and development

n Efficiently using human capital and planning workforce needs

n Modeling different business scenarios which may include new pricing structures,outsourcing options, new product development and acquisitions or mergers

n Determining and monitoring key performance indicators such as growth of a specific product line or in a specific geography, workforce retention, or increasingrevenue and earnings per share by x amount

n Creating accurate forecasts based on meaningful information

To gain and maintain a competitive advantage, technology companies are turning to

Business Performance Management software.

Reducing Operating Expenses A Web-based budgeting and planning system is a powerful tool which provides finance

and operations personnel with unprecedented insight into expenses vs. actuals, budgets

against forecasts, and other information to support the creation of a long-term, corporate

plan. As the door to the budget process opens for more and more individuals within

technology companies, it is important to have a single, centralized repository for budget

information. It is no longer sufficient to consolidate hundreds of spreadsheets from multi-

ple departments. Giving more people access to the budgeting process in a centralized

repository gives finance and operations the ability to see detailed budget information and

adjust accordingly to improve performance numbers.

Introduction

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Monitoring Key Performance IndicatorsWhen the company’s goals and objectives are clearly articulated to employees, and their

strategies and tactics are monitored against the corporate objectives, you are on the

road to improving your performance. If your key performance indicators are to increase

marketshare by 10%, the employees in each department should have supporting per-

formance goals that they are tracking regularly. If your goals include reducing customer

service costs, having a clear understanding of each of the costs associated with cus-

tomer service allows you to determine where positive changes can be made. You may

employ a scorecard on each customer service representatives desktop in which they are

held accountable for meeting specific levels of customer service while reducing costs.

Marketing professionals may have a scorecard that tracks how well their campaigns

are performing and whether sales forecasts are being met. Host Scorecard enables

executives to clearly articulate key performance indicators and monitor each employees

progress toward those goals.

Accurate Forecasting As you know, stated revenue projections are key for today’s technology companies. If

you project a certain number in license revenue or product sales for a given quarter, you

better meet that number. Shareholders want to see that you can do what you say. Host

Forecaster gives you the ability to more accurately forecast based on budget information

from Host Budget. This in turn provides you with the mechanism to improve your corpo-

rate governance and more accurately state your projected earnings to Wall Street.

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Workforce Management and PlanningAs departments from within a technology company request additional personnel to

research and develop new products, market those products and support the entire organ-

ization, it becomes critical to clearly understand how each new hire or existing employee

contributes to revenue or adds to the cost of sales. With a Web-based budgeting and

planning application, HR departments can more effectively manage and plan for future

growth, or understand how downsizing will impact the business. Finance departments are

able to ensure their hiring plans reflect the resource requirements of their projects, and

that the budgeted costs for those resources are accurately reflected in both plans. Host

Budget contains both detailed workforce planning and project budgeting capabilities

using standard costs and actual costs from an HR plan. The “to be hired” headcount

requirements from a project plan can seamlessly integrate with the HR plan. Many budget

environments plan projects and their required resources as a separate and disjointed

function from their human resource planning. This leads to disjointed budgets. Host

Analytics enables HR departments to better forecast future staffing needs, create “what

if” scenarios for executive management and drive position requirements and “To Be

Hired” positions based on revenue drivers, budgeted service levels or volumes. The end

result is that HR has the opportunity to play a more important role in improving business

performance. As technology companies work to improve their overall business and corpo-

rate performance, the budgeting process continues to play a critical role.

Modeling Different Business ScenariosBusiness Performance Management software plays a critical role in improving business

performance by allowing users to model different business scenarios. Whether you are

focused on mergers and acquisitions, or implementing a new pricing structure, Host

Budget allows you to model “what if” scenarios and clearly understand the impact of your

business decisions. For example, if you are interested in increasing revenues with pricing

changes, Host Budget enables you to model different pricing structures to determine the

best scenario—what the market will bear in terms of higher prices and if customer serv-

ice levels need to improve to support the higher costs. If you are considering a merger or

acquisition, you can plug in revenue, expenses and workforce costs from the company

you wish to acquire, and determine the best purchase price for the company and their

products/services.

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SigmaTelSummaryAs one of the fastest growing companies in the semiconductor space, SigmaTel’s goal

was to create a streamlined, global budgeting, planning and consolidation model. Host

Analytics has improved the top-down and bottoms-up budgeting and planning process,

eased global financial consolidations, and provided employees with visibility to their

performance against strategic corporate goals. Prior to Host Budget, SigmaTel pieced

together hundreds of independent spreadsheets for budgeting and forecasting.

Consolidating spreadsheets was cumbersome and compromised the integrity of the

process. Forecasts were created based on high-level summary data with no drill down

capabilities. The company required a Web-based solution that mimicked Excel for ease

of adoption, accommodated multiple planning scenarios, closed loop planning, rolling

forecasts, multi-dimensional reporting capabilities, integrated workforce planning, and

ability to support multiple currencies.

About SigmaTel, Inc. Founded in 1993, SigmaTel (NASDAQ: SGTL) designs, develops, and markets analog

intensive, mixed-signal semiconductor solutions for a wide range of digital multimedia

products in the consumer electronics and computing markets. The $325 million dollar

company saw growth in upwards of 67% in 2005.

Outcome Host Budget provides SigmaTel with a Web-based, Excel user interface, where managers

of profit and cost centers can view their budgets, route proposed changes to upper

management, and view actual-to-budget variances in real-time. The company now has

a quarterly budgeting process where managers have full accountability and control with

an audit log generated each step of the way. Prior to implementing Host Consolidator,

multi-dimensional and ad-hoc reporting was cumbersome for SigmaTel. The company

now uses Host Consolidator for inter-company eliminations and routine allocations which

will free valuable resources from keying information into the general ledger system.

Real World Scenario

Host Analytics, Inc.

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E-mail: info@hostanalytics.com

Additional Resources

Events: www.hostanalytics.com/events.html

White Papers: www.hostanalytics.com/resources.html#wpapers

If you are ready to change the way you budget, plan,forecast and monitor your performance, contact us atHost Analytics at Toll Free: 866-853-HOST (4678) or E-mail: info@hostanalytics.com

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ConclusionMany companies have asked why they should look at new software and process today.

We answer with a question—can you afford to wait? Aren’t you ready to improve your

business performance today? Your shareholders are demanding it and Host Analytics

offers the most cost-effective path.

One of the key values that no other Business Performance Management Software vendor

can offer is the option to have your solution hosted (software as a service or SaaS),

meaning there is little disruption to your business and IT resources. Host Analytics has a

unique implementation methodology to get an organization up and running quickly. With

the hosted model, if the software doesn’t work, the customer doesn’t pay. It’s that simple.

Lastly, the solution is cost-effective—it is 1/5 that of the other vendors offering the same

robust solutions.