Data Driven DecisionsJ P K G r o u p 2019 Leading Strategy Forum June 20-21, 2019 • San Diego, CA...

JPK

Gro

up2019 Leading Strategy Forum

June 20-21, 2019 • San Diego, CA

Session: Implementing an Analytics Culture Of Data Driven Decisions

June 21, 1:00 pm

Jesper Sorensen - Finance Analytics InstituteJesper Hybholt Sorensen is a Senior Finance Director. He is formerly from Dupont where he led the global

finance teams for the Biotech Division responsible for Performance Management including being the financial lead and owner of the Forecast, Budget & Strategy Process, Competitive Intelligence Financial owner and Lead

Analyst. Jesper has extensive experience as a Financial Business Partner supporting a large number of Executive Vice Presidents with optimizing financial performance. During his carrier Jesper has also worked in

China and Denmark, has studied in Denmark and Belgium and holds a Master Degree in Economics.

Robert Zwerling - Aurora PredictionsFounder and Managing Director of Aurora Predictions, a software company that provides revenue foresights

planning to ensure companies make their quarterly revenue targets and insights to understand what drives their revenue dynamics. He is also founder and president of Z Concepts, a company that promotes innovation in

technology and civics; and co-founder of US Vigilance (www.usvigilance.com), inspiring responsible citizenship through fact based and reasoned discussion on public policy. He has been a high-tech entrepreneur for 25

years founding and growing software companies in telecommunication, manufacturing & distribution, high data availability, and predictive analytics. His accomplishments include a patent pending business performance

analysis and predicting system, intuitive user interfaces for software business applications, author of numerous papers on predictive analytics for business, and inventor of the concept of discovery software for hyper-

dimensional data analysis. He architected significant exits as co-founder of the ISIS Telecom Group (sold to Computer Science, NYSE: CSC) and CEO of Vision Solutions (sold to a foreign public company)

View presentation online at: https://jpkgroupsummits.com/sandiegols2019-attendee

Password: JPK

© 2018-19 Finance Analytics Institute, Aurora Predictions, LLC, Robert J Zwerling & Jesper H Sorensen. All Rights Reserved.

Implementing an Analytics Culture

Of

Data Driven Decisions

Introduction

Notice

Participants at the Implementing Analytics Academy can rely that information and data disclosed to

them at the Academy is not in breach of a confidentiality/non-disclosure agreement, as such, each

Participant at the Academy warrants that any information shared by a disclosing Participant at the

Academy shall not violate any confidentiality/non-disclosure agreement by the disclosing Participant.

The material in this presentation is proprietary property of the Finance Analytics Institute, Aurora

Predictions, LLC, Robert J Zwerling & Jesper H Sorensen and may not be reproduced or transmitted

without the prior written consent of any one of the authors and the following notice prominently

displayed: © 2017-19 Finance Analytics Institute, Aurora Predictions, LLC, Robert J Zwerling &

Jesper H Sorensen. All rights reserved.

The Implementing Analytics Academy™ and its contents are intellectual property and copyright.

This presentation may contain forward looking statements with no guarantee of being achieved. This

presentation is for information only and Finance Analytics Institute and the authors make no

representation or warranty to the accuracy or completeness of the information herein or fitness or

merchantability of its use of any kind. Trademarks are the property of their respective company.

/ 2 /2018 Copyright Finance Analytics Institute. All Rights Reserved.

/ 3 /

Our mission is to empower the Finance Community to implement

an analytics culture of data driven decisions by promoting the

Analytics Academy™ and empowering knowledge with articles,

research, training, benchmark studies & networking.

Learn more at: www.fainstitute.com

Finance Analytics Institute

2018 Copyright Finance Analytics Institute. All Rights Reserved.

The fusion of finance & analytics

http://www.fainstitute.com/

/ 4 /

Next Generation Finance

Roadmap to an Analytics Culture

Mindset – The Personas of Analytics

Benchmarking – Where You Are & Going

Agenda


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/ 6 /

From Trusted Scorekeeper to Strategic Partner


Evolution of Analytics

Agenda


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Reporting & Compliance

Performance & Decision Making

Commercial Skills

Technical Skills

THE STRATEGIC PARTNER

Strategy & Intelligence

THE CONTROLLER

Control & Governance

TRUSTED SCOREKEEPER

Reporting & Analysis

THE SPECIALIST

Diligence & Processes

Role of Finance



Become a Predictive Powerhouse who use advanced analytics skillset and toolbox to generate insight and foresight for data driven decision

Turn data into actionable insight and Foresight

Compliant and Report according to Accounting Standards

Compliant data

Turn data into information

Reliable data

Provide Accurate & Timely Information and Better Information by Automating, Eliminating and Elevating Financial Reporting and Analysis

Optimize data capturing, financial processes - to deliver consistent and trustworthy data for Financial reporting and analysis

Finance Value Proposition

Strategy & Intelligence


Process & Diligence

Control & Governance

The Trusted Scorekeeper

The Specialist

The Controller

The Strategic Partner

Bu

sin

ess

Val

ue

Trad

itio

nal

Fin

ance

Finance Value Proposition Role of Data Role of Finance

Nex

t G

en.

Fin

ance

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Next Generation

Finance Transformation


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Provide Timely & Accurate Information

Provide Better Information by using Visualization

Provide Deeper Information to influence decision makers

Provide Predictive Information to impact the strategic direction

Next Generation Finance Mission

The Mission of Next Generation Finance


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Achieving Next Generation Finance

FINANCE MATURITY

VA

LUE

CR

EATI

ON

REPORTING• Accurate & Timely

Reporting• Clean & Concise

Communication

ANALYSIS• Understanding Business

Operation• Teamwork &

CollaborationBASICS

INFLUENCE• Business Insight• Risk & Opportunity

Management

IMPACT• Strategic Thinking• Innovating Finance

ACUMEN

INTELLIGENCE

STRATEGY


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Strategy


Transactions2000s

2020s

Journey Starts with Efficiencies – Center of Excellence


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Predictive Analytics

Simulations

Clusters & Correlations

≠Variance Analysis

Cost Controlling

Standard Reporting

EXCEL

TOOLS

Strategic PartnerTOOLS

Trusted Scorekeeper

TOOLS

Journey Starts with Efficiencies – Tools


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Evolution of Analytics


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AN

ALY

TIC

AL

INTE

LLIG

ENC

E

VALUE CREATION

Descriptive Analytics

Diagnostic Analytics

Predictive Analytics

Prescriptive Analytics

What Happened? Why did it happen? How can we make it happen?What might happen?Where did it happen?

2000s 2010s

Standard Reporting Statistics & Correlations Smoothing & Regression Big Data Analytics & Simulations

2020s1990s1980s

Pivot & Visualization

ReportingAnalyzing

Identifying

Predicting

Optimizing

The Evolution of Analytics


Advanced Toolbox

Diverse Skill Set

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Roadmap


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Agenda

Building the Roadmap

Analytics Failure & Success

Application of Advanced Analytics


For Finance to evolve from a trusted score

keeper to strategic partner to the business it

will have to engage analytics to enable a culture

of data driven decisions

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Image freakimgnews.com


Evolution of Finance

What is an Analytics “Culture”

Mindset, People, Processes, &

Systems to make data driven

decisions from quantitative

analysis and predictions

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Mindset

System

People

ProcessWorld

Class


Mindset

Mindset to

Decision

Process

Deliverable Persona

Stage of Next

Generation

Finance

Support Accurate historical reporting Reporter Basics

ContributeAccurate historical reporting delivered

efficiently & with analysisCommentator Acumen

InfluenceDetail behavior of the trend & what’s

driving itAdvisor Intelligence

ImpactDetail behavior of the trend &

prediction of the future of the trendStrategist Strategy

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Mindset

System

People

Process


Reporter

Commentator

Advisor

Strategist

Mindset vs. Persona vs. Analytics Intelligence

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Mindset

System

People

Process

MINDSET

Predict

Analysis

Report

Support

Insight

Reporting timely & accurate

Efficient Reportingwith simple analysis

Reportingwith insights

Reporting with foresight

Contribute Influence Impact

ANALYTICS

INTELLIGENCE


Mindset vs. System

*Note: Enterprise Data Mining tools (e.g. SAS & SPSS) not included as too complex & expensive for Finance control and use.

Python & R are not systems but languages & formula library

Mindset to Decision

ProcessPersona Primary System Example

Support Reporter Excel & BI Hyperion, Cognos

Contribute Commentator Discovery & Visualization (DV) Tableau, Domo

Influence AdvisorDesktop Statistical (DS) or

Discovery, Visualization & Analytics (DVA)

Crystal Ball (DS)

Aurora (DVA)

Impact* Strategist Discovery, Visualization & Analytics Alteryx, Aurora

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Mindset

System

People

Process


EPM are budgeting tools NOT analytics

Demand Planning is a specialized analytics tool

Legacy BI* are reporting NOT analytics; e.g. TM1, BPC

* Note: Microstrategy has some analytics capability

What Is & Is Not an Analytics System

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mindset

system

people

process


Dashboard are Descriptive – Not Predictive

Insightful to trends but

not predictive,

dashboards can lead to

false positive/negative

that can lead to wrong

decisions*

*Seeing the past is insufficient to make decisions about the future

This would have been predicted by DVA

Will this

good

trend

continue?

What

decision

would

you make

if it will?

Or will

not?

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mindset

system

people

process


Reporter

Commentator

Advisor

Strategist

Mindset vs. Persona vs. Analytics Intelligence

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Mindset

System

People

Process

SYSTEMS

MINDSET

Support

Reporting timely & accurate

Efficient Reportingwith simple analysis

Reportingwith insights

Reporting with foresight

Contribute Influence Impact

Excel/BI

Data Visualization Tool

Desktop Statistical Tool

Discovery, Visualization & Analytics Tool

ANALYTICS

INTELLIGENCE

Predict

Analysis

Report

Insight


People & Processes

People: need threshold number of analyst & consumer users –

1 man does not make a culture - “Bobby in the basement”

Processes: written procedures for Data Governance and

Decision Governance to assure institutionalization – with each

supporting the other

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Mindset

System

People

Process


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Definition of Data Governance

Management process of data to assure it’s timely,

complete, accurate & accessible for reporting &

analytics to its intended business purpose

mindset

system

people

process


/ 28 /

Definition of Decision Governance

Management process of decisions to assure

it’s driven by analytics to make better

decisions that improve business performance

mindset

system

people

process


People & Processes – Cornerstones

Alignment of People & Mindset – Excel jockeys will not get past a Reporter

Written Processes are the weak link in culture – do them or the culture will die

How you make decisions are equally as important as the data used to make decisions

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Mindset

System

People

Process


Reporter

Commentator

Advisor

Strategist

SYSTEMS

MINDSET

Support Contribute Influence Impact

Excel / BI

Data Visualization Tools

Desktop Statistical Tools

Discovery, Visualization & Analytics Tools

ANALYTICS

INTELLIGENCE

Predict

Analysis

Report

Insight

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Analytics

Reporting

Sufficient People & Processes

Insufficient People & Processes

Mindset

System

People

ProcessRoadmap to Implementing an Analytics Culture


Examples

Analytics Failure & Success


Failure – Death by Excel – Fortune 500 Telecom Company

Successful analytics pilots with proven 10X-100X ROI

1. Forecast Product Demand – increased to 98.6% vs. 94.1% accuracy over 1 year

equivalent to 35 million units delta

2. Forecast EDA Software Utilization – achieved 90%-99% accuracy over 1 year with

72% of time more accurate than internal forecast

3. Forecast & Allocate Global Disk Utilization – higher accuracy avoided $7 million per

month of excess disk purchasing


Failure – Death by Excel

Image instructables.com

Pilots terminated because staff had Excel “culture”

Excel protects my job from productivity

Excel hides mistakes – just blame the data

Excel makes me indispensable – I’m the MESS


Implementation Failure – Mindset & System Mismatch

Staff

Management

/ 34 /

Mindset

System

People

Process


Failure – Death by Attrition - $1B NASDAQ Retailer

Successful analytics pilot with goals to:

Reduce monthly planning cycle effort by 50% – goal met!

Increase weekly forecast accuracy to an average of 98% – goal met!


Failure – Death by Attrition

1 man in Finance trained as “analyst” user, promoted 2

weeks before roll-out into operations

No written procedures for replacement

No consumers for analytics

Image instructables.com


Implementation Failure – Insufficient People & Processes

/ 37 /

Mindset

System

People

Process


Success – Alignment – $2.5B NYSE Transportation Company

AI increased forecast accuracy at each business unit to

98% over 18 months

Reduce forecast time & level of effort to support quarterly

& rolling 18 month forecast cycles

Correlations find lead economic indicators of demand

Analytics “reward” was 22% higher PE multiple*Image psychologytoday.com


*FA Institute – against a market basket of public companies (excluding tech companies)

Implementation Success – Follow the Roadmap

/ 39 /

Mindset

System

People

Process


Application of Advanced Analytics


Example – Application of Advanced Analytics


Management is pretty good at correcting bad trends but where are they

wasting their time and what other risks are they missing?

Good trends to ignore?

Bad trends to fix?



Good trends

getting better to

increase price

Some bad trends to fix

and others that are

fixed to ignore

Predictions give management a better view as to where to spend their time

to fix problems and take advantage of opportunities



Find the good trends

that can go bad to

close the barn door

before the horse

leaves

There’s at least two times more money to be found in preventing bad

trends before it happens then fixing bad trends after it happens

FAQ

How long does it take to create an analytics environment?

How many people do I need and with what skill sets?

Do I need consultants or IT to buy analytics tools?

What if I don’t have enough or clean data?

What should we budget?


Conclusion

Analytics culture is not hard, long or expensive – just disciplined

Analytics failures occur with no Roadmap or misaligned Roadmap

Analytics is a culture with four components – follow the Roadmap to success

Analytics elevates Finance as a partner with business & delivers measurable returns


/ 46 /

Mindset

mindset

system

people

process


Agenda

Introduction

The Mindset Framework

From Average to World Class

mindset

system

people

process


Crawl

Walk

Run Fly

Strategist

Advisor

Commentator

Reporter

The Finance Visionmindset

system

people

process


Mindset Framework


Mindset Model

TRUSTED SCOREKEEPER STRATEGIC PARTNER

StrategistReporter Commentator Advisor

SUPPORT CONTRIBUTE INFLUENCE IMPACTRE

CO

RD

KE

EP

ING

VA

LU

E C

RE

AT

ION

PREDICTIVE

INFORMATION

DEEPER

INFORMATIONBETTER

INFORMATION

ACCURATE

INFORMATION

Data

mindset

system

people

process


Capability Model

Analysis & Judgment

Communicating with

Impact

Analysis & Judgment

Communicating with

Impact

Business Acumen

Teamwork &

Collaboration

Analysis & Judgment

Communicating with

Impact

Business Acumen

Risk & Opportunity

Management

Teamwork &

Collaboration

Business Insight

Analysis & Judgment

Communicating with

Impact

Business Acumen

Risk & Opportunity

Management

Teamwork &

Collaboration

Business Insight

Innovating Finance

Strategic Leadership

Persona

Next G. Finance Reporter Commentator Advisor Strategist

Acumen

Strategy

Basics

Intelligence

mindset

system

people

process


Assessment Model

Assessment Target

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Excel main analytics tool Timely and accurate reporting

Clean & conciseCommunication

Back Office Mentality

Financial Compliance

Understand FinancialReporting Systems

Efficient Use of Tools

Go

odW

orl

d C

lass

Commentator

Strategist Reporter

Advisor

mindset

system

people

process


From Average to World Class


From Average to World Class Finance mindset

system

people

process

Next Generation

Finance Transformation

The Evolution of Analytics

Mindset Systems

World Class Finance


2000s 2010s

AN

ALY

TIC

AL I

NT

ELLIG

EN

CE

VALUE CREATION

Descriptive

Analytics

Diagnostic

Analytics

Predictive

Analytics

Prescriptive

Analytics

2020s1990s1980s

Reporter

Commentator

Advisor

Strategist

Basics StrategyIntelligenceAcumen

Excel Discovery, Visualization and Analytics ToolsDesktop Statistical ToolsData Visualization

From Average to World Class mindset

system

people

process

What happened? Where did it happen? Why did it happen? What might happen? How can we make it happen?

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Support ImpactInfluenceContribute


Benchmarking Framework

Participants Survey Results

FAI Benchmark Case Study

Agenda


Benchmark Framework

Define Vision, Set Objective & Get Buy-in

Define Baseline &

Gap Analysis

Implement the changes

Evaluate new status


2. Plan - Define Baseline

– Interviews

– Shadowing

– Questioner


2. Plan - Gap Analysis

Traditional Finance Next Generation Finance

• Comparing to other finance functions in the company

• Finance expenses as a percent of company revenue

• Time spending on Data Gathering vs vs Analysis


• Assessment of how much value Finance is generating against Target


2. Plan – Next Generation Finance Gap Analysis

3. Implement Changes

Commentator Advisor Strategist

• Reporting efficiencies

• Better Information

• Data Visualization Tools

• Understand Business Needs

• Do not run unnecessary reports

• What to Where it happened

• Hindsight to Insight

• Deeper Information

• Desktop Statistical Tools

• Business Recommendations

• Influence Decision Making

• Why it happened

• Insight to Foresight

• Predictive Information

• Discover, Visualization and Analytics Tools

• Impact Strategic Direction

• What might happen & How to make it happen


4. Evaluate New Status & Iterate


FAI Benchmark

Case Study



Commentator

Reporter

Advisor

Strategist

A

F

B

C

D

All Participants


COO vs Finance Reporter

Commentator

Advisor

Strategist

A

F

B

C

D


Reporter

Strategist

COO vs President vs CFO

Commentator

Advisor

A

F

B

C

D


Reporter

Strategist

President & CFO vs Target

Commentator

Advisor

A

F

B

C

D

Completive Comparison (President & CFO | Market VP/CFO Benchmark)

Analysis & Judgment

Communicating with

Impact

Business Acumen

Risk & Opportunity

Management

Teamwork &

Collaboration

Business Insight

Innovating Finance

Strategic Leadership

Persona

Capabilities Reporter Commentator Advisor Strategist

Acum

en

Str

ate

gy

Basic

sIn

telli

gence


2.6 | 2.4 2.2 | 2.3

1.6 | 1.5 0.5 | 1.01.4 | 1.8

2.3 | 2.01.8 | 2.21.9 | 2.42.2 | 1.71.2 | 1.50.9 | 0.8

1.2 | 1.60.5 | 0.4

1.9 | 1.92.1 | 1.50.4 | 0.80.3 | 0.71.0 | 1.71.2 | 1.8

1.6 | 1.8

Reporter

Commentator

Advisor

Strategist

SYSTEMS

MINDSET

Support Contribute Influence Impact

Excel

Data Visualization Tools

Desktop Statistical Tools

Discovery, Visualization & Analytics Tools

ANALYTICS

INTELLIGENCE

Predict

Analysis

Report

Insight

Analytics

Reporting

Sufficient People & Processes

Insufficient People & Processes


Your Are Here

Rating on Roadmap to Analytics Culture for Next Generation Finance

Analytics Academy Agenda


Select any of 1 and/or 2 and/or 3 days

Day 1 – The Roadmap

Roadmap to implement an analytics culture

Day 2 – The Tools to Tell the Story

Workshops on using systems & storytelling for data driven

decisions

Day 3 – The Thinking that Yields Insights

How to think systematically to exploit data for insights, AI &

ML basics with applications of advanced analytics

Registration & Information: www.jpkgroupsummits.com

http://www.jpkgroupsummits.com/

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Web: www.fainstitute.com

Email: [email protected]

http://www.fainstitute.com/

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Implementing an Analytics Culture

Of

Data Driven Decisions

© 2017-19 Finance Analytics Institute, Aurora Predictions LLC, Robert J Zwerling & Jesper H Sorensen. All rights reserved.

NONE OF SUCH INFORMATION HEREIN MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE

FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT AURORA PREDICTIONS PRIOR WRITTEN CONSENT.

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not purport to contain all information which may be material to recipients and they should conduct their own independent evaluation and due diligence of Aurora Predictions. Each recipient agrees, and the receipt of

this report serves as an acknowledgment thereof, that if such recipient determines to engage in a transaction with Aurora Predictions, its determination will be based solely on the terms of the definitive agreement

relating to such transaction and on the recipient’s own investigation, analysis and assessment of Aurora Predictions and the transaction. Aurora Predictions makes no representation of the completeness or accuracy of

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Data Driven DecisionsJ P K G r o u p 2019 Leading Strategy Forum June 20-21, 2019 • San Diego, CA...

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Transcript of Data Driven DecisionsJ P K G r o u p 2019 Leading Strategy Forum June 20-21, 2019 • San Diego, CA...