Financial and operational Performance Management

© 2014 IBM Corporation 1

Performance Management Financial and Operational Performance Management

Click to edit Master title stylePerformance Management Financial and Operational Performance Management

© 2014 IBM Corporation

Financial and Operational Performance ManagementCreating the future-ready enterpriseEnabling better decisions to drive better outcomes with performance management



What I’ve heard

• Organizations need a performance management solution that provides a line of sight to improve outcomes.

Data collection

New business modeling

Profitability and pricing

Performance scorecarding

Error checking

Decrease effort Increase focus

Process monitoring

Increase in value from analytic initiatives



Banking and insurance

Government and

educationRetail

Consumer packaged

goodsIndustrial Life sciences

North- western Mutual

U.S. Department

of Agriculture

Patagonia Estee Lauder Daimler NA Truck Pfizer

StateFarm

North Carolina General

Assembly

Elie Tahari Nike Becker Underwood Merck

National Commercial

Boston University Best Buy Del Monte

FoodsDenver Water Novartis

AON U.S. Navy Mueller PepsiCo Jabil Circuit Abbott

Thousands of clients in dozens of industries are using IBM for their financial and operational performance management platform

Read about IBM client successes at ibm.com.



Survey says enterprises want to do better in five key areas

Integrate information across the enterprise

Optimize planning, budgeting and

forecasting

Develop talent in the finance function

Provide input into enterprise strategy

82%

87%

87%

92%

91%

24%

41%

45%

55%

57%

Measure and monitor business performance

Importance of activity Effectiveness of function

58-point gap

46-point gap

42-point gap

37-point gap

34-point gap

The latest IBM study aims to identifydrivers of outperformance

4,183 interviews in

70 countries

6 roles:

CEO, CFO, chief HR officer, CIO, chief

marketing officer, chief supply chain officer

SOURCE: IBM, The Customer Activated Enterprise: Insights from the Global C-Suite Study, October 2013.



IBM is helping clients weave business modeling and predictive intelligence into cross-enterprise performance management processes

Manufacturing

Sales

Marketing

Finance

Logistics

Technology and productdevelopment

HR

Creating a future-ready enterprise

The flexibility of IBM [Cognos® TM1® software] for all these different applications and the ability to view data in different layers and at different resolutions really make it an ideal solution, not only for our office of finance, but increasingly for users in other areas of the business.

—Laura Smith, director of corporate finance analysis and support, BBVA Compass

“ ”



Three imperatives for improving performance management outcomes

Transform the system of

engagement

Integrate finance and operations

performance management

Infuse scenario and

predictive intelligence

The IBM point of view

Creating a future-ready enterprise



1/22/2014IBM Confidential


engagement



Infuse scenario and predictive

intelligence

Financial and operational performance management

Guided business processes, mobile, collaboration

Profitability modeling and optimization

Scorecarding and strategy management

Planning, budgeting and forecasting

Management and performance reporting

Predictive intelligence and scenario analytics



IBM is a world-class ally for this journeyVa

lue

Maturity

Today’s challenge

Realize performance potential

Drive analytic innovation

Forecasting success

Elevate with predictive

Better outcomes

Analytic agility

• Spreadsheets for reporting and analysis

• Enterprise resource planning budgeting

• Isolated applications

• Disparate data

• Financial and operational performance management

• Rolling forecasts

• Key performance indicators (KPIs) and scorecards

• Statistical algorithms to improve information under uncertainty

• Predictive intelligence

• Driver-based planning and forecasting

• Near-real-time analysis

• Scenario analytics

• Narrative reporting

• Dashboards and management reports

Span the enterprise

First steps

Status quo Integrate and accelerate

Automate and model

• New analytic modeling and enhancement

• Product and customer profitability analysis

• Continual alignment of resources with opportunity



1

• Link operational models and plans with financial forecasts

• Monitor strategy execution to more quickly identify performance gaps

• Assemble performance reports more quickly to drive understanding

2

Why IBM is different

Transform the system of engagement

3 Infuse scenario and predictive intelligence

Integrate finance and operations performance

management

• Leverage available data to drive predictive intelligence into forecasts and profitability models

• Enable more rapid simulation and scenario analytics across the enterprise

• Drive participation and greater frequency in performance management processes

• Support continual, dynamic collaboration with social and mobile advances

• Guide business process engagement with task lists to help reduce alert overload



• User experiences support a variety of user needs across the web, desktop and spreadsheet.

• Drive participation and greater frequency in performance management processes

• Guide business process engagement with task lists to help reduce alert overload

• Blend social collaboration and guided business processes with mobile devices into a collaborative performance management process evolution

Help ensure tailored user experiences and keep people in the loop, even when on the go

Finance Executives Managers Line of business IT

Transform the system of engagement


engagement



Support a wide variety of user needs to encourage high participation

• Web

• Mobile

• Desktop—connected and pack and go

• Microsoft Office integration



Support continual, dynamic collaboration with social and mobile advances—virtually anytime, anywhere

Guided business processes Personalized task lists highlight priorities and walk users through processes step by step to highlight important, time-sensitive tasks and help improve efficiency

Focus on collaborationAct upon insights by more easily collaborating and sharing data analysis with almost anyone, almost anywhere to build consensus around business decisions

Mobile enabled, cloud deployable Activity streams alert you to changes and collaborative insights as they occur across the enterprise; prioritized tasks can be acted upon sooner

http://www.youtube.com/watch?v=FqORBjtaRtY



IBM redefines the workspace for task-based navigation, activities, collaboration and metrics



Integrating financial and operational planning is the bedrock of performance management excellence

IBM advantage• Financial and operational

planning in a single application

• Dynamic, near-real- time forecasting

• Ability to capture forecast data from virtually the entire organization at required levels

• Integrated reports, dashboards and scorecards

Manufacturing

Sales

Marketing

Finance

Logistics

Productdevelopment

HR

Analyze and

enhance

Plan, forecast

and control

Collect and aggregate





Integrate finance and operations performance management

SalesMarketing FinanceOperations HR

• Campaign scorecards

• Promotion plans• Customer and

product profitability

• Revenue plans

• Sales dashboards

• Sales forecasts • Incentive

compensation• Quota plans• Territories • Sales channels

• Enterprise scorecards

• Strategic financial plans

• Profit and loss• Balance sheets• Cash flow

• Workforce KPIs• Headcount

plans • Salary and

compensation • Staffing plans• Training and

development

• Operational KPIs• Strategy and

operations plans• Capacity and

inventory plans• Product

allocation• New products

Planning, analysis, forecasting and scorecarding in one platform to span finance and operations

Strategy and activity driver-aligned organization



Manufacturing

Sales

Marketing

Finance

Logistics

Productdevelopment

HR

Scorecarding and strategy management

Monitor strategy execution to quickly recognize performance gaps

Integrated scorecards highlight KPI and metric variances

•Communication of strategy and vision to support success

•Visual classification of the results, outcomes and impacts

•Ability to tie strategic plans to forecasting data

Forecasting and

corrective actions

Performance reporting



Rapidly assemble management and performance reports to drive understanding

• Daily, weekly, monthly and quarterly board books and presentations

• C-suite and board packages• Performance reporting

• Save potentially hundreds of hours per year

• Reduce errors • Accelerate understanding

Narrative reporting

Workflow and approvals

Business rules Security



ANCAP refines its approach to operational analytics

96 percentreduction in time required to complete budget consolidation processes

Practically instantgeneration of reports that previously took 10 days to produce

Increasedoperational visibility with access to near-real-time information Business challenge: How can a leading energy company manage almost

every aspect of its business—from refining and logistics through sales and marketing—when time-consuming reporting processes prevent it from gaining a centralized view of its operations?

Analytics journey: Working with IBM Business Partner Quanam, ANCAP deployed a suite of IBM business analytics solutions to help streamline operations by providing a unified, near-real-time view of the business.

“The IBM Cognos solution we implemented was a total success, in every area of the company up to top management levels, and we are absolutely satisfied with the technical support and business insight delivered by both IBM and Quanam.”—Sergio Pi, CIO, ANCAP



• A patented 64-bit, read-write, in-memory, online analytical processing (OLAP) engine provides analysis beyond the financial planning process to:– Profitability modeling– Detailed customer analysis– Marketing campaign analysis– Sales forecasting– Headcount analysis– Almost anywhere there are large

amounts of disparate data• Supports multidimensional analysis • Advanced sorting and ranking• Familiar Microsoft Excel and web

interfaces

Scenario analytics

Infuse scenario and

predictive intelligence



Profitability modeling

• Modeling and quantifying the business

• Scaling the analytics to include small subsets of the business to the entire organization

• Providing an interactive user experience to manage data and scenarios

• Enabling scope to cover almost all operational and financial aspects of the business

• Direct integration to predictive intelligence modeling for statistical impact IBM offers best-in-class predictive and

big data analytics

Likelihood of churn

Credit worthinessFuture lifetime value

Consumer data

Transaction history

Social media history

Transaction history

Profitability analysis on retention,

performance and patterns



McCormick protects profit with detailed understanding of customer value and uncertain prices

Challenge

• Significantly reduce the profit at risk because of volatile commodity input prices

• Solution

• Collect and analyze sales plan data by customer and across more than 30,000 SKUs

• Evaluate the resulting profit contribution of product input in the bill of material

• Results

• Diagnosed profit improvement moves ahead of time; commodity price increases can be passed on to consumers or renegotiated with industrial customers

• Conducted value engineering with operations to reformulate flavors using commodities from different regions and suppliers

• IBM Cognos software helped McCormick record USD56 million in cost savings from its comprehensive and continual improvement program

McCormick is a global leader in flavor. With more than USD4 billion in annual sales, the company manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the entire food industry—retail outlets, food manufacturers and food service businesses in more than 110 countries.

Challenge

Solution

Results



What is predictive analytics?

Predictive analytics helps connect data to effective action by drawing reliable conclusions about current conditions and future events.

—Gareth Herschel, research director, Gartner Group

I do not know what I may appear to the world, but to myself I seem to have been only like a boy playing on the sea-shore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me.

—Sir Isaac Newton



Predictive analytics enables organizations to better understand their data, surfacing insights that drive better results

• Interactive interface designed to be easy to use, without the need for programming and with an automated exchange with the performance solution

• Automated modeling and data preparation capabilities

• Data is fed directly from and to an IBM Cognos TM1 system

• Enables the discovery of key insights, patterns and trends in data that can be used to enhance business decisions



Mueller, Inc. uses advanced business analytics to transform its business model, becoming an information-driven enterprise

Business challenge: A shift in business strategy from manufacturing to retail drove a comprehensive cultural transformation within U.S. manufacturer Mueller Inc. The company needed to analyze its business processes and performance to assess how well employees were adapting to its new business strategy.

The smarter solution: Mueller implemented business analytics technology that enables company employees to view and analyze company data in near- real time, empowering workers to measure individual performance and assess how their work affects the bottom line.

“We can show sales teams exactly how they are contributing to the business and explain what they need to do to improve their metrics...a much more effective way of driving the changes in behavior that are vital for business transformation.”—Mark Lack, manager of strategy analytics and business intelligence

20–30% reductionin scrap metal manufacturing waste

20% return on assetsresulting from rapid identification and tracking of business process improvements

113% return on investmentthrough use of business analytics



Let’s get started achieving better business outcomes with proven approaches to collaborative problem solving

Business value assessment

Align business capabilities with business strategy, and recommend a road map for improved value.

Solution workshop

Lay out the path ahead, from immediate improvements to a common future vision.

Proof of concept

Prove the path forward, starting small and scaling up.

1Visioning workshop

Whether via web seminar, at your facility or in an IBM solution center, we can begin charting a course.

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3

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Thank you.



Trademarks and notes

© IBM Corporation 2014

• IBM, the IBM logo, ibm.com, and Cognos are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with the appropriate symbol, these symbols indicate US registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml.

• Microsoft is a trademark of Microsoft Corporation in the United States, other countries, or both. • Other company, product, and service names may be trademarks or service marks of others.• References in this publication to IBM products or services do not imply that IBM intends to make them available in all

countries in which IBM operates.

http://www.ibm.com/legal/copytrade.shtml



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