Simplifying Financial Performance Management Systems
Transcript of Simplifying Financial Performance Management Systems
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Simplifying Financial Performance Management Systems
Geoff Noble 9th September 2014 at 4:45pm Auckland
Prepared by CFO Group for Chartered Accountants Australia and New Zealand members
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Agenda
1. What is Financial Performance Management? – Why we think it’s important to you as Chartered Accountants
2. Performing a self-assessment health check – Effectiveness and efficiency scores
– Solution roadmap and business case
3. Implementing a solution – Critical success factors
– How-to guide for projects
4. Summary and Q&A
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1. What is Financial Performance Management?
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Financial Performance Management (FPM)
§ Planning
§ Budgeting
§ Forecasting
§ Closing
§ Consolidation
§ Management Reporting
§ Statutory Reporting
§ Regulatory Reporting
§ Scenario Modeling
Corporate / Group
Operations / Divisions
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We often find these processes supported by: • Multiple systems requiring data transfers and reconciliation • Manual intervention and adjustment • Big Excel spreadsheets with Macros that sometimes fail • Key person dependencies when failure occurs • Excel and Word for disclosures • Lots of scaling, rounding and manual balancing • PowerPoint for presentations • Lots of copy / paste • Lots of checking and re-checking
But the complexity in these multi-step fragile processes is often “unseen”, with bottlenecks and failure points costing an enormous amount of time and effort.
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Great potential opportunity by simplifying FPM
Add more value
Free up time
Reduce costs
Reduce effort
Streamline processes
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We think FPM is particularly important for Chartered Accountants
CFOs are telling us: - Want Finance to become business partner / advisor / catalyst / strategist
- make time available for analysing information - proactively bring opportunities to the business
- Need to reduce the cost of Finance - streamline processes - off-shore the mundane - beat the top performer benchmarks for finance costs % revenue
- Improve quality and timeliness of performance information - Deliver the right information to the right people at the right time
… automating and simplifying FPM supports all the above and Chartered Accountants Australia and New Zealand members have the right qualifications to make this happen
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2. Performing a self-assessment health check
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If you don’t do this, a terrible thing will happen
NOTHING!
“I get all the information I ask for”
“They don’t realise I was up to 2am preparing that forecast” “But it’s OK, we get by”
“Finance seems very responsive”
“With all the copying and pasting, checking and re-checking, every iteration of the budget nearly kills us and
there is absolutely no time for analysis.” “But it’s OK, we get by. We have to.”
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How to self-assess your FPM processes
• Interview the key stakeholders of each FPM process – Recipients of the output – Contributors in the process
• Assess current situation by scoring processes out of 10 for: – Content effectiveness
• Relevance • Accuracy • Timeliness • Alignment (e.g. Budget to Strategic Plan)
– Process efficiency • Time (benchmarks are available) • Effort • Cost • Satisfaction
• Rank the processes in order of importance to fix
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FPM Scorecard ! Effectiveness!of!output!(0010)! Efficiency!of!process!(0010)! Importance!
FPM!Process! Relevant! Accurate! Timely! Aligned! Time! Effort! Cost! Satisfaction! Priority!Strategic!Planning!
! ! ! ! ! ! ! ! !
Budgeting! ! ! ! ! ! ! ! ! !Forecasting! ! ! ! ! ! ! ! ! !Closing! ! ! ! ! ! ! ! ! !Financial!Consolidation!
! ! ! ! ! ! ! ! !
Management!Reporting!
! ! ! ! ! ! ! ! !
Statutory!Reporting!
! ! ! ! ! ! ! ! !
Regulatory!Reporting!
! ! ! ! ! ! ! ! !
External!Reporting!
! ! ! ! ! ! ! ! !
Board!Reporting!
! ! ! ! ! ! ! ! !
Scenario!Modeling!
! ! ! ! ! ! ! ! !
Operational!Planning!
! ! ! ! ! ! ! ! !
Operational!Reporting!
! ! ! ! ! ! ! ! !
!
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What is required to score a 10?
• For each process, identify what could be done to get a 10: – Identify the existing reports, usage and the issues with them – Outline what new reports are required and rationalise existing – Map out the steps of the existing process identifying bottlenecks
• Look for copy / paste to Excel, Word and PowerPoint • Look for manual intervention and manual adjustment • Look for failure points and duplication of effort
– Design a new streamlined and ideal process in outline – Estimate the future effort and therefore savings
• Document a FPM roadmap – Quick wins: that can be implemented now within existing “business as
usual” budget or other available budget for this financial year – High priority: Next financial year priorities and budget required – Future: Roll-outs in future years based on priority
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Create a compelling Business Case for the implementation of FPM
• Quantify the hard $ benefits of getting a score of 10 – Effort savings (FTE) – Cost savings ($ calculated from the effort savings in FTE)
• Note the opportunity to re-deploy staff to value-adding activities
• Quantify the soft benefits of getting a score of 10 – Better quality plans, budgets, forecasts, actuals
• More iterations of plans, budgets, and forecasts • Relevant, accurate, timely, consistent information
– Less risk of reporting the wrong numbers – Higher staff satisfaction
• Quantify the costs and return on investment – FPM software fees and hardware costs or SaaS costs – Training and implementation services – Demonstrate return on investment is good based only on cost savings
Add more value
Free up time
Reduce costs
Reduce effort
Streamline processes
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3. Implementing a solution
Outcome: Know what we have found the critical success factors to be and how best to approach the project
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Critical Success Factors for a FPM project
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Critical Success Factors
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Financial Performance Management software
• The software industry calls it xPM
FPM
CPM
BPM
PM
EPM
Large software vendors
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Most software vendors have bought multiple products for FPM
Disclosure Management tools
Planning tools Consolidation tools
Strategy Management tools
Analytical tools
Closing tools
Forecasting tools
Data Integration tools
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Pitfalls using multiple products
• Multiple specialists
• Too many cooks
• Cost é
• Time é
• Complexity é
• Value ê
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Use a single software product not many
Planning
Budgeting
Forecasting
Closing
Consolidation
Management Reporting
Statutory Reporting
Regulatory Reporting
Scenario Modeling
Group / Corporate
Operations / Divisions
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Critical Success Factors
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Typical approach to projects
• The traditional project team: – Project manager
– Business analysts
– Technical specialists
• This approach falters when: X The project manager is generic and not experienced in financial
performance management and can’t allocate the required tasks
X The business analysts are generic and do not understand FPM or consider the natural built-in financial intelligence and capabilities of the software
X Technical specialists build the system based on documented requirements, leading to poor use of software, protracted development and customisation
It doesn’t have to be this complicated…
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It is easy with a qualified Solution Designer Central and key project role. They define and design the solution.
Their qualifications include: – Understand finance and management accounting – Understand financial systems – Strong analytical and problem solving skills – Can communicate in a visible, logical and persuasive way – Can see the big picture and also have an attention to the detail – Interested in software and how to get the best from it – Collaborative work style
Chartered Accountants are ideal to take on this role…
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Critical Success Factors
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Business logic and financial rules
4. Data Model: 5. Processes: 6. Data Sources: 3. Outputs: 2.Goals:
1. Vision: Deliver a unified system for financial performance management across the organisation providing an single accessible source for all financial performance information
• Less effort and pain to produce the information
• More relevant information
• More accurate and consistent information
• Transparent rules and assumptions
• More timely delivery of information
• Less costs to own, maintain, run and use
• Flexible platform to meet future needs
Statutory Reports
Management Reports
Scenarios and Analyses
Ad Hoc and other outputs
Dimensions: • Periods • Scenarios • Categories • Currencies • Accounts • Entities • Products • Customers • Other
Operational systems
Manual Input
Financial systems / GL
Other sources
Plans
Management Actuals
Scenario Modeling
Plans, Budgets and Forecasts
Dimensions and logic to support outputs
Statutory Actuals
Forecasts
Budgets
Timetables
Workflows
Approvals
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Critical Success Factors in Summary
1. Right software 2. Right people 3. Right approach
Take any away and the project will likely fall over.
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Benefits we have seen from applying this simple top-down methodology
ü Successful implementations of FPM systems – On time, on budget, on scope
ü Get the right numbers out faster to the people that need them – With less pain and effort – With reduced costs
ü Happy users – High staff satisfaction in both Finance and the business
ü Provide far more time for analysis… – Finance to become the partner as intended proactively introducing
opportunities to the business
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4. Summary and Q&A
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Approach to simplifying FPM…
• Perform a self assessment scoring each process for effectiveness and efficiency out of 10 and rank them
• Prepare roadmap and business case to get to 10s
• Implement the unified vision in stages
• Combine three ingredients for a successful project:
• Right technology – Pick unified to keep it simple • Right people – Chartered Accountants ideal to design solution • Right approach – Top down from outcomes and outputs
Case Studies…please email me for copies
Benchmarks…please email me for details
10
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Simplifying Financial Performance Management Systems