event driven business planning

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Event Driven Business PlanningCase Tieto2016-03-17

Jyri Peltoniemi

Lead Enterprise Architect

Tieto, Finance Development

[email protected]

© Tieto Corporation

Public

Agenda

• Tieto as Company

• Starting point for development

• New approach for planning• Prerequisites

• Event driven planning

• Future

2

Public

This is Tieto

©Tieto Corporation4

Tieto is the largest company in the Nordics that provides full lifecycle services in IT, as well as product development, for private and public organisations.

Building on our Nordic heritage and values, we have global capabilities and a strong presence where our customers need it – in the Nordics or via globaldelivery centres across the globe.

We employ over 13 000 experts in close to 20 countries.

Operating countries

in IT services in Finland

#1

Among top players

in telecom R&D in Europe

in IT services in Sweden

Among top 3


Financial facts

5

Financial Services 24%

Manufacturing, Retail and Logistics 21%

Public, Healthcare and Welfare 30%

Telecom, Media and Energy 15%

Product Development Services 10%

Managed Services 35%

Consulting and System Integration 27%

Industry Products 28%


Managed Services 29%

Consulting and System Integration 21%

Industry Products 41%


EBIT by Service Line *)

Customer sales in 2015: EUR 1 460 millionEBIT margin excl. one-off items*): 10.3%

Tieto’s market position:

Market leader in Finland

Among top 3 in Sweden

Among top 7 in Norway

Sales by Service Line

Sales by industry group

*) Excluding capital gains, impairments and restructuring costs

How it was?


Inte

rnal

TietoFacts

Planning process status was quite low due to scattered tools and

unclear roles

7

Strategic level(3- 5 years )

Tactical level(year )

Operational level(Quarters)

Business

Managers

Finance

Partners

Customer/Delivery

Executives/Managers

Finance

Controllers

TietoPlanningTietoPlanningTietoFacts

TietoPlanningTietoPlanning

TietoFacts

What are your

personnel

expenses cost

center xx in Dec-

18?

Internal trade

between Sweden

and India during

Q3-17?

New approach for planning


Inte

rnal

Target is to have clear roles and adequate toolset for planning

9

Strategic level(3 years)

Tactical level(year)

Business

ManagerFinance

Partner

New Customers?

New Offering?

Production plan?P/L

BS

Cashflow

Cost per FTE?

Capex investment?


Prerequisites for event driven planning

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Source Data- Deliveries

- Employees

- Customers

Model- Offering

- Country

- Role

- Site

- Industry

Tool- Data input

- Modelling

- Reporting

Operative Accounting (ABC)


External RevenueEffort FTEs

Unit FTEs

Net Sales

Delivery Margin

Gross Margin

Operative Margin Contribution

Margin

Profit Margin EBIT

OPERATIVE ACCOUNTINGINTERRELATED

MEASURES

FINANCIAL

ACCOUNTING

Planning Model

ACT&FC

• Drivers

• Measures

• Scaling

USER INPUT

• Baseline

• Future events

• ScenariosLONG-TERM

PLAN

BRIDGE TO FA

• Internal trade

• Other

Calculation of FTEs


Planning Workflow

Kick-offBusiness Mix, etc. TBD

Define L2 ambition

by Business Mix

Verify and

modify baseline

Plan Future

EventsBuild Scenarios

Submit

Scenarios

Review/ Approve

Long-term Plan

Tie

to L

T

L2 B

usin

ess u

nit Feedback if ambition

should be changed

Change L2 ambition

Change selectionCreate new;

change events


Inte

rnal

Role mix as part of baseline for Cost per FTE

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20162016 2017

Adjustment is done on provider

country/offering portfolio level

Job codes are used for

defining role mix

Role mix change will impact

salary and social costs

1

2

3


Plan Future Events

Products Main Activities: • Identify future event

• Select appropriate template type

• Name the selected template

• Plan the future event by using several

templates

SL (incl.IP):Plans future events by using relevant template

(pls. see event type specific slides)

IG:Plans future events by using ‘Generic’ template

(pls. see slide )

SF:Plans future events by using ‘Generic’ template

Ma

rke

ts

• New Customer

• New Large deal

• Existing Contract ends

• Volume Change

• Divestment

• New Offering

• New Markets entry

• Efficiency

• GDM

• M&A

• Other

CURRENT

CU

RR

EN

TN

EW

NEW

Templates:Revenue change

Revenue change Country Mix

Sourcing Mix change

Generic

Capex


FUTURE EVENT Modelling of future actions to evaluate financial outcome A set of planned actions to contribute to scenario creation

Manager view on needed

investment

Manager view on

expected new revenue

Model drivers based cost

and FTEs calculation

Manager view on model

drivers if different for the

specific future event


SCENARIO Baseline and set of selected future events reflecting different scenarios

of a long-term business plan

Manager view on future

events to be selected

Manager view on the need

to plan new future events

and/or change selection of

future events for scenarios


Activities for each of SL (incl. IP), IG and

SF: • Select future events to be included in scenarios

• Evaluate if the defined ambition level will be

reached

• Plan new or revise already planned future

events

• Provide feedback to Tieto LT if ambition levels

should be changed

Build and Submit Scenarios

Future EventFuture Event

SCENARIO 1

Pessimistic

SCENARIO 2

Realistic

SCENARIO 3

Optimistic

Future EventFuture EventFuture EventFuture Event

Future EventFuture EventFuture Event

AMBITION

Difference Difference Difference

BASELINE

Future


Support for changes

19


Inte

rnal

Baseline for Planning units

20

Input Sheets: ‘Scenario 1’, ‘Scenario 2’, ‘Scenario 3’

Item Prior Year

Current

Year Plan Year

External revenue Data Data Calculation

Growth vs prior year, % Calculation Driver

Delivery costs (total) Data Data Calculation

Delivery margin; kEUR Data Data Calculation

Delivery margin; % Data Data Driver

Operative costs (total) Data Data Input

Operative margin; kEUR Data Data Calculation

Operative margin; % Data Data Calculation

NCV Data Data Calculation

Book to bill Data Data Driver

Head of

Planning Unit

REPORT

Dimensions for input:

• External revenue, book to bill ratio,

delivery margin %:

→Planning unit by Offering for SL

→Planning unit by Key Customer for IG

• Operative costs, kEUR

→Planning unit; offering ‘uncategorized’

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2

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Public

Jyri Peltoniemi

Lead Enterprise Architect

Tieto, Finance Development

[email protected]

event driven business planning

Data & Analytics