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Surviving turmoil and driving growth: How good practice EPM can differentiate you from the pack
Oracle EPM Conference Oslo 20th September 2012
www.pwc.com
PwC
Agenda
1. Introductions
2. PwC and Oracle EPM
3. Cornerstones of EPM good practice
1. From first mile to last mile of actual results reporting
2. Integrated planning and forecasting for a clear view ahead
3. Analytics for the business partner
4. Consistent data matters
5. EPM software facilitates the change
4. The business benefits
5. The PwC Approach to EPM transformation
6. Questions
1
PwC
Introductions
David Jones
Consulting Director, Enterprise Performance Management (EPM)
David is one of Europe's leading experts in financial management processes, management information systems and enterprise performance management (EPM). David has specialised in working with large multinational corporations to design and implement group-wide, high performance and reliable performance management, financial reporting, planning and forecasting processes and systems using the latest techniques and technologies available. Clients include multinational corporations such as Hoffman La-Roche, Nordea, Rio Tinto, Allianz, GSK, Tesco, Jaguar Land Rover, Hellenic Petroleum, Specsavers, Diageo, DHL Worldwide, Millennium & Copthorne, Titan Cement, Dubai Ports World , AstraZeneca and Xstrata.
2
PwC
PwC and Oracle EPM
3
Track Record Breadth and depth of
experience
Partnering approach
Proven methodologies
and tools
We have 100’s of Oracle EPM experts worldwide and have extensive experience of designing and implementing integrated Hyperion consolidation, reporting and budgeting systems. Our UK and Norway team have completed over 150 Hyperion EPM implementations. In the UK we are proud to have implemented over 50% of the FTSE 100 HFM applications.
We are one of the world’s most successful and well respected performance management delivery organisations. We are often involved in projects that require process transformation where we bring our delivery capability, functional, systems, process, industry knowledge and international presence
From our experience, partnering with our
clients enables project success. We have
extensive experience of working with all types
of international and cross functional teams.
PwC is also one of Oracle Corporation’s
global business partners with close and
regular co-operation and working between
the two organisations. When right for our
clients we also partner with selected and
highly skilled specialist organisations on
infrastructure, specialist resources, e-based
training and so on.
We bring to bear robust methodologies, which are
complementary to your own change management
approaches, and which are proven to support
achieving tangible, sustainable results and provide a
robust framework for planning and monitoring
progress.
PwC
Differentiate you from the pack?
4
PwC
The cornerstones of Enterprise Performance Management
5
“People, process and systems integrated and aligned to deliver outstanding performance management”
PwC
The Cornerstones of Enterprise Performance Management
6
Enterprise Performance Management
Actual Results which are reliable,
trusted and fast
Consistent and standardised data
from ERP to BI
Agile driver based plans and forecasts
EPM tools that support standardised and
automated processes
Planning Integrated across business functions
Standardised processes for performance
management
Finance People equipped for
analysis & partnership
Business Intelligence to
support insight
PwC
Actual results which are accurate and timely
7
“Perfect the first mile of finance and then you are in a fit state to tackle the last mile”
PwC
So, what’s the first mile? Current good close practices
Leading companies have been driven by the following objectives to improve their financial and management close:
• Earlier announcement of annual results enhancing the reputation of the company
• Faster production of monthly/ quarterly financial results for decision making
• Greater data quality (relevance & accuracy)
• Earlier close of actual results drives earlier forecasts and better analysis
• Lean finance processes drive down the cost of finance
This resulted in the following benefits:
- Streamlined close processes on local and group level
- Finance staff time freed up to focus on analysis and commentary and on more value adding support, becoming a true business partner
- Earlier forecast process and time to focus on accurate forecasting of key drivers
- Reduced finance costs
- Enhanced reputation of Finance internally and externally
8
PwC
So, what’s the first mile? Current good close practices
9
* Based on financial results for 2011 Source: BPM International Close Cycle Rankings 2012
*Source: The BPM International EMEA EPM Study – Monthly Close Cycles
EMEA Median (working days)
EMEA Top Quartile (working days)
EMEA Best (working days)
10 6 3
Close Cycle Rankings 2012 - Scandinavian Top 50
Ranking all
Elapsed
days
Year to Year
Improvement
Ranking
SE Company subindustry Country Ranking all
Elapsed
days
Year to Year
Improvement
Ranking
SE
49 24 h -4 1 Investor Venture Capital & Investment Companies Sweden 591 73 h -4 38 X
49 24 i 9 1 Nordea Bank Banks Sweden 65 40 g 0 7 X
64 25 g 0 3 Ericsson Information technology hardware Sweden 301 55 h -3 23 X
83 26 g 0 4 Getinge Health Sweden 301 55 i 27 23 X
83 26 g 0 4 Kone Electronic & electric equipment Finland 12 26 g 0 1 X
83 26 i 1 4 Nokia Information technology hardware Finland 547 68 i 2 35 X
83 26 i 1 4 SCA Personal care & household products Sweden 207 52 i 1 20 X
83 26 i 6 4 SKF Diversified industrial Sweden 416 60 h -1 31 X
104 27 i 1 9 Wärtsilä Support services Finland 12 26 i 1 1 X
137 31 i 2 10 Atlas Copco Diversified industrial Sweden 144 47 i 1 15 X
158 32 i 1 11 Fortum Oyj Electricity Finland 25 31 i 1 3 X
158 32 i 1 11 Sandvik Engineering & machinery Sweden 144 47 i 1 15 X
158 32 i 1 11 SCANIA Automobiles & parts Sweden 79 41 i 4 10 X
158 32 h -12 11 UPM-Kymmene Oyj Industrial Finland 119 46 i 1 14 X
172 33 h -6 15 AstraZeneca Pharmaceuticals & biotechnology UK 37 33 h -6 5 X
172 33 g 0 15 Electrolux Personal care & household products Sweden 301 55 g 0 23 X
172 33 i 5 15 Novo Nordisk Health Denmark 31 32 g 0 4 X
172 33 i 1 15 TeliaSonera Telecommunication services Sweden 561 69 h -1 37 X
172 33 15 Royal Caribbean Cruises Leisure & hotels US 416 60 31 X
198 34 i 1 20 Volvo Engineering & machinery Sweden 268 54 i 1 22 X
211 38 i 1 21 Alfa Laval Engineering & machinery Sweden 491 65 h -2 34 X
211 38 h -3 21 SEB Banks Sweden 301 55 g 0 23 X
211 38 i 1 21 Tele2 Telecommunication services Sweden 638 76 g 0 43 X
211 38 i 8 21 Yara International Chemicals Norway 679 82 h -1 46 X
226 39 i 1 26 Hexagon Utilities Sweden 728 87 h -3 48 X
226 39 26 Lundin Petroleum Oil & gas Sweden 789 102 49 X
226 39 26 Millicom Int. Cellular SDB Telecommunication services Europe 456 61 33 X
226 39 26 Nokian Renkaat Oyj Automobiles & parts Finland 57 39 6 X
226 39 i 2 26 Skanska Heavy Construction Sweden 384 59 h -4 30 X
226 39 i 1 26 Renewable Energy Corp Electricity Norway 665 80 i 3 44 X
226 39 i 1 26 Statoil Oil & gas Norway 591 73 g 0 38 X
226 39 g 0 26 Telenor Telecommunication services Norway 687 83 g 0 47 X
38 Average 58
Public Announcement Audited Results
PwC
So, what’s the first mile? Current good close practices
10
* Based on financial results for 2011 Source: BPM International Close Cycle Rankings 2012
Close Cycle Rankings 2012 - FTSE Global100
Ranking all
Elapsed
days
Year to Year
Improvement
Ranking
SE Company subindustry Country Ranking all
Elapsed
days
Year to Year
Improvement
Ranking
SE
2 11 g 0 1 Cisco Systems Information technology hardware US 107 45 i 6 18 X
3 13 i 1 2 J P Morgan Chase Banks US 416 60 h -1 62 X
5 17 i 1 3 Citigroup Banks US 301 55 i 1 45 X
5 17 i 2 3 Wells Fargo Banks US 384 59 h -3 57 X
9 18 i 1 5 Goldman Sachs Group Speciality & other finance US 384 59 g 0 57 X
9 18 i 1 5 Saudi Basic Industries Diversified industrial Saudi Arabia 234 53 i 1 31 X
20 19 i 2 7 Bank of America Banks US 268 54 i 2 37 X
20 19 i 1 7 Google Software & computer services US 12 26 i 16 4 X
20 19 h -1 7 IBM Software & computer services US 384 59 h -6 57 X
20 19 g 0 7 Intel Information technology hardware US 268 54 i 1 37 X
33 20 i 1 11 General Electric Diversified industrial US 301 55 i 1 45 X
33 20 i 1 11 Schlumberger Oil & gas US 31 32 i 3 10 X
36 21 i 1 13 Microsoft Software & computer services US 18 28 i 2 6 X
36 21 i 2 13 Reliance Industries Oil & gas India 7 21 i 2 1 X
40 22 g 0 15 Hewlett-Packard Information technology hardware US 107 45 g 0 18 X
40 22 h -4 15 Wal-Mart Stores General retailers US 347 58 g 0 52 X
42 23 g 0 17 Johnson & Johnson Pharmaceuticals & biotechnology US 234 53 g 0 31 X
42 23 i 1 17 Oracle Software & computer services US 15 27 i 3 5 X
49 24 h -1 19 Apple Inc Information technology hardware US 31 32 g 0 10 X
49 24 g 0 19 McDonalds Leisure & hotels US 301 55 i 1 45 X
49 24 i 1 19 Verizon Communications Telecommunication services US 301 55 i 4 45 X
64 25 i 1 22 Abbott Laboratories Pharmaceuticals & biotechnology US 207 52 h -3 28 X
64 25 i 1 22 ConocoPhillips Oil & gas US 207 52 i 2 28 X
64 25 g 0 22 Medtronic Health US 416 60 g 0 62 X
64 25 i 2 22 Novartis Pharmaceuticals & biotechnology Switzerland 9 24 i 2 2 X
64 25 i 1 22 Occidental Petroleum Corp Oil & gas US 268 54 i 1 37 X
64 25 i 1 22 SAP Software & computer services Germany 268 54 i 8 37 X
64 25 i 1 22 United Technologies Aerospace & defence US 65 40 i 1 14 X
83 26 i 1 29 AT&T/SBC Communications/Bellsouth (from 29/12/06)Telecommunication services US 301 55 i 4 45 X
83 26 i 1 29 Caterpillar Engineering & machinery US 207 52 i 1 28 X
104 27 i 1 31 Chevron Oil & gas US 268 54 i 1 37 X
104 27 i 1 31 Samsung Electronics Co., Ltd. Information technology hardware South Korea 234 53 i 8 31 X
122 28 g 0 33 Honda Automobiles & parts Japan 701 84 i 1 88 X
122 28 g 0 33 NTT DoCoMo, Inc. Telecommunication services Japan 652 78 i 1 83 X
42 Average 60
Public Announcement Audited Results
PwC
So, what’s the first mile? Current good close practices
• An effective close and reporting process is an integral part of Enterprise Performance Management
• It is also symptomatic of good underlying transaction processes and integrated systems
• Standard and repeated processes drive efficiency and accuracy in actual reporting
• The data model should integrate management and financial reporting from a single source
• The close process should be a “non-event”, one process x 12 times
Before After
M Q
Y
Time
Closing tasks
Ongoing accounting
M M M M M M M M M M M Q Q Q
Year end
M
Q
Y
M M M M M M M M M M M M M M M M
Q Q Q. Q.
Ongoing accounting
Time
Closing tasks
11
PwC
So, what’s the first mile? Current good close practices
Good close practice characteristics:
• Introducing clear ownership and management for close processes (including their measurement)
• Standardised, integrated, repeatable processes
• Focus on data quality, lack of quality is a major drag on speed.
• Accuracy at source and “right first time” mentality
• Highly automated processes (e.g. sub-ledger close, integration of GL’s and consolidation system)
• Global SCOA implemented at BU GL level
• Single stream reporting integrated for legal and management purposes
• Consolidation systems are common, shared, automated and standardised
12
PwC
What’s the “last mile of finance” ?
Taking high performing “finance functions” to the next level of close efficiency by focussing on:
• Financial Close Process Management helps companies understand, manage and optimize their financial close processes
• Reporting & Disclosure Management helps companies manage the collaborative development of their regulatory reports and filing in the most efficient manner
• Financial Governance automate and integrate internal controls and ensure financial policies are followed for content and configuration
• Automate reconciliations at every level
- Automate reconciliations and other bulk processing that still prevents a world class close (e.g. bank reconciliations, AP reconciliations)
- Intercompany reconciliations
• Data integration Minimizing re-keying and manual data entry to reduce errors and maximize efficiency
13
PwC
The Last Mile of Finance – what is it? ...focuses on managing all aspects of the close process Automation of internal &
external reporting
Check completeness & accuracy of reporting data
Group consolidation
Management reporting
Sub- Group consolidation
Consolidation pack, internal & statutory
reporting
Management reporting
Check completeness & accuracy of reporting data
External Reporting & Publication
Gu
idel
ines
, po
lici
es &
d
ead
lin
es
Gu
idel
ines
, po
lici
es &
d
ead
lin
es
Group
Sub group
Legal entity / Reporting Unit
Pro
cess
ma
na
gem
ent
& G
RC
General ledger closing Sub-ledger closing
Process management & Governance, Risk & Compliance (GRC)
Inter- company
reconciliation
Intra- company
reconciliation
Confirm Interco balances
Key elements: 1) Close process management & GRC
2) Reporting & Disclosure management
3) Automated Reconciliations
4) Data Integration
14
Pro
cess
ma
na
gem
ent
& G
RC
PwC
Integrated and agile planning and forecasting
“It’s time to retire expensive and slow detailed annual budgets, we need agile, driver based plans and forecasts, integrated across the business”
15
PwC
What is Integrated Business Planning?
“Integrated business planning is a framework that links together interdependent components of
planning across the Commercial, Operations and Finance functions. It creates cross
functional alignment and collaboration to support effective and efficient decision making
driving improvements in customer satisfaction and business performance. “
16
Planning Integration covers four perspectives:
1. Process
2. Functional
3. Data
4. Geography
Operations Commercial Finance
Gro
up
Re
gio
nM
ark
et
FUNCTIONAL INTEGRATION
GE
OG
RA
PH
IC I
NT
EG
RA
TIO
N
Strategic Planning
Annual Budgeting
Operational PlanningP
RO
CE
SS
IN
TE
GR
AT
ION
“As well as integrating functions, data and geography,
it aligns the strategic planning process with the
operational planning process, building a firm
foundation for ensuring continual alignment
between strategy and operational plan”
PwC
Typical business challenges addressed through effective Integrated Business Planning
17
Triangulation of plans: ability to relate commercial, supply chain and financial plans and explain the gaps e.g. can articulate why each plan is not equal
Management of the ‘cost, cash & service trade off’: ability to serve the right customers, at the right cost with the right level of investment e.g. can manage inventory to service customer needs
Management of opportunities: ability to react quickly and confidently to opportunities as they present themselves in the marketplace e.g. can respond to a changing competitor and customer landscape
1 2 3 Alignment of strategic planning and operational planning: clear link between the strategic plan and the operational plan e.g. strategic planning relevant to the business and linked to annual plan
4
PwC
What differentiates Integrated Business Planning from traditional planning processes?
18
Budgeting and
forecasting
Commercial planning
Supply Chain
Planning (S&OP)
Three functional processes seeking to develop a monthly forecast
1 cross functionally integrated monthly end to end forecasting process addressing specific functional needs
Parallel and overlapping decision making forums Streamlined and simplified decision making forums – right focus and right attendees
Functionally driven KPIs Cross functional outcome related KPIs that drive reward
Short Term tactical focus on HY and YE Rolling planning horizon (eg: 18 months)
Function specific data structures (product, customer, GL) Standard data structures with flexible attributes
Limited visibility and trust in data across functions Full visibility of data and trust in cross functional information
No link with strategic plan and lack of guidance and incentives to encourage the right behaviours
Common goals and behaviours from strategy to plan embedded and incentivised
Lack of buy in to the outcomes of planning decision forums Clearly defined accountability for the execution and adherence to the outcomes of decision making forums
Budgeting and
forecasting
Commercial planning
Supply Chain
Planning (S&OP)
Strategic Planning
and target setting
Strategic Planning
and target setting Integrated
Business Planning
PwC
Planning Process Integration
Slide 19
A key element to creating an effective planning model is to ensure there is one integrated process instead of separate silo based processes which duplicates effort and reduces accuracy. Outlined below is an indicative view of a joined up strategic planning and budget process for a manufacturer
Key observations
• The strategic planning and target setting process is linked to the budget through formal cascading of targets at at the start of the budget process
• Baseline plans are created between business and finance teams which reflect business drivers and include a risk overlay
• Transfer price allocation, cash, new product launches and capital planning link to the main planning processes, and feed directly back into process once complete
• Reviews are collective and levels of review are kept to a minimum to ensure the process remains fast and effective
• Once a base case is agreed, a stress test is run and presented for approved to the board
• Iterations are kept to a minimum, with a maximum of 3 full iterations allowed
PwC
What could an integrated planning process look like in a manufacturing environment?
20
PwC
Embedding the right behaviours
Slide 21
Our view is there is no silver bullet to solving these issues. Instead we would point to a number of considerations in changing the culture and behaviour around the planning process. In relation to the conservatism issue, options include:
• Focus targets on the strategic plan, which if conducted correctly, should be free from any of the sandbagging type behaviours of the budget process
• An additional option is to leverage external data in the planning process. This offers a useful comparator and is a good tool to challenge overly conservative plans
• Some organisations have moved completely aware from incentivising staff against an annual budget and have instead used indicators such as year on year growth or marketplace position.
• Reduce the amount of approval levels for plans. There is empirical evidence to suggest, the more approval levels the great the conservatism of the plan
Some of the wider options relating to changing Management behaviours of the planning process include:
• Increase the use and influence of business partnering. Often managers request huge amounts of detail because they do not understand enough about the business. The role of business partnering can play a key issues in this. The closer relationship between business and management results in a change of focus away from detail, to challenging the drivers of the plan, and identifying potential new opportunities
• Measure and report on the process. Report items such as late submissions, number of iterations, accuracy of forecast to actuals and quality of submissions at Management level across the business as a tool to drive behavioural change
Behaviours around the planning process have historically been a big challenge. The most acute being the link between planning and individual incentives, the consequence being overly conservative plans and potential missed market opportunities. Other behavioural issues we commonly observe include, too much focus on attention to detail and analysis of variances to budget by management. This drives significant amounts of time during the process for arguably little value.
PwC
Integrated Planning Capability Assessment
22
Current State Desired State
Integrated Planning 1 2 3 4 5 1 2 3 4 5
To which extent do you set stretch targets as well as base targets and are
rewards relative based?
To which extent are your budgeting and forecasting models based upon
the value drivers of the business?
To which extent do you have integrated strategic planning, budgeting and
forecasting processes with supply/demand side integrated models?
How much are your individual operational activities aligned to the overall
corporate strategic goals?
How much do you involve operational and other non financial managers in
compiling and reviewing plans?
To which extent do your planning processes include scenario modelling,
sensitivity analysis and what if analysis?
How agile are your planning processes giving you the ability to re-plan
quickly and effectively following a major event or change in assumptions?
How efficient are your planning processes with regard to cost and time
taken? (produce budget in < 8 weeks and forecast in < 6 days)
How accurate are the forecasts you produce?
To which extent are you avoiding gaming in your budgeting process and a
tendency to always ask for more each year?
PwC
Integrated Planning: 6 Key Benchmarks
Criteria topics: Balance, Relevance, Timeliness, Accuracy, Cost
1. Balance: How many of the following do you budget for (KPI’s, BS, CF, IS, non-fin. Data)? / What is the percentage of non-financial information you budget for?
2. Relevance: How many line items do you budget for on average ? (per statement?)
3. Timeliness: What is the total length of the budget preparation process, i.e. from commencement to formal approval, release and distribution? / How many formal review and approval cycles by senior management does the budget have to go through before it is finalised?
4. Timeliness What is the period before or after the budget year when the budget is finalised?
5. Accuracy: What has been the relative accuracy of the budgets / forecasts in prior years both on the cost and revenue sides? / What degree of reliability does management place on the forecasting process, with respect to accuracy and commercial capability of the forecasting team?
6. Cost: What is the total cost of the budget preparation process across the organisation (total number of hours for all personnel involved in any aspect of the budget preparation and multiplying this by a nominal hourly rate)?
23
PwC
Integrated Business Planning People and Process Changes Deliver Broad Benefits
24
Improved cross functional working breaks down silos and also adds “softer” benefits:
Trust – both of the numbers and decisions based on these numbers
Collaboration and clarity – improved working relationships
Ownership & accountability – encourages clearer governance
Visibility & transparency – encouraged rather than discouraged
Alignment & understanding – strategy understood and integrated
More responsive and robust decision making – reduced fire fighting and ad-hoc activities
Improved organisational efficiency – reduced planning cycle times and removing duplication
Clarity of strategic direction – common understanding of strategy and targets
PwC
Enterprise Performance Management needs aligned and standardised data
“If data is not aligned and consistent there will be no alternative but to allow the proliferation of excel solutions to deliver consistent data for analysis”
25
PwC
Enterprise Performance Management must be supported by aligned data structures
26
Data structures and definitions need to be aligned to facilitate fast and accurate transfers of information across functions and geographies
Eliminates the need for data transformation and reconciliation
Functions “speak the same language”
Typical dimensions to align across the organisation:
Brand/Product/Service
Customer/Channels
Accounting GL
Operations Commercial Finance
Gro
up
Re
gio
nM
ark
et
FUNCTIONAL INTEGRATION
GE
OG
RA
PH
IC I
NT
EG
RA
TIO
N
Strategic Planning
Annual Budgeting
Operational PlanningP
RO
CE
SS
IN
TE
GR
AT
ION
PwC
Key steps to the Common Business Language
Identify and streamline information needs across
functions to reduce data duplication
• Identification, analysis and commonly shared understanding of key MI needs for Group, Regions, OpCo, and functional management
• Detailed analysis assessment and analysis of MI requirements and existing KPI sets
• Elimination of redundancies and data duplication for a clear definition of connection points to data environment of OpCos
4
Create “One source of truth” – consistent,
accurate information
• Eliminate inconsistent data and reconcile definitions
• (Re-)establish a centralized governance structure to ensure consistently use of data source through the entire corporation and in different reporting dimensions based on shared and common standards and definitions (“Trusted Data”).
Finance Supply Chain Comm
erce
HR IT
EB / ExCo
F SC C HR IT
OpCo
Com
mon d
efin
ition a
nd g
overn
ance
2
3
1
2
3 Phased migration from a report
to a information-based environment
• Transparency and (stepwise) adoption of central information source through the entire corporation and in different reporting dimensions based on shared and common standards and definitions
• Enhanced data slicing, dicing and simulation enabling fact-based analysis for decision support
Establish a common language for decision
support and Performance Dialogue
• Strategy-grounded KPI framework breaking strategic goals into operational KPIs enabling a commitment enforcement based on focused and reliable forecasts and detailed variance analysis as well as basis for Performance Management and cross-functional Dialogue
1
1
1
(semi-)automated
27
PwC
Enterprise Performance Management solutions
“To fully exploit Enterprise Performance Management organisations will use EPM software to support EPM processes, drive efficiency and enhance analytics”
28
PwC
EPM Technology offers significant benefits
The vendors outlined in the Gartner Quadrant represent technology options that are suited to performance management, corporate reporting and business and financial planning.
In many organisations these technologies sit at the heart of the planning and reporting process and collect data and commentary around the core business and financial planning processes.
These technologies do not eradicate the use of Excel from the process. Indeed many are designed to integrate seamlessly with spreadsheets. We still the use of spreadsheets as a key tool to the planning process.
The key to selection is to match your business requirements with the strengths and weaknesses of the vendors.
Specialist Performance Management and Planning technology offers significant benefits. Automating data integration and reporting, providing a single version of data, systemising approvals, automating calculation and allocation logic alone can significantly reduce the manual workload and improve control of the process. In summary deployed appropriately and combined with improving other areas, it can provide the single biggest step change to improvement
Slide 29
PwC
Developing an appropriate technology landscape
EPM solutions sit outside of the accounting systems and often over a data warehouse both of which are key sources of information.
The key to ensuring the process works is an integrated information model, that is consistent across all systems and is tightly governed by a data governance process.
This will enable plans to be developed using the same definitions and enable data to be easily consolidated and shared between processes.
This is a key enabler for fast cycle times, as it reduces the need for time consuming reconciliation processes
There are multiple technology landscape options available and the EPM solution will depend heavily on the requirements and legacy of your organisation. We have outlined below where planning, consolidation and management reporting element of EPM technology normally sits within the manufacturing technology infrastructure
Slide 30
Controls (including Reconciliations)
Period Processing & Workflow Management
Common Data Management
Governance & Organisation
Sarbanes Oxley (SOX)
Programme & Change Management
Performance Metrics IT & Data Governance
Product Accounting Rules
Reference Data Report Mapping Rules
Operating Model
Validation Rules (minimum standard
General Finance & Audit Controls
Business Reconciliation
Technical reconciliation
General Ledger Product Processing
(Source systems /
Front office)
Data Capture
(ETL/ Middleware/
Operations)
Product Accounting (Sub ledger)
Reporting Information Delivery
Financial Data (Data Warehouse)
Trading
Loans
Deposits
Extract
Control & Validate
Transaction processing
Enrich & transform
Check data quality
Load
Process business / trade events
Process Accounting rules
Process valuations
Enrich posting data
Effective interest
Post to GL
Daily P&L (real - time)
GL Financial Data
Enriched Data
Instrument & Transaction Level Data
GL Financial Accounting (Chart of Accounts)
Average Balances
Funds Transfer Pricing
FX revaluation & restatement
Period open / close
GL Reports
Statutory & Management Reports
• Legal Entity
• IFRS Financial
Statement (B/S + P&L )
Regulatory Reports • Bank of England
• Compliance
reporting (Basel III)
• IRR (FSA)
Performance Reports • Integrated Product,
Channel, Customer,
Profitability
• Expense Mgmt
Tax Reports
Treasury reports
Ad - hoc queries
Outbound interfaces, including
Group Finance
Cost Accounting Accounts Payable
Project Accounting
Accounts Receivable
Staff Expenses
Fixed Asset Accounting
Executive reports
Production reports
Portal delivery
Power users (BU Finance, Group
Finance)
Other Finance & Analytics
Tax
Planning, Budgeting & Forecasting
Asset / Liability & Liquidity
Management
Economic Capital & other Risk
Analytics
Financial Consolidation
Cost Mgt and MI
EPM Applications
PwC
EPM Solutions under pin EPM good practices in Planning, Reporting and Analytics: Architecture
31
PwC
Enterprise Performance Management aligns with business partnering
“To fully exploit Enterprise Performance Management the finance function will need to embrace change and face the challenge of collaboration and analytics”
32
PwC
A strong foundation in Finance provides the critical platform for Business Partnering
33
Customer Focus
Works hand in hand with business managers to address issues
Understands the impact of decisions across the business
Provides value-adding analysis to business managers
Leadership
Provides clear direction and targets and sets clear guidance
Commitment to performance and people, motivates, mentors
Challenges the business
Big Picture Thinking
Looks beyond the present to identify longer-term risk and opportunity in delivery corporate performance targets
Proactively manage risks, opportunities and support the development of actions to drive business value
Rigour
Interprets and challenges information, draw insight from data to enable informed decisions, balancing risk and opportunity
‘Ask the right questions to the right people at the right time’
Ensures decisions are supported by independent, objective, analysis
Focuses on business performance and develops pragmatic solutions
The Business Partnering role supports EPM How business partners can improve your performance
More time for value adding activities:
• R&D portfolio evaluation
• Supply chain effectiveness review
• Assessing models for new sales channels
Strengths in:
• Managing customer relationships
• Providing robust and independent challenges
• Proactively proposing performance enhancements
PwC
Enterprise Performance Management solutions
“A Business Intelligence platform, well used, enables insight into business critical information in a consistent and controlled way”
34
PwC
BI Technology offers significant benefits Specialist Business Intelligence technology offers significant benefits. Allowing data visualisation, self service reporting, dashboards and drill through, all in an intuitive environment off a single version of data. Deployed well Business Intelligence technology can dramatically improve both the costs associated with delivering information but also the value of the information delivered through improved insight.
Slide 35
There are many Business Intelligence solutions, even more than EPM solutions.
Typically the vendor will have several reporting tools in their portfolio to address very different types of reporting need.
For example tabular reports which are commonly printed and dashboards which are presented electronically and have drill through.
Careful evaluation is needed to ensure you can meet all of your reporting requirements and styles and integration with your EPM platform should be a key driver.
PwC
Developing an appropriate technology landscape
EPM solutions sit outside of the account systems and often over a data warehouse both of which are key sources of information.
The key to ensuring the process works is an integrated information model, that is consistent across all systems and is tightly governed by a data governance process.
This will enable plans to be developed using the same definitions and enable data to be easily consolidated and shared between processes.
This is a key enabler for fast cycle times, as it reduces the need for time consuming reconciliation processes
There are multiple technology landscape options available and the EPM solution will depend heavily on the requirements and legacy of your organisation. We have outlined below where planning, consolidation and management reporting element of EPM technology normally sits within the manufacturing technology infrastructure
Slide 36
Controls (including Reconciliations)
Period Processing & Workflow Management
Common Data Management
Governance & Organisation
Sarbanes Oxley (SOX)
Programme & Change Management
Performance Metrics IT & Data Governance
Product Accounting Rules
Reference Data Report Mapping Rules
Operating Model
Validation Rules (minimum standard
General Finance & Audit Controls
Business Reconciliation
Technical reconciliation
General Ledger Product Processing
(Source systems /
Front office)
Data Capture
(ETL/ Middleware/
Operations)
Product Accounting (Sub ledger)
Reporting Information Delivery
Financial Data (Data Warehouse)
Trading
Loans
Deposits
Extract
Control & Validate
Transaction processing
Enrich & transform
Check data quality
Load
Process business / trade events
Process Accounting rules
Process valuations
Enrich posting data
Effective interest
Post to GL
Daily P&L (real - time)
GL Financial Data
Enriched Data
Instrument & Transaction Level Data
GL Financial Accounting (Chart of Accounts)
Average Balances
Funds Transfer Pricing
FX revaluation & restatement
Period open / close
GL Reports
Statutory & Management Reports
• Legal Entity
• IFRS Financial
Statement (B/S + P&L )
Regulatory Reports • Bank of England
• Compliance
reporting (Basel III)
• IRR (FSA)
Performance Reports • Integrated Product,
Channel, Customer,
Profitability
• Expense Mgmt
Tax Reports
Treasury reports
Ad - hoc queries
Outbound interfaces, including
Group Finance
Cost Accounting Accounts Payable
Project Accounting
Accounts Receivable
Staff Expenses
Fixed Asset Accounting
Executive reports
Production reports
Portal delivery
Power users (BU Finance, Group
Finance)
Other Finance & Analytics
Tax
Planning, Budgeting & Forecasting
Asset / Liability & Liquidity
Management
Economic Capital & other Risk
Analytics
Financial Consolidation
Cost Mgt and MI
Planning systems
PwC
Enterprise Performance Management Business Benfits
“A fully EPM enabled business will be better positioned to out perform its peers in a fast moving competitive world”
37
PwC
The Business Benefits of EPM
Close and reporting of actual results:
- Fast, efficient, effective, accurate
- Focus on analytics not on production of numbers
Planning and forecasting:
- Fast, agile driver based plans and forecasts
- Based on fast accurate actual performance
- Plans driven by events and opportunities not the financial timetable
- Risk properly reflected in forecast and plans
- Performance measured and rewarded on strategic objectives not annual budget
Reporting and analysis
- Fast, efficient, effective, management and external reporting
- Self service reporting, insight and analysis not formatting and printing
Organisation and process
- Open and integrated approach to performance management
- Business Partnering in practice through EPM
38
“Enabling EPM across our organisation is
having a dramatic and positive impact on our
business, both in Finance and beyond”
CFO Global Retail Organisation
PwC
Enterprise Performance Management solutions
“The PwC blueprint approach is helping our clients achieve success in EPM though a realistic road map for implementation and benefits realisation”
39
PwC
Our approach to transforming Performance Management
Slide 40
Our EPM blueprint centres around a high level solution design with seven distinct deliverable outputs across the dimensions of data, process, systems, people and organisation. Each of these seven outputs is required to inform the business case and develop a realistic roadmap.
Business case and roadmap
High level solution design
Data
Conceptual data model
Data integration model
Data governance framework
SD1
SD2
SD3
Process
High level IP process flows SD4
Systems
Systems architecture
Infrastructure and hosting strategy
Software selection
SD5
SD6
People and organisation
People and organisation impact
assessment
SD7
Diagnostics and vision V
isio
n a
nd
gu
idin
g p
rin
cip
les
As-is analysis
V1
Data
Process
Systems
People & org
High level planning requirements
V2
Benchmark and maturity profile
V3
V4
Business case for change
BC1
Roadmap
BC2
Project organisation design
BC3
We have extensive experience of conducting projects to integrate planning processes. The EPM blueprint is our approach to redesigning a client’s planning and reporting capabilities; it reflects the high-level target operating model design with its key deliverable outputs across the enabling dimensions of data, process, technology and people which inform the business case and develop a realistic roadmap. It is sufficiently flexible to allow us to focus on different components at different levels of detail.
PwC
Example deliverables
Slide 41
Guiding principles Capability assessment and visioning Guiding principle Key performance indicators
Roles and responsibilities across all planning
processes are defined and understood with the key integration points clearly defined with cross SET participation and accountability in
place where required
Annual survey review of planning effectiveness
Annual measure of total resource deployed for planning,
Annual measure of resource allocation to low value tasks
The planning processes drive the right
behaviors across the business balancing short and longer term accountability with aspiration planning rather than conservative
“sandbagging”
Annual review of short and longer term planning accuracy
We will proactively train, coach and knowledge
share to ensure policy clarity and best practice understanding
Annual review of training
Annual survey review of knowledge and training requirements
Materiality levels are set across the
organisation. Management at all levels of the organisationunderstand, respect and adhere to these levels
Annual review of materiality levels
Number/time spent on reviews
We will have a clearly defined process for
measuring and managing the delivery, and ensuring compliance with planning, including these principles. We will reward compliance &
challenge non-compliance.
Annual review of performance ratings for individual staff
contributing to corporate reporting process (Red/Green/Blue)
Periodic publication of KPI’s for the group reporting process
Review of trends.
Diagnostics – Maturity profile Business requirements – Data
A1 A1
A2 A3
We have a toolkit of methodologies available to accelerate the delivery of an EPM process, including Integrated Planning. Samples shown below give an indication of the approach used.
PwC
Questions
42
PwC
Contacts
Jørn Eskil Juliussen
Mobile: +47 95 26 00 60
David J H Jones
+44 77 11 063 722
43
pwc.com
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not constitute professional advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No representation or warranty
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information contained in this publication or for any decision based on it.
© 2012 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to
PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom), which is a
member firm of PricewaterhouseCoopers International Limited, each member firm of which is a
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