Thriving in the World of Chaos with Integrated Financial Performance & Risk Solutions

Prashant

Tewari

Country Manager -

Business Analytics

IBM India South Asia

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“Insight and foresight are linked with leadership. It's insight that helps to capture opportunity.”

Zhou Ming, Executive Vice President and Secretary General, China

Council for Int’l Investment Promotion (Source: IBM Global CEO Study, 2010)

Hurricane KatrinaFinancial Meltdown

Statutory DefaultsVolcanic ash

TerrorismEnvironmental Issues

Healthcare ReformReal estate

H1N1

Credit Default Swaps

CFOs in India believe that industry / sector pressures will increase challenges and opportunities over the next three

years

Industry / Sector Changes Over the Next Three Years

ISA N = 129 to 133; Global N = 1,844 to 1,905Source: IBM Institute for Business Value, The Global CFO Study 2010

As a result of these factors, a majority of India Finance organizations believe that they have to make major changes to respond.

83%

79%

77%

75%

53%

39%

0% 20% 40% 60% 80% 100%

Need for faster decision making

Product/Service Demand Growth

Pressure to reduce cost base

Demand for external transparency (e.g.,Board, shareholders, taxpayers, regulators)

Ability to atract and retain talent

Access to short term liquidity/long-termcapital

ISA GlobalImperatives of a Growing Economy

74%

61%

78%

69%

56%

40%

0% 20% 40% 60% 80% 100%

Top Challenges

What is keeping the CFO up at night?

According to Several Studies:• Ability to forecast results• Transparency• Attracting/retaining qualified employees• Flexibility to react to market changes• Balance sheet risks –

Cash

• Accuracy of information• Regulatory requirements

– Sarbanes-Oxley, XBRL, Credit Risk, Market Risk• Where is our growth going to come from?

– Mergers/Acquisitions– Internal growth

• Supply chain risk• Managing IT systems• Personal job security• Cost of health care• Data security risks

Quarterly Duke University/CFO Global Business Outlook Survey from June 2008

Planning and Performance Management

Governance Risk and Compliance

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Risk has never been a bigger challenge than in today’s business environment…

…new regulations, globalization, increased risk and business velocity,and an explosion of information…

all demand more effective compliance and risk management practices and better alignment of risk and performance management objectives for better business outcomes

The IBM Global CFO Study 2010

The Risk Mitigation Challenge

Finance Function Faces Challenges

Spreadsheets Failing“there have been well-documented cases of errors

and losses resulting from spreadsheet

manipulation errors and accidents.”

Source: Gartner, August 2007

Disparate Systems“Average finance organizations operate

11 finance systems per billion dollars

of revenue.”

Source: Hackett Group, 2007

Business Risks“62 percent of enterprises …

encountered a major risk event …

42 % of these

enterprises were not well prepared for the event.”

Source: IBM Global CFO Study 2008

CFO

ControllerTax/

TreasuryFP & A

IT

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The Planning & Budgeting Challenge

PAIN: Inability to deliver timely, reliable forecasts & plans that align operational tactics with financial targets.

PLANS & FORECASTSInfrequent Unreliable Forecasts

Weak Top-Down

& Bottom-up Coordination

Disconnected

Plans

• Do you rely on Excel for creating budgets and reports?

• How long does the budgeting process take?

• Are you using spreadsheets to manage the planning process?

• Are your budgets and forecasts as reliable for decision-making as you would like?

• Is planning and budgeting an exercise to be endured rather than a strategic corporate tool?

Analytics-driven organizations outperform others Efficiency combined with business insight contributes to better

financial performance

Sources: IBM Institute for Business Value; 2010 IBM Global CFO Study.

One year: 2008–2009Five years: 2005–2009

EBITDA, earnings before interest, taxes, depreciation and amortizationCAGR, compound annual growth rateROIC, return on invested capital9

Value Integrators All other enterprises

7.7%

12.0%

10.3%

3.8%

8.8% 9.0%

105% better

36% better

15% better

EBITDA5-year CAGR, 2005-2009

Revenue5-year CAGR, 2005-2009

ROIC5-year average, 2005-2009

32.2%

-0.3%

7.2%

2.5%

-4.1%

6.0%

12 x better

15 x better

20% better

EBITDA1-year change, 2008-2009

Revenue1-year change, 2008-2009

ROIC2009

1010

Predict potential threats and opportunities

Spot and analyze trends and anomalies

Assemble and interact with relevant information

Compare “what-if”

scenarios

Understand customer sentiment and behavior

Plan, budget and forecast resources

Assess and manage risk

Measure and monitor behavior

Turn insight into action, optimizing results

Align strategic and operational decisions

Business Analytics Portfolio

1111

• Simplify, structure, and automate dynamic and sustainable FP&SM practices

• Monitor and analyze business performance against targets

• Plan, forecast and control enterprise resources aligned with corporate objectives

• Close the books, consolidate results and report financial performance with confidence.

Finance

Performance ManagementApplications

Performance Process

• Enterprise Planning, Budgeting, and Forecasting

• Consolidation and Corporate Reporting

• Financial Analytics (e.g., profitability)

• Strategy Management & Scorecarding

Analytic ApplicationsFinancial Performance• General Ledger Analytics• Accounts Receivable Analytics• Accounts Payable Analytics

Industry Frameworks

Supplier / Operations• ProcurementCustomer• Sales Analytics

Workforce Performance• Workforce Analytics• Talent Analytics

Financial Performance Management

Analysis

Financial Reports

Dashboards/ Scorecards

Close Reports

InProcess

Reporting

PostProcess

Reporting &

Planning

SOURCE SYSTEMS

IBM Cognos

Controller

Financial AnalysisPlanning/ ModelsE

X T E N D

IBM Cognos

TM1

• A patented 64-bit read-write in-memory OLAP engine that provides compact data storage

and exceptionally fast performance

• Model design and data access that presents business information in familiar formats

• Ease of use, thanks to a development environment that enables users to create sophisticated applications with no need for programming or traditional IT skills

• An intuitive, flexible approach, which enables users to easily express complex, multi-

dimensional business rules

• Fuses Analysis & Planning together to provide greater accuracy

• A component of

Cognos

Performance Management Platform

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Marico• Brief profile

– Present in almost every FMCG market segment –

hot oils, hair, skin, weight

management, beauty and wellness amongst others

– Marico

has also been rated one of India’s ‘Top 8 Global Challengers’

by Standard &

Poor

Challenge Solution Results

Inflexible planning through spreadsheets

Seamless integration across multiple data sources including mySAP

and SAPBW

Cognos

TM1

Reduces the time required for budgeting, planning and reporting.

Increases flexibility, accuracy and efficiency.

Easy to use and maintain.

“IBM Cognos

TM1 has helped usstreamline and take our planningand budgeting processes to a newlevel. This tool has enabled us toshift our focus from data crunchingto data analysis.”Girish

RaoIT Head , Marico

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Indus Towers

Challenge Solution Results

Inflexible planning through spreadsheets

Finance department manually consolidates and extract data & create profit and loss (P&L) statements and the annual operating plan (AOP).

IBM Cognos

BI and Planning

IBM Global Business Services (GBS): BAO: (Business Analytics and Optimization) Services

Shortens preparation time for Annual Operating Plan (AOP) development by 30 to 35 %

Improves data accuracy by more than 20 to 25 %

Decreases turnaround time for gathering information and data to do financial analysis by 50%

Provides a significant improvement in data and business analysis in terms of various costs like rent, network and energy costs

The solution gives companies an integrated, accurate view of financial numbers, enabling them to plan, respond and implement financial decisions that will help them maintain or achieve leadership positions in their marketplace.

What if you could gain insight into your financial data to predict and proactively respond to trends that could negatively impact company growth?

This communications infrastructure company implements a game-changing financial planning process that uses “what-if”

simulations, and trend, target-setting and variance analysis to make financial decisions that keep it on a strong growth trajectory

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Enterprise requirements

CIO has to manage multiple datamarts and point solutions for risk and compliance data

CRO cannot get aggregate risk exposure position

CCO cannot ensure regulatory compliance, adapt to change or manage regulator interaction

Unifies enterprise-wide risk and compliance initiatives into a single management system

provide visibility into risk exposure and to facilitate compliance management

Provides synergy with Information and IT Governance, Risk Management, and Security

CEO, CRO, CFO

IT risk

Compliance

Finance

Marketplace

Operational riskCredit

Struggle with fragmentation of risk and compliance information

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An integrated approach facilitates transparency

Marketplace

riskCredit

riskFinance

riskOperational

riskIT

risk

CRO, CCO, CFO

Compliance

risk

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GRC across organizations worldwide

Over the past 18 months, a number of change has been made to regulations aimed at strengthening risk oversight processes at the board level across several countries :

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Financial Controls

Management

General Controls

IT Governance

Internal Audit

Operational Risk

Business DriversRisk Intelligence and Scorecarding

Enterprise GRC software platform that serves as the foundation for a company’s enterprise risk management efforts by unifying enterprise-wide risk and compliance initiatives into a single management system. Platform provides a modular and integrated approach to governance, risk and compliance.

IBM Open Pages GRC Platform

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Gartner’s Magic Quadrant for Enterprise GRC platforms

Source: Gartner Report: Magic Quadrant for Enterprise Governance, Risk and Compliance Platforms, July 2011

Magic Quadrant for Enterprise Governance, Risk and Compliance Platforms

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OpenPages

Platform for Integrated Risk Management

The OpenPages

Platform serves as the foundation for a company's enterprise governance, risk and

compliance management efforts through its ability to unite an organization’s risk and compliance initiatives into a single management system, including:

– OpenPages

Operational Risk Management (ORM)

-

Out-of-the-box and fully integrated key risk indicators (KRI), loss event and RCSA reporting, to provide an enterprise-wide view of risk across the business and manage Basel II AMA compliance

– OpenPages

Financial Controls Management (FCM)

-

Automated assessment and testing processes to standardize and manage SOX compliance testing and controls enterprise-wide

– OpenPages

General Compliance Management (GCM)

-

Integrated solution for reducing the complexity of complying with numerous industrial, ethics, privacy and government regulatory mandates

– OpenPages

Information Technology Governance (ITG)

-

Enables organizations to manage IT risk and compliance by centrally monitoring and assessing the overall

effectiveness of IT investments, and adopt best practices in IT governance with process-centric and policy-driven controls

– OpenPages

Audit

-

Provides auditors with a configurable view into organizational GRC

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Challenge Solution Results

German regulator can audit at any time –

at Allianz’s

cost.

Lack of evidence to support operational risk and control.

Lack of standardization across the group.

OpenPages

ORM

Improved standardization of processes across the group.

Reduced the regulatory burden with increased depth of information, audit trail and documentary evidence, resulting in less frequent audits.

Better and easier consolidation of information.

Allianz

spent much of 2008 and 2009 focused on infrastructure and Pillar I of Solvency II and selected OpenPages

ORM (Operational Risk Management) for loss data capture, risk self-

assessment and quantitative scenario analysis.

Allianz

(formerly Allianz

AG) is a global financial services company headquartered in Munich, Germany. Its core business and focus is

insurance. As of 2010, it was the world's 12th-largest financial services group and 23rd-largest company according to a composite measure by Forbes magazine.

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“What makes companies stand out from one another is the ability to use analytics across the end-to-end business model. Greater transparency from one end of the business to the other is key.”

Dennis Hickey

VP -

Corporate Controller, Colgate Palmolive

Source: 2010 IBM Global CFO study

Summary• Analytics in today’s turbulent times is not an option anymore !

• Analytics driven organizations outperform their peers

• The Office of Finance is the key Value Integrator in the Enterprise

• Start your Cognos

Validation Workshop to gain internal agreement and identify possible areas where Analytics can help you outperform

• Work with a Partner who provides you Domain Consulting, Software Solutions and World-class deployment & support –

IBM

IBM Business Analytics

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