It was a small group of about 15 FP&A pros gathering around the conference room at the Boston Hilton. We analyzed conditions that suggest it is better to stick with spreadsheets for budgeting and planning. Then we looked at cases where it is a "gray area" as well as "no brainer" cases for replacing spreadsheets based on estimating the ROI of implementing a dedicated planning application.

1. Measuring the ROI of Planning Software
June 21, 2012 IE Group
Ben Lamorte, VP Marketing
Follow us! @AlightPlanning
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2. The Subtle Message
1: Is it EVEN worth it to replace
spreadsheets with a planning
tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
AGILE

3. The Subtle Message
1: Is it EVEN worth it to replace
spreadsheets with a planning
tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
AGILE

4. The Subtle Message
1: Is it EVEN worth it to replace
spreadsheets with a planning tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
AGILE

5. Last Month’s Webinar Survey Results
Of those purchasing dedicated planning software solution,
74% report ―Unsure of ROI‖ (approx 100 on webinar)
13%
Unsure
13% Good ROI
Bad ROI
74%
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6. Rand Heer (He’s ―Heer‖ In Spirit)
 Business Activities
 CEO, Alight Planning (Planning software)
 Co-Founder, Aspirity (Microsoft BI consulting)
 Founder, FP&A Train (Essbase training)
 Founder, Pillar Corporation
 CFO for 2 public companies
 Rockwell Int’l, Business Unit CFO and Corporate
 Publications
 The Planning Maturity Curve: Where Are You? Where Do You Want to Be?
 How Agile is Your Planning: Find out by Measuring the ROI of Your
Planning Software
 Coauthor: “Business Intelligence: Making Better Decisions Faster”.
Published by Microsoft Press.
 Education
 MBA degree Harvard Business School
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7. Ben Lamorte
 Business Activities
 VP Marketing, Alight Planning
 VP Business Development, Alight Planning
 Principal, Decision Consulting (Adobe, Kaiser)
 Manager, Business Intelligence, planetrx.com
 Management Consultant, APM/CSC Healthcare
 Editor of “The Agile Planner” Blog
 Yes! Planning can be a Positive Experience
 Why Financial Reporting Software Delivers No Value?
 The Value of Agile Planning Over Time
 Driver Based Planning: How is it Defined?
 Education
 MS Management Science & Engineering, Stanford University
 BS Mechanical Engineering, UC Davis
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8. Agenda for Afternoon
 Planning Maturity Curve Framework for ROI
 Small ROI Example (1x)
 Big ROI Example Agile Planning
 33x – Pittsburgh Mercy Health
 20-80x – SoftLayer
 Bonus Item: Optimization – the BEST CASE SCENARIO
 Lisa comes on for an Alight Demo focusing on
 Driver-Based Planning
 Rolling Forecasts
 Scenario Analysis
 Cocktails!
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9. History: Getting to Planning Maturity Curve
2011
Planning
Maturity Curve
Introduced
1980s 1990s/2000s
Agile Planning
Spreadsheet Many Planning Trademarked
Era Apps Available
1990s 2010
―Pillar Era‖ Alight Wins Overall
1st Planning App Business Performance &
Analytics Award**
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*BPM Partners
** Ventana Research

10. Planning Maturity Curve: Business Value!
Insights Actionable Financially-
Understanding things Knowledge Sound Decisions
we didn’t see before
Understanding Scenario analysis gives us
impacts of our actions the financial impact of choices
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11. Planning Maturity Curve: 2 Types of Benefits
Effort
Type 2: Introduce New
Forecasting Processes to Add Value
Reporting
Budgeting Type 1: Streamline
Existing Processes
Reduce Effort
Business Value
AGILE

12. Small ROI : Type 1 Benefits Insights
Key Question: Who’s ROI is this anyway?
Type 1 Benefits of Planning Software tend to be minimal for Line Managers
– known as “end users” by vendors
 Key Drivers for Annual ROI for End Users
(Labor reduction/end user between $0-$800)
X (# active users)
 Example
($400 reduction in labor per user)
X (10 users)
Bottom Line for End-User Example
$4,000 per year cost reduction for a 10-user system
AGILE

13. Small ROI : Type 1 Benefits Insights
Type 1 Benefits of Planning Software tend to be small to moderate for
Finance Departments
 Key Drivers of Annual ROI for Finance Dept
(Time savings improvement between 20-40%)
x (Total Finance Dept Cost of budgeting in spreadsheets)
 Example
(30% time savings improvement from planning software)
X ($80,000 Total Finance Dept Cost of budgeting in spreadsheets)
Bottom Line for Finance Dept Example
$24,000 per year cost reduction
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14. Small ROI: ROI Calculator Example
Example: 10-User System Type 1 Benefits of $19,504 per Year
$10,800 for Budgeting, $8,704 for Forecasting
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15. Big ROI: 33x More ROI with Agile Planning?
Traditional Planning Agile Planning
Type 1 Type 1 & 2
Deployment Web-Based Forms On-Premise
#Seats Purchased 10 5
Costs
Year 1 $30,000 $40,000
Year 2 $15,000 $5,000
Year 3 $15,000 $5,000
Total Costs $60,000 $50,000
Benefits
Year 1 $19,504 $450,000
Year 2 $19,504 $600,000
Year 3 $19,504 $600,000
Total Benefits $58,512 $1,650,000
ROI Multiple 0.98 33.00
Source:
Traditional Planning: Interview with web-based software user focused on saving time
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Agile Planning: Ray Wolfe at Pittsburgh Mercy Health Case Study
No Surprise that more than 80% report management prioritizes type 2 over type 1

16. Planning Maturity—Agile Planning
Planning Maturity Curve (PMC)
Effort
Forecasting
Reporting Forecasting/Agile Planning
Budgeting
Seat of Pants
AGILE Business Value

17. The 4 Steps to Agile PlanningTM
4. Implement
Scenario
Analysis
2. Implement
Driver-Based
Planning
3. Integrate
(Don’t Just
Import)
Actuals
1. Reduce
Level of Detail
AGILE

18. Big ROI: Pittsburgh Mercy – The Leader
Ray Wolfe, CEO (was CFO)
 Business Activities
 Chief Financial Officer, Pittsburgh Mercy Health
System 2006-2011, now CEO
 Director of Fiscal and Information Systems– Mercy
Behavioral Health 1996-2006
 Chief Fiscal Officer, Summit Center for Human
Development, 1988-1996
 Awards: Overall Ventana Leadership 2010
 Education
 JD, West Virginia University 1977
 BA, Marshall University, 1974
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19. Big ROI: Pittsburgh Mercy Overview
 Community Mental Health and Health Care Related
 Mental Health, Mental Retardation, Drug/Alcohol, Homeless
 Prevention Services and a Private Foundation
 Business Metrics
 3 subsidiary corporations
 60 community locations
 27 major programs product lines
 260 revenue/cost center
 1,700 employees; 106 Managers & Supervisors
 Funded through traditional insurance billing, government grants and
capitation contracts, Private Foundations
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20. Big ROI: Pittsburgh Mercy Before
 Demographic Problems
 Managers with only clinical backgrounds/ no business skills
 60 sites yielded communication barriers and no common language
 Excel based —
 Overload mode of worksheets with link and formula errors
 Too much time to maintain and no certainty of integrity
 Budgeting became a ritual without meaning
 Tops down budgets w/o manager buy in
 No operational integration
AGILE

21. Big ROI: Pittsburgh Mercy After
 Organization of Forecast Groups & Processes
 Group managers by functional areas—e.g.
 Community Treatment Teams
 Child Services
 15 Groups each meet once a quarter
 3 to 12 managers per group
 4 members from accounting/finance
 Real time process elements
 Alight Planning displayed on Overhead Projector with Smart Board
 Ray is facilitator; Alight Admin on mouse & keyboard
 Review / make changes in real time
 Everyone sees everything!
AGILE

22. Big ROI: Reduce Detail 10k to 3k line items
 Not Just a ―SOFTWARE ISSUE‖ - a ―SOLUTION ISSUE‖
 Moved to a lower level of detail by reducing T&E accounts
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23. Big ROI: Actuals ―Rates‖ Drive Plan ―Rates‖
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24. Big ROI: Pittsburgh Mercy - Results
 Financial Results
 $600K annual impact to bottom line
 Combined revenue increase and costs cut
 Process Results
 No budgeting
 Global updates twice a year – detailed updates quarterly
 Forecast accuracy to 2%
 Manager commitments based on demonstrated best practices
 Model Status
 Now on third model iteration built from scratch
AGILE

25. What is Agile Planning?
3-Minute Overview
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26. The Value of Traditional Planning Over Time
But ROI
diminishes
quickly
over time.
VALUE
High ROI at
the early
stages of
planning…
TIME
Source: The Agile Planner Blog
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27. The Value of Agile PlanningTM Over Time
Long-term
VALUE value from
planning
increases
significantly
ROI remains
high in the
early stages
of planning…
TIME
Agile Planning Defined: Impactful planning that addresses the right
business issues at the right time with the right people at the right
level of detail. Unlike budgeting, it is a continuous process that adds
increasing value over time.
AGILE Source: The Agile Planner Blog

28. Next Steps: Who wants to go Agile?
 Free - if exploring rolling forecast or Agile Planning
 Customized ROI Assessment
 In-Depth Planning Model Review
 Customized Planning Maturity Curve Report!
 Recorded Webinars
 IE Group Workshop: Application Requirements for Rolling Forecasts
 www.AlightPlanning.com/Workshop/Requirements-for-Rolling-Forecasts/Video.html
 Transforming Planning at Pittsburgh Mercy
 www.Alightplanning.com/Webinars/PM/Video.html
 IMA June 2012: Case Study: Measuring the ROI of Planning Software
 http://event.on24.com/r.htm?e=463939&s=1&k=AC2FB205C027E8CF17646BAE071ECC9
1 (Register and then click Launch Presentation)
 Follow up with Kevin Pellegrino, VP Sales & Marketing
 kpellegrino@alightplanning.com
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29. Wrap-Up & Preliminary Implications
 Small Companies looking only to streamline existing planning
processes will have marginal type 1 benefits; they may in fact be
better off sticking with spreadsheets!
 While end-user licenses may benefit the finance department, there is
minimal (and even sometimes negative ROI) associated with
replacing spreadsheets as reported by end users; many of whom
prefer to stick with spreadsheets and only enter data in once a year
anyhow.
 It is no surprise that management prioritizes type 2 benefits as this
is where one can experience the ―BIG ROI‖
 To achieve type 2 benefits, ―software‖ alone is insufficient. We need
ongoing, iterative training & model building to cross the
planning maturity curve by:
 optimizing ―level of detail‖ - ―implementing driver-based planning‖
 ―integrating (not just importing actuals)‖ - ―leveraging scenario analysis‖ to better
communicate the model and deliver actionable knowledge to inform better
business decision making
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30. Examples of Type 2 Benefits
 Specialized Functionality
 Roll the Forecast
 BS/Cash Planning
 Integrate Short/Long Range
 Operations Integration
 Integrate Drivers
 Volume/Rate Causal Analysis
 Capture/Calculate KPIs
 Profitability Analysis
 Complex Allocations
 Analyze Customer Profitability
 Analyze Product Profitability
 Decision Support
 Interactive Dashboards AND Real-Time Planning
 Scenario Analysis On-the-Fly
 Strategy Analysis
AGILE

31. Planning Maturity—Agile Planning
Planning Maturity Curve (PMC)
Effort
Forecasting
Reporting Forecasting/Agile Planning
Budgeting
Seat of Pants
AGILE Business Value

32. Types of Models
Doing the thing right vs. doing the right thing
 Lilien and Rangaswamy, Marketing Engineering, (2001), page 11-13
 “Descriptive decision models address the question, ―What will happen if we do X?‖
 Normative decision models address the question, ―What is our best course of action
in a given situation?…explore the value of a decision option under different scenarios
(Note #1)…when there are only a few options..descriptive models may be
adequate…with many options to choose from, formal mathematical procedures are
needed.‖ (Note #1)
 Shapiro, Modeling the Supply Chain, (2001), pages 10-11
 “Descriptive models are used to better understand functional relationships, e.g.,
 Cost relationships that describe how direct and indirect costs vary as a function of cost drivers
(Note #1)
 Simulation / Forecasting models
 Normative models..that practitioners develop to help make better decisions. Our view
is that normative and optimization models are synonyms.‖
 Note #1: Descriptive models must evaluate alternative options or scenarios, one at a
time, to find the best one. Normative models evaluate huge numbers of alternative
scenarios, simultaneously, and chose the best.
Thanks to Alan Dybvig for Creating this Slide
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33. Planning Maturity Curve with Optimization
Effort
Forecasting •Implement unit-based planning
•Integrate (don’t just import) actuals
•Implement scenario analysis
Reporting
Forecasting/Agile Planning
Move out of Excel Optimized Forecasting/
Reduce level of detail
Budgeting Agile Planning
•Implement optimized unit-based planning to create the
maximally profitable projected income statement
•Implement cost function variance analysis with actuals
•Implement scenario analysis using profit, EVA and CLV
•Implement profitability analyses
•Implement analyses of broader range of constraints
Seat of Pants •Implement supply chain optimization
AGILE Business Value