The FP&A organization along with the rest of finance is undergoing a transformation, with increasing responsibilities and their accompanying challenges, all of which have to be undertaken with limited resources. FP&A leaders, like their peers in other finance groups, are being asked to elevate their focus and extend their reach across the organization, while still delivering on traditional blocking and tackling activities. Hear from FP&A leaders who have created significant company value while navigating high growth business environments. Learn how best practices – on KPIs, planning cycles, rolling forecasts, and other techniques – have enabled high performance, both for their functions and for their overall business. Speakers: Eileen Tobias, Sr. Director of FP&A, NetSuite Eric Zimmerman, Manager of Financial Planning and Analysis, Infusionsoft Presentation delivered at ProformaTECH 2014 - http://www.proformatech.com Track: Operational Advantage | Session: 4

1. Delivering Value
and Financial
Performance Leading FP&A
Practices of High
Growth Companies
Presenters
Eileen Tobias, Sr. Director Financial
Planning & Analysis, NetSuite
Eric Zimmerman, Financial Planning
& Analysis Manager, Infusionsoft

2. Agenda
• FP&A – Challenges Today
• Planning - Business Strategy and Value Creation
• Planning Cycles
• Designing an Effective Process
• Process Overview
• KPI Framework
• How Cloud Helps
• Key Takeaways
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3. NetSuite: World’s #1 Cloud ERP
Background
Performance
Founded 1998
World’s most deployed cloud ERP
Publicly traded on NYSE: “N”
Used by 20,000+ organizations
Offices in 10 countries
Fastest growing top 10 ERP
2,400+ employees
Used across 100+ countries
$414.5M revenue FY13 (34% Growth)
#1 Cloud ERP Suite
Industry Recognition
Best Financial Management
Best Cloud Infrastructure
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Fastest Growing
Top 10 FMS Vendor
3rd Year Running
Top 10 Cloud Companies
to Watch

4. FP&A – Challenges Today*
•
•
Strategic Initiatives – FP&A is increasingly is tasked with contributing to organizational strategy, as well as meeting
demand for operational insights.
•
Getting Insights - data is not translated into information quickly enough to be useful to business units.
•
Single View - information is not sufficiently detailed to be meaningful. A unified view to data and information is
essential to gain visibility to financial and operational performance.
•
Closing and Reporting - takes twice as long for an average company vs. a world-class enterprise.
•
Lacks a Standard Discipline - example standard chart of accounts, common processes, globally mandated
standards, common data definitions etc.
•
Information Gathering Process necessary to generate timely, relevant insights can be extremely challenging.
•
Inefficient Budgeting & Forecasting - iterative processes that frequently yield inaccurate results.
•
4
Confronting Global Change - not fully equipped to analyze and deal with new business risks leading to forecasting and
transaction processing errors.
Internationalization - diverse business structures, assorted systems and processes
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*Rethinking the FP&A Operating Model – FTI Consulting

5. Planning - Business Strategy and Value Creation*
Basic Practice
Progressive Practice
•
Annual plan with no longterm forecast
•
•
Strategic initiatives not
quantified
•
•
Strategic planning is shortterm and reactive to
immediate problems
•
•
Planning is a nuisance:
Business ignores targets,
participation is a necessary
evil to avoid corporate
retribution
•
Finance acts as the steward
for the process to assure
some minimal level of
accuracy amid business
pushback
Process
Characteristics
Business
Integration
Value Finance
Brings
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Benchmark Practice
Annual plan with re-forecast
during year, long-term forecast
independently managed
Strategic initiatives are prioritized
and approved annually, but not
translated into targets
Strategic planning focuses on
improving current operations
•
Long-term forecast integrated with annual
plan, budgets, and revised interim forecasts
•
Strategic plan and strategic initiatives are
core inputs into planning process
•
Strategic planning focuses on realizing a 3-5
year vision that addresses most critical
market and organizational challenges
•
Planning is tolerated: Finance
establishes a plan and everyone
accepts the need to complete an
orderly and accurate process
•
Planning is core: Planning process is critical
to governing business decisions, goal setting,
and performance management
•
Finance strives to be an efficient
process operator to minimize pain
and assure accuracy
•
Finance is a strategic player that uses the
planning process as a catalyst for achieving
performance goals
*Rethinking planning, budgeting and forecasting - A Deloitte perspective

6. Leading Practices in Planning Cycles*
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*Rethinking planning, budgeting and forecasting - A Deloitte perspective

7. Planning, Budgeting and Forecasting - Principles
•
Our Philosophy
•
Fund top line growth while maintaining profitability and generating cash
•
Focused and valued externally on revenue growth
•
Forecast used to manage the business
•
•
•
Robust feedback loop between Finance, Executive team, and business owners
Top-down approach
What do we forecast?
•
•
Rolling eight quarter view updated monthly
•
•
Revenue, Expenses, Deferred Revenue, Operating Cash Flow
P&L forecasts saved as different versions in Financial Planning module
Forecasts that are unique to SaaS companies
•
•
Customer-level revenue forecast by month
•
Churn
•
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Deferred Revenue
Headcount – expense lever
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8. Planning & Forecasting – Designing an Effective Process
Integrated Planning Capabilities
Forecast Inputs and Outputs
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9. Budgeting and Forecasting Calendar
• Annual planning done Q3 / Q4 for the next fiscal year
• Targets are locked down for operating, quota-setting, and other
compensation purposes
• Completed and reviewed by Board in December
• Final version completed and approved in January
• Rolling forecast updated monthly
• Eight quarter view
• Reviewed with CFO and Executive team
• Each forecast is saved and documented
• Multi-year planning done annually
• Completed each year during Q3 and reviewed with the Board
• Multi-year planning at a software company is used as a framework
for broader strategic discussion on competition, new
markets, verticals, etc.
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10. Customer Level Revenue Forecasting
• Revenue visibility and predictability creates unique forecasting environment
• We typically have a high degree of visibility into next year’s recurring revenue
• Tight ranges for revenue outlook and expectations of a high level of precision
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11. Measuring Actuals vs. Forecast
• Actuals compared against P&L forecast
• Ability to measure against multiple forecast
versions
• Results incorporated into the current
forecast
• Analysis done for Income
Statement, Deferred Revenue, Cash
Flow, and other key metrics
(Bookings, Churn, PS attach rate, Hiring)
• Monthly results and forecast update
reviewed with Business Partners, CFO, and
Executive team
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12. Benchmarking
• We compare our financial performance with other public SaaS companies
• Informs our short-term and long-term target operating models
70%
Revenue YoY Growth
70%
60%
60%
50%
50%
40%
32.6%
Peer group average = 28.3%
40%
30%
30%
20%
20%
10%
10%
0%
12
S&M as % of Revenue (TTM)
0%
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44.6%
Peer group average = 36.6%

13. Analysis and Reporting
• Dashboards
• Management reporting for Executive
and Board reviews
• Predictive analytics
– Sales coverage
– Cohort analysis
• Focus on metrics that matter for our
industry
– New customer acquisitions
– Annual recurring revenue
– Cost of customer acquisition
– Retention
– Lead conversion rates
– Average selling prices
– Sales rep productivity
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14. How FP&A Benefits from the Cloud
• Distributed Team
• Facilitates off-shoring / shared services
• Supports flexible schedules / team in multiple time
zones
• Real time view into centralized data
• Single system, single database
• Browser access, visibility from anywhere
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15. Key Takeaways
Discipline:
• Get into a routine of updating forecasts at regular intervals
• Develop a set of relevant metrics and review with regular frequency
• Use dashboards to monitor real-time results and KPI’s on a regular basis
• Strive to turn most ad hoc requests into recurring analysis
– Typically if a question is asked once, it gets asked again
Flexibility:
• Ensure you have the right team and tools to facilitate fast answers
• Update forecast models for changes in the business
• Make sure mindset is in synch with business environment
– Be ready to switch from cost control mode to investment mode and back
again
• Be open to new ideas and approaches
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16. Agenda
• About Infusionsoft
• FP&A Challenges
• Budget Cycle
• Key Objectives
• Forecast Inputs
• Calendar
• FP&A Lessons Learned
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17. Infusionsoft at a Glance
• Infusionsoft is the leading sales & marketing software for small
businesses, designed to help them get organized, grow sales & save
time.
• 20,000 customers around the globe
• Explosive-growth (+45% annual revenue growth)
• $59M in revenue in 2013
• 60K+ users
• 440 employees
• Headquartered in Chandler, AZ
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18. FP&A Challenges for Infusionsoft
• Culture Change:
Old
NEW
- Annual focus
+ Rolling refresh
- Few involved
+ Cross-functional owners
- Finance mandate
+ Finance partnerships
• Staff Changes: finding, training and motivating the right employees
• Software Changes: moved from Excel based to Cloud based forecasts
• Influence Changes: true business partners to add increased value to the team
• Business Changes: How to account for acquisitions, headcount growth, new
products, and organizational changes
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19. Budget Cycle Key Objectives
 “Infusionsoft way” of forecasting -world class & continuous improvement
 Improve the forecast relevance iteratively
 Create a flexible, unified quarterly cadence to enable timely course
corrections
 Investment in upfront process, resulting in back-end time savings
 Focus on the right areas at the right time.
 Trained focus on sustainable growth
 Deliver results. Do what we said we would do.
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20. Budget Cycle- Not all forecast inputs are alike
Economic
Relevance
Variability
Speed of
Impact
Update
Frequency
Revenues
High
High
Weekly
Headcount
High
Low
Medium
Monthly
Events
High
Low
Medium
Quarterly
Advertising/Mar
keting
High
Medium
High
Quarterly
Commissions
High
Medium
High
Quarterly
Capital
High
Medium
Medium
Quarterly
All other
Expenses
20
High
Low
Medium
Medium
Annually
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21. Budget Cycle- High-level Calendar
Quarter
Start Month
Forecast Horizon
Deliverable
Q1
February
Current +3 Qtrs
Review Q1 goal attainment, make updates to
budget if outside guardrails.
Q2
May
Current +6 Qtrs
Review Q1 actual, Q2 goal attainment and First
look into next year. Update current if needed
Q3
August
Current +3 Years
Review 1H performance adjust 2H if needed and
3 Year Long Range Plan
Q4
November
Current +4 Qtrs
Review current Quarter adjust if needed and set
annual budget for next year
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22. FP&A Lessons Learned
• Culture Change:
 Cross-functional buy-in: no more “Those are finance’s numbers”
• Staff Changes:
 Adding staff is much more fun then cutting staff
• Software Changes:
 Better transparency & accuracy through integrated, cloud-based planning tool
• Influence Changes:
 Connecting strategy to daily business operations is the essence of planning
• Business Changes:
 FP&A processes need to be flexible and allow for the only inevitable of
business….Change.
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23. &
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24. Thank You For Attending
Delivering Value
and Financial
Performance Leading FP&A
practices of High
Growth Companies