Learn about best practices for financial planning and analysis (FP&A) solutions that are independent of software platform. View the video recording and download this deck: http://www.senturus.com/resources/ibm-cognos-tm1-demo-and-financial-planning-best-practices/. Senturus experts demonstrate use of IBM Cognos TM1, a high-performance enterprise planning software for budgeting, forecasting and analysis. Senturus, a business analytics consulting firm, has a resource library with hundreds of free recorded webinars, trainings, demos and unbiased product reviews. Take a look and share them with your colleagues and friends: http://www.senturus.com/resources.

1. Financial Planning
Best Practices
04/14/2011
www.senturus.com
Helping Companies Learn From the Past, Manage the
1 Present and Shape the Future

2. Agenda
• Introductions
• 12 Elements of Financial Planning Best
Practices
• TM1 Demo
• Planning Solution Case Studies
• Q&A
2

3. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire presentation and
download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos
Enterprise Planning and TM1”
3

4. Welcome and Introduction
• Senturus
– Greg Herrera, Co-Founder, CEO
– Steve Chapman, Management
Consultant
– Chris Fargo, Office of Finance
Account Manager
• IBM Cognos
– Michael Mackevicius, Technical
Manager
4

5. Who is Senturus ?
• Consulting firm specializing in Corporate
Performance Management
– Business Intelligence and Enterprise Planning
& Budgeting
– Platform-independent
– San Francisco Business Times Hall of Fame --
Four consecutive years in Fast 100 list of
fastest-growing private companies in the Bay
Area
• Experience
– 10-year focus on performance management
– More than 1,000 projects for 450+ clients
• People
– Business depth combined with technical
expertise. Former CFOs, CIOs, Controllers,
Directors...
5

6. A few of our 450+ Clients
6

7. The Best Financial Performers:
“Value Integrators”
High
32% 23%
Finance
Efficiency 33% 12%
Low
Low High
Business Insight
Source: IBM Institute for Business Value, The Global CFO Study 2010
7

8. Their Financial Results
Efficiency + Business Insight Contributes to Outperformance
Value Integrators
> 20x 49% 30%
more 14.0% more more All other enterprises
12.1%
11.3%
9.4% 9.3%
0.5%
EBITDA Revenue ROIC
5-year CAGR, 2004-2008 5-year CAGR, 2004-2008 5-year average, 2004-2008
Value Integrators also have an almost
20% better operating efficiency ratio than
all other companies examined.
Source: IBM Institute for Business Value, The Global CFO Study 2010
8

9. What do Value Integrators do differently?
% More
Data and Streamlined information delivery 32%
Analytics
Electronic data capture at the source 35%
Systematic data cleansing and auditing 31%
Business Risks in Performance Reporting 22%
Process Employed Functional Best Practices 31%
Utilized automated workflow tools 25%
Measurement & monitoring of processes 41%
Technology Common reporting platform 31%
Common planning platform 22%
0% 20% 40% 60% 80% 100%
Percent Adopted
Disciplined Operators Value Integrators
Constrained Advisors Scorekeepers
Source: IBM Institute for Business Value, The Global CFO Study 2010
9

10. 1. Use one planning process for periodic,
rolling plans / forecasts
• Don’t: Use one, long annual “budgeting” process; and a
different, infrequent (or no) reforecasting process . . .
• Do: Use one, efficient rolling reforecast process
• BENEFITS:
– One process for managers to learn (and remember)
– An efficient planning process should complete in a few days at
most
– More accurate projections due to frequent reviews and updates
– Continual management actions are based on better trend
information and accurate, timely actual-to-plan variances
10

11. 1. Planning for Employees
11

12. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire presentation and
download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos
Enterprise Planning and TM1”
12

13. 1. Planning for Cap Ex
13

14. 1. Planning for Expense Line Items
14

15. 1. Expense Summary
15

16. 2. Provide bottoms-up and top-down
planning capabilities in the same model
• Don’t: Limit planning managers to only a bottoms-up
planning model . . .
• Do: Provide top-down change and adjustment
capability
• BENEFITS:
– Goal and target setting can be done very efficiently at the
company, division, department or account levels using
“spread” or “breakback” techniques
– Only forecast (non-actual) months and open (“unheld”)
accounts are adjusted to achieve the target amount
16

17. 2. Top-down planning / forecasting example
17

18. 2. Top-down planning / forecasting example
18

19. 2. Top-down planning / forecasting example
19

20. 2. Top-down planning / forecasting example
20

21. 3. Maintain central control over drivers,
assumptions, parameters, and versions
• Don’t: Assume that distributed Excel workbooks will use
the correct drivers . . .
• Do: Use drivers wherever possible and secure drivers,
conversion factors, and versions centrally
• BENEFITS:
– All planning managers, executives and reports will refer to the
“live” scenario / version
– No confusion about what version is active
– Up-to-date global and department drivers / assumptions
21

22. 3. Planning drivers example
22

23. 3. Planning drivers example
23

24. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire presentation and
download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos
Enterprise Planning and TM1”
24

25. 4. Integrate planning solution security with
company security systems
• Don’t: Assume that data in the distributed Excel
workbooks will be secure . . .
• Do: Use company Active Directory and LDAP to
integrate security, preferably with single sign-on
• BENEFITS:
– Secure company confidential data
– Minimize redundant maintenance of security files
– Aid end user solution adoption by eliminating separate sign-on’s
for transaction vs. planning vs. reporting systems
(Note: Combined, comprehensive web portals are even better!)
25

26. 4. Integrated security example
26

27. 5. Use a centralized planning data base for
consolidation and workflow management
• Don’t: Waste time manually tracking distributed Excel
workbooks and manually consolidating them . . .
• Do: Manage plan submittals and their reviews with real-time
status and consolidate results with no latency
(CFO study corollary: “automated workflow tools”)
• BENEFITS:
– Better accountability and adherence to planning timetables
– Frequent and accurate roll-ups and reports on evolving plans
and forecasts leads to early feedback and adjustments
27

28. 5. Workflow status example
28

29. 5. Workflow status example
29

30. 6. Leverage planning solutions and integrate
planning data across multiple business areas
• Don’t: Build planning silos or only install planning
solutions in finance or a few functional areas . . .
• Do: Leverage your industrial-strength planning solution
with its centralized data base across the enterprise,
replacing Excel-based processes, and sharing plans
(CFO study corollary: “common planning platform”)
• BENEFITS:
– Integrated and timely plans between sales, marketing,
production, inventory planning, finance, tax and H/R
30

31. 6. Planning solution examples
31

32. 7. Use the centralized planning data base for
uniform, timely updating of actual data
• Don’t: Distribute actual data extract files or dozens of Excel
workbooks . . .
• Do: Leverage the centralized planning data base and
distribute actual updates often and instantly to all users in a
structure that matches the planning models and after any
necessary mappings and reclassifications
• BENEFITS:
– Integrated and timely actual updates, enterprise-wide with
centrally controlled, consistently applied organizational changes
and historical restatements
– “Single version of the truth” / “Common reporting platform”
32

33. 7. Remapping / reclassification examples
33

34. 7. Remapping / reclassification examples
34

35. 8. Distribute monthly pre-close reports for
feedback on accruals and variances
• Don’t: Close the month without line management input, nor
blind-side them with untimely variances . . .
• Do: Leverage real-time reporting capabilities to seek input on
needed accruals and to support variance research
(CFO study corollary: “common reporting platform”)
• BENEFITS:
– Shorter, more accurate financial closes
– Line management is prepared for timely, knowledgeable
executive review of results
35

36. Integrated Information = Integrated Business Process Dimensional Models
“Single Version Planning Planning Solutions
of the Truth” Data
Solutions
Planning
Actual
Data
Self-service Reporting
Querying
ERP Data Data Warehouse
Ad hoc
& Analysis
Source Systems of Record
Slicing &
Dicing
G/L Data Standard
Reports
Data Abstraction Model
Dashboard
Authoring
Data Integration
Web Portal
Dashboards/
Scorecards
Labor Data Conforming
Authoring
Report
Business Process
Dimensional Models Threshold-based
Alerts
Information Security
Other Sources
Corollary: “common reporting platform”
36

37. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire presentation and
download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos
Enterprise Planning and TM1”
37

38. 9. Distribute month-end Budget vs. Actual
reports the day after close (and close a few days after
period-end)
• Don’t: Take a week or two to close each financial period
• Do: Leverage timely report distribution capabilities
• BENEFITS:
– Actionable, timely BvA reports in the hands of line management
[ There is clearly bottom-line impact to timely management
reporting followed by timely actions. ]
38

39. 9. Distribute month-end Budget vs. Actual
reports the day after close (and close a few days after
period-end)
39

40. 10. Automatically update planning model
structures from source systems
• Don’t: Allow planning dimensions to get out of date; and
don’t waste time manually updating lists of accounts,
departments, products or their hierarchies.
• Do: Leverage automatic links and scheduled processes to
ERP tables, Systems of Record (SOR’s), and/or data
warehouse / mart data for dimension updates
• BENEFITS:
– Less data management and more analysis time for FP&A staff
– Uniformly accurate structures across all planning models and
planners
40

41. 10. Automatically update planning model
structures from source systems
41

42. 10. Automatically update planning model
structures from source systems
42

43. 11. Centrally control planning model formulas
and methods
• Don’t: Allow distributed Excel workbooks to introduce errors
to the methods and calculations used in planning
• Do: Leverage a centrally controlled planning model and data
base
(CFO study corollary: “common planning platform” / “common reporting
platform” and data base)
• BENEFITS:
– Guaranteed adherence to and consistent interpretation of
company financial policies and definitions (e.g., Exactly what
accounts define Gross Margin and Net Margin? Consistently how
are key metrics calculated?)
43

44. 11. Centrally control planning model formulas
and methods
44

45. 12. Use all appropriate company business
dimensions for planning models
• Don’t: Limit planning models and methods to only the segments
available in the General Ledger’s Chart of Accounts
• Do: Build planning processes to utilize all the business dimensions
needed to model each business area
For example, where appropriate:
– Plan sales and revenue by region, by product, by sales rep, and by customer
– Plan inventory by product and by store
– Plan factory capacity by material category and by construction type
– Plan capital expenditures by asset class
– Plan marketing by program and/or brand
– Plan travel by country, by region and/or by trip
• BENEFITS:
– More accurate plans
– Better alignment between finance and business operations
– Better integration between planning and enterprise data and reporting
45

46. 12. Use all appropriate company business
dimensions for planning models
46

47. Summary of Do’s
1. Use one planning process . . . and reforecast frequently
2. Provide bottoms-up and top-down capabilities in planning models
3. Maintain central control over drivers, assumptions, and versions
4. Secure planning data by integrating security systems
5. Use a central planning data base for instant consolidation
6. Leverage and integrate planning across business areas
7. Provide timely actual data to all planners
8. Distribute pre-close reports to improve accruals, shorten close
cycles and explain variances
9. Distribute actionable, final BvA reports within days of month-end
10. Automatically link account, department and product structure
changes to planning models (via ERP’s, SOR’s or DW’s)
11. Centrally control all formulas and models used for planning
12. Utilize all appropriate business dimensions in planning models
47

48. Summary of Don’ts
1. Use only one, annual, lengthy budgeting process
2. Provide only a bottoms-up planning method or model
3. Distribute Excel workbooks and loose control over driver values,
financial assumption values, and plan versions
4. Risk unauthorized access to planning data due to insecure files
5. Waste time chasing and consolidating distributed Excel workbooks
6. Risk silos of planning data
7. Take days or weeks to distribute actual data to planning models
8. Close financial periods without line management input
9. Wait two or three weeks to distribute final BvA reports to line
management
10. Rely on manual maintenance of planning solution structures
11. Loose control of distributed formulas and planning models
12. Limit planning model dimensions to General Ledger segments
48

49. Recommended Next Steps
1. Nail the basics . . .
by re-engineering the financial planning processes using
most if not all of the 12 best practices and a common
planning platform with a centralized data base.
2. Expand performance management’s reach . . .
by going beyond basic financial data, statements and
BvA reports to ad hoc user analytics that look at
operational measures that are integrated with financial
information using a common reporting platform and an
enterprise data warehouse*.
Top priority target: product and customer profitability !
* Incrementally-built
49

50. Effectiveness across the full CFO
agenda
Value Integrators
Scorekeepers Disciplined Constrained Value Constrained Advisors
(Baseline) Operators Advisors Integrators Disciplined Operators
0% 19% Better 33% Better 59% Better Scorekeepers
Driving integration of information
across the enterprise
Measuring / monitoring business
performance
Developing your people in the Finance
organization
Providing inputs into enterprise strategy
Executing continuous Finance process
improvements
Supporting / managing / mitigating
enterprise risk
Driving Finance function cost reduction
Driving enterprise cost reduction
Strengthening compliance programs
and internal controls
0% 20% 40% 60% 80% 100% 120% 140%
Percent more effective than baseline
Source: IBM Institute for Business Value, The Global CFO Study 2008, 2010
50

51. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire presentation and
download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos
Enterprise Planning and TM1”
51

52. Contact Senturus
Senturus, Inc
www.senturus.com
sales@senturus.com
888-601-6010
52

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