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Impact of Digital Disruption on Finance and a Roadmap for Success

8th Annual San Antonio CPE Event June 28, 2018

Introductions

Dan Spaeth Business and Technology Practice Leader Former CIO, CFO, SVP Sales and Marketing CPA Aventine Hill Partners

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Agenda

• Discuss How Finance Has Transformed

• Define Digital Disruption

• Identify Key Enablers for Finance Roadmap

• Walk-Through Modern BI Tools

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In Business and Finance – Time is Money

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DIGITAL DISRUPTION

What is Digital Disruption?

What is Digital?• Social Media• Mobile• Cloud/Open Systems/Web/eCommerce• Better and Cheaper IT• Analytics/Big Data (Digital doesn’t work without data & analysis)

What is Digital Disruption?• Fundamental technology driven change of markets, consumer experience and

business models across industries (e.g. Uber, Electronic Books, Netflix…)

Digital Disruption is Accelerating Finance Transformation

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Select Trivia

1. 49% - 36% - 15%2. 13%3. Gummy bears, frozen pizza, ice cream4. 20 Million or 13.35. 2.5 Petabytes6. June 29 , 2007 – 4.5 billion – 52%7. 2011

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What is Big Data?

• Petabytes & Zettabytes

• Streaming• Real Time

Feeds

• Text• Audio• Photos• Video• Social Media• Sensors

• Do You Trust Your Data?

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BIGDATA

VOLUME

VARIETY

VERACITY

VELOCITY

Significant Volume

Numerous OptionsSpeed

Accuracy & Reliability

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FINANCE 20 YEARS AGO

Efficiency• Cost• Productivity

Effectiveness • History of big surprises/adjustments• Time to close books• Cust. sat. and status as strategic

partner• Adequacy of controls• Degree of system integration• Degree of self service/web

enablement• Quality of decision support

Goal

Majority of Companies

Cost of Finance as % of Revenue • 1% was a major goal • Driven by Shared Services,

System Consolidation, Automation

World Class Finance 20 Years Ago

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1 2 3 4

1

2

3

4

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World Class Finance 20 Years Ago Continued

• Cash Close• Accrual Entries (expense,

investment & reserves)• Balance Sheet &

Income Statements• Performance Indicators

Process daily accounting data, close the books & prepare reports for analysis

Annual planning & budgeting process & quarterly reforecast

Prepare reports & filings for external sources (e.g. SEC, NAIC, OSFI, analysts, other stakeholders)

Analyze operating results & identify & report drivers of key items impacting business results

• Annual Report• Press Release• Analyst Supplement • Statutory Statements

• Variance Analysis• Standard Analysis Package• Management Review

Scorecard• Senior Management Signoff

Plan

Analyze

• Strategic Business Plan

• Operational Plan• Detailed Budget• Reforecast

Outputs

Selected

Collect

Distribute

Manage/improve close process, maintain application infrastructure & develop human resources

Sequential Financial Management Life Cycle

Outputs

Selected

Outputs

Selected

Outputs

Selected

Maintain Infrastructure

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External Data

• Extract• Stage• Cleanse• Transform• LoadFA

COST

HR

AP/AR

G/L

• Business Area• Some Distribution• More Detail

OtherOperational

Sources

ETL Tools

Data Warehouse• Enterprise • Centralized• Most Detail

ConsolidationInvestment

Mgmt.

Budgeting ABC

• Application Specific • Distributed• Less Detail

OLAP Data Marts

Relational Data Marts

Integration Server

&ETL Tools

OperationalData Store

• Near Real-Time

Portal

• OLAP Analysis• Ad Hoc Query• Modeling• Spreadsheet• Web Reporting

APPLICATIONS

World Class Finance 20 Years Ago Continued

External

The Financial Information Infrastructure Vision

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ROADMAP TO THE FUTURE

Finance Today – Vision

Finance Operations Business Unit Finance Technical & Special Finance

Cloud Based Technology & Big Data Hadoop Information Infrastructure

• Shared Services/BPO• Automated Day to Day

Transactions• Continuous Close

• Integrated Planning• Analytics• Modeling

• Tax• Risk• Compliance• “Czars” – e.g., Cash,

Risk

Talent & People Development

Streamlined Factory Embedded in BU’s - Virtual & Collaborative

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Finance Roadmap

Finance Today Future Finance

Big data infrastructure and improved analytics capabilities is a great place to start!

2018 2018 2019 2019 2019 2019 2020 2020Initiatives Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Big DataPeopleSpecialty TechCloudOtherCore ERPAutomation

Illustrative Roadmap

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Organizations Have Always Collected/Analyzed Data

What’s Different Today?

• Hadoop distributed file system (speed & accuracyrunning in memory – move compute to data)

• Low cost hardware and storage

• Explosion of many forms of data

• Cloud and robust software and tools

• Internet/IOT, mobile and social media maturity

• Focus on data science and technical resources

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Big Data – Bottom Line

Use Data and Analytics To:

• Spot trends and patterns

• Predict customer behaviors/needs

• Personalize offers and products

• Delight customers – improve business

• Use it in real time to gain competitive advantages

$$$

Action

Insights

Foundation

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Marketing Analytics is Critical

Marketing Spend Analysis

• Traditional tactics have lower ROIs than digital, E.G.:• Digital Display Ads Have a 7:1 MROI

• Targeted Emails have a 4:1 MROI

• FSI’s (inserts) have a 1:1 or less MROI

• Finance can play a key role in measuring marketing ROI and optimizing marketing spend on the most valuable channels and campaigns

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High-Level Big Data Infrastructure

Data Lake/Hub

On-Premises/Cloud Computing Platform

Scalable Physical or Virtual Clusters/NodesData Feeds/Sources

Internal/External

CRMERPOTP

CDW/EDW

Social Media, Web, Mobile

IOT/Sensors

3rd Party

Batch/Stream

Flat Files/Data

Data Processing

Hadoop/HDFS

AI, Machine Learning, Data Science Tools

Apps+

ToolsCustomers

Developers

Users

Product and Service Recommendation Engines

Real Time Alerts – Supply Chain, Customer, Etc. Actionable Trends and

Patterns

Campaign Management

Queries

Visualization, Dashboards, Reporting

Predictive Analytics and BI

Statistical Analysis

Interactive Web/Mobile

Interfaces

ETL

Example Business Capabilities

Security/Encryption/Identity Management

People and Talent – Analytics Leaders, Data Scientists, Data Analysts, Data Engineers, System Admins, Business Analysts

Open Source and Interoperable Applications, Products and Tools

Technology Stack

Web Analytics

API’s

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Roadmap for Success Key Elements

Streamlined Factory1. Highly automated financial processes/transactions

• Artificial intelligence• Robotic process automation• Integrated cloud systems

2. Continuous close, budgeting and reporting leveraging business intelligence tools and big data infrastructure (with exceptions for quarterly and annual reporting)

3. Lean six sigma and continuous improvement around end-to end processes

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Roadmap for Success Key Elements Continued

Business Unit Finance1. Finance collaborative model with key functions – Marketing, IT,

R&D, Operations, Analytics/Data Science

2. Big data, business intelligence and analytics capabilities• Modeling business scenarios and changes• Rapid/real time reporting• Finance as data analytics hub of the organizations

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Roadmap for Success Key Elements Continued

Specialty Finance1. Finance seen as business value creator

• Transfer pricing optimization• Working capital management• Tax optimization• Currency and commodity hedge management

2. Apply enabling technologies• AI, Robotic Process Automation in area such as tax• Blockchain in areas such as supply chain• ERP cloud platform with add-ons- Tax optimization, profitability analysis, specialty vendor IP

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Roadmap for Success Key Elements Continued

Specialty Finance3. Compliance as a strategic differentiator

• Highly automated compliance capabilities• Machine learning• Single source of compliance truth

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BI is a Great Early Roadmap Win

2018 2018 2019 2019 2019 2019 2020 2020Initiatives Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Big DataPeopleSpecialty TechCloudOtherCore ERPAutomation

As part of a big data analytics strategy, quick wins can be implemented with common BI tools.

Illustrative Roadmap

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POWER BI

Why PowerBI?

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Power BI Report Canvas for Sales Data

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Interact with Canvas by Pressing Action Button(s)

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Search by State

Multiple Visualizations on One Canvas

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Data Updated Based on Search Criteria

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Filter by Multiple Criteria

Select Anywhere on Canvas

Numerous Ways to Interact with Data

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• Define KPI’s/metrics• Mock-up POC/

wireframe• Determine roles &

technical infrastructure

• Identify data sources and mapping

• Define deliverables, timeline, plan, budget & security approach

• Connect to databases, files, websites

• Create formulas to connect data sources or extrapolate data

• Cleanup queries • Resolve issues and

questions

a

• Create canvases with visualizations

• Install Gateway • Schedule data

refresh• Validate data • Test functionality of

canvases & scheduled refreshes

• Create support manual

• QA & validate internally

• Demo final solution• Update solution with

final changes• Provide support

documentation • Perform additional

training as required

STEP

STA

SKS

PowerBI Implementation Framework

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VALIDATE & HAND OFFTo End Users

CREATE & TESTDashboards & Reports

CONNECTData Sources

DEFINEBusiness & Technical

Requirements

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A Final Thought…

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QUESTIONS?

CHANGE HAPPENS. We Can Help.

www.aventinehillinc.com

Thank You!

dan.spaeth@aventinehillinc.com

CHANGE HAPPENS. We Can Help.

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