Bolstering the Finance Foundations for BPM – It’s About Data IntegrationTheresa Clark – VP, Finance Transformation

April 2005

Overview

• Defining BPM• Starting with Finance

– Why Finance?– Finance Data Integration Issues– The Current Architecture– The History of Finance Data

• How to Proceed – Moving Ahead– Suggested Architecture– The Effort Required– Compliance is Next– The Data Test

• Making BPM a Reality

The Definition of BPM – Starting on the Same Page

• BPM is a methodology not a technology

• Includes all processes, methods and supporting technologies

• The analytics are inclusive of all critical business information — operational and financial

• The processes are integrated and closed loop from planning through monitoring

The goal of business performance management is to optimize a company’s ability to execute against its strategies and measure the business.

Stating the Obvious — Data Integrity Is Key to Performance Measurement

Obviously, having the correct data for BPM is paramount

Unfortunately, this is much harder than it should be

“As with any style of business intelligence, poor data quality can lead to misguided decision making. CPM, with its critical role in compliance and support of strategic business processes, demands a strong focus on data quality.”

– Gartner, T. Friedman 2004

A Starting Point — BPM Starting with Finance Data

• There is a talk of ‘finance-centric’ focus of BPM. The need to ensure that there is a closed loop from the operational metrics to planning.

“To have a BPM suite, the solution should include financial BPM (e.g. financial reporting, consolidations, business planning) as its central application, with the ability to build out BPM components

for CRM, SRM and other applications.” – META Group,

January 2005

Why Finance?

Finance should be at the core of BPM on all fronts

• Finance data constantly undergoes audit scrutiny• Finance data is pervasive in key metrics • Finance personnel have the analytical skill sets and• Finance understands the business processes

BUT…

There are Integration Issues in the Finance Data

With a 1% of revenue budget and constantly increasing demands, the finance architecture has become somewhat of a morass:

• Legacy data too delicate and time consuming to integrate• ERP systems put in piece parts or “vanilla”• Data marts and special apps provided to solve individual

needs• Warehouses built and modeled over long periods of time and

difficult to maintain• Excel® is a central BI tool• BI of every flavor to suit multiple end user needs• IT departments requiring specialists to maintain each layer

BITools

ERPReporting

LegacyTools

Multiple Intelligence

ToolsLarge

Analyst Staff

!?!

The Resulting Current State Architecture

Multiple/Custom

ETLDisparate Reports

DependentEnd-users and

Decision Makers

OLTP Systems Data Management

Enterprise Analytics

Multiple Custom

Data Marts

MultipleSource

Systems

ERP

Operational

Other

Legacy

ThirdParty

FlatFiles

• Handsome reports• Data integration and

accuracy issues revealed • Planning is paramount

Looking Back Before Forging Ahead —20 Years of Finance Data in Short

1985 1995 2005

• Reports: Massive volumes of pieces of data

• Effort: Compiled by lots of people around the globe

• Systems: Legacy, Lotus®, flat file databases

• Reports: Data dumps from ERP and systems – ugly

• Effort: Lots of data in, Pivot table lives, Excel® Lots of tired people.

• Systems: ERPs going in, budgeting, consolidation

• Reports: Looking good• Effort: BI gurus producing

information and plenty of Excel® jockeys, Fewer people but tired ones

• Systems: ERPs in place , BI tools galore, data marts

• Siloed reports on specific information

• Costly information• Highly subject to errors

• Speedier data• Disappointment with

information• Seeking common terms

Data and facts – Yes please. May I have some?

Ugh. Data overload. Can you boil this down please?

Nice report. Where is it from? Is it correct? Prove it, please.

The Request

The Activity

The Result

The Environment

Quick Fast Turbo

How Do We Move Ahead?

• We learn from our history and experience– ERPs don’t have all the data and are a bit stubborn about

sharing their data– A warehouse is the way to make diverse data sources come

together– Less is more with tools– Excel® may actually get a Nobel Prize, but it does not solve all

analytics issues– Data integration matters

• We take this moment of opportunity where Finance is a focus and BPM is a must to shore up the underlying technology layers

Make Certain to Revisit the Data Foundations

Defined Hierarchies Allocations

Level of Granularity

Clear Securities

Well Defined

CoA

ERP Operational Other LegacyFlatFiles

Taxonomy

Clarity

The Better Place to Be

Standard Sourcing

Independent End-users and

Decision Makers

OLTP Systems Enterprise Analytics

MultipleSource

Systems

ERP

Operational

Other

Legacy

ThirdParty

FlatFiles

Company-wide Data Warehouse

Unified Finance-centric

Data

Dashboards, Metrics,

and Alerts

BI

Data Management

It May “Pinch A Bit”

• What needs to be adjusted will vary by enterprise– The age of the technologies, the timing of implementations, the

pace of acquisitions…

Tune

Overhaul

Review ERP capabilitiesTurn on functionsReset parameters

Implement workflowAutomate excelTune the warehouse

Restructure the CofAImplement a warehouseReimplement securities

Implement/Change ERPConvert legacy to newReplace built with new

Low High

The Level of Effort Will Vary By Enterprise

Effort Requirement

These are only some examples of possible changes

And Next Comes Compliance

• The focus on controls, data integrity and corporate governance is a matter of evolution not just a harsh government reaction in the US

• In a global economy, a set of rules of play at the internal controls level has always made sense. Shades of IFRS

• Attempted avoidance of an internal controls scrubbing appears a bit weak

• Many countries and industries have begun to require a focus on governance and controls as a matter of sound corporate citizenship – UK’s Combined Code, Basel II, Germany’s Cromme Code etc.

• Reported according to GAAP requirements

• Reported in correct category

• Reported in correct period

• Auditable

• Details tie to totals• Data is secure • Data access is restricted and

segregated• Calculations are accurate

and auditable• Data ties to source• Consolidation/compilation

accurate

• Accounting is appropriately applied

• Accounting is correct• Calculations are correct• Transaction was

approved• Transaction is legitimate• Transactions are secure• Access is appropriate

The Test of the Finance Data Looks Like This

Reported Financials

FinancialAnalytics

ERPB

LegacySystems

FlatFiles

ERPA

BIData

Making BPM A Reality – It’s in the Data

• Start Your BPM Initiative with Finance • Find the Means to Integrate Your Data

Now – Look at tools that can enable

analytics while you are transitioning data to the goal state

• Look at your Architecture in Light of BPM– You need a warehouse that can do

cross-functional analytics– You need ready access to your most

current data– You need to your data to be

auditable to the source

Measure

Learn

Adjust Monitor

Enterprise Wide BPM is Now Attainable

www.decisionpointsw.cominfo@decisionpointsw.comph: 800-970-5372