driving a future ready enterprise

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1 #SmarterBiz Driving a Future-Ready Enterprise Del Krause, Sales Manager, IBM Business Analytics [email protected]

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Presentation from IBM Smarter Business Summit: Halifax Sept 10th 2014

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  • 1. Driving a Future-Ready EnterpriseDel Krause,Sales Manager, IBM Business [email protected] #SmarterBiz

2. New dynamics put new pressures on CFOsUncertainty Regulatory environment and volatility Uneven economic recovery Growing shareholder expectations Changes to currency and financialinstitutions Globalization and demographic shifts...growth and job creation are still tooweak. New risks are arising while severalold risks remain. (IMF) Higher levels of transparency New cybersecurity / informationsecurity regulations Focus on corporate governance75% of security breaches are driven byfinancial motives (Verizon)Business model innovation Changing nature of transactions(e.g., mobile) Partnering for speed Growth in emerging markets Cash-rich balance sheetsIn the U.S., non-financial companies havea record $1.45 trillion in cash (Forbes)2 #SmarterBiz 3. CFO insights from the IBM Global C-suite Study:576 CFO interviews from around the worldCentral and Eastern Europe57 Western Europe15519Middle East and Africa 51Asia Pacific3 #SmarterBizJapan98North America102South America94Source: Question E--Participant Country 4. CFOs rank second only to CEOs in collaborative C-suiteinfluenceC-Suite collaboration partners78%65%24%CEO CFO All othersSource: CFO insights from the Global C-Suite Study, IBM Institute for Business Value, 2014Life Sciences, Unites States Source: Question B6--Which of your C-suite peers do you work most closely with in support of the enterprise?Finance has a role in bringingbalance to the funding ofinnovation. We play a role inchallenging ideas and callingout where they are not working.Finance applies discipline to theprocess4 #SmarterBizCFO, 5. The gaps between importance and effectiveness have grownsince 2005, demonstrating growing business pressuresLargest gaps between importance and effectiveness58%19%46%34%42%37%27%37%33%205%increase35%increaseDrive integrationof informationacross theenterpriseDevelop talentin the financeorganizationOptimize planning,budgeting andforecasting2013Source: CFO insights from the Global C-Suite Study, IBM Institute for Business Value, 20145 #SmarterBizExecuteContinuousfinance processimprovementsMeasure/monitorbusinessperformance2005Source: Question CFO1--How important are each of the following areas of responsibility to your enterprise? CFO2: Howeffective is your organization in the following areas? 6. Finance organizations continue to rely on spreadsheets andintuition two-thirds of the timeCapabilities/tools used to support Finance14% 52% 19% 15%Intuition Spreadsheet ERP Analytic tool0% 50% 100%We need to ensure wedeliver value throughchanging technologyversus being a slave toour systemsCFO,Insurance, United Kingdom Source: CFO insights from the Global C-Suite Study, IBM Institute for Business Value, 2014Source: Question CFO6--What capabilities / tools does your organization use for the following activities?6 #SmarterBiz 7. Flashback: The 2010 Global CFO Study identified 4 Finance profiles,with one group, Value Integrators, outperforming the restHighFinance EfficiencyEnterprise-wide informationstandardsStandard financial chart ofaccountsCommon finance data definitionsand data governanceStandard/common financeprocessesLowFinance efficiency and business insightValueIntegratorDisciplinedOperatorScorekeeperConstrainedAdvisorLow HighBusiness InsightOperational planning and forecasting capabilityFinance talent developmentCommon planning platformValue IntegratorPerformance optimizationPredictive insightsEnterprise risk managementBusiness decision makingDisciplined OperatorFinance operations focusedInformation provisionPerformance interpretationConstrained AdvisorAnalytics focusedSub-optimal executionFragmented dataScorekeeperData recordingControllershipMultiple versions of the truthSource: IBM Institute for Business Value,The Global CFO Study 2010, The Global C-suite Study 20137 #SmarterBiz 8. Flash forward: Value Integrators are pushing the boundaries ofefficiency and insighta subset are emerging as PerformanceAcceleratorsHighFinanceEfficiency Value IntegratorValue Integrator *Business InsightHighPerformanceAccelerator* Value Integrators are 30% and Performance Accelerators are 7% of the overallCFO population interviewed.Source: CFO insights from the Global C-Suite Study, IBM Institute for Business Value, 2014Comparison of average rankingon measures of profit and70% morethan the remaining Value8 #SmarterBizrevenueIntegratorsSource: Question E4--How does the revenue growth of your enterprise compare to your industrypeers over the past 3 years?; Question E5--How does your enterprises profitability compare toyour industry peers over the past 3 years? 9. Performance Accelerators are defined by the fact that theyreboth better at performing core tasks and more willing to enternew arenasEffectiveness of FinanceProfitability/Economic Analysis 91%Mergers and acquisitions22%Source: CFO insights from the Global C-Suite Study, IBM Institute for Business Value, 20149 #SmarterBiz89%Pricing39%Demand planning and forecasting52%100%31%50%90%Product/service development78%Core financeOrganic growthInorganic growthPerformance Accelerators Remaining Value IntegratorsSource: Question CFO5--How effective is Finance in the following areas? 10. Insurance company, Canada Performance Accelerators strong focus on data analyticsenables them to excel in delivering stronger businessforesightEvaluate market trends andcompetitor actionsEffectiveness of FinanceApply predictive modeling to improveforesight and trigger actionChallenge business partners assumptions,business cases and plansCollaboratively create timely, reliableforecasts to steer business performance44%60%59%30%31%74%My objective is tomove the finance stafffrom a state oftransaction thinking toone of analyticalthinking92%59%Performance Accelerators Remaining Value IntegratorsSource: CFO insights from the Global C-Suite Study, IBM Institute for Business Value, 2014Source: Question CFO7--How effective is your organization at performing the following?10 #SmarterBizCFO 11. Strong business foresight defines a future-ready enterpriseKey characteristicsAnalytics appliedto new andemerging datasourcesFinanceITHRProcurementsourcingCross-channelcommerce,fulfillmentSalesMarketingpromotionsForesightCustomerservice, casemanagementAutomatedrecurring analyticprocessesPredictiveintelligence appliedto steer thebusiness and adaptto risk more reliablyIntegrated financialand operationalinformation to deliverdeeper insights11 #SmarterBiz 12. IBM is the ultimate partner to drive a future-ready enterpriseValueAnalytic DataManagementValue Integrators Performance AcceleratorsSpan Financeand Operations12 #SmarterBizMaturityAligninformationOptimizeoutcomesBestPracticesStrategy AlignedOrganizationAnalyzepatternsProcessAutomationEnterprise-wideTransformationContinuousSteering Managing multi-dimensionalperformanceinformation FinancialConsolidationand Close Budgeting IncentiveCompensationManagement Span Financial &Operations Leading & ExternalIndicators Driver-basedmodeling Scenario Analytics Rolling Forecasts Metrics andScorecarding StrategyManagement Product andCustomerProfitability PredictiveAnalytics Big DataAnalytics Planning, Analysis,and Forecasting Collaborative andNarrativePerformanceReporting DisclosureManagement Sales PerformanceManagement Agile enterprise Risk-adjustedValueManagementAccelerateEngage & LinkFrontlines 13. McCormick protects profit with detailed understanding ofcustomer value and uncertain pricesChallenge Significantly reduce the profit at risk due to volatilecommodity input pricesSolution Collect and analyze sales plan data by customer and acrossover 30,000 SKUs Evaluate the resulting profit contribution of product inputin the bill of materialResults Diagnosed profit improvement moves ahead of time;commodity price increases can be passed on to consumersor renegotiated with industrial customers Conducted value engineering with operations to reformulateflavors using commodities from different regions and suppliers TM1 and Cognos helped McCormick record $56 million incost savings from their Comprehensive and ContinuousImprovement programMcCormick is a global leaderin flavor. With more than $4.0billion in annual sales, thecompany manufactures,markets and distributes spices,seasoning mixes, condimentsand other flavorful products tothe entire food industryretailoutlets, food manufacturersand food service businesses inmore than 110 countries.CHALLENGESOLUTIONRESULTS13 #SmarterBiz 14. Mueller, Inc. uses advanced business analytics to transformits business model, becoming an information driven enterpriseChallenge Needed to analyze its business processes and performanceto assess how well employees were adapting to its newbusiness strategy shift from manufacturing to retailCHALLENGESOLUTION Implemented business analytics technology that enables allcompany employees to view and analyze company data innear-real time Empowered workers to measure individual performance andassess how their work affects the bottom lineRESULTS 113% ROI through use of business analytics 20 30% reduction in scrap metal manufacturing waste 20% return on assets resulting from rapid identification andtracking of business process improvementsBased in Ballinger, Texas,Mueller, Inc. manufacturesprefabricated steel buildings,roofing and constructionproducts. In business morethan 80 years, the companyserves customers in thesouthwestern United States.Mueller employs more than 500people and operates threemanufacturing and distributioncenters in Texas.14 #SmarterBiz 15. Three analytics imperatives drive a future-ready enterpriseTransform thesystem ofengagementSpan finance andoperations, risk &performance management15 #SmarterBizInfuse scenarioand predictiveintelligenceGuided business processes, mobile, collaborationFinancial & OperationalPerformance ManagementNarrative Reporting &Disclosure ManagementSales PerformanceManagementGovernance, Risk andCompliancePredictive intelligence and scenario analyticsBig data platform 16. Tailored user experiences High participation and greaterfrequency Guided business processengagement Integrated social collaborationEngage allthe rightpeople whenneededFinance Executives Managers Line of business IT16 #SmarterBizTransform thesystem ofengagementTransform the system of engagement 17. Drive collaborative performance management17 #SmarterBizTransform thesystem ofengagement 18. Span finance & operations, risk & performance management Campaignscorecards Promotion plans Customer andproductprofitability Revenue plansStrategy and activity-aligned organization Salesdashboards Sales forecasts Incentivecompensation Quota plans Territories Sales channelsMarketing Sales Operations HR Finance18 #SmarterBiz Enterprisescorecards Strategicfinancial plans Profit and loss Balance sheets Cash flow Workforce KPIs Headcountplans Salary andcompensation Staffing plans Training anddevelopment Operational KPIs Strategy andoperations plans Capacity andinventory plans Product allocation New productsSpan finance &operations,risk &performancemanagementEstablish one comprehensive, analytic, planning, andscorecarding platform 19. Integrate scorecards, highlight KPI and metric variancesManufacturingSalesMarketing19 #SmarterBizFinanceLogisticsProductdevelopmentHRScorecardingand strategymanagement Communicate strategy Visualize results,outcomes and impacts Tie strategic plans toforecasting data Forecastingand correctiveactionsPerformancereportingSpan finance &operations,risk &performancemanagement 20. Assemble management and performance reports rapidly Daily, weekly, monthly and quarterly boardbooks and presentations C-suite and board packages Performance reporting Save hundreds of hours / year Reduce errors Accelerate understandingNarrative reportingWorkflow andapprovalsBusinessrules Security20 #SmarterBizSpan finance &operations,risk &performancemanagement 21. Link pay-for performance plans to strategyAlign sales territories withcorporate objectives andstreamline sales creditingIInncceennttiivveeccoommppeennssaattiioonnmmaannaaggeemmeennttTTeerrrriittoorryymmaannaaggeemmeennttQQuuoottaaImprove salesquota planningand disseminationto stakeholdersmmaannaaggeemmeennttSales performancemanagementAutomate theprocess ofadministering,calculating, reportingand analyzingvariable-based payERP CRM HRIS BI Other21 #SmarterBizSpan finance &operations,risk &performancemanagement 22. Take an integrated approach to governance, risk &compliance Reduce the cost of compliance Accelerate and streamline processes toreduce operational risk Improve decision making by providing riskinsight and transparency to businessdecisions Increase your return on capital by investingin the right opportunities Dynamically evolve as risk practices andregulations changeRisk solutionsLines of business22 #SmarterBizSpan finance &operations,risk &performancemanagementRiskFinanceTreasury 23. Apply scenarios and range plans to account foruncertainty and risk Model- Build scenarios reflecting range offuture market conditions Collaborate- Collaborate across business unitsand functions- Capture variability of input drivers Report & Analyze- Create range of outcomes- Analyze sensitivity of outcomes tovariability in drivers Plan- Plan for multiple outcomesScenario analysisRange of Outcomes Driver Sensitivity23 #SmarterBizInfuse scenarioand predictiveintelligence 24. Model multi-dimensionaloperational and financialbusiness structures Integrate predictive modelsfor statistical impact -examples Customers most likely to buyspecific products or services Customer most likely to turnto a competitor Employees most likely tosucceed Incorporate predictiveoutputs into scenario modelsand plansTransactionhistoryLikelihood of churnFuture lifetime valueCredit worthinessConsumer dataTransactionhistorySocial mediahistory24 #SmarterBizProfitabilityanalysis onretention,performanceand patternsBring profitability analytics forwardInfuse scenarioand predictiveintelligence 25. Demonstration25 #SmarterBiz 26. Technology is of ever-increasing importance to CFOsthe keymoving forward is capturing its potentialMost important external forces2010 2013Macro-economic factorsMarket factorsTechnology factorsRegulatory concernsPeople skillsGeopolitical factorsSocio-economic factorsEnvironmental issuesGlobalizationWe need to have the rightinformation on time and giveit the interpretation value.There is a need to frameinformation in a financial focusIndustrial Products company, Mexico CFOSource: CFO insights from the Global C-Suite Study, IBM Institute for Business Value, 2014Source: Question E8--What are the most important external forces that will impact the enterprise over the next 3 to 5 years?26 #SmarterBiz 27. All IBM Solutions: On-cloud or on-premisesDeployment flexibility to meet your needs today, and tomorrowCloud On premisesOur placeor yours?27 #SmarterBiz 28. Build your agendaDecrease effort Increase focusDatacollectionSpan finance andoperations risk &performance management28 #SmarterBizNew businessmodelingProfitabilityand pricingPerformancescorecardingErrorcheckingProcessmonitoringIncrease in value from analytic initiativesTransform the systemof engagementInfuse scenario andpredictive intelligence 29. 2Business valueassessmentAlign businesscapabilities withbusiness strategy, andrecommend a road mapfor improved value.3Solution workshopLay out the path ahead,from immediateimprovements to acommon future vision.Proof of conceptProve the path forward,starting small andscaling up.1Visioning workshopWhether via webseminar, at your facilityor in an IBM solutioncenter, we can begincharting a course.29 #SmarterBiz4IBM Big Data & AnalyticsIBPMer Bfoirgm Daantcae & B AluneaplyritnictssPerformance BlueprintsTake proven next steps 30. Next Steps Visit the Social Caf for access to whitepapers and much more Find more information about Performance Management at https://ibm.biz/BdFzuE Please join us at Insight 2014, the conference for Big Data and Analytics, atMandalay Bay in Las Vegas, October 26 30. More information is available in theSocial Caf or you can visit https://ibm.com/ibminsight30 #SmarterBiz 31. 31 #SmarterBiz 32. 32 #SmarterBiz 33. Trademarks and notesIBM Corporation 2014 IBM, the IBM logo, and ibm.com are trademarks or registered trademarks of International Business MachinesCorporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on theirfirst occurrence in this information with the appropriate symbol ( or ), these symbols indicate U.S. registered orcommon law trademarks owned by IBM at the time this information was published. Such trademarks may also beregistered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at Copyright and trademark information at www.ibm.com/legal/copytrade.shtml. Microsoft, Windows, Windows NT, and the Windows logo are trademarks of Microsoft Corporation in the United States,other countries, or both. Other company, product, and service names may be trademarks or service marks of others. References in this publication to IBM products or services do not imply that IBM intends to make them available in allcountries in which IBM operates.33 #SmarterBiz