ibm: driving a future-ready enterprise

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1 #SmarterBiz Driving a Future-Ready Enterprise Dan Beer, Director, Performance Management, IBM Business Analytics [email protected]

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IBM's Dan Beer discusses the role of Watson predictive analytics in mitigating risk from the CFO's office to the entire enterprise. Presented at the Smarter Business Summit in Montreal, Sept 17, 2014.

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  • 1. Driving a Future-Ready EnterpriseDan Beer,Director, Performance Management, 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, 2014Performance AcceleratorProfitability and economicanalysisPricingDemand planning andforecastingProduct and servicesdevelopmentMergers and acquisitions8 #SmarterBiz 9. 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?9 #SmarterBizCFO 10. 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 insights10 #SmarterBiz 11. IBM is the ultimate partner to drive a future-ready enterpriseValueAnalytic DataManagementValue Integrators Performance AcceleratorsSpan Financeand Operations11 #SmarterBizMaturityAligninformationOptimizeoutcomesBestPracticesStrategy AlignedOrganizationAnalyzepatternsProcessAutomationEnterprise-wideTransformationContinuousSteering Managing multi-dimensionalperformanceinformation FinancialConsolidationand Close Budgeting IncentiveCompensationManagement Span Financial& Operations Leading &ExternalIndicators Driver-basedmodeling ScenarioAnalytics RollingForecasts Metrics andScorecarding StrategyManagement Product andCustomerProfitability PredictiveAnalytics Big DataAnalytics Planning,Analysis, andForecasting Collaborativeand NarrativePerformanceReporting DisclosureManagement SalesPerformanceManagement Agile enterprise Risk-adjustedValueManagementAccelerateEngage & LinkFrontlines 12. 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.CHALLENGESOLUTIONRESULTS12 #SmarterBiz 13. 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.13 #SmarterBiz 14. Three analytics imperatives drive a future-ready enterpriseTransform thesystem ofengagementSpan finance andoperations, risk &performance management14 #SmarterBizInfuse scenarioand predictiveintelligenceGuided business processes, mobile, collaborationFinancial & OperationalPerformance ManagementNarrative Reporting &Disclosure ManagementSales PerformanceManagementGovernance, Risk andCompliancePredictive intelligence and scenario analyticsBig data platform 15. Demonstration15 #SmarterBiz 16. Three analytics imperatives drive a future-ready enterpriseTransform thesystem ofengagementSpan finance andoperations, risk &performance management16 #SmarterBizInfuse scenarioand predictiveintelligenceGuided business processes, mobile, collaborationFinancial & OperationalPerformance ManagementNarrative Reporting &Disclosure ManagementSales PerformanceManagementGovernance, Risk andCompliancePredictive intelligence and scenario analyticsBig data platform 17. 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 mediahistory17 #SmarterBizProfitabilityanalysis onretention,performanceand patternsBring profitability analytics forwardInfuse scenarioand predictiveintelligence 18. IBM Watson Analytics consumable predictive intelligence18 #SmarterBizInfuse scenarioand predictiveintelligence 19. IBM Watson Analytics sign up to use at no chargehttp://www.watsonanalytics.com19 #SmarterBizInfuse scenarioand predictiveintelligenceRReeggiisstteerr NNooww!! 20. 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?20 #SmarterBiz 21. All IBM Solutions: On-cloud or on-premisesDeployment flexibility to meet your needs today, and tomorrowCloud On premisesOur placeor yours?21 #SmarterBiz 22. Build your agendaDecrease effort Increase focusDatacollectionSpan finance andoperations risk &performance management22 #SmarterBizNew businessmodelingProfitabilityand pricingPerformancescorecardingErrorcheckingProcessmonitoringIncrease in value from analytic initiativesTransform the systemof engagementInfuse scenario andpredictive intelligence 23. 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.23 #SmarterBiz4IBM Big Data & AnalyticsIBPMer Bfoirgm Daantcae & B AluneaplyritnictssPerformance BlueprintsTake proven next steps 24. Next Steps Meet me in the Social Caf to continue the conversation 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/ibminsight24 #SmarterBiz 25. 25 #SmarterBiz