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Thriving in the World of Chaos with Integrated Financial Performance & Risk Solutions
Prashant
Tewari
Country Manager -
Business Analytics
IBM India South Asia
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“Insight and foresight are linked with leadership. It's insight that helps to capture opportunity.”
Zhou Ming, Executive Vice President and Secretary General, China
Council for Int’l Investment Promotion (Source: IBM Global CEO Study, 2010)
Hurricane KatrinaFinancial Meltdown
Statutory DefaultsVolcanic ash
TerrorismEnvironmental Issues
Healthcare ReformReal estate
H1N1
Credit Default Swaps
CFOs in India believe that industry / sector pressures will increase challenges and opportunities over the next three
years
Industry / Sector Changes Over the Next Three Years
ISA N = 129 to 133; Global N = 1,844 to 1,905Source: IBM Institute for Business Value, The Global CFO Study 2010
As a result of these factors, a majority of India Finance organizations believe that they have to make major changes to respond.
83%
79%
77%
75%
53%
39%
0% 20% 40% 60% 80% 100%
Need for faster decision making
Product/Service Demand Growth
Pressure to reduce cost base
Demand for external transparency (e.g.,Board, shareholders, taxpayers, regulators)
Ability to atract and retain talent
Access to short term liquidity/long-termcapital
ISA GlobalImperatives of a Growing Economy
74%
61%
78%
69%
56%
40%
0% 20% 40% 60% 80% 100%
Top Challenges
What is keeping the CFO up at night?
According to Several Studies:• Ability to forecast results• Transparency• Attracting/retaining qualified employees• Flexibility to react to market changes• Balance sheet risks –
Cash
• Accuracy of information• Regulatory requirements
– Sarbanes-Oxley, XBRL, Credit Risk, Market Risk• Where is our growth going to come from?
– Mergers/Acquisitions– Internal growth
• Supply chain risk• Managing IT systems• Personal job security• Cost of health care• Data security risks
Quarterly Duke University/CFO Global Business Outlook Survey from June 2008
Planning and Performance Management
Governance Risk and Compliance
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Risk has never been a bigger challenge than in today’s business environment…
…new regulations, globalization, increased risk and business velocity,and an explosion of information…
all demand more effective compliance and risk management practices and better alignment of risk and performance management objectives for better business outcomes
The IBM Global CFO Study 2010
The Risk Mitigation Challenge
Finance Function Faces Challenges
Spreadsheets Failing“there have been well-documented cases of errors
and losses resulting from spreadsheet
manipulation errors and accidents.”
Source: Gartner, August 2007
Disparate Systems“Average finance organizations operate
11 finance systems per billion dollars
of revenue.”
Source: Hackett Group, 2007
Business Risks“62 percent of enterprises …
encountered a major risk event …
42 % of these
enterprises were not well prepared for the event.”
Source: IBM Global CFO Study 2008
CFO
ControllerTax/
TreasuryFP & A
IT
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The Planning & Budgeting Challenge
PAIN: Inability to deliver timely, reliable forecasts & plans that align operational tactics with financial targets.
PLANS & FORECASTSInfrequent Unreliable Forecasts
Weak Top-Down
& Bottom-up Coordination
Disconnected
Plans
• Do you rely on Excel for creating budgets and reports?
• How long does the budgeting process take?
• Are you using spreadsheets to manage the planning process?
• Are your budgets and forecasts as reliable for decision-making as you would like?
• Is planning and budgeting an exercise to be endured rather than a strategic corporate tool?
Analytics-driven organizations outperform others Efficiency combined with business insight contributes to better
financial performance
Sources: IBM Institute for Business Value; 2010 IBM Global CFO Study.
One year: 2008–2009Five years: 2005–2009
EBITDA, earnings before interest, taxes, depreciation and amortizationCAGR, compound annual growth rateROIC, return on invested capital9
Value Integrators All other enterprises
7.7%
12.0%
10.3%
3.8%
8.8% 9.0%
105% better
36% better
15% better
EBITDA5-year CAGR, 2005-2009
Revenue5-year CAGR, 2005-2009
ROIC5-year average, 2005-2009
32.2%
-0.3%
7.2%
2.5%
-4.1%
6.0%
12 x better
15 x better
20% better
EBITDA1-year change, 2008-2009
Revenue1-year change, 2008-2009
ROIC2009
1010
Predict potential threats and opportunities
Spot and analyze trends and anomalies
Assemble and interact with relevant information
Compare “what-if”
scenarios
Understand customer sentiment and behavior
Plan, budget and forecast resources
Assess and manage risk
Measure and monitor behavior
Turn insight into action, optimizing results
Align strategic and operational decisions
Business Analytics Portfolio
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• Simplify, structure, and automate dynamic and sustainable FP&SM practices
• Monitor and analyze business performance against targets
• Plan, forecast and control enterprise resources aligned with corporate objectives
• Close the books, consolidate results and report financial performance with confidence.
Finance
Performance ManagementApplications
Performance Process
• Enterprise Planning, Budgeting, and Forecasting
• Consolidation and Corporate Reporting
• Financial Analytics (e.g., profitability)
• Strategy Management & Scorecarding
Analytic ApplicationsFinancial Performance• General Ledger Analytics• Accounts Receivable Analytics• Accounts Payable Analytics
Industry Frameworks
Supplier / Operations• ProcurementCustomer• Sales Analytics
Workforce Performance• Workforce Analytics• Talent Analytics
Financial Performance Management
Analysis
Financial Reports
Dashboards/ Scorecards
Close Reports
InProcess
Reporting
PostProcess
Reporting &
Planning
SOURCE SYSTEMS
IBM Cognos
Controller
Financial AnalysisPlanning/ ModelsE
X T E N D
IBM Cognos
TM1
• A patented 64-bit read-write in-memory OLAP engine that provides compact data storage
and exceptionally fast performance
• Model design and data access that presents business information in familiar formats
• Ease of use, thanks to a development environment that enables users to create sophisticated applications with no need for programming or traditional IT skills
• An intuitive, flexible approach, which enables users to easily express complex, multi-
dimensional business rules
• Fuses Analysis & Planning together to provide greater accuracy
• A component of
Cognos
Performance Management Platform
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Marico• Brief profile
– Present in almost every FMCG market segment –
hot oils, hair, skin, weight
management, beauty and wellness amongst others
– Marico
has also been rated one of India’s ‘Top 8 Global Challengers’
by Standard &
Poor
Challenge Solution Results
Inflexible planning through spreadsheets
Seamless integration across multiple data sources including mySAP
and SAPBW
Cognos
TM1
Reduces the time required for budgeting, planning and reporting.
Increases flexibility, accuracy and efficiency.
Easy to use and maintain.
“IBM Cognos
TM1 has helped usstreamline and take our planningand budgeting processes to a newlevel. This tool has enabled us toshift our focus from data crunchingto data analysis.”Girish
RaoIT Head , Marico
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Indus Towers
Challenge Solution Results
Inflexible planning through spreadsheets
Finance department manually consolidates and extract data & create profit and loss (P&L) statements and the annual operating plan (AOP).
IBM Cognos
BI and Planning
IBM Global Business Services (GBS): BAO: (Business Analytics and Optimization) Services
Shortens preparation time for Annual Operating Plan (AOP) development by 30 to 35 %
Improves data accuracy by more than 20 to 25 %
Decreases turnaround time for gathering information and data to do financial analysis by 50%
Provides a significant improvement in data and business analysis in terms of various costs like rent, network and energy costs
The solution gives companies an integrated, accurate view of financial numbers, enabling them to plan, respond and implement financial decisions that will help them maintain or achieve leadership positions in their marketplace.
What if you could gain insight into your financial data to predict and proactively respond to trends that could negatively impact company growth?
This communications infrastructure company implements a game-changing financial planning process that uses “what-if”
simulations, and trend, target-setting and variance analysis to make financial decisions that keep it on a strong growth trajectory
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Enterprise requirements
CIO has to manage multiple datamarts and point solutions for risk and compliance data
CRO cannot get aggregate risk exposure position
CCO cannot ensure regulatory compliance, adapt to change or manage regulator interaction
Unifies enterprise-wide risk and compliance initiatives into a single management system
provide visibility into risk exposure and to facilitate compliance management
Provides synergy with Information and IT Governance, Risk Management, and Security
CEO, CRO, CFO
IT risk
Compliance
Finance
Marketplace
Operational riskCredit
Struggle with fragmentation of risk and compliance information
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An integrated approach facilitates transparency
Marketplace
riskCredit
riskFinance
riskOperational
riskIT
risk
CRO, CCO, CFO
Compliance
risk
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GRC across organizations worldwide
Over the past 18 months, a number of change has been made to regulations aimed at strengthening risk oversight processes at the board level across several countries :
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Financial Controls
Management
General Controls
IT Governance
Internal Audit
Operational Risk
Business DriversRisk Intelligence and Scorecarding
Enterprise GRC software platform that serves as the foundation for a company’s enterprise risk management efforts by unifying enterprise-wide risk and compliance initiatives into a single management system. Platform provides a modular and integrated approach to governance, risk and compliance.
IBM Open Pages GRC Platform
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Gartner’s Magic Quadrant for Enterprise GRC platforms
Source: Gartner Report: Magic Quadrant for Enterprise Governance, Risk and Compliance Platforms, July 2011
Magic Quadrant for Enterprise Governance, Risk and Compliance Platforms
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OpenPages
Platform for Integrated Risk Management
The OpenPages
Platform serves as the foundation for a company's enterprise governance, risk and
compliance management efforts through its ability to unite an organization’s risk and compliance initiatives into a single management system, including:
– OpenPages
Operational Risk Management (ORM)
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Out-of-the-box and fully integrated key risk indicators (KRI), loss event and RCSA reporting, to provide an enterprise-wide view of risk across the business and manage Basel II AMA compliance
– OpenPages
Financial Controls Management (FCM)
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Automated assessment and testing processes to standardize and manage SOX compliance testing and controls enterprise-wide
– OpenPages
General Compliance Management (GCM)
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Integrated solution for reducing the complexity of complying with numerous industrial, ethics, privacy and government regulatory mandates
– OpenPages
Information Technology Governance (ITG)
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Enables organizations to manage IT risk and compliance by centrally monitoring and assessing the overall
effectiveness of IT investments, and adopt best practices in IT governance with process-centric and policy-driven controls
– OpenPages
Audit
-
Provides auditors with a configurable view into organizational GRC
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Challenge Solution Results
German regulator can audit at any time –
at Allianz’s
cost.
Lack of evidence to support operational risk and control.
Lack of standardization across the group.
OpenPages
ORM
Improved standardization of processes across the group.
Reduced the regulatory burden with increased depth of information, audit trail and documentary evidence, resulting in less frequent audits.
Better and easier consolidation of information.
Allianz
spent much of 2008 and 2009 focused on infrastructure and Pillar I of Solvency II and selected OpenPages
ORM (Operational Risk Management) for loss data capture, risk self-
assessment and quantitative scenario analysis.
Allianz
(formerly Allianz
AG) is a global financial services company headquartered in Munich, Germany. Its core business and focus is
insurance. As of 2010, it was the world's 12th-largest financial services group and 23rd-largest company according to a composite measure by Forbes magazine.
.
“What makes companies stand out from one another is the ability to use analytics across the end-to-end business model. Greater transparency from one end of the business to the other is key.”
Dennis Hickey
VP -
Corporate Controller, Colgate Palmolive
Source: 2010 IBM Global CFO study
Summary• Analytics in today’s turbulent times is not an option anymore !
• Analytics driven organizations outperform their peers
• The Office of Finance is the key Value Integrator in the Enterprise
• Start your Cognos
Validation Workshop to gain internal agreement and identify possible areas where Analytics can help you outperform
• Work with a Partner who provides you Domain Consulting, Software Solutions and World-class deployment & support –
IBM
IBM Business Analytics
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