michael ingemann tug

CFO challenges and solutions

November 23, 2010

Michael IngemannDirector – CFO Services, EMEA

Teradata Confidential2 >

Agenda

• Today’s CFO Challenges

• Solving the Finance Organization Challenge

• Architectural Complexity Gets in the Way

• Examples from industries and customers

• Summary


Evolve finance to play a more strategic advisory

role to the business

Establish consistent enterprise performance

metrics

Quickly consolidate and release accurate financial results with leaner staffs

Consistently and confidently comply with evolving

regulations (e.g., SOX, IFRS)

What makes this really complicated?

Enterprise Performance Management

Financial Reporting and

Analysis

Operations Reporting and

Analysis

Today’s Finance Organizations Must Focus on Transforming Numerous Capabilities Simultaneously


Complication #1

• Companies must address legal, statutory and tax requirements

• Differing/conflicting local and regional requirements:> US GAAP, UK GAAP, IAS, etc.

• Constantly changing accounting and reporting standards> Segment Reporting FAS 131/IAS 14> Pooling & Goodwill FAS141/142> Sarbanes-Oxley, Basel, Solvency…

Multiple Statutory Reporting Requirements

And it all must be accurate and auditable!

Teradata Confidential5 > 5th Annual Teradata Report on Enterprise Decision-Making, September 2006

Complication#2

• KPI/metrics

• Common definitions/calculations

• BI Governance

• Technology

• Logical data model

• Reporting tool

Decisions Require Greater Speed and Depth and alignment with company strategic objectives!

And remember alignment to statutory reporting requirements!


FRAGMENTED DATA SOURCES

AD-HOC PROCESS

MULTIPLE ROLES

DISPARATE BI TOOLS AND REPORTING SYSTEMS

DIFFERENTMETRICS

HIRINGQUALITY

EBITDA

BRAND

SERVICELEVELS

COMPANYHEALTH

GOAL

PLAN

ANALYZE

REPORT

MODEL

CUSTOMERSERVICE

MARKETING

EXECUTIVE

FINANCE

HUMANRESOURCES

Complication #3

Information System “Spaghetti”

Multiple ERP

Multiple POINT

APPLICATIONS

MultipleLEGACY

APPLICATIONS

Multiple SUPPLYCHAIN

Multiple DATA

WAREHOUSES

FIN

AN

CE

PLA

NN

ING

OP

ER

ATIO

NS

?

?

?

?

?


Complication #4

IT and Finance Speak Different Languages

Finance:• To much time is used to explain

the objective of the report, I am requesting…

• Required reports are received +2 days after my request…

• Operational reports do not tally to our statutory reporting…

• IT doesn’t not understand our requirements…

IT:• Are using Excel as the main

reporting engine => mgt relies on “them” and/or Hyperion/Cognos solutions…

• Which needs additional ETL processes and maintenance from IT…

• Don’t understand the meaning of common definitions and calculations, they make their own!

• Are doing “something” with data, which make our data look “wrong”


Complication #5

Profitability is based on aggregated data…

Customer, Store, Brand, Product etc.

• Aggregated data• No use of non-financial data• Excel is the “engine”• Poor traceability• No drill-down capabilities• Etc.


ERP is Not the Silver Bullet

• Optimized for Transaction Processing> Enforces optimal, standard processes> But poor for analytics, since company strategies differ to

achieve competitive advantage• Limited Flexibility

> Changes are costly and time-consuming> Inherent structured nature of ERP stalls

company’s incentive to evolve and progress

• Limited View of the Business> Multiple ERPs in the same company

thwart a unified view> Data from key operational areas are

not contained within ERP


Agenda





• Summary


• Established objectives

• Change mobilization

• Information sharing

• Accountability

• Strong data quality

• Integrated monitoring

• Timely information

• Weak operational links

• Static systems

• Departmental silos

• Relevant metrics

• Disparate systems

• Weak data architecture

• Data latency

• Focus

• Flexibility

• Alignment

• Forward looking

• Simplicity

• Sustainability

• Speed

Solving the Finance Organization Challenge

Requirements for Success Barriers to Overcome Capabilities Needed


Speed Reduced Cycle Times and Speed of Insight – Action

• Ability to track performance variances back to tactical and operational drivers enabling tactical policy changes needed to improve performance

FlexibilityRapid Adaptation through

Organizational Agility

Foundational Pillars for Success Best Practice Characteristics

• Changing reporting views can be implemented quickly and cost effectively without impacting operational systems

• Multiple analytical views of the business are not hampered by external reporting requirements

• Less time spent on data collection and validation and more time spent on transacting and analyzing the business

• Simplified and faster close, consolidation and reconciliation through dimensional views facilitating a thinner chart of accounts

Alignment Linked Goals, Objectives and

Actions Enterprise-Wide

Forward Looking Anticipating the Future

Focus Attention to Key Value Drivers

Sustainability Evolves with the Business

Simplicity Consolidate and Standardize

• Transformation of the planning process from an annual budgeting process into a core, ongoing piece of the management process – includes rolling plans and event based forecasting

• Seamless integration of operational and financial data to identify the few, key drivers which management needs to concentrate upon to drive the business

• Organizations focus upon a data management foundation that is consistent across the enterprise and is flexible

• Architectures that scale effectively to support more users and data

• Information consistency is a key enabler in improving operational efficiency through reduced complexity

• The cost of compliance is lower for companies that standardize

System Capabilities for Success


12.5x

Source: Hackett Book of Numbers 2010

Foundational Pillars

Next Generation Capabilities – Leading Finance Organizations Find a Means

Enterprise Data Warehouse – Foundation for Success

Speed Reduced Cycle Times and Speed of Insight – Action

FlexibilityRapid Adaptation through

Organizational Agility

Alignment Linked Goals, Objectives and

Actions Enterprise-Wide

Forward Looking Anticipating the Future

Focus Attention to Key Value Drivers

Sustainability Evolves with the Business

Simplicity Consolidate and Standardize

Percent of companies with high use of data

warehousing/data marts to support business

performance reporting, 2009

Percent of management reports generated from a

centralized data repository, 2009


Agenda





• Summary


Ad-HocTools and Processes

MultipleSources

MultiplePurpose BuiltData Marts

Inconsistent Data Sourcing

Disparate Reports

Dependent End-users and Decision Makers

RiskManagement

Regulatory Reporting

Capital Allocation

Profitability

Architectural Complexity Gets in the Way

Legacy Systems

Other ERP

PeopleSoft

SAP

Oracle

Flat Files

Operational Systems Analytical Repositories Analytics and Reporting


Simplification, Standardisation, Consolidation

• Simplifying and standardizing finance architecture provides sustainable cost reduction

• Single version of the truth with consistency of data and metrics across the organization enables fact based, data driven decisions fostering a culture of accountability

• Automation of data integration & validation frees finance to focus on analysis, commentary and business change

• Ability to drill to detail and connect the dots provides new insights and value enhancement opportunities

The optimal Technology platform for Profitability analysis!

SourceSystems

General Ledger

AP FAARPurch PA

Consolidation

Financial Systems Calculation Engines &

Applications

HR

HR

PR

Other

Planning Allocation

Profitability

Mktg

HR

IT

Legal

Billing

Ntwk

CustMgmt

Sales

Data Warehouse

Based on Logical Data Model

Reporting & Analytics

Financial Reporting

Management Reporting

Regulatory Reporting

OperationalAnalytics

Tactical Info Delivery

AccountingHub

110110011011

Data Management

Accounting Treatment Rules

Sub-Ledger

Next Generation Finance Infrastructure

Hierarchy Management Rules Management

Customer Introduction & Life-Cycle Maintenance Process

Sa

les

Lo

gis

tics

Sa

les

Re

p/

DS

D R

ep

Fin

an

ce /

O

vera

ll D

ata

S

tew

ard

Sys

tem

Upload Customers

Update logistics information

Update Customer Profile Information

Credit Approval Reqd?

Resolve Duplicates

yes

Set Status to Charge

Update Billing Information

noUpdate Hierarchy

Information

Update Trade Channel

Information

Review Alerts

Hierarchy, Channel,

Address info complete?

Duplicate resolution

reqd?yes

no

Put customer state to ACTIVE

Alert respective role

yes

no

Workflow ManagementSecurity

ManagementData Quality

& GovernanceMaster DataManagement

Metadata Management


Agenda





• Summary


When you have a best-of-breed platform…

RETAIL:•Detailed profitability by Customer/basket

•Total overview on daily sales•Detailed insight into gross margin components

BANKING:•Enrich data at transactional level and aggregate compliance reports on the fly

•Alignment between source systems by LDMs

•Detailed profitability by Customer

MANUFACTORING:

•Detailed cost controlling

TELCO:•Detailed profitability by Customer

•Campaign profitability•Improved cash flow!

•Total customer view=> reduce credit risk etc

•Compare actual costs with standard cost rates on the lowest level of data•Efficient QA analysis of raw materials by supplier•Efficient Sales & Operational planning!

•Combine customer behavior with customer financials/profitability•What are my subsidy costs on handsets and how profitable are customers with highest subsidy costs•How efficient are my call centers?•What are the elements of my service costs across the company?


Major Mobile Services Company Streamlines Millions of Transactions Royalty & Residuals Management

Situation

World leading mobile device manufacturer & network provider, whose core business strategy is to deliver innovative services and media to their customers through their devices, needed a solution to manage millions of micro-transactions for content and applications

Problem

Massive transaction volumes, coupled with complex licensing agreements, created challenges around revenue and cost recognition, and royalty management associated with content

Solution

Deployed Teradata Royalty & Residuals Management with Microgen to handle contract data integration, reporting and royalty/revenue share calculation. Moved client to an exception-based, straight-through processing environment, enhancing the existing and legacy systems

Impact

• Drove significant operational cost savings

• Automated royalty calculation, and delivered rights usage validation & enforcement

• Delivered full suite of accounting and reconciliation services

• Enabled robust business monitoring and reporting with full transparency into the underlying transactions and processes


Otto GroupCorporate Performance Management

Impact• Integrated, detailed view of profitability

across all 13 German mail order companies

> 400 profit and loss positions at customer/item level refreshed daily

• Better able to identify/terminate unproductive catalogues

> Supports goal of 1% annual reduction in 1 B Euro catalog spend

• Reduced return rates and overstock losses

> Discovered the late deliver date which had high customer rejection was shorter than expected

> Confirmed customer still wanted before making late shipment

• Shifted budget dollars for on-line products based upon click-stream analysis of likely purchase conversion

Situation• Leading mail catalog and online retailer, 123 major companies

in 20 countries (Germany HQ)• Three segments: Retail operations, Financial Services, and

Services (Logistics and Travel)• 2008-9 revenues of EUR 10.1B• Approximately 49,500 employees

Problem• Unable to monitor daily shifts in profitability by product by

customer by sales channel> Daily view needed to determine resource allocation

decisions between on-line and catalogue channel> Holistic view by customer and product unavailable – one

system tracked product only and the other customer only

Solution• Process and Activity-Based Profitability Accounting system

(P.A.P.A.) built using> Teradata Database> Business Objects reports> Thinking Networks for planning data management


Situation

• Top 10 Spanish savings bank• New strategy focused on becoming a “customer-centric”

organization• Management aimed to improve insight into customer

behavioral and analytical metrics

Problem

• Existing profitability methodologies could not perform detailed “bottom-down” calculations of customer value

• Existing methodologies did not produce results trusted across all major constituencies (e.g. Marketing, Finance)

• No way to tie operating costs to contribution to customer profitability, at contract level

Solution

• Implemented Teradata system • Teradata Value Analyzer application• Teradata Relationship Manager application

Impact

• Detailed profitability metrics for customer; contracts; products

• Customer profitability metrics added insight to bank’s CRM programs/initiatives

• A flexible platform to implement corporate strategy, i.e. corporate objectives based on client/product profitability

• Elimination of inconsistencies in corporate data: economies of scale to face the incoming financial sector complexity

Caixa Galicia Savings BankCustomer Contract Profitability

Thank you!

Any comments/Questions

Michael IngemannDirector – CFO ServicesEurope, Middle East and AfricaTeradata division

Mobile: +45 20 84 78 88

[email protected]

Teradata.com

michael ingemann tug

Documents

teradata confidential

main reporting engine

annual teradata report

aggregated data customer

different languages

regional requirements

company strategies

company strategic objectives