Fei presentation 4-22-08

© 2008 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firmsaffiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are

registered trademarks of KPMG International, a Swiss cooperative. 14107MIN 2

Because Finance Touches All Areas of an Organization…

Support decision making

Ability to manage portfolio

risk

Ability to invest

Ability to raise funds

Manage Taxes

Preservation and

Management of Capital

Support Owners and other stakeholders

Standardize

Faster reporting

More reliable information

Automate

Measurement

Eliminate

Consolidate

Run an efficient finance function

Finance Director/ CFO

Prospective “What If” Analysis

Better Budgeting

Real-time information

Quantitative and Qualitative

analysis

…an Effective Finance Function is Critical to Success at Leading Organizations



Value Preservation to Value CreationKPMG International commissioned the Economist Intelligence Unit to conduct research to examine how finance executives are improving the effectiveness of the finance and accounting function

Survey of 286 senior executives (53% came from organizations with > $1 billion in annual revenues)

Cross section of industries

Research found that top performing businesses have top performing finance functions



Value Preservation to Value Creation –What Does That Mean?Transforming the finance function

From an inward-looking organization focused primarily on financial reporting and controls (value preservation)

To one that spends more time focused on strategic decision-making (value creation)

Challenges

Assumption of new responsibilities

Pressure to control costs

Regulator and investor demand for information and tight controls



Business Intelligence OutlineDiscussion objective

What is Business Intelligence

Common challenges

Benefits achieved through successful implementation

Summary



Business IntelligenceDiscussion Objective

Share what we know about BI

Share what others are saying about BI

Share the perspective of BI stakeholders

What is BI

Share common challenges

Share our lessons learned

Provide leading practices examples



Objectives of the discussionThe objective of this discussion is to share what we know about Business Intelligence, and what it can mean to the Enterprise. What are some of the things you have heard of when you think of BI?

Level detail needs to be

lower to allow meaningful

detailed analysis

What do I need to report on globally?

I need the ability to store and use

different exchange rates

Does my business

strategy align with my BI program?

Ability to do variance analysis

for current and prior periods

easily within the system

Core analytics in a matter of

hours versus days

We need a centralized source to pull data

BI Is just a technology for

reporting

The planning process is very stressful due to time constraints

and data gathering efforts

What KPIs does my business

need to assess performance

“

“ How do we

compare as a business in our

industry? Across

industries?

I am a large ERP customer, what do I do with all the different BI offerings from

them?

I have the data but my reports

provide multiple answers to the same question.

Where does a BI CC sit, finance or IT or other?

Better, faster, quicker – better information

faster, allowing resources to be

deployed to higher value activities



Business IntelligenceWhat is Business Intelligence?

Industry View

KPMG View

KPMG BI Framework

Top 10 Trends

CFO and CIO perspective – What matters

Why we should care about BI?

What can BI mean?

Business Strategy Alignment

The promise of BI

BI and Business Performance Management (BPM)

Components of BI



What is Business Intelligence?

Business Strategy

Performance Management

BI Platforms

InformationManagementInfrastructure

Analytic Applications

People Process

Business Strategy

Performance Management

BI Platforms

InformationManagementInfrastructure

Analytic Applications

People ProcessBI

Competency Center

Business Centric

IT Centric

Layers of Gartner Business Intelligence & Performance Management Framework

Source: Gartner Position Paper, October 2006

Business Intelligence (BI) is the use of information that enables organizations to best decide, measure, manage, and optimize performance to achieve efficiency and financial benefit.

– Gartner, 2008

BI — a set of methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information — Forrester, 2008



What is Business Intelligence?It’s about business performance…

…The capacity to acquire, correlate and transform data into insightful and actionable information through analytics, enabling an organization and its business partners to make better, more timely decisions



KPMG Framework: Adapted Industry View

• Corporate Strategy and Alignment to Goals• Organizational Readiness and Staffing• Enterprise Business Intelligence Vision • Executive Commitment and Sponsorship

Enterprise BI Framework

• Organizational Structures and Accountabilities• BI Competency Center

•Policies and Procedures (Master Data Mgmt)•Risk, Control, Compliance•Change Management/QA

• KPI’s/Metrics Defined• Reporting Definition and Development (content)• Performance Scorecards/Dashboards Defined• Decision Support and Workflow Mapped

• Master Data Management Prioritization Processes • Data Standardization• Conceptual Design • Information Integrity & Compliance

• Analytics Applications & Tool Portfolio/Selection • OLAP Front End/Back End• Visual Development Tool• Information Access and Delivery Methods

• Technology Tool Portfolio and Selection• Data Warehousing/Mining Management/Source

Systems• ETL and Data Cleansing/Data Integrity• Security and Data Access Technologies

Integrated Information Management

Governance

Performance ManagementProcess & Reporting

Business Strategy Alignment

Infrastructure

Business Intelligence Platform (Translation)

Key Framework Components

Business

Technical

Financial Reporting &

Analysis (External, R

egulatory, Managerial)

Operational R

eporting (Custom

er, Product, Capacity)

Tactical (KPI. Scorecards, Short term

decisions)

Strategic (Enterprise Insights )



The Top 10 Trends in Business Intelligence1. Information Quality: at the heart of many business challenges and opportunities

2. Master Data Management: building a common language

3. Data Governance: overcoming organizational barriers

4. Enterprise-level BI: striving for an integrated view of the business

5. Regulatory Compliance: driving BI investment

6. Enterprise Data Transparency: keeping companies off the front page

7. Actionable BI: turning volumes of data into usable insights

8. Service-oriented Architecture: drawing the connections to BI

9. “Rightsharing:” making BI development more efficient

10. Semi-structured and Unstructured Data: entering the BI universe

Source: TDWI



Business Performance is a CFO Priority

% of respondents

Measuring/MonitoringBusiness Performance

Partnering with yourorganization to identify

and execute growth

Continuous process improvement/business improvement

Leading finance-related compliance programs

Meeting fiduciary and statutory requirements

Source: IBM Global CFO Study, December 2005



BI is a CIO Priority



Why Do We Care About BI?

Valued Business InformationDashboards, Monitoring, Insight

KPIs, Scorecards

Real Time Reporting

Supporting FrameworkBusiness Strategy Alignment

Governance

Integrated Information Management

BI Platform

Infrastructure – Database, Security, ETL

There are many benefits to the business at the surface, however a sustainable and defined infrastructure and governance framework is required to support the consistent delivery of effective Business Intelligence and Performance Management information.



What Can BI Mean?Performance management aligning operations to the strategic plan

A enterprise-wide framework to assess, monitor and act upon business unit, employee, customer, supplier performance

A set of standard measures, performance indicators, and metrics for evaluating companies for acquisition, as well as monitoring their performance during integration

Role-based scorecards that indicate company sales revenue, profit, and inventory turns by region and product versus plan

Corporate dashboards that allow management and staff to reduce T&E costs by seeing potential & lost savings

Reports that identify the effectiveness of product placement within a store

Eliminating manual spreadsheet reporting and manipulation processes by warehousing data and using standard enterprise-wide analytics platform



The Promise of Business Intelligence

Simplified access and standardized reporting across the organization based on a single version of the truth empowers improved decision making at all levels

Strategy MapDrives definition of all measures

Strategic Dashboards – Executives can quickly assess their progress toward strategic objectives and identify areas for action as well as review leading indicators to drive the business forward. Management Dashboards – Managers and business

analysts can track frontline performance, track against plan, quickly review group performance and drill down into specific details. Granular reports are available for performance reviews.

Operational Dashboards – Empowering the front line with information to track daily activities and processes. Employees can drill down into detailed reports and use information to improve business process.



Business Intelligence and Performance Management

Effective Measurement – Strategy and business objectives are the starting point for identifying the KPIs and measures required to manage the business.

Effective Performance Reporting and Reviews – Clear principles are articulated around expectations of how information is to be used to drive effective decision-making and technology is in place to support the closed loop process.

Effective Tracking and Remediation – Fit for purpose processes exist for capturing issues and actions to resolve. Accountabilities are defined and best practices are accessible to resolve individual or team issues.

Effective Rewards and Compensation Process – Processes are in place that link personal rewards to the strategic business objectives. This will involve strategically linked measures being included as part of an individual’s performance review.

Performance Management Framework

Effective performance management focuses attention on the things that drive the most value and provides a clear link between day-to-day activities and long-term strategic goals.




Where does finance fit in?

What can finance do to improve?

What does finance need to do to get there?



Its about less time on cost control and more time on decision support…

Where is finance’s role?

Top Performing

Average

Key Points

Areas where finance plays a leading role



… More time on planning budgeting and forecasting, and management reporting.

What can finance do to improve?

Top five priorities for improvement in finance’s capabilities



What does finance need to do to get there?

Use non-financial performance metrics, and increase the understanding within the business.

Top five areas where finance needs to improve its skills




It’s about business performance…the capacity to acquire, correlate and transform data into insightful and actionable information through analytics, enabling an organization and its business partners to make better, more timely decisions.What can it mean?

Align, assess, monitor and act upon performance standard Acquisition, integration, data model, scorecards Dashboards, savings, alerts, effectiveness, eliminating Excel, analytics

Framework Strategy alignment Governance Performance management and reporting Integrated information management BI platform Infrastructure

Finance’s role Its about less time on cost control and more time on decision support More time on planning budgeting and forecasting, and management reporting Use non-financial performance metrics, and increase the understanding within the business



Business IntelligenceCommon Challenges

Challenges from the stakeholder perspective

Where do I begin? How do I know I am zeroing in on BI?



Common ChallengesCFO

Redundant data, multiple sources

User security

Technology vs. business requirement interpretation

Too many controls over data

Lack of planning & resources for coordinated BI strategy

CIO COO

Fragmented reporting

Compliance (SOX etc.)

Limited forecasting capabilities

Timeliness in reporting

Data integrity

Lack of robust analytics

Spreadsheet dependency

Redundant data marts

Ineffective KPIs

CMO

Lack of insight on operations cost – big ‘hidden factory’

Multiple transaction systems

Lack of intelligent, automated customer support services

Unable to monitor product landed cost

Not enough detail, need “drill-down” capabilities

CEO

Inadequate performance insight

Lack of data and information integrity

Costly, manual reporting to get comprehensive view

Risk of error and loss of economic value

What is BI?

Lack of agility in defining & managing marketing plans

Lack of robust analytics

Lack of customer relationship and intelligence management

Wasted communication based on poor information

Clients aren’t asking “How do I turn information into insight?”

But rather saying “I need trustworthy data access, integrity

and validation”



Where do I begin? How do I know I am zeroing in on BI?

How do we compare as a business in our industry? Across industries?

I can’t provide accurate forecasts or plans.

What are my global reporting requirements?

I have 100's of reports, how do I standardize?

I need flexibility between my actual and my forecast data.

Tax needs to be able to consume my forecast data for their purposes.

Does my business strategy align with my BI program?

What KPIs does my business need to assess performance?

Is my BI program working?

Am I meeting my industry regulatory requirements or my SEC requirements?

I have the data but my reports provide multiple answers to the same question.

What are my industry metrics?

Do these issues resonate with you and your team members?



Business IntelligenceBenefits achieved through successful implementation

Potential benefits are broad in reach

Lessons learned

General benefits



Potential benefits are broad in reachCFO

More standardized information architecture

More timely information delivery

Enhanced sustainability and repeatability of master data management processes

Enhanced data integrity standards and governance

CIO

COO

Enhanced capability for analytics and predictive analysis

Capability to support KPI transparency and drill down

Greater alignment of financial and operational reporting to strategy

Enhanced capability to support a complete digital reporting process

Integrated financial, managerial, regulatory, and control reporting and measurement

One version of the truth

CMO

Accurate spend tracking and supplier scorecarding

Engineering cost reduction savings

Ability to better manage and control advertising spending

Ability to tie financial and operational forecast

Ability to retrofit design from service issues

Ability to tie labor to earned value methods and optimize workforce cost

CEOIncreased shareholder value through increased customer loyalty

Competitive advantage

Quicker business decisions

Enhance view of enterprise information

Integration across organizational functions to provide Enhanced Performance Management

More effective use of sales and marketing tools

Enhanced insight into market information and customer/client preferences

Enhanced utilization of personalized products/services and customer stratification

Target products correctly

Trustworthy data access, integrity and validation which provides

Business Insight



What have we learned?

It is critical to understand your process deficiencies – both from a performance and controls perspective

Standardizing and simplifying processes and data will enhance performance and control

Focus on the beginning of the process redesign lifecycle, particularly requirements and visioning

Involvement and contribution of senior executive leadership can provide the governance and management necessary to achieve organizational buy-in

Bureaucratic processes and organization structures can slow and complicate the completion of process implementation improvements and dampen user support

It is critical to constantly manage the stakeholders’ expectations of the transformation program

Develop a vision with supporting goals and objectives based upon improving specific capabilities achieves success in the transformation program

Complex levels of detail that typically exist at global manufacturers (particularly in the budgeting process) diverts focus from analysis and leads to information overload

Finance should focus on those views and hierarchies that concentrate value and enable future looking analysis rather than an extensive list of views and reports

Business Intelligence capabilities provide an improved ability to quickly identify and respond to performance and risk management issues

Process

Organization

Strategy

Reporting

Engagements with long-lasting success have taught us a few lessons to share



Business IntelligenceBenefits achieved through successful implementation

What BI can do for you

BI’s value to your organization

Market overview

BI applications

BI leading practices

Based on the number of failed and under-utilized BI implementations – to successfully implement BI tools CFOs and CIOs need to team together in the areas of:

• Resource management/Organizational alignment

• Data quality/integrity, and

• Overall alignment/integration of Enterprise and BI Strategies



BI can provide you…Vision, strategy and performance alignment

Proactive decision capabilities

Governance and communication

Sustainable change management

Consistent control and compliance across the organization

Reporting and monitoring

Flexible data model(s)

Foundational toolset for future needs

ACTIONALBLE INSIGHT and DECSION MAKING ABILITY



The Application of Business Intelligence

Sales MarketingOrder

Management& Fulfillment

Supply ChainFinance HR

PipelineAnalysis

TriangulatedForecasting

Sales Team Effectiveness

Up-sell/Cross-sell

Cycle TimeAnalysis

Lead Conversion

Employee Productivity

Compensation Analysis

HR Compliance Reporting

WorkforceProfile

TurnoverTrends

Return on Human Capital

A/R & A/PAnalysis

GL/BalanceSheet Analysis

Customer& Product

Profitability

P&L Analysis

ExpenseManagement

Cash FlowAnalysis

Supplier Performance

Spend Analysis

Procurement Cycle Times

Inventory Availability

EmployeeExpenses

BOM Analysis

OrderLinearity

Ordersvs. Available

Inventory

Cycle TimeAnalysis

BacklogAnalysis

FulfillmentStatus

CustomerReceivables

Campaign Scorecard

Response Rates

Product Propensity

Loyalty andAttrition

Market Basket Analysis

Campaign ROI

Service &Contact Center

Churn Propensity

Customer Satisfaction

ResolutionRates

Service RepEffectiveness

Service CostAnalysis

ServiceTrends

BI Program

BI Platform

Strategy alignment Governance Performance Management Framework

Master Data Management Data Models

Examples of Business Intelligence Applications



Leading PracticesA few sample itemsBusiness Strategy

Measures should be aligned with, and demonstrably support, the business strategy

Norton-Kaplan strategy maps are considered the most useful organizing construct

They should define linkages from the financial to customer to operational processes and finally people (as the key foundational element)

Measures should cascade from the business strategy down to the individual scorecards at the lowest point of organizational accountability



Leading PracticesA few sample itemsPerformance Management

Defines how the BI and PM program deliverables link to achieve the overall business strategy

Use rolling corporate planning forecasts (e.g., 3 – 6 months forward, regardless of year-end, corporate plans of 3 – 5 years)

Measures should be quantifiable and include targets

Reports should show actual performance against targets and measure forecast accuracy to improve the process and increase confidence in the numbers



Leading PracticesA few sample itemsPeople & Processes

Creation of an “BI Competency Center” to support field level activities and drive consistency in people skills and processes

Extensive focus on change management to drive the right set of behaviors – using the information for analytics, focusing only on the key metrics instead of all metrics, etc.

Consistent set of processes for analytics and data management are defined and implemented (e.g., archival, retrieval, storage, refresh, MRD controls/change management)

Data is effectively managed across its “lifecycle” (model, cleanse, map, etc.) with supporting governance to ensure the data is well maintained and the MI is flexible to support the changing needs of the business



Leading PracticesA few sample itemsAnalytic Applications

Define the relationship and integration between the analytic applications to achieve needed levels of consistency, relevancy, accuracy and timeliness for cross-functional analysis

Move from reporting what happened, to analyzing root causes, or predicting what might happen next under certain customer, competitor, or market scenarios

Pulls all the source data into a single analytic tool to harmonize reporting and promote consistency



Leading PracticesA few sample itemsInformation Management Structure

Address how the data architecture and data integration infrastructure ensure efficiency and agility to react to changing business requirements

Consistency in data used across the other layers

Appropriate controls are in place to provide optimum security and appropriate access

Core ERP functionality is leveraged to the maximum extent



Leading PracticesA few sample itemsBI Platforms

Consists of Enterprise Information Portals (EIPs) for providing access to both structured and unstructured data, augmented by knowledge management tools

Supports process improvement, definition, and capture

Monitors and measures improvements in process

Access to corporate data and ability to push information stores should be designed to increase user productivity and knowledge sharing

Consider a phased roll-out to build expertise and support for change

Ensure data harmonization across multiple source systems



Business IntelligenceSummary

Objective of this discussion

Business Intelligence – Our definition

Top BI Trends

Common Challenges

Lessons Learned

Benefits achieved through successful implementation

Market Overview

Leading Practices

Fei presentation 4-22-08

Documents

Transcript of Fei presentation 4-22-08