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Driving a Future-Ready Enterprise

Paulo MonteIBM Performance Management

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19Middle East and Africa 51

Asia Pacific

Central and Eastern Europe

57Western Europe

155

Japan

98

North America

102

South America

94

CFO insights from the IBM Global C-suite Study: 576 CFO interviews from around the world

Source: Question E--Participant Country

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CFOs rank second only to CEOs in collaborative C-suite influenceC-Suite collaboration partners

Source: Question B6--Which of your C-suite peers do you work most closely with in support of the enterprise?

78%

65%

24%

CEO CFO All others

Source: “CFO insights from the Global C-Suite Study”, IBM Institute for Business Value, 2014

Finance has a role in bringing

balance to the funding of

innovation. We play a role in

challenging ideas and calling

out where they are not working.

Finance applies discipline to the

process

CFO, Life Sciences, Unites States

”

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Technology is of ever-increasing importance to CFOs–the key moving forward is capturing its potential

2010 2013

Macro-economic factors

Market factors

Technology factors

Regulatory concerns

People skills

Geopolitical factors

Socio-economic factors

Environmental issues

Globalization

We need to have the right

information on time and give

it the interpretation value.

There is a need to frame

information in a financial focus

CFOIndustrial Products company, Mexico

”

Source: Question E8--What are the most important external forces that will impact the enterprise over the next 3 to 5 years?Source: “CFO insights from the Global C-Suite Study”, IBM Institute for Business Value, 2014

Most important external forces

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The gaps between importance and effectiveness have grown since 2005, demonstrating growing business pressures

Largest gaps between importance and effectiveness

58%

19%

46%

34%

42%

37%

27%33%37%

205%increase

35%increase

Drive integration of information

across the enterprise

Develop talentin the financeorganization

Optimize planning,budgeting and

forecasting

Execute Continuous

finance process improvements

Measure/monitorbusiness

performance

2005

2013

Source: Question CFO1--How important are each of the following areas of responsibility to your enterprise? CFO2: How effective is your organization in the following areas?Source: “CFO insights from the Global C-Suite Study”, IBM Institute for Business Value, 2014

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Finance organizations continue to rely on spreadsheets and intuition two-thirds of the time

Intuition Spreadsheet ERP Analytic tool

14% 52% 19% 15%

50% 100%0%

Capabilities/tools used to support Finance

Source: Question CFO6--What capabilities / tools does your organization use for the following activities?Source: “CFO insights from the Global C-Suite Study”, IBM Institute for Business Value, 2014

We need to ensure we

deliver value through

changing technology

versus being a slave to

our systems

CFO, Insurance, United Kingdom

”

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Flashback: The Global CFO Study identified 4 Finance profiles, with one group, Value Integrators, outperforming the rest

Low

High

HighLow

Value Integrator

DisciplinedOperator

Scorekeeper

ConstrainedAdvisor

Finance Efficiency

Enterprise-wide information standards

Standard financial chart of accounts

Common finance data definitions and data governance

Standard/common finance processes

Operational planning and forecasting capability

Finance talent development

Common planning platform

Value IntegratorPerformance optimizationPredictive insightsEnterprise risk managementBusiness decision making

Disciplined OperatorFinance operations focusedInformation provisionPerformance interpretation

Constrained AdvisorAnalytics focusedSub-optimal executionFragmented data

ScorekeeperData recordingControllershipMultiple versions of the “truth”

Business Insight

Finance efficiency and business insight

Source: IBM Institute for Business Value, The Global CFO Study 2010, The Global C-suite Study 2013

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* Value Integrators are 30% and Performance Accelerators are 7% of the overall CFO population interviewed.

High

Business Insight

High

Finance Efficiency Value Integrator

Value Integrator *

Performance Accelerator

Source: “CFO insights from the Global C-Suite Study”, IBM Institute for Business Value, 2014

Flash forward: Value Integrators are pushing the boundaries of efficiency and insight–a subset are emerging as Performance Accelerators

Excel at:. Better by:.

Proftability/Economic Analysis 1.17x

Pricing effectively 1.80x

Demand Planning/Forecasting 2.28x

Product/Service Development 2.36x

M&A Success 3.23x

+38%

+70%

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IBM is the ultimate partner to drive a future-ready enterprise

Valu

e

Analytic Data Management

Maturity

Aligninformation

Optimizeoutcomes

Best Practices

Strategy – Aligned Organization

Analyzepatterns

Span Finance and Operations

Process Automation

Enterprise-wideTransformation

ContinuousSteering

• Managing multi-dimensional performance information

• Financial Consolidation and Close

• Budgeting

• Incentive CompensationManagement

• Span Financial & Operations

• Leading & External Indicators

• Driver-based modeling

• Scenario Analytics

• Rolling Forecasts

• Metrics and Scorecarding

• Strategy Management

• Product and CustomerProfitability

• Predictive Analytics

• Big Data Analytics

• Planning, Analysis, and Forecasting

• Collaborative and Narrative Performance Reporting

• Disclosure Management

• Sales Performance Management

• Agile enterprise

• Risk-adjusted Value Management

Accelerate& Link

EngageFrontlines

Value Integrators Performance Accelerators

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Manufacturing

Sales

Marketing

Finance

Logistics

Productdevelopment

HR

Scorecarding and strategy management

Forecasting and

corrective actions

Business and Op planning

Performance reporting

Budgeting

Strategic planning

Enterprise Span - System of engagement

Cloud, Scale &

Performance

Advanced Analytics

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Amazon: Financial Planning & AnalysisReal-Time Integrated Financial Modeling

Challenge

• Lack of Corporate Insight into Financial Plans

• Solution

• Capital Expenditure

• Headcount & Employee Expense

• Revenue / COGS

• P&L and Balance Sheet Forecast

• Hourly Variance Reporting with Actuals

• Results

• “TM1 underpins all of Amazon’s critical Financial Processes on behalf of the Office of the CFO on a 24 x7 basis providing Weekly Forecast Routines, Month End Close, and Annual Operating Plans” -Wade Diamanti, Director FP&A

Amazon, described by Forbes as the “Worlds most valuable Brand”, is the largest internet retailer in the United States with $90B in annual revenue. The company also produces consumer electronics and is a major provider of Cloud Computing Infrastructure and Services.

Challenge

Solution

Solution Benefit Statement

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McCormick protects profit with detailed understanding of customer value and uncertain prices

Challenge

� Significantly reduce the profit at risk due to volatile commodity input prices

Solution

� Collect and analyze sales plan data by customer and across over 30,000 SKUs

� Evaluate the resulting profit contribution of product inputin the “bill of material”

Results

� 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 reformulate flavors using commodities from different regions and suppliers

� TM1 and Cognos helped McCormick record $56 million in cost savings from their Comprehensive and Continuous Improvement program

McCormick is a global leader in flavor. With more than $4.0 billion in annual sales, the company manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the entire food industry—retail outlets, food manufacturers and food service businesses in more than 110 countries.

CHALLENGE

SOLUTION

RESULTS

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IBM Corporation 2014

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