Fix Your Forecast and Build Your Budget

Fix Your Forecast and Build Your Budget
Best Practices for Enterprise Performance Management

Emil Fernandez, General Manager
EPM National Practice
June 29, 2010
About Perficient
Perficient is a leading information

technology consulting firm serving clients
throughout North America.
We help clients implement business-driven
technology solutions that integrate
business processes, improve worker
productivity, increase customer loyalty and
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create a more agile enterprise to better

respond to new business opportunities.
Fast Facts
Founded in 1997
Public, NASDAQ: PRFT
16 locations throughout the U.S. & Canada:

Chicago, Cincinnati, Cleveland, Columbus, Dallas,
Denver, Detroit, Fairfax, Houston, Indianapolis,
Minneapolis, New Orleans, Philadelphia, San Jose, St.
Louis and Toronto
1,100+ employees
Dedicated solution practices
Served 400+ clients in past 12 months
Alliance partnerships with major technology vendors
Multiple vendor/industry technology and growth

awards
Our Solutions
Why do we
Budget?
Planning and Budgeting Challenges
Time takes too long, results

obsolete
Quality political/negotiation,
not reflective of business
Cost many wasted
resources, dubious benefits
Flexibility lack of
responsiveness to changes
Senior Management
FP&A Group
Dept A
Dept B
Dept C
Reason #1:
Spreadsheet driven
Reason #2:
Long Cycle Times
Reason #3:
Complexity
of Business
Metrics
10
Reason #4: Disconnected
11
So why
is it
this way?
12
Transactional
Systems
vs.
Management
Systems
13
Transactional Systems
Mature technology
Over 50 years of development
Pervasive (GL, AP, AR, HR, Supply Chain, etc.)
Management Systems
Relatively new (10 years)
2nd or 3rd generation products
Not well understood
Requires a cultural change
Not pervasive, but getting there
14
How new?
Corporate Performance Management (CPM)
Gartner 2001
Business Performance Management (BPM)
Hyperion 2003
Enterprise Performance Management (EPM)
Oracle 2007
15
So what is EPM
anyway and
why should I care?
16
EPM is the connecting fabric

that allows management to link
strategies to plans, continuously
monitor execution against goals
and drive enterprise-wide
performance improvement.
17
Management Processes Exist in Silos
VARIANCE
ANALYSIS
FINANCIAL
REPORTING
ROLLING
FORECAST
GOAL
SETTING
FINANCIAL
MODELING
OPERATIONAL
PLANNING
MONITOR
RESULTS
SCORECARDS
ANALYZE
PERFORMANCE
18
Results of Silos
Lack of Alignment
Cant Align Company Goals with Plans and Execution
Low Predictability
Not Able to Improve Accuracy in Forecasts and Plans
Inconsistency
Unable to Base Decisions on the Right Information
Lack of Transparency
Not Able to Meet Evolving Disclosure Requirements
Stale Data
Data is Out of Date and Irrelevant
19
An EPM Strategy Can Eliminate

Links strategic goals to
operational decisions
Transforms financial
management processes
Monitors execution in
real-time
Delivers consistent,
reliable insights to drive
action
Lowers costs and reduce
system complexity
Single version of the
truth
Set
Goals
Plan
Align
Insight
Performance
Action
Report
Monitor
Analyze
20
EPM Favors More Complex Organizations

Size
Performance
Management
Large
Financial
Modeling
Financial
Reporting
Medium
Small
Mgmt Rpts
Analysis
Basic
Reports
Private
Public
Multi-National
Multi-Division
Complexity
21
Large Domestic Company
Multiple Locations
Multiple Products/Services
Distributed Authority
Multiple Operational Systems
Frequent Reporting
Accurate Forecasting
Resource Management Critical
Management System
Requirements:
HQ
Division 1
Division 2
Division 3
Replace/Augment Spreadsheets
BI Query & Reporting Tools,
Dashboards
Packaged Budgeting and Planning
Application
22
International Organization
More Locations and Systems

Reporting and Budgeting in
Multiple Currencies
Intercompany Transactions
Financial & Management
Consolidations & Reporting
Local Tax and Statutory
Reporting
Management System
Requirements:
BI Query & Reporting Tools
Multidimensional Analysis Platform
Packaged Budgeting & Planning
Apps.
Packaged Financial Consolidations
& Reporting System
HQ
EMEA
NA
APAC
UK
East
Japan
France
Central
China
Germany
West
ANZ
23
Competitive
Advantage
Smart
Smart Actionable
ActionableInsights
InsightsAcross
AcrossEnterprise
Enterprise
Agile
Adaptable
to
Changing
Business
Agile Adaptable to Changing BusinessConditions
Conditions
Aligned
Aligned Consistent
ConsistentView
Viewof
ofPerformance
Performance
MANAGEMENT EXCELLENCE
Cost
CostLean
Leanand
andMean
Mean
Quality
Six
Sigma,
Quality Six Sigma,TQM
TQM
Speed
Real-time,
JIT
Speed Real-time, JIT
OPERATIONAL EXCELLENCE
Time
24
2.40
World-class EPM
organizations deliver 2.4
times the equity market
returns of industry-peer
companies
1.0
Peer Group
Enterprise
Performance
Management (EPM)
World-Class
Source: CFO Challenges and Opportunities in the Flat world
25
26
How do I apply
EPM Principles to the
Budget process?
27
Pulling it together Budgeting the EPM way

1. Link the budget to the corporate strategy
2. Avoid excessive detail (this is not the GL!)
3. Dont sweat the small stuff (80/20 rule)
4. Use targets (top down or bottom up)
5. Capture the business drivers
6. Focus on data quality
7. Combine budget numbers with actuals
8. Close the loop enforce accountability
9. USE A PURPOSE-BUILT PLANNING APPLICATION,
NOT A DESKTOP SPREADSHEET TOOL
28
Question: What is a Planning Application?

Answer:
A purpose-built software program
designed to manage the input of
budget data across the enterprise,
enforce consistent calculation of
business rules, and automate the
aggregation of the budget.
29
Planning Applications Key Components
OLAP
Web
Forms
Managers
Centralized
Database
Approve
Deny
Promote
Manage
Planning
Manager
GL
Actuals
Analyze
Model
Report
30
Features & Benefits (continued)

Feature
Benefit
Automated
Reduces Errors, reduces cycle

times
Web-based forms
Gets away from e-mailing

spreadsheets
Secure
People see only what they need

to see
Workflow
Increases efficiency, reduces

cycle times
Flexible
Able to run multiple what-if

scenarios
31
Planning Applications Features & Benefits

Feature
Benefit
Centralized database
Single version of the truth

(raw data)
Calculation Engine
Single version of the truth

(business rules)
Summary-level data
Ultra-fast performance,
reduces cycle times
Easy-to-generate reports
Facilitates analysis, reduces

cycle times
Ability to load actuals
Measure and improve

enterprise performance
32
Does it really work?

Yes.
33
Texas Childrens Hospital

Texas Children's Hospital is an internationally recognized full-care pediatric hospital located in the Texas
Medical Center in Houston. One of the largest pediatric hospitals in the United States, Texas Children's
Hospital is dedicated to providing the finest possible pediatric patient care, education and research.
CHALLENGE
Painfully inefficient (Excel-based) budget
process
Budget cycle sometimes took 6-8 months
Managers completed Excel worksheets which
were batch loaded to PeopleSoft for
consolidation
Consolidated financial statements required 2448 hours lead-time to produce
Operating target negotiations would begin after
the budget was finalized
Lengthy and difficult process to make changes
and provide updated forecasts
SOLUTION
Texas Childrens selected Hyperion for its
powerful out-of-the box budgeting and forecasting
capabilities, and for its ease of integration with
PeopleSoft.
FEATURES & BENEFITS

Executive meetings were moved to the start of
the budget cycle to set goals and targets
Operating targets are loaded into Hyperion
Planning before the budget season opens
Drivers and business rules are reinforced by
the system
The system supports 230+ planners both
online and offline
Directors and Executives generate selfservice reports on demand
Now, real-time reporting to the Director level is
possible, providing immediate visibility into the
numbers
Actuals loaded directly from PeopleSoft for
easy variance reporting
34
Wyman Gordon
Since we implemented our EPM Planning
application, we understand our business better and
make quicker and smarter decisions. We have one
integrated system for budgeting, planning, and
forecasting. I cant believe we ever lived without it.
Steve Tuozzo, Controller
Benefits Realized:
Allows finance to spend more time on analysis by eliminating

manual effort for collection and reporting of budget and forecast
data
Managers now have access to more accurate and timely forecast
data to make better business decisions
Reduced errors and increased confidence in the numbers by
automating roll-up of forecast/budget data
Single system of record now provides increased predictability of
revenue and expenses
Improved collaboration by centrally tracking changes, annotations,
and comments to plan data
35
Continental Airlines
Developed EPM Planning application for

consolidated Income Statement reporting
for Actual, Forecast and Budget
Managerial and Clerical Budget/Forecast
Replaced 1000s of Excel spreadsheets
Configured to allow multicurrency input
Accounts dimension > 6000 Accounts
Company Dimension > 6300 Cost Centers
Over 400+ users submitting their
budget/forecast
Near real-time aggregations utilizing 64-bit
servers
Actuals loaded every 24 hours to base member
Matching reports created to tie Planning Income
Statement to the GL Income Statement
Rate, Volume, other variance reports created
using Financial Reporting and the qualitative
analysis added using Annotation Server
36
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Fix Your Forecast and Build Your Budget

Best Practices for Enterprise Performance Management

Perficient is a leading information

View other Perficient on demand

create a more agile enterprise to better

Public, NASDAQ: PRFT

16 locations throughout the U.S. & Canada:

Dedicated solution practices

Served 400+ clients in past 12 months

Alliance partnerships with major technology vendors

Multiple vendor/industry technology and growth

Planning and Budgeting Challenges

Time takes too long, results

Reason #4: Disconnected

EPM is the connecting fabric

Management Processes Exist in Silos

An EPM Strategy Can Eliminate

EPM Favors More Complex Organizations

Large Domestic Company

More Locations and Systems

Source: CFO Challenges and Opportunities in the Flat world

Pulling it together Budgeting the EPM way

Question: What is a Planning Application?

Planning Applications Key Components

Features & Benefits (continued)

Reduces Errors, reduces cycle

Gets away from e-mailing

People see only what they need

Increases efficiency, reduces

Able to run multiple what-if

Planning Applications Features & Benefits

Single version of the truth

Single version of the truth

Facilitates analysis, reduces

Ability to load actuals

Measure and improve

Does it really work?

Texas Childrens Hospital

FEATURES & BENEFITS

Allows finance to spend more time on analysis by eliminating

Developed EPM Planning application for

Follow Perficient Online

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