combining financial and physicals people, data and tools in business planning two cultures. two...

Combining Financial and Physicals People, Data and Tools in Business

Planning

Two cultures.

Two datasets.

Two toolsets.

One budget.

2

Combining Financial and Physicals People, Data and Tools

Introduction

Different groups Different data Different tools Different needs

Consolidated (Summary)

Reports

3


Overview

Part I: Context: The business planning task– What is involved?– What are the problems?

Part II: People Part III: Data

– Activities, Transactions, Costs Part IV: Tools Summary

4


Disclaimer

Stereotypes, archetypes, exaggerated No reference to any specific individual or

organisation Not a predictor of individual behaviour

Path of least resistance: an ideal

5


Part I: Context

Multi-national corporate organisation Multiple, remote sites Local manager costs local activities Head office integrates data from multiple

sites and performs additional calculations Separate and consolidated reports…

6


Context

Many stakeholders. Many problems.

7


Mine Schedule export extract

8


Consolidated Financials extract

Amount DateH1 H2 H3 H4 Description Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06Balance Sheet -10,274 -757,954 51,974 -467,166 -1,300,176 -2,541,545 -3,114,565

Assets -413,301 7,764,562 9,193,154 7,441,888 6,112,826 7,637,491 7,776,085Current Assets -1,605,526 3,618,151 5,877,990 4,210,008 2,698,899 2,725,899 1,052,988

Cash/Short Term Money Market Deposits 915,971 -1,969,446 -992,030 -458,052 -1,374,401 -1,472,419 -230,090

Inventories 1,125,307 5,664,885 6,786,864 4,856,775 4,229,012 3,275,812 1,592,442

Receivables -3,646,804 -77,289 83,156 -188,715 -155,711 922,506 -309,364

Non Current Assets 1,192,225 4,146,411 3,315,164 3,231,880 3,413,927 4,911,592 6,723,097

Goodwill

Mining Properties and Development 788,893 2,131,679 1,061,673 1,121,489 1,083,152 3,008,477 1,876,860

Other -274,984 -1,035,734 -1,296,430 -658,261 -655,929 -614,169 948,600

Property, Plant, & Equipment 678,316 3,050,466 3,549,922 2,768,651 2,986,704 2,517,284 3,897,637

Liabilities 403,027 -8,522,516 -9,141,181 -7,909,054 -7,413,003 -10,179,036 -10,890,651Current Liabilities 1,511,804 1,868,996 -139,193 2,194,168 63,037 3,178,341 2,652,061

Accounts Payable 1,391,042 1,308,277 -3,378,643 1,780,900 -695,556 -2,135,179 1,381,570

Provisions 120,763 560,719 3,239,450 413,268 758,592 5,313,519 1,270,491

Non Current Liabilities -1,108,777 -10,391,513 -9,001,988 -10,103,222 -7,476,039 -13,357,377 -13,542,712

Borrowings -469,136 -8,000,000 -6,966,486 -7,867,522 -5,250,573 -10,552,009 -22,966,164

Provisions -639,641 -2,391,513 -2,035,502 -2,235,700 -2,225,466 -2,805,368 9,423,453

Income 10,274 757,954 -51,974 467,166 1,300,176 2,541,545 3,114,565Profit & Loss 10,274 757,954 -51,974 467,166 1,300,176 2,541,545 3,114,565

Profit and loss before tax 10,274 757,954 -51,974 467,166 1,300,176 2,541,545 3,114,565

Expenses 4,152,305 16,358,893 19,471,068 20,116,460 20,880,374 20,875,706 21,806,571

Income -4,142,031 -15,600,939 -19,523,042 -19,649,294 -19,580,198 -18,334,161 -18,692,005

Trial Balance 0 0 0 0 0 0 0

9


Alternative Scenarios

Hospital administration Manufacturing Logistics Power generation and distribution etc

10


Common factors

Things

People

Time

Money

11


What’s the problem?

ERP

SourceData

Consolidated Financials,

KPIs ?

Contrast

12


What are the problems?

Huge expenditure of time and effort. Wheel re-invention. Delayed benefits. No audit trail. Difficult variance analysis.

– (actuals versus forecast) Cannot learn or improve. Conflict.

13


Part II: People

14


15


People

What are the people problems? Why do we have them? What can we do about it?

16


People: Finance versus Technical

The Bean Counters versus the Eggheads The Suits versus the Techies City Boy/Girl versus Rugged Individualist

Bushman Corporate Accountants versus Mining

Engineers and site staff.

17


Stakeholders

Stakeholder: A person or group that has an interest in the process or

outcome of a project.

18


What are the people problems?

Failure to see process patterns– “But everything changes each quarter!”

Conflict of interest = Lack of motivation– “It doesn’t help me at all”

Defensiveness– “I’m the only one who can do it”

Unwillingness to change– “Better the devil you know”

19


Why do we have people problems?

Failure to understand stakeholders. Poor deployment…

20


People form “tribes”

Emphasise what is common. Exaggerate what is different. More likely to work for the benefit of the

group. Less likely to work for the benefit of other

groups. They’re everywhere. They might not be obvious.

21


A strategy for the people problem, for everyone

Deploy solutions properly. Acknowledge and understand tribes. Demonstrate personal advantage.

22


A strategy for the people problem, for specialists

Automate the drudgery.– Free specialists from data administration.

Focus on the fun.– Allow specialists to concentrate on what makes

them special

Don’t frighten them.

23


Part III: Data

24


Data: Finance versus Technical(Mining)

Financials– Opening balances– Fixed Costs– Rates, Charges,

Taxes– Cost Elements, Cost

Centres…

Physicals– Mine Plan/Schedule– Labour Schedule– Equipment Schedule– Stockpiles– Material Movements…

Outputs:– Budget/Chart of Accounts– KPIs ($ and physical)…

25


Data: Health care

Admissions, tests, treatments, observations, discharge…

Beds, patients, drugs, equipment, dressings…

Waste disposal, catering, laundry, transport…

Medicare, private insurance, government subsidies, research protocols…

26


What do people do with the data?

Make spreadsheets. Copy data Create formulae Apply rates Tinker Tidy Fix

27


Data models

Human-friendly– Complex– Multi-channelled– Compact– Organic

Technical– Activity-based

Financial– Transaction-based

Machine-friendly– Simple– Bulky– Mechanical

Management– Consolidated

Reference– Static or time-based

28


Human-friendly data

Complex Multi-

channelled Compact Organic

29


Human-friendly data

30


Machine-friendly data Simple Bulky Mechanical

31


Using reports to build reports

ERP

SourceData


KPIs ?

Fn?Fn?

Fn?

Fn? Fn?

Fn?

Fn?Fn?

References?

Raw Data?

32


A strategy for the data problem

Design a machine-friendly data model. Keep data, business rules and report formatting

separate. Keep variable (activity) and stable (reference) data

separate. Collect and translate automatically all variable data

to machine friendly standards. Store reference data in a common database.

– e.g. lookup tables for prices, rates, capacities

33


Activity Schedule

Data

Reference Data

CostExplosives

Cost Calc$/BCM

Rate0.5

Cost CodeDrill & Blast

Event(Period)

Metric

Resource

$ Cost

Consolidated Report

Data Entry

Processing

Reporting

34


Data – Rules - Reports Variable Activity Data (Schedule):

– Period (Oct 2007)– Activity (Hauling)– Truck operating hours (60)

Stable Reference Data:– Truck oil consumption rate ($10/op hour)– Cost Centre (123 Hauling)– Cost Element (666 Oil)

Business logic:– Check oil price– Cost of Oil consumed = OpHrs x OilConsumptionRate x OilPrice

Reporting and analysis:– Oct 2007; 123 Hauling; 666 Oil; $600– Show all oil consumption costs for Q3 2007 over $500

35


Activity – Resource – Cost

36


Activity – Resource – Cost Calculation

37


Activity Events: Schedule to Cost

Technical

Financial

Reference

38


Part IV: Tools

39


The usual toolset

Major ERP financial and technical solutions. Gap-filling tools:

– spreadsheets– documents– scripts– macros– databases– brains– whiteboards– paper…

40


The usual toolset

Alice’sScript

Chris’Document

Bob’sDatabase

FinancialEnterpriseSystems

Mike’sSpreadsheet

TechnicalEnterpriseSystems

Contrast

41


Not convinced? Ad hoc solutions may be:

– Developed by individuals whose expertise lies outside solution and process design

– Developed and maintained with unique or unusual methods.– Located on isolated personal computers or mobile devices.– Used in uncontrolled or unaudited ways.– Extremely difficult and time consuming to maintain.– Subject to errors in data and logic.– Meaningful only to the owners.– Poorly if ever documented.– Unable to be shared or transferred.– Lacking source or version control.– Re-invented repeatedly.– Inadequately or never backed up.– Lost when the owner leaves the organisation.– The proudest achievement of the owners.

42


Spreadsheets et al

“…our reliance upon and use of spreadsheets represents one of the single greatest threats to corporate data quality and accuracy”

Ian Charlesworth

Managing Spreadsheet Sprawl, Butler Group Review, Issue 24, Dec 2004, p5.

43


A solution for the tools problem

XempleX Agile Service-oriented Object-oriented Integration-friendly Human-friendly graphical language No scripting required

44


XempleX Graphical language

•If Sales are greater than or equal to Production, increase Production. •If Sales are less than Production, reduce Production.

45


The XempleX Solution

Separate data management from business logic and

reporting requirements.

1. Read/Control

3. Write

Source Data

Reporting Tools

Reports

XempleX model

2. Process Rules

Results

46


A comparison – XempleX vs VBA

47


A comparison – XempleX vs VBA

48


Scalable

49


50


Documented data management, technical and business process logic

ERP

Process A Process B Process C Process D

SourceData


KPIsAudit

Contrast

51


StandardisationAutomationIntegration

EnterpriseSystems

XempleX

Contrast

52


Summary

53


Technical versus financial

People Data Enterprise solutions Specialist technical systems Ad hoc solutions

54


Problems

Extended Expensive Unreliable Unauditable Inflexible

55


Building a Solution

A blend of hard and “soft” skills Flexible tools Project Management Psychology (social, organisational, cognitive) Workflow Analysis Data Modelling Logic Modelling Systems Integration Change Management

56


XempleX Pty Ltd www.xemplex.com

Perth-based Experienced in:

– Mine management– Technology– Business– Finance– Project management.

International partners in other verticals

57


Reading

All by Stephanie Bateman-Graham, available at www.xemplex.com/downloads/

“Combining Financials and Physicals Data in Mine Business Planning”

“An End-to-End Solution for Mine Business Planning”

“Filling the Gaps in Enterprise Solutions”

58


The XempleX Solution

Separate data management from business logic and

reporting requirements.

1. Read/Control

3. Write

Source Data

Reporting Tools

Reports

XempleX model

2. Process Rules

Results

combining financial and physicals people, data and tools in business planning two cultures. two...

Documents

physicals people

people problems

toolscombining financial

idealcombining financial

peoplecombining financial

specific individual

toolscontextmany stakeholders

process patternsbut