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© 2016 Host Analytics Inc., All Rights Reserved -- Slide 1

Leader In Cloud-Based Enterprise Performance Management

John Head – Vice President of Services

Matt Wilson – Account Executive

E P M C L O U D B E S T P R A C T I C E S


How Many of You Feel Like This?


• The State of Budgeting and Planning

• Five Steps to Improved Budgeting,

Planning and Forecasting

• Customer Examples

• Q&A

top

ics


EPM Drives Efficiency, Accountability and Insight

Model

Plan

Close Report

Analyze

$

Efficiency Faster Processes

Accountability Across the org

Insight Actionable


What’s Impacting EPM?

Market Forces

• New Regulatory

Requirements

• Global Competition

• Shorter Product Lifecycles

• More Volatility

• Exploding Volumes of Data

• More Tech-Savvy Workforce

Impacts on Finance

• Reduce Manual Processes

• Dynamic Planning

• More Analytics

• Scenario Modeling

• Fast Delivery of New Apps

• Mobile Support


State of the Market - What Tools?

Source: BPM Partners’ 2015 BPM Pulse Research Study


State of the Market – Spreadsheet Usage



Excel Relationship

The Good

Flexibility, familiarity, speed, cost

The Bad

Error-prone, complex models can break

Limited data security and scalability

No workflow, controls, audit trail, etc.

Implications

Multiple versions of the truth

Hours or days of extra effort

Erroneous reports and forecasts

Lack of confidence in the results

It’s a Complex Relationship


Excel Errors Impacting Companies

Spreadsheet Mistake Costs

Tibco Shareholders $100

Million (2014)

2012 trading loss of $6.2

billion misstated by about

$2 billion due to Excel

error

88% of spreadsheets contain errors

According to a University of Hawaii study


State of the Market – Budgeting Process



State of the Market - Forecasting



State of the Market - Satisfaction



State of the Market - Dissatisfaction



State of the Market Summary • Today’s market requires a dynamic approach to

planning and budgeting

• Many companies still relying on spreadsheets, manual

processes

• Leading companies are:

• Adopting EPM Applications

• Putting less focus and effort into annual

budgeting

• Using regular, rolling forecasts to update budget

assumptions

• This leads to better business agility, competitiveness

• How to get there?


Planning and Forecasting Best Practices - 5 Tips

1 – Standardize and Automate

2 – Collect Financial Data in One Place

3 – Unify Financial and Operational Data

4 – Use Flexible Processes and Tools

5 – Ensure Data Security and Integrity


The old way of budgeting

Finance

Emails

Templates to

managers

Finance

Creates

Templates

Dept.

Completes

Template

Dept.

Emails

Finance

Finance fixes

broken templates

and becomes

owner

Finance Stays up

all night working

on manual

consolidation

Finance presents budget to

CEO and business tells CEO

that Finance changed the

numbers

Countless hours are

wasted trying to explain

what ended up in the

budget


Using Budget Templates


The new way of budgeting

Finance updates

templates in

Host

Finance meets

with depts. To

develop a plan

Dept’s complete

templates for

opex, capex and

workforce

Finance reviews

completed

templates with

dept and approves

Finance presents

budget to CEO

directly from host

reports

Actual ERP data

loaded to host

and available to

business

People are happy

and our business

is more informed


Fragmented Data Problem

Corp

Plan

Div

Plan

Div

Plan

Workforce

Plan OPEX

Plan

CAPEX

Plan

Workforce

Plan OPEX

Plan

CAPEX

Plan

Workforce

Plan OPEX

Plan

CAPEX

Plan

Div

Plan


A Better Approach

Excel as a Front-end

• Data Entry

• Reporting

• Ad hoc Analysis

• Charts and Graphs

• Personal Models

EPM Suite as a Secure,

Scalable Back-end

• OPEX Plan

• Workforce Plan

• CAPEX Plan

• Revenue Plan

• Project Plan

• Sales Plan

• Financials

• HR

• CRM

• Data Warehouse

• Spreadsheets

• Other

Multiple Data Sources


Cloud-Based EPM Suite

ERP HCM CRM SSO Spreadsheet Cloud apps External Data Dell Boomi

Planning Consolidation Reporting Modeling

Data Integration

Operational Planning Solutions

EPM Application Modules

Analytics

ERP HCM SSO Cloud Apps External Data

EPM Platform Common Data, OLAP, Dimensions, Calculations, Security

CRM Spreadsheets


EPM Never Really Got Outside of Finance

Finance

Sales

Marketing

Services

Operations

Software was too hard to use

Deployment model didn’t cooperate

Finance collecting spreadsheets

Opaque buckets-of-money effect

Ordered EPM and got FPM


We Created

Top-Down

Budgets

that Didn’t

Align with

Ops Plans


Reduce reliance on disconnected spreadsheets

Integrate operational plans with financial plans and forecasts

Empower with real-time finance and operating metrics

Anticipate business outcomes, improve alignment

Collaborate securely across Excel, Web and Mobile

Opportunity to Unite Finance and Operations

Sales

Finance

Mkting

SC

Services

Integrated

Plan

Sales

Finance

Mkting

SC

Services

Integrated

Plan


Support and Align Planning and Operational Modeling

Strategic Planning Financial Budgeting Operational Planning

Structured

Planning

Processes

M&A Modeling Sales Volume Labor Model

Ad Hoc Modeling

Planning vs. Modeling


The Planning Process

Strategic Financial Operations Rolling

Forecast

• Worst Companies: 50 Days for Annual Budget

• Best Companies: 20 Days for Annual Budget

• Best Practice: Rolling Forecasts

Source: APQC Open Standards Benchmarking Data 2013


Seven Key Problems with Traditional Budgeting

1. Budgets take too long to prepare (often making them out of date when published)

2. Budgets cost too much

4. Budgeting causes gaming that erodes the ethical foundation of the company

3. Budgeting is based on assumptions that are nearly always wrong

Source: Beyond Budgeting Roundtable


5. Budgeting triggers unnecessary spending

6. Budgeting gives the illusion of control by robbing potential

7. In the words of Jack Welch, “It [Budgeting] brings out the most unproductive behaviors in an organization…” (Jack Welch, “Winning,” p. 189)



How good are you at predicting the future?

Budgeting is Based on Assumptions that are Nearly

Always Wrong



Rolling Forecasts Support Dynamic Planning


Driver-Based Planning

Source: Grant Thornton


What’s So Special About Finance’s Data?

• Ultimate “scorecard” of company performance

• Competitively sensitive

• Legally sensitive

– Selective disclosure

– Insider trading

• Compliance

– Sarbanes-Oxley

– Personal and criminal liability for company officers


Source: Proformative survey. October 23, 2013. N= 103 finance professionals

Secure….Compared to What?

Spreadsheets

79%

QUESTION:

“What technology do you think has the

most security risk?”


Security Must-Haves

Complete Security of:

• Data Transfer

• Application Interfaces

• Data Storage

• User Access

In Addition to:

• Compliance

• Redundancy, Recovery, Business Continuity


High

availability

Secure data

centers

No spreadsheet

risks Security and compliance

audits & testing

Cloud Security Requirements

• T4 data centers

• Two factor, biometric

security access

• Mech. & electrical

systems in separate,

secured areas

• No burden

• Fast

• SLA

• Historical

performance

• Redundancy &

business

continuity

• AICPA SSAE-16 SOC1

Type 2 & SOC2 audits

• Internal & third-party

penetration testing

• US EU Safe Harbor

• Access controls

• SSL encryption

• Central database

No-wait security

patches


The Cloud is More Secure

“Conventional IT wisdom says that you’re

safer and more secure when you control your

own on-premises datacenter. Yet if you think

about every major data breach over the

last two years, whether Anthem, Sony,

JPMorgan or Target, all involved on-

premises datacenters, not the cloud.”

The Cloud Could Be Your Best Security Bet, TechCrunch, April 4 2015

Encryption and Access Control

Secure Data Centers

Security and Compliance Audits and Testing

No-Wait Security Patches

High Availability


• The State of Budgeting and Planning

• Five Steps to Improved Budgeting,

Planning and Forecasting

• Customer Examples

• Q&A

top

ics



Medium

Large

Small

Medical Device Manufacturers



Medium

Large

Small

Pharma & Bio-Tech Customers



Reduce Budget Process from 8 Weeks to 3 Weeks

• Completely dependent on Excel

• Inability to prevent errors

• Lack of IT resources to support new software

• Sole burden lies on finance team

• Little to no budget input from department managers

• 30+ depts.; changes in staffing models require overhaul

of excel allocations

• What-if scenarios not explored due to time constraints

• Cumbersome, error-prone forecasting process

Before After Process Improvements

• Reduced a labor intensive process from 8 to 3 weeks

• Eliminated multiple re-work of allocations

Financial Accountability

• Active participation by dept. managers creating ownership and financial accountability

Immediate Visibility to Actuals

• Dept. managers who previously had no visibility into their results can now generate budget/actual monthly reports

• Dept. managers have capability to drill-down into financial accounting system, react quickly to data

Health Integrated is a health management company. 300+ employees in 17

states.



Abbott Chooses Host Analytics For Cloud Benefits

• 150 different budgeting solutions

• No standard chart of accounts

• Long budgeting cycle

Before After

• One solution replaced disparate

systems

• Automated the budget process

• Consolidate budgets from entities

across the globe

• Lower TCO with Cloud

• Finance runs it

• Easy to use for 500+ participants

Abbott is a global, broad-based health care company devoted to discovering new

medicines, new technologies and new ways to manage health.



Tandem Diabetes Care® is a rapidly-growing medical device company based in San

Diego, California. The company takes an innovative, user-centric and integrated approach

to the design, development and commercialization of products for people with diabetes

who use insulin.

Adopting a Budgeting Solution That Supports Growth

• Company outgrew Excel-based

approach to budgeting and forecasting

• Needed a solution that was more scalable, less prone to errors, better audit trails

• Microsoft Dynamics couldn’t meet flexible budgeting requirements

Before After • Single version of the truth for budgets

and plans

• Improved traceability of budget assumptions

• Better data integrity and audit trail on forecast assumptions

• Better visibility into supporting detail

• Foundation for future growth


Leader In Cloud-Based Enterprise Performance Management

Get Additional Questions Answered

Website: Hostanalytics.com

Email: [email protected]

Phone: 866-391-4678

Twitter: @host_analytics

Blog: www.hostanalytics.com/blog

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