Business Transformation and IT
Finance Transformation & IT
FEI Summit
Carlos Passi
Asst Controller, Business Transformation
Business Transformation and IT
Agenda

IBM Finance Transformation

Leveraging Technologies & Tools

2

Global Integration

Risk Management

Business Analytics

IT Infrastructure (Virtualization & Cloud)
Evolution of IBM Finance
© Copyright IBM Corporation 2009
(1)Finance
The Journey…
(1)Finance
Effectiveness
• Country
Conducted
Undertook
Horizontal
Global
Centers
focused
integration
several
Hackett
of Excellence:
enterprise
benchmarking
of processes
initiatives:
Planning
study
(SAP/Y2K
–Financial
Assets,
Finance
/ Euro
Over
the
past
decade,
Finance
• High
E/R
conversion
Payables,
systems
2x
labor
competition
/ Acct
Procurement)
count
/ VM/ Treasury
migration / Web exploitation
has
leveraged
new
technologies
• Disparate
Created
Focus
Improve
WW
Finance
onGlobal
collaboration/access
reduction
systems
transformation
Finance
of WW
Process
application
inIT
for
Planning,
internal
Owners
portfolio
Services,
• Administrative
Focus
(theoretical
customers
Cash
Management,
on core
(ODW)
minimum)
focus
accounting
Tax, Business
transaction
Controls,
systems
A/R,
to transform
the
organization,
• (Transaction
Conducted
Focus
Capital
on
Tracking,
core
second
foundation)
competencies
Access
Hackett
Management
study
/ Outsource
to reset
driving
simplification,
• Implemented
benchmarks
transaction
Cognos
BI &processes
Planning
common (BTO
Systems
processes
AP/FA)
(WWCOA) &
• global
Ubiquitous
systems
self service
to financial
productivity
&access
effectiveness.
information (Portal, FIUI)
(1)Finance
(1)Finance
E/R 1.5%
E/R <2%
1 Cost
E/R >3%
of Finance as a % of Revenue
Efficiency
Characteristics (Best of Breed)
High Cost & Disjointed
Low Cost & Integrated
PEOPLE (ORG)
Unit, Application & Geo Specific
Slow & Task Focused
Country Centric & Isolated
PEOPLE (ORG)
Global CoE’s / Outsource
Agile & Value Focused
Productive & Collaborative
PROCESS
Complex & Disparate
Local Initiatives
Transactional / Reporting
‘96
TECHNOLOGY
Legacy / Interfaced
Proprietary / Monolithic
Disintegrated Portfolio
‘98
‘00
PROCESS
Simplified & Standardized
Enterprise/Horiz Initiatives
Decision Support / Analysis
‘02
‘04
Continuous progress marked with significant milestones
3
E/R 1.4%
(1)Finance
Characteristics (Starting Points)
‘94
E/R Goal <1%
© Copyright IBM Corporation 2009
Access | Integration | Innovation
Business Transformation and IT
TECHNOLOGY
Open & Standard / SOA
OnDemand / Self-Serve
Small Strategic Portfolio
‘06
‘08
Business Transformation and IT
The Stack…
APPLICATIONS / SOLUTIONS
Financial
Enrichment Layer
Common World Wide Planning
System, Consolidated & Geographic
Finance Information Warehouses
Financial
Warehousing,
Planning
Finance Transaction Layer
Common Ledger, F/A, A/P,
A/R, Interco (WW Run-Once
Solutions)
Finance as a Service
(SOA) e.g. SABRIX,
WWPRT
4
Decision
Support
Ledger, Fixed Assets, A/R, A/P,
Intercompany, Pricing, Costing, Treasury
Enterprise Layer
Enterprise business transaction applications and
corporate data facilities
© Copyright IBM Corporation 2009
Data Standards (WWCOA), Currency, Product Maps
Single World Wide Consolidation System,
Cognos BI Tools, CFO Portal
Consolidation,
Reporting &
Analysis
Business Transformation and IT
Our processes and information technology are centered
around trusted sources of data
Executive
Dashboard
FIUI
CFO Portal
Web
Server
APEX
EDGE
Accounting
Consolidation
FIW-C
CORPORATE
Lotus Notes
Databases
Actuals
EMEA
AP
JAPAN
FIW-MC
E/ME/A FIW-MC
AP
STRATEGIC
OPERATIONAL
SYSTEMS
Americas
FIW-MC
NA/LA
Lotus Notes
Databases
LEDGER
5
LEDGER
© Copyright IBM Corporation 2009
LEDGER
Business Transformation and IT
Finance leverages and exploits new technologies to drive
value, manage risk and reduce cost
INCREASE VALUE
MANAGE RISK
REDUCE COST
Blue Harmony
 COGNOS Integration
 Research (STAR)
Business & Consolidation Global
Analytics
Integration
New
Technologies
& Tools
IT
Infrastructure
 Virtualization
 Cloud Computing
6
© Copyright IBM Corporation 2009
Risk
Management
Continuous Control
Monitoring (CCM)
Business Transformation and IT
Blue Harmony (Enterprise Transformation Initiative)
Implementing common SAP platform across 3 major processes
Blue Harmony enables
IBM’s GIE strategy as it
simplifies operations
in 3 major processes
and helps to reach
earning-per-share
targets
Opportunity to Order
Order to Cash
Finance
Potential Benefits for IBM
 Productivity efficiencies from FIN, OTC
and OTO
 Enhance solution selling capabilities,
improved customer satisfaction and
retention
 Improve DSO and other capital measures
 Simplify IBM’s Applications landscape by
retiring ~1000-systems
2010 EPS
$11.00
Retirement-related
Acquisition and growth initiatives
Share repurchase
GIE Strategy
Global Simplification
Margin Expansion
$1.00
Historical revenue growth
$0.75
Margin Expansion
2006 EPS
• Leverage global resources through
common processes
• Adopt standards for seamless intra
and inter-organization operation
• Provide adequate control through
compliance and governance
7
© Copyright IBM Corporation 2009
• Better information
• Better decisions
• Better executions
$6.06
• Improve productivity and efficiency
to expand margin and grow EPS
Business Transformation and IT
CCM (Continuous Control Monitoring)
Managing risks in key business processes
■
Uses IBM Complex Event Processing (CEP) technology to extract information from internal
business applications and analyze the data against predefined criteria
■
Monitors high risk transactions in key business processes that are administered in an
automated environment to deter and detect circumvention of controls
Current implementations & sampling of rules Continous
include:
Controls Monitoring
• Customer / Enterprise concessions exceeding a country
limit and/or customer credit rating
• Deviated Refunds (sent to IB address or changed
ALERT ACTIVITY
customer address)
• Invoices for low credit rated customers
• Aged (30+ days) collection activity that is not
documented for large valued invoices
Business Partners (6 countries and 67 rules)
• Multiple/excessive discounts applied to same BP
• Processed payment doesn’t match approved
disbursement amount
• Purchase returned but credit not applied timely
General Procurement (1 country and 5 rules)
• Orders open for 180 days without activity
• Adherence to required to vendor source selection and
fair value (SS/FV) analysis
8
© Copyright IBM Corporation 2009
LAT
Monthly Measurements Report for June 2009
> ARGENTINA
Accounts Receivable (WW focus, 37 countries, 48 rules)
MAIN
Screen Shot from CCM (Activity Alert):
SOX
RELATED
CONTROLY/N
UNIVERSE
OF
TRANSACTIONS
ALERTS
GENERATED
ALERTS
GENERATED
YTD
TOTAL
VALID
TOTAL
OPEN
Multiple concessions (2 or more) to the same customer number where the aggregate total
1 value of the concessions is equal to or is greater than defined clip level. Individual
concessions equal to or greater than clip level in USDare excluded.
Y- KCFR106
0
0
0
0
0
Multiple concessions (2 or more) to the same enterprise number where the aggregate total
2 value of the concessions is equal to or is greater than the defined clip level. Individual
concessions equal to or greater than clip level in USDare excluded.
Y- KCFR106
0
0
0
0
0
Multiple concession write-offs (2 or more) for a customer number where the aggregate total
value of the concessions is equal to or is greater than defined clip level. Individual
3
concessions equal to or greater than clip level in USDare excluded. Additionally, the credit
codes are PA, RRand SA.
Y- KCFR106
0
0
0
0
0
Invoices valued at a defined USDclip level or more where the customer number has one of
the following credit codes: PA, RRand SA.
Y- Headlight
294
85
190
0
85
Collection activity in CDMS(Common Dispute /Debt Management System) that is not
5 documented for invoices exceeding the USDclip level with invoice dates that are 15 days
old (fromcurrent date).
Y- KCO# 501.0
79
29
120
0
29
Collection activity in CDMS(Common Dispute /Debt Management System) that is not
6 documented for invoices exceeding the USDclip level with invoice dates that are 30 days
old (fromcurrent date).
Y- KCO# 501.0
249
58
194
0
58
RULE
4
RULEDESCRIPTION
Business Transformation and IT
COGNOS Integration
Increasing the value of finance through business analytics
Integration

Leverage Cognos products to solution
new business requirements; and
opportunities to transform and simplify
processes.

Potential to fundamentally change how
IBM Finance will support the business
and add greater value.
Project
Technology
New Capabilities
Backlog Reconciliation
BI
FMS Commissions
BI
BaRT (Backlog Run-Out Tool)
TM1 & BI DB2
CIO Scorecard Phase I
BI
Wall Street Systems
BI & WSS
Marquis Application Replacement
FIUI
BI
WW Spend
TM1 & DB2
Phased 3rd Party Replacement
9
Cognos EP
Planning
Investigations Measurements
BI
© Copyright IBM Corporation 2009
FMS (Field Management System) Commissions
 One of IBM’s largest suite of applications supporting the incentives
process
 Allow sellers to track quota attainment and perform sales reporting
at a customer level
 FMS enables the implementation of key business strategies:







30 days to pay; Monthly commission payments
Ledger-based measurements
Line-of-sight measurements for employees
Increased incentive value to employee
Timely management information to executive team
Improved discipline and controls in the process
Reduced resource stacking; Reduced manual workload
WW Spending Harmonization
 Drives WW standardization of spending analysis and reporting
 Replaces multiple local spending Apex cubes with one common
WW cube using Cognos TM1 platform
 Potential benefits to IBM:
 Better control of spending and quicker decision making
 Support career growth for finance professionals
 Common source of information for better business controls and
simplified access control
Business Transformation and IT
STAR (Statistical Tracking & Assessment of Revenue)
Consistent metric-driven model for performance estimation
STAR Model:
METHODOLOGY
Opportunity data from
EIW (i.e., Siebel)
Each opportunity detail is
modeled
Revenue data to
calibrate parameters
Quarterly transactional
revenue
Predict, based on
history, the Future
Yield due to
opportunities not yet
in the pipeline
Compute Probability of
Winning and Expected
Yield of each opportunity
using detailed EIW data
wk1 wk2 wk3 wk4 wk5 wk6
 Consistent metric-based method
(statistical model based on historical data)
Load data
Provides value of
closed deals
ready to ship
 Link tracking measures to performance
 Accurate in early weeks, low volatility
over weeks
Orders
 Re-focus human effort from estimating
outcomes to decision-support activities
wk 13
Today
End of Quarter
10
LEADSONLY
PILLAR
LEADSAND-LOAD
PILLAR
LOADONLY
PILLAR
WEEKLY PILLAR WEIGHTING MODEL
Computes historically optimal weights for
each pillar, by week, geo/region, and brand
FINAL OPTIMIZED ASSESSMENT
an optimal weighted average of the four pillars
for each geo/region, and brand
© Copyright IBM Corporation 2009
I-view
STAR1
STAR2
Delta to Actual
Developed by IBM Research
Assessment Precision Comparison
Firm
LOADONLY
PILLAR
Wk 1
Wk 2
Wk 3
Wk 4
Wk 5
Wk 6
Wk 7
Wk 8
Wk 9
Wk 10 Wk 11 Wk 12 Wk 13
Business Transformation and IT
Today, Finance IT activities align with the Dynamic
Infrastructure and makes use of virtual hosting
Evolution of IT Infrastructure – IT Simplification
Key Technologies (unordered)
• Service oriented architecture
• End-to-end service mgmt
• Comprehensive virtualization
• Ensembles & scalable servers
• Converged networks
• Cloud computing services
11
Top IT Requirements (all are vital)
• Software as a service
• Information as a service
• IT appliances
• Real-time data streams
• Mobile client services
• Virtual worlds
© Copyright IBM Corporation 2009
• Agility – rapid deployment, self-service, …
• Resiliency – availability, disaster recovery, …
• Security – trusted computing, surveillance, …
• Greenness – energy efficiency, low impact, …
• Low Cost – TCO (HW, SW, labor, facilities, …)
Business Transformation and IT
Virtualization benefits are significant
Expected Benefits of Virtualization
Large Scale Migration Challenges
• Substantial savings: energy, software
and system support costs
• Decision-Making: Integrating Enterprise
and business unit view
• zLinux target: 80% energy, 85% floor
space
• Mindset/culture of distributed vs.
mainframe
• Inventory hygiene, including application
to server mapping
• Workload selection -- multidimensional
nature
• Dramatically faster provisioning
• Improved security and resiliency
• Quality – simple, stable, available
• Incomplete/dated inventory records
• Detailed date for internal business case
• Integrating project/ program priorities
Next Steps:
Evolution of business intelligence to
Cloud Computing
12
© Copyright IBM Corporation 2009
Business Transformation and IT
Delivering Business Intelligence through Cloud Computing
WHAT IS CLOUD COMPUTING?
Cloud computing provides
dynamically scalable and
virtualized computing resources
as a self service.
WHAT WILL THIS BRING?
• Saves $23M over 5 years (on System z Linux)
 Infrastructure savings – provisioning a common
service
 Operations expense – reducing BI infrastructure
 Talent restructuring – common BI tooling
landscape
Tenants can subscribe to this
service focusing on capability
instead of infrastructure.
• Supports a massive install base of +200K
knowledge workers
Infrastructure and capabilities are
standardized and provisioned
through automation.
• Centralizes the delivery of BI services using
economy of scale to deliver value to all adopters,
regardless of size
Business model allows tenants to
pay for usage, fixed cost vs
variable cost
13
© Copyright IBM Corporation 2009
• Provides delivery of a widely used, common
service within the IBM enterprise
• Enables faster time to value for adopters and allows
users to consume services at a rate and pace to
match their investment
• Creates a standard BI process that prevents an
infrastructure build per project investment
Business Transformation and IT
Overview for a private Business Intelligence (BI) Cloud
offering
■
In 1Q09, the 3rd most popular search term on
Gartner.com was business intelligence
■
Despite the difficult economic conditions, in 2008
the growth in BI platform sales was at 20%
The vision
Business
intelligence
Strategy is a tops down approach that starts with business services to
capture tactical ROI and market interest:
■
■
Master data
management /
integration
Content / data
management
14
14
■
■
Leverage existing GA products & services to jumpstart sales for
private clouds
Use the CIO account to drive product requirements and a marketing
showcase
Consolidate and virtualize BI silos across an enterprise for large cost
savings/avoidance
Grow cloud at the rate and pace of the market
…while offering a stake in the ground for expansion into clod delivered data
centric consolidation and cloud services.
© Copyright IBM Corporation 2009
Business Transformation and IT
Transformation Roadmap for BI Cloud
The BICC is the underlying foundation for the entire transformation in IBM
Phase 1: 3 - 6 mo
‚
Bring Cloud to the User
■ Consolidate & centralize BI
■ Leverage data as-is
■ Standardize boarding
processes & services
■ Identify the processes for
automation
■ Identify services for catalog
Phase 3: > 12mo
Phase 2: 6mo - 12mo
Expand the Cloud
■ Create a standard services
catalog
■ Automate the boarding process
■ Provide auditing
■ Automate billing and rating
capability
■ Integration w/CHQ cloud
transformation team
■ Notes integration pilot*
4Q08
Boarding schedule for
IBM tenants
2Q09
3Q09
4Q09
1Q10
Finance IT
Integrated Supply Chain
FMS
HR
Sales Transformation
SWG
GTS
Blue Harmony (Pilot/Development)
Target is 120,000 IBM tenants by 1H2010
15
1Q09
Expansion into data
■ ETL services
■ Offering data warehouse
services
■ Semi-structured /
unstructured data access
■ Evolution into IMCC
platform offerings
© Copyright IBM Corporation 2009
In Discussion
BICC Environment
Non BICC Environment
2Q10
3Q10
Business Transformation and IT
The evolution of Finance at IBM
Business
Analytics

Effectiveness

COGNOS
STAR model




Global
Integration

Blue
Harmony
16

Basics
Infrastructure
Continous
Control
Monitoring
Standard / Common Process
Automation
Functional Best Practices
Financial Reporting
>3%
1994
Risk
Management






Virtualization
Cloud
Computing
 Process Outsourcing / Global COEs
 Technology Exploitation
 Rationalized ERP
<1%
 Information On Demand
Shared Services
Web Enablement
Core Competency
Decision Support
Globalization
<2%
Enterprise
Integration
E/R
1998
© Copyright IBM Corporation 2009
2002
Business Transformation and IT
Finance Transformation in IBM – The Journey
■
Transformation has been an Evolutionary process…

Moving from a Country Based Model to a Global model

Standardizing Data and Systems

Reengineering Common Global Processes

Implementing and Promoting Self-Service

Consolidating Core Functions into Shared Services

Globalizing Centers of Excellence
It is Hard…
17
© Copyright IBM Corporation 2009
Business Transformation and IT
passi@us.ibm.com
18
© Copyright IBM Corporation 2009