Operational & Financial Planning
Greg Ferenc Nagy, IBM Cognos, AT/EE, CIS/Russia
Session Objectives
Purpose of this session is to describe how:
 Improving performance management requires more
than automation of the existing planning, budgeting,
and forecasting process
 Leading companies are adopting best-practices and
moving performance management beyond finance.
 IBM Cognos can help you reduce the time and risk to
drive greater business value.
TODAY’S PERFORMANCE
MANAGEMENT SYSTEMS

Designed in 1930’s when
market volatility was low

When companies could ‘ship everything
they produced’

Management practices:
• Detailed, top-down annual budgets
• Infrequent forecasts
• Not linked to business drivers
nor operational plans
• Not linked to strategic objectives
• Not linked to market events
SPEED AND VARIABILITY
ARE INCREASING
Results:
 Resources not optimized
 Long time delays
 Missed revenue and profit opportunities
COMPANIES NEED TO SYNCHRONIZE
FINANCIAL & OPERATIONAL DOMAINS
FINANCIAL
 Corporate Planning
Strategic
Planning
Target
Setting
Operational
Planning
Financial
Planning
Reporting
Forecasting
 EPS, market share,
quality, growth…
 Corporate Reporting
and Analysis
SALES & MKTG
HR
IT
OPERATIONS
 Sales Forecasting
 Headcount Planning
 IT Portfolio Planning
 Demand Planning
 Qualification/close
 Attrition rate
 ROI/TCO Analysis
 Stock-outs
 Promotions planning
 Resource effectiveness
analysis
 Shared Services
Planning
 Throughput analysis
OPERATIONAL
ENTERPRISE PLANNING ALIGNS
CORPORATE OBJECTIVES…
MARKETING
with operating
plans linked to
market events
and operational
drivers
EXECUTIVE
MANAGEMENT
SALES
PRODUCTION
AND
DISTRIBUTION
FINANCE
PURCHASING
CUSTOMER
SERVICE
TECHNOLOGY
IT/R&D
HUMAN
RESOURCES
Financial Performance
Management Challenges
Spreadsheets Failing

“there have been well-documented
cases of errors and losses resulting
from spreadsheet manipulation errors
and accidents.”
Source: Gartner, August 2007
Disparate Systems

“Average finance organizations operate
11 finance systems per billion dollars of
revenue.”
Source: Hackett Group, 2007
Business Risks

“62 percent of enterprises …
encountered a major risk event … 42
percent of these enterprises were not
well prepared for the event.”
Source: IBM Global CFO Study 2008
Benefits of IBM Cognos Solutions
Timely, Reliable
PLANS & FORECASTS
Forecasts
Top-Down
& Bottom-Up
Alignment
Connected
Planning Models
IMPACT: Timely, reliable forecasts & plans
that align operational tactics with financial
targets. Better, confident resource allocation
decision-making.
IBM Cognos Solutions for Enterprise
Planning
Pre and Post-Planning
Alternative hierarchies,
Allocations, Reporting and
Analysis
Collaborative
Plan & Forecast
Emphasis on user
experience; workflow;
auditability and process
control
PLANS & FORECASTS
CUSTOMERS USING IBM COGNOS
ENTERPRISE PLANNING SOLUTIONS
RETAIL
PHARMA/
HEALTHCARE
FINANCIAL
SERVICES
MANUFACTURING
CUSTOMERS USING IBM COGNOS
ENTERPRISE PLANNING SOLUTIONS
ENERGY
PROFESSIONAL
SERVICES
CONSUMER
GOODS
FOOD & BEVERAGE
TELECOMMUNICATIONS
PUBLIC SECTOR
IBM COGNOS PLANNING CUSTOMERS
& THEIR PRIMARY DATA SOURCES
Essbase
IBM Cognos Solutions





Cognos 8 Planning
Cognos TM1
Performance Blueprints
Replaces spreadsheet-only
processes
Engages the whole organization to
make better informed decisions
Replaces rigid, annual budgeting
with continuous planning for higher
responsiveness
Supports best practices such as
drive based planning and rolling
forecasts
Connects operations and finance
ENTERPRISE PLANNING
Cognos 8 Planning and TM1
Post-Planning
Goal seeking, Allocations
High Participation Plan &
Forecast
Pre-Planning Analytics
Alternative hierarchies, trending
PERFORMANCE MANAGEMENT
ROADMAP
AUTOMATION
1
ADDRESS
Initial Needs
---------------------------------- TRANSFORMATION ----------------------------
2
DRIVE
Best
Practices
3
EXTEND
EnterpriseWide
4
ADVANCE
Performance
Management
Embrace and Extend Your Existing Infrastructure
Automating the Planning Process With
Cognos Planning & TM1
4
Centralized Modeling Approach
Familiar Environments
Web, Excel
Centralized Control and
Management
100% Web : Consumption
Central application management
– process, deployment, security
Integration with Cognos PM portal
Integrated EXCEL capabilities
DRIVE BEST PRACTICES
AUTOMATION
1
ADDRESS
Initial Needs
---------------------------------- TRANSFORMATION ----------------------------
2
Support Best Practices
 DRIVER BASED PLANNING
 ROLLING FORECASTS
 TIMEFRAME-APPROPRIATE
PLANS
 HIGH PARTICIPATION
 A WIDER / DEEPER VIEW
DRIVE
Best
Practices
3
EXTEND
EnterpriseWide
Cognos Innovation Center
4
ADVANCE
Performance
Management
Performance Blueprints
BEST-PRACTICE
THOUGHT LEADERSHIP
AUTOMATION
1
---------------------------------- TRANSFORMATION ----------------------------
ADDRESS
Initial Needs
2
DRIVE
Best
Practices
3
EXTEND
EnterpriseWide
4
PM for
Strategy
Execution
RESEARCH, CASE STUDIES, PUBLICATIONS
Hope
BBRT
Axson
Sonax
Roth
Hackett
Norton
BSCol
ASSETS, RESOURCES, EVENTS
Business Content
Customer Forums
Strategy Development
Performance Blueprints
MEMBERS AND PEER NETWORK / COMMUNITY
…
Enterprise Planning
OPERATIONS,
MARKETING,
ETC.
CAPITAL
EXPENDITURE
PLANNING
Reports
 Income Statements
Balance Sheet
 Cash flow
 Financial Ratios
STRATEGIC
FINANCIAL
PLANNING &
FORECASTING
Operating
Expenses
•
•
Pool collective
best-practice knowledge
Accelerate time-to-value
Increase project success rate
Cap Ex
•
FINANCE
Depreciation
Expenses
EXPENSE
PLANNING
& CONTROL
SALES
Revenue Plan
Pre-configured solution
building blocks that:
Market Demand
Performance Blueprints: Functional Solutions
SALES
PLANNING &
FORECASTING
HUMAN
RESOURCES
WORKFORCE
PLANNING
Headcount
& Compensation
Expenses
FUNCTIONAL SOLUTIONS
 Strategic Financial
Planning & Forecasting
 Strategic Long Range
Planning
 Risk Analysis
 Sales Planning
& Forecasting
 Sales Compensation
Planning
 Workforce Planning
 Expense Planning &
Control
 Allocations
 Capital Project
Planning
 Discretionary Capital
Expenditure
 Initiative Planning
EXTEND Enterprise - Wide
AUTOMATION
1
ADDRESS
Initial Needs
---------------------------------- TRANSFORMATION ----------------------------
2
Model the Whole Business
DRIVE
Best
Practices
3
EXTEND
EnterpriseWide
Cognos Solution Map
4
ADVANCE
Performance
Management
Industry Performance
Blueprints
Financial Services
 Link operational plans
Public
Sector
to financial plans
Manufacturing
 Increase forecast
reliability
 Performance Blueprints
accelerate
implementations
Retail
Life Sciences
Extend Enterprise Wide
Continued Investment in Industry Blueprints
Manufacturing

Trade Promotion Management

S&OP Executive Review

Sales & Operations Planning

Transportation and Logistics Performance
Public Sector

Program Objective Memorandum (POM)

Grant Thornton & Cognos Federal Budget
Planning & Performance Framework – Business
Partner

BearingPoint POM Budget Planning – Business
Partner
•
Higher Ed Performance
•
Mayor’s Scorecard
Retail

Store Operations

Store Development

Promotion Planning

Merchandising Performance Management

Retail Financial Workbench
Pharmaceuticals & Life Sciences

Clinical Trial Planning

Samples Optimization (Joint w/ TM1)

Clinical Trial Enrollment Forecasting

Sales Quota Allocations
Banking & Financial Services

Retail Branch Performance

Retail Banking Customer Segment Performance

Corporate Banking Customer Segment
Performance

Insurance Product Profitability

Cognos & IBM Risk Adjusted Profitability for
Banking – Business Partner BP

Loan Pricing
ADVANCE PERFORMANCE
MANAGEMENT
AUTOMATION
1
ADDRESS
Initial Needs
Pervasive Performance
Management
---------------------------------- TRANSFORMATION ----------------------------
2
DRIVE
Best
Practices
3
EXTEND
EnterpriseWide
Cognos Performance
Management Platform
4
ADVANCE
Performance
Management
Continuous Business Alignment
Summary
 Cognos Planning and Cognos TM1
complement each other and each
contributes to a complete Enterprise
planning solution
 TOGETHER they serve all
requirements across the enterprise
planning, forecasting, analysis and
optimization domain
Key Principles

Structure and automate the process
• Keep Finance in the driver’s seat

Adopt Best-Practices
• Driver-based planning
• Rolling Forecasts
• Engage all the right people
• Forecast frequently

Radiate Beyond Finance
• Synchronize financial and operational plans

Performance Management for Strategy Execution
• Link strategic objectives to the resource allocation
process
THANK YOU