Fix Your Forecast and Build Your Budget

Best Practices for Enterprise Performance Management

Emil Fernandez, General Manager

EPM National Practice

June 29, 2010

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About Perficient

Perficient is a leading information

technology consulting firm serving clients
throughout North America.

We help clients implement business-driven

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productivity, increase customer loyalty and
create a more agile enterprise to better
respond to new business opportunities.

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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

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Our Solutions

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Why do we
Budget?
Planning and Budgeting Challenges

Time takes too long, results

obsolete
Senior Management
Quality political/negotiation,
not reflective of business
Cost many wasted
resources, dubious benefits
Flexibility lack of FP&A Group
responsiveness to changes

Dept A Dept B Dept C

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Reason #1:
Spreadsheet driven

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Reason #2:
Long Cycle Times

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Reason #3:
Complexity
of Business
Metrics

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Reason #4: Disconnected

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 So why
is it
this way?

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Transactional
Systems
vs.
Management
Systems

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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

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 How new?

Corporate Performance Management (CPM)

Gartner 2001

Business Performance Management (BPM)

Hyperion 2003

Enterprise Performance Management (EPM)

Oracle 2007

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 So what is EPM
anyway and
why should I care?

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 EPM is the connecting fabric
that allows management to link
strategies to plans, continuously
monitor execution against goals
and drive enterprise-wide
performance improvement.

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Management Processes Exist in Silos

VARIANCE
ANALYSIS GOAL
FINANCIAL
REPORTING SETTING

ROLLING
FORECAST OPERATIONAL
FINANCIAL
MODELING PLANNING

MONITOR
RESULTS

ANALYZE
SCORECARDS PERFORMANCE

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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

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An EPM Strategy Can Eliminate Silos

Links strategic goals to

operational decisions
Transforms financial
management processes
Set
Monitors execution in Goals
real-time Align Plan
Delivers consistent, Insight
Performance
reliable insights to drive Action

action Report Monitor

Lowers costs and reduce
Analyze
system complexity
Single version of the
truth

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EPM Favors More Complex Organizations

Size

Performance
Large Management
Financial
Modeling

Financial
Medium
Reporting

Mgmt Rpts
Analysis
Small
Basic
Reports
Private Public Multi-National Multi-Division

Complexity

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Large Domestic Company

Multiple Locations
Multiple Products/Services HQ
Distributed Authority
Multiple Operational Systems
Frequent Reporting Division 1 Division 2 Division 3
Accurate Forecasting
Resource Management Critical
Management System
Requirements:
Replace/Augment Spreadsheets
BI Query & Reporting Tools,
Dashboards
Packaged Budgeting and Planning
Application

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International Organization

More Locations and Systems

Reporting and Budgeting in HQ
Multiple Currencies
Intercompany Transactions
Financial & Management
Consolidations & Reporting EMEA NA APAC
Local Tax and Statutory
Reporting UK East Japan
Management System
Requirements:
France Central China
BI Query & Reporting Tools
Multidimensional Analysis Platform
Packaged Budgeting & Planning Germany West ANZ
Apps.
Packaged Financial Consolidations
& Reporting System

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 Smart
Smart Actionable
ActionableInsights
InsightsAcross
AcrossEnterprise
Enterprise
Agile
Agile Adaptable to Changing BusinessConditions
Adaptable to Changing Business Conditions
Competitive
Aligned
Aligned Consistent
ConsistentView
Viewof
ofPerformance
Performance
Advantage

MANAGEMENT EXCELLENCE

Cost
CostLean
Leanand
andMean
Mean
Quality
Quality Six Sigma,TQM
Six Sigma, TQM
Speed Real-time, JIT
Speed Real-time, JIT

OPERATIONAL EXCELLENCE

Time

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 2.40 Enterprise
Performance
Management (EPM)
World-class EPM
organizations deliver 2.4
1.0
times the equity market
returns of industry-peer
companies

Peer Group World-Class

Source: CFO Challenges and Opportunities in the Flat world

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 How do I apply
EPM Principles to the
Budget process?

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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

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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.

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Planning Applications Key Components

OLAP

Web Approve Planning

Centralized
Managers Forms Deny Manager
Database
Promote
Manage

GL

Actuals
Analyze

Model Report

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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

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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

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Does it really work?

Yes.

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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 FEATURES & BENEFITS

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 24-
48 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.
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 self-
service 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

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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

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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

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