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  Demand Planning  Stock-outs  Throughput analysis SALES & MKTGHRITOPERATIONS F I N A N C I A L O P E R A T I O N A L  Sales Forecasting  Qualification/close  Promotions planning  Headcount Planning  Attrition rate  Resource effectiveness analysis  IT Portfolio Planning  ROI/TCO Analysis  Shared Services Planning Strategic Planning Target Setting Operational Planning Financial Planning Reporting Forecasting  Corporate Planning  EPS, market share, quality, growth…  Corporate Reporting and Analysis

ENTERPRISE PLANNING ALIGNS CORPORATE OBJECTIVES… EXECUTIVE MANAGEMENT EXECUTIVE MANAGEMENT MARKETING SALES PRODUCTION AND DISTRIBUTION PRODUCTION AND DISTRIBUTION PURCHASING HUMAN RESOURCES HUMAN RESOURCES HUMAN RESOURCES HUMAN RESOURCES TECHNOLOGY IT/R&D TECHNOLOGY IT/R&D CUSTOMER SERVICE FINANCE SALES FINANCE with operating plans linked to market events and operational drivers

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 IMPACT: Timely, reliable forecasts & plans that align operational tactics with financial targets. Better, confident resource allocation decision-making. PLANS & FORECASTS Top-Down & Bottom-Up Alignment Timely, Reliable Forecasts Connected Planning Models

IBM Cognos Solutions for Enterprise Planning PLANS & FORECASTS Pre and Post-Planning Alternative hierarchies, Allocations, Reporting and Analysis Collaborative Plan & Forecast Emphasis on user experience; workflow; auditability and process control

RETAIL PHARMA/ HEALTHCARE FINANCIAL SERVICES MANUFACTURING CUSTOMERS USING IBM COGNOS ENTERPRISE PLANNING SOLUTIONS

ENERGY PROFESSIONAL SERVICES CONSUMER GOODS FOOD & BEVERAGE TELECOMMUNICATIONSPUBLIC SECTOR CUSTOMERS USING IBM COGNOS ENTERPRISE PLANNING SOLUTIONS

IBM COGNOS PLANNING CUSTOMERS & THEIR PRIMARY DATA SOURCES Essbase

IBM Cognos Solutions  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 Cognos 8 Planning Cognos TM1 Performance Blueprints

Post-Planning Goal seeking, Allocations High Participation Plan & Forecast Pre-Planning Analytics Alternative hierarchies, trending ENTERPRISE PLANNING Cognos 8 Planning and TM1

PERFORMANCE MANAGEMENT ROADMAP Embrace and Extend Your Existing Infrastructure ADDRESS Initial Needs 1 DRIVE Best Practices EXTEND Enterprise- Wide ADVANCE Performance Management AUTOMATION TRANSFORMATION

Automating the Planning Process With Cognos Planning & TM1 100% Web : Consumption Integration with Cognos PM portal Integrated EXCEL capabilities Familiar Environments Web, Excel Centralized Control and Management Central application management – process, deployment, security Centralized Modeling Approach 4

DRIVE BEST PRACTICES ADDRESS Initial Needs 1 EXTEND Enterprise- Wide ADVANCE Performance Management AUTOMATION TRANSFORMATION DRIVE Best Practices Cognos Innovation Center Performance Blueprints Support Best Practices  DRIVER BASED PLANNING  ROLLING FORECASTS  TIMEFRAME-APPROPRIATE PLANS  HIGH PARTICIPATION  A WIDER / DEEPER VIEW

BEST-PRACTICE THOUGHT LEADERSHIP Norton BSCol Axson Sonax Hope BBRT Roth Hackett RESEARCH, CASE STUDIES, PUBLICATIONS ASSETS, RESOURCES, EVENTS … MEMBERS AND PEER NETWORK / COMMUNITY Business Content Customer Forums Strategy Development Performance Blueprints ADDRESS Initial Needs 1 EXTEND Enterprise- Wide PM for Strategy Execution AUTOMATION TRANSFORMATION DRIVE Best Practices 2 3 4

Enterprise Planning Performance Blueprints: Functional Solutions 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 Pre-configured solution building blocks that: Pool collective best-practice knowledge Accelerate time-to-value Increase project success rate WORKFORCE PLANNING SALES PLANNING & FORECASTING STRATEGIC FINANCIAL PLANNING & FORECASTING EXPENSE PLANNING & CONTROL CAPITAL EXPENDITURE PLANNING HUMAN RESOURCES SALESFINANCE OPERATIONS, MARKETING, ETC. Depreciation Expenses Reports  Income Statements Balance Sheet  Cash flow  Financial Ratios Cap Ex Operating Expenses Headcount & Compensation Expenses Revenue Plan Market Demand

EXTEND Enterprise - Wide  Link operational plans to financial plans  Increase forecast reliability  Performance Blueprints accelerate implementations ADDRESS Initial Needs 1 ADVANCE Performance Management AUTOMATION TRANSFORMATION DRIVE Best Practices 2 EXTEND Enterprise- Wide 3 4 Cognos Solution Map Industry Performance Blueprints Model the Whole Business Financial Services Life Sciences Retail Public Sector Manufacturing

Extend Enterprise Wide Continued Investment in Industry Blueprints 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 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

ADVANCE PERFORMANCE MANAGEMENT ADDRESS Initial Needs 1 AUTOMATION TRANSFORMATION DRIVE Best Practices 2 EXTEND Enterprise- Wide 3 ADVANCE Performance Management 4 Cognos Performance Management Platform Continuous Business Alignment Pervasive Performance Management

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