1. Enterprise Performance Management Pressure To Perform 25 May 2005

2. Agenda
Accenture Overview
Our Point of View on Enterprise Performance Management
Implementation framework
How to get started

3. Introduction to Accenture
Accenture Overview
Introduction to Accenture
Global management and technology consulting organisation, with revenues of $13.7bn in FY2004
More than 100,000 people working in 48 countries
Operates as a global organisation servicing clients in five industry based groups, Financial Services, Communications and Hi-tech, Products, Resources and Government
Globally serves 87 of the Fortune Global 100 and more than two-thirds of the Fortune Global 500

4. Accenture Overview
Accenture credentials – Our position in Financial Services and our specialist “Service Lines”
Finance and Performance Management (F&PM)
Global cross-industry organisation, providing financial expertise to align clients’ finance and business functions to improve efficiency and effectiveness across the enterprise.
Currently working on 2700 finance related projects at over 950 clients
Financial Services
Represents over $2.8bn of Accenture’s global revenue.
Financial Services Operating Unit is organised by industry, split between Insurance, Banking and Capital markets
Globally, we have approximately 11,000 professionals dedicated to the FS Practice.

5. Agenda
Accenture Overview
Our Point of View on Enterprise Performance Management
Implementation framework
How to get started

6. High-performance businesses use EPM to:
EPM Point of View
Enterprise Performance Management (EPM) is critical to manage near- and long-term performance
High-performance businesses use EPM to:
Identify and predict value drivers that will optimize position in the value chain
Link strategy with planning, budgeting, forecasting and performance reporting capabilities
Capture information that can generate insight and turn that insight into action
Set better strategic goals and make more informed decisions
Identify issues / threats faster, and react to them more quickly

7. Satisfaction Rate (%) Common Gaps
EPM Point of View
Fact: Many organisations are not satisfied with their current EPM capability
Satisfaction Rate (%)
Common Gaps
Alignment between company strategy and planning process (40%)
Focus on key business drivers (24%)
Amount of time required to create the annual plan (47%)
Speed and accuracy of the forecasting processes (48%)
Ability to produce business models and test impact of changes (31%)
Speed and accuracy of the monthly financial reporting (63%)
Reporting of non-financial measures (28%)
Business users view and analyze performance reports at will (25%)
Integrated IT systems to collect and manage the information (41%)
Visibility into current results (29%)
Understanding of future performance trends (30%)
Source: October 2002 survey of 245 companies conducted by CFO Research Services

8. Current Value versus Future Value
EPM Point of View
Accounting earnings based financial management has become less relevant as the majority of value is in the future…
Current Value versus Future Value
Russell 3000 (May 2003, $ trillions)
Future Value is a significant component of total Enterprise Value for most organisations
Future Value is the expected incremental value beyond the value delivered by current operations
Enterprise Value
Future Value
$13.1
$7.6 1 3
100%
58%
Current Value
$4.9 2
42%
4.2%
$0.6
First Year
Remaining Years

9. Market to Book Value Over Time
EPM Point of View
…Neither does the Balance Sheet adequately track the assets that are driving value.
Market to Book Value Over Time
S&P 500 – (1980 – 2002)

10. EPM Point of View
However few organisations extend EPM beyond traditional financial measurement
Credit Ratings
Borrowing Capacity
Receivables Certainty
Accruals Convertibility
Cash
Investments
Receivables / Debtors
Payables / Creditors
Plant Flexibility
Plant Modernity
Access Rights
Balance Sheet Strength
Property
Plant
Equipment
Inventory Value
Customer Loyalty
Quality of Contracts
Strength of Stakeholders’ Support
Networks
Regulatory Imposts
Customer Contracts
Formal Alliances, JVs, Supply Agreements
Structure
Appropriate
Informal Processes
Organization Reputation
Brand Meaning
Productivity of R&D
Systems
Formalized Processes
Codified Knowledge
Patents
Brands
Top Mgmt Quality/ Experience
Ability to Execute Strategy
Leadership Capabilities
Problem Solving Ability
Employee Loyalty
Management Contracts
Documented Accessible Skills Inventories
Intangible
Tangible
Monetary
Physical
Relational
Organizational
Human
Traditional scope of financial/accounting measurement

11. Agenda
Accenture Overview
Our Point of View on Enterprise Performance Management
Implementation framework
How to get started

12. Target Setting & Business Plan
EPM Implementation
We work with our clients to implement a holistic framework for Enterprise Performance Management
Target Setting & Business Plan
Strategic Plan
Monitor
Determine Key Measures of Success
Determine Key Business Drivers
Refine Corporate Vision & Strategic Objectives
Develop Action Plans, Re-allocate Resources and Update Forecast
Portfolio Value Assessment
Enablers
Incentives and Rewards
Policies & Procedures
Review Performance with Executive Management
Set Targets for
Key Measures of Accountability
Integrated IT Arch
Monitor Key Measures of Business Performance
Common Data Structures
Controls
Useful management tool to consider EPM as a holistic process
Structured approach to identify focus points
Diagnostic developed to speed up the process
Cascade Targets to Lower Level Metrics/ Organization
Close and Consolidate Books and Report Actuals
Operate
Develop Plans to Achieve Targets
Allocate Resources to Achieve Plans
Review, Challenge & Finalize Plans & Forecasts

13. Typical EPM issues – target setting
EPM Implementation
Typical EPM issues – target setting
Target Setting & Business Plan
Strategic Plan
Monitor
Determine Key Measures of Success
Determine Key Business Drivers
Refine Corporate Vision & Strategic Objectives
Develop Action Plans, Re-allocate Resources and Update Forecast
Portfolio Value Assessment
Enablers
Incentives and Rewards
Policies & Procedures
Target setting wrapped into the budgeting process – slow and resource intensive
Review Performance with Executive Management
Set Targets for
Key Measures of Accountability
Integrated IT Arch
Monitor Key Measures of Business Performance
Common Data Structures
Controls
Useful management tool to consider EPM as a holistic process
Structured approach to identify focus points
Diagnostic developed to speed up the process
Cascade Targets to Lower Level Metrics/ Organization
Close and Consolidate Books and Report Actuals
Operate
Develop Plans to Achieve Targets
Allocate Resources to Achieve Plans
Review, Challenge & Finalize Plans & Forecasts

14. Typical EPM issues – enablers
EPM Implementation
Typical EPM issues – enablers
Target Setting & Business Plan
Strategic Plan
Inefficient use of resource & poor control from over-reliance on spreadsheets
Lack of common business language leads to misinterpretation of numbers
Monitor
Determine Key Measures of Success
Determine Key Business Drivers
Refine Corporate Vision & Strategic Objectives
Develop Action Plans, Re-allocate Resources and Update Forecast
Portfolio Value Assessment
Enablers
Incentives and Rewards
Policies & Procedures
Review Performance with Executive Management
Set Targets for
Key Measures of Accountability
Integrated IT Arch
Monitor Key Measures of Business Performance
Common Data Structures
Controls
Useful management tool to consider EPM as a holistic process
Structured approach to identify focus points
Diagnostic developed to speed up the process
Cascade Targets to Lower Level Metrics/ Organization
Close and Consolidate Books and Report Actuals
Operate
Develop Plans to Achieve Targets
Allocate Resources to Achieve Plans
Review, Challenge & Finalize Plans & Forecasts

15. Typical EPM issues – linkage to strategy
EPM Implementation
Typical EPM issues – linkage to strategy
Target Setting & Business Plan
Strategic Plan
Monitor
Determine Key Measures of Success
Determine Key Business Drivers
Refine Corporate Vision & Strategic Objectives
Develop Action Plans, Re-allocate Resources and Update Forecast
Portfolio Value Assessment
Enablers
Incentives and Rewards
Policies & Procedures
Review Performance with Executive Management
Set Targets for
Key Measures of Accountability
Lack of broad understanding of key value drivers
Current report content does not align with strategy
Integrated IT Arch
Monitor Key Measures of Business Performance
Common Data Structures
Controls
Useful management tool to consider EPM as a holistic process
Structured approach to identify focus points
Diagnostic developed to speed up the process
Cascade Targets to Lower Level Metrics/ Organization
Close and Consolidate Books and Report Actuals
Operate
Develop Plans to Achieve Targets
Allocate Resources to Achieve Plans
Review, Challenge & Finalize Plans & Forecasts

16. Illustrative example for Life Insurance
EPM Implementation
EXAMPLE : Determining key business drivers using a value tree for the organisation
BUSINESS DRIVERS
Illustrative example for Life Insurance
Business Drivers
Value Tree
APE by Product
Total APE
Profit Margin X
Average Product Profit Margin
Distributor Profitability
Cost of Servicing
Salesforce Remuneration
Distribution Margin
New Business + -
Directly Controllable Costs
Distribution -
Allocated Overhead +
Economic Profit +
Commission Variance
Product Design
Quality of Servicing
Brand
Salesforce Calibre
Variances
Commission + -
Other
Capital Charge
Existing Business
Persistency

17. Illustrative example for Life Insurance Information Requirements
EPM Implementation
EXAMPLE: Using business drivers to develop structured reporting requirements
Illustrative example for Life Insurance
Priority Drivers
Key Measures
Information Requirements
Actual APE vs Target by Consultant
Salesforce Calibre
% of Consultants with Basic / Advanced Skills Training
Prioritisation of drivers by their Economic Value sensitivity
Mapping of KPIs to prioritised business drivers, with identification of additional new KPIs where required
Linking accountability for business drivers and their outcomes to individual business roles enables a matrix of information requirements to be developed
Matrix includes classification of information priority and required reporting frequency

18. Agenda
Accenture Overview
Our Point of View on Enterprise Performance Management
Implementation framework
How to get started

19. Leading practice is to break EPM into a number of discrete stages
Getting started
Leading practice is to break EPM into a number of discrete stages
REVIEW
CONCEPTUAL DESIGN
DETAILED DESIGN
IMPLEMENT
Detailed Design & Plan
Implement
High Level Plan & Business Case
Conceptual Design of Solution
Business Case Development
Detailed Design & Plan
Implement
Assess current state to identify gaps / Perform Diagnostic
Implementation Plan
Detailed Design & Plan
Implement
Detailed Design & Plan
Stakeholder Engagement
Architecture Design
High Level
Software Evaluation
Implement
Detailed Design & Plan
Implement
Organisational alignment
Justification of investment
Implementation blueprint
Realisation of benefits

20. Getting started
Our EPM Diagnostic enables issues to be confirmed / identified in a structured approach over 4 – 8 weeks
Copyright © 2004  Accenture.   Patent Pending.  All Rights Reserved.

21. Determine Key Value Drivers
Getting started
The Diagnostic is pre-populated with leading practice for each of the main building blocks of the EPM framework
EXAMPLE: Strategy Formulation & Planning
Key Inputs
Key Outputs
Refine Corporate Vision & Strategic Objectives
Determine Key Value Drivers
Determine Key Measures of Success
Opportunity and risk assessment
Investor expectations
Key competitor and external information
Current business performance
Current strategic plan
Agreed upon business assumptions
Well-understood business strategy & objectives
Revised and prioritized value drivers and cause and effect maps
Identified strategic initiatives
Updated scorecards with revised key measures for each business unit
Defined key measures
Clearly defined
Communicated to all levels of the organization
Consistently understood
Identified
Prioritized
Well- understood
Clearly linked to strategy
Critical few key metrics
Aligned with shareholder value creation
Clearly defined common definitions
Aligned with measures reported up and used to manage down
Strategic Planning answers 2 primary questions: Is this the right strategy and if so, how do we measure it?
To accomplish this we need to:
Look at the current vision and strategic objectives and assess it against business performance and investor expectations. Other key inputs to refining the strategy include opportunities and risks that are on the horizon as well as competitor positioning and other external information such as the price of gold.
After establishing the strategic objectives the underlying value drivers must be identified and aligned to those objectives. The value drivers are the levers which drive improvements in financial performance. For example, tons is a key driver for revenue.
Additionally BSC performance – quantitative analysis of cause-and-effect of objectives (be ready for question on this develop an example)
Value drivers – look at the sensitivity and manageability of each. For sensitivity we generally look at the financial drivers to quantify – lends itself.
What are the investors expecting from us and the industry? Are we aligned, if not why? How do we close the gap, what is our rationale?
Identify critical success factors to map and cascade strategic objectives and key value drivers to organizational scorecards – (develop Cox example).
Institutionalize BSC measure definitions – ensure organizational understanding of overriding strategic objectives and their role in pursuing them. Must have mechanisms in place to accomplish this, key considerations include:
Maintain a multi year strategic financial model
Model aligned with clear financial performance measures and shareholder value
Separate long-term and short-term investments
How often should strategy be reviewed? – depends on the volatility of the primary business driver (e.g. commensurate with the price of gold)
How do you check for and avoid conflicting objectives?
Structured and formalized meetings with a clear understanding of what was going to be addressed and what the outcomes were to be. What would that be for Cox? – country risks, strategic issues specific to regions/site(s)
Copyright © 2004  Accenture.   Patent Pending.  All Rights Reserved.

22. Getting started
We capture an assessment from key stakeholders to determine the value of addressing each gap
Copyright © 2004  Accenture.   Patent Pending.  All Rights Reserved.

23. Perspective Definition Example Benefits
Getting started
The business case for EPM should consider value through three perspectives
Perspective
Definition
Example Benefits
Ability to make better decisions based on value throughout organisation
Ability to detect issues for management attention on timely basis
Sales force incentives aligned with maximising value across channel / product mix
More accurate business plans and forecasts build credibility with stakeholders
Effectiveness
Ability to provide information with optimal balance across cycle time, effort and quality
Cycle times for internal and external reporting reduced
FTE savings through reduction of manual effort
Efficiency
Ability to manage within financial and operational risk parameters
Compliance with external regulations
Enhanced internal controls through automation and clearer audit trails
Risk Mitigation