sherwood group consulting: pm executive presentation

Future Directions & Exploiting Performance Management & BI Systems value

SherwoodGroup Consulting

Performance Management

Topics of Discussion

Changes occurring in performance management

Future directions of the PM software services.

Share some large and small organisation experiences on how they to use their PM applications to exploit value.

Sherwood Group Consulting

Sherwood Group Consulting – Confidential

Gordon Wood, is the Executive Director of Sherwood Group Consulting, performance management & analytics consultants and solutions implementers

Gordon has been working with clients in Asia-Pacific since 1993, on high profile projects for manufacturing, mining oil & gas exploration, retail and financial services sectors.

About the Presenter

About Sherwood Group Consulting

Organisation

•Sherwood Group Consulting is an alliance based organization. It comprises affiliated professionals who combine to uses a blended business and IT experience with world class globally scalable solutions.

Experienc

e

•With deep experience and longstanding alliances with high value recognized solution providers, this sets Sherwood Group Consulting well to help clients setup and mine value from their applications.

Mission

•For Sherwood Group Consulting our mission is achieving for our clients the ability to grow by simplifying their management planning and control processes and exploiting cost effective value from their business performance management systems..


Let’s start by sorting the jargon

BI - Business intelligence IFRS - Inter’l Financial Reporting StandardsOLAP - online analytical processing PM - Performance management SOA - service-oriented architecture SaaS - software as a service

Sherwood Group Consulting –

Some PM definitions from the web

Performance management links strategy with corporate objectives and aligns a company's resources by coordinating efforts of every member of the organization.

The integrated process by which an agency involves its employees in improving organizational effectiveness in the accomplishment of agency mission and strategic goals.

The process of quantifying, measuring, correcting and reporting system service levels

PM is a business process application for managing outcomes from strategy thru to execution.


BI, what exactly is it?

Intelligence or information gathering in business terms broadly covers employment of analytical systems to retrieve process and present information for business use.

BI tools now come with sophisticated analytically based graphics and intuitive interactive end user reporting and reduce massive online data sources to simple and decisive value.

Performance management have embedded BI processes for transaction drilling


PM BI Systems

Succinctly put, Business Intelligence (BI) systems present decision based information by systematically analyzing an organization's own business data directly from its source.


PM Software Today

ExecutionExecutionForecasting

StrategyStrategy Consolidation

BudgetingPlanningStrategy

Process Workflow and Compliance

Direct Align Control

A complete process end to end in a closed loop system

PM Understanding its value

PM ROI – is dollars, but could be lives and safety. ROI calculations on PM projects are mostly subjective

and not always necessary. The "soft" benefits of PM are the most important - The

main benefits you get from PM are intangible benefits of strategic value, such as faster reporting, better management information, better decision making and more productive users.

Executive sponsorship is key to sell and recoup these kinds of soft, intangible benefits.


Assessing the Value

Estimate what is be needed to revert to a manual spreadsheet system. How many people, Time taken Decision lead time and so on

Result .. Yes it is not possible to revert

But check you are not doing both – old habit die hard, believe me.


Testing the value Example Do a top down Plan first

Try doing the top down approach first . Then do the budget bottom up and match it

(budget can be done in detail even by product) Discuss the Gaps and proceed with approvals

(Do another round if and compare in minutes /days) Consolidate and present to Board Check how long it took and the quality

Suggest revert and see reaction (That is everyone go back to the offline spreadsheet)

Impossible so you know the value


Live Experience -SME is MalaysiaPrivate Company $25 million

Scenario All states logistics operation Very profitable Incentive based management style Budgets takes 6-10 weeks and painful Actuals take 17 days each month including

reprocessing. Management issue Sources CPM ERP, Budget, Operations data. Vendors support difficult to find Business growth constrained by systems


Live Experience -SME is Singapore Results – as we go approach

Implemented PM system in 4 days Loaded data and budgets in 2 days &

collaborating immediate value Live in development (parallel) fix as we go. Results now taking 4 days as issues dealt with Next year budget already planned top down. Growth plan is now in the design. restructuring issues solved on the fly. Operations are thrilled.. Can see the numbers


Live Experience -SME in Malaysia Operation 12 months but formally still a POC internally

As a Service no technology in-house (yet) Process focus and outcomes were the key Business rules adopted quickly to facilitate build Very focused finance team for results and buy-in Dedicated consultant working remotely One face to face meeting with Consultant Recommended by Accountants for growth and due

diligence planning (always ready) No way back now.. Management ecstatic


PM Users, who are they & why?

An estimated 23% of business have a PM system. This is mostly high end organisations

99.9 % of all business have a spread sheets 75% manual 5% link then to sources directly.

Small but significant growing number of SMEs taking up PM (3-5% but rapid take )

And about 35 % are using some form of BI or information extractions tool

There is a big gap and huge demand growth with the software industry targeting that very hard


PM and BI Trends & drivers & why?

Bad spreadsheets & good quality tools at reduced cost & ease of ownership are driving high interest in

performance management software.

PM/BI software is trending to be seen more as an essential for all business like the ERP systems became

for transaction management .

Regulators and private inventors and banks are insisting on formal PM processes to be and show transparent

controls

SME are adopting formal PM processes for wealth and growth creation management with always ready due

diligence capability to maximum sale value


Evolution of Capability

Maturity of PM disciplines and

systems, means valuable consistently organized data is very

accessible in organizations.

Those with control can probe this rich

data source to support change to

move quickly to their next level of

competitive advantage.


Business Pressures Unrelenting

-PM gets you proactively ahead

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Business Performance

Business Performance

Shortened Cycles

Global Competition

Regulatory Scrutiny

IFRS

IASGAAP

Changing Markets

Performance Management Software Today is Highly Sophisticated

Delivers Embedded disciplines knowledge foundation Intuitive Workflow based processes Pervasive ease of use and accessible Maintainable in open technologies Total business Applications not only tools.

Functionally highly flexibility to change for growth business people can see and exploit the value Business and People adapt to change environments


Software Expectations

Software subject matter must perform like a A highly qualified graduate with 100 perfect

pass park in the highest university level course in the world currently and have at least 25 years experience.

Manager’s may not have the skill to manage this level of resource and get the value

Specialist consultants are important Everyone wants support


Skill Shortages changes impacts

Today there is a serious shortages of skilled financial controllers and financial management people Open market is generating massive demand for control World on move so quickly so no sustainable transitions Functional learning base rather logic based with problem

solving skills changing or less sustainable Less focus on in-house formal manage training and

leadership courses Smart management and BI software is picking up the gap

as they manage the processes too Universities now teach use of software as a core


Consolidation Systems – Now Must have

Organisation , including complex ownership structures

Currency translation (including accounts valuation distinctions)

Data Flow Standards (Opening Balances and automatic results re-balancing from inputs)

Consolidation entries and audit process Intercompany and Investment elimination

functionality Complex accounting automation (journals and

adjustments)


Consolidation Systems - Future New breed smart systems in the works

will : Automate movements analysis (attributed

capability for structured movements analysis) Have Automated attributed outcomes for

report generation (e.g. Cash flow) Handle transaction currency and Hyper

inflation revaluation.. They do already actually Provide Functional currency switching . (What

happens when you the rules change and you answer is different? )


Example on Grand Scale Building the ultimate PM/ BI

In Oil drilling information is rich in information but is scattered across the world

Same for manufacturing and mining as with services banking and in fact every process

Alternative energy and exploitation and conservation will depend on the ability to normalize and analysis this data form disparate sources and formats

But how can we do this?.Sherwood Group Consulting –

Grand Scale Example – cont’dBuild the ultimate PM/ BI

Chevron planning a PM /BI project that will take 5 years to complete.

Largely in Asia with skills high capability at lower cost.It will provide indexing of data to a normalize BI data

mart with search engine power And use high end visualization and simulation toolsData will stay where it is but available, real time


Emended Business intelligence

Amazing Yes. but not really We do it every day now but with blinkers on. PM systems & embedded BI like Infor does this

now But the scale is now becoming obvious as

business people are seeing the value and expand the platforms away from just being finance focused


Futurist Maintenance Performance

Use of Optical scanning on operator head gear fed back to central database will provide instant diagnosis of performance.

This is real now in energy companies so imaging the impact on manufacturing automotive and general life operating life style if were harness that technology

Six Sigma to identify and remove the causes of defects will look like quite a passé Sherwood Group Consulting –

Software as a service [Saas] Is it a real phenomenon or just a hype to

sell software What does it mean? What is the value proposition? Who gets the benefit? What are the risks? What about the 2 sets of books? Do we really trust an outside computer? What is SAS70?


Just a few examples

Google.com Range of services including, web services,

email, photo news and many more Yahoo.com

Try Finance for share portfolio management Salesforce.com

Huge take up for sales pipeline management

Many more .. And it is here to stay


Live example Using PM as a change tool

Thai company recently spent a year revamping their corporate performance management thinking.

The sort is fantastic for this 100 year old consumer products company of 85000 employees, including 4000 in IT.

You would think they would have all the tools but they chose just a Strategy Management tool for the task and it has had revolutionary results


By Joining the dots in the strategy


What makes up the plan and what is the drag on the plan when it falters


Performance Contribution Value


Making it happen

If you don’t have a PM system It is costing you a fortune It places you at risk in a downturn Planning for growth is costly and hard to

achieve Get your PM up and working

It will invoke best practice and attract quality people to exploit it to grow your organisations

If you have one now I guarantee it ‘s underutilized Expand and exploit it and add planning BI an SM


Shernox Thailand Client

A Top 10 Public Company in Thailand Oils and Gas industry International in Asian and other countries Operated and Non Operated Assets 65 + separate complex organisation Onshore and offshore operations Multi currency trading and reporting Several presentation currencies Cross functional structured with shares


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Implementation Methodology

Support Implementation

Deploy In

Short Stages

Configure Application

Form Team& Design

Business Case

1. Business case – (Understand Benefits)2. Form Team & Design (Design Commitment)

– Involve managers and users (early buy in)– Get Finance involved as information owners– Get IT involved as the infrastructure owners– Design – Agree Process, function, scope & plan

3. Configure Application (Develop System)– Manage outcomes & risks – Tackle boundary issue early. E.g. security

4. Deploy in Stages (to see value early)– Deliver early for user buy-in & confidence

5. Support Implementation (Make it stick)– Test, Train, and support

Other Visionaries - Who & what are they doing?

Richmond Police Force , Richmond, Va. predict the crimes patterns and deploy officers to potential hot spots.(http://searchdatamanagement.techtarget.com/news/article/0,289142,sid91_gci1250435,00.html)

Jefferson Medical Center - monitor employee productivity (http://searchdatamanagement.techtarget.com/news/article/0,289142,sid91_gci1202027,00.html)

Office Depot - Financial data arrives from 1,000 retail outlets every day, and needs to be accessed by thousands of users. Built processes for receiving, storing and accessing data. (http://searchdatamanagement.techtarget.com/news/article/0,289142,sid91_gci1139408,00.html

)


http://searchdatamanagement.techtarget.com/news/article/0,289142,sid91_gci1250435,00.html







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Shernox Oil Project Phases & Deliverables Shernox Oil Project Phases & Deliverables

3.88

Phases Deliverables:

§Business Problem Requirements document

§Application Requirement & Spec Outline design & detail Specification

§Technical Design Environmental Design

Verified Development Working Application

§Acceptance Testing Signed User acceptance form

§Solution Roll-out End User Training / User Guides

§Post Implementation Review Project Sign off

Integrated of budgets and reporting

Sherwood Group Consulting Production & Revenue

Expenditure

Capital

Earnings, Cash Flow, Capital Summary Reporting Performance Metrics, Net Sales/Production Statistics

Production Planning

Revenue Planning Gas, Condensate & Oil

Department Cash

Expenses Planning

Expense Allocation

& Partner Recovery

Allocation

SOE Cash Expenses

Classification

Other Expenses & Payment Planning

Tax & Working Capital

Capital Projects

Detail Planning

Capital Project &

Reporting Analysis

Drilling Performance

Planning

DD&A Rating

Reporting

Net Cash Expenses &

Analysis

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Budgeting Preparation - Overview

Strategic planning Linking Budget Process & Function

Budgeting time table and meeting information Budget assumptions / Global drivers Multiple budget version Multi-currency transaction budgeting Accrual budgeting / Cash budgeting Budget preparation workflow route Incremental budget capability

Formats Non-monetary data Efficient budget preparation worksheet Efficient supporting sheet Different formula / budget item for each worksheet

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Budget Preparation – Functional Automated Alternatives

Automate Work Programs Automatically calculate some certain budget e.g.. Salary &

Traveling expenses Top-down budgeting route

Closing forecast preparation Allocation process Processes & Budget Review Efficiency

Consolidation Consolidated budget analysis and report Screen proposed budget analysis Standard analysis method for decision making.

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Budget Preparation-Work Flow

Approval Process Approval & Communication Approved budget notification

Change Control Request for Contingency workflow route Request for Budget reclassification workflow route Authority for expenditure and Internal authority for

expenditures preparation workflow route Support Management

Budget help desk workflow route Alert messages with e-mail report distribution.

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System Administration Organisation Management

Dynamic organization and matrix organization view.

hierarchical responsibilities. Security

Easy to create, maintain user security accountability.

audit trail. Data Management

Easy to create and maintain dimension value.

Easy to create and maintain formula. Processing & Control

Quick calculating process (with reliable output).

Efficient task scheduling and sequencing. Indicate error details and solutions in

running result.

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Technical Requirements General System requirement

Flexible Application Server based Databases; Oracle, Microsoft & others Network Open

Software design Flexible Platform configuration

Hardware design Open system architecture for industry interfacing. Fault tolerant. Architecture multi-tier Integrated auditable security

Technical Requirements Reporting

Standard set of reports and analytical views Monthly cost control report A drilldown to transaction level report multidimensional reporting and analysis with

annotations, flexible formatting, graph types. Ad-hoc reporting tools Two-ways communication

Administration & Support List of available report with authorization Most frequently used report Quick access to reliable information.

Good print-out. E-learning


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Best Practice LessonsIntuitive Solutions (If you can say it simply, it works)

Simple scope…. (Don’t do too much at once.)

Challenge bad practices (Don’t carry on mistakes)

Exploit strengths. (Decide who does what best)

Share knowledge. (Regular communication)

Test, test, and test live well before going live

Plan Good Support for “Go Live”

Exploit value as phase 2 project in Rollout ….