IBM Business Analytics Banking Solutions for Financial Performance Management

Transcription

1 IBM Business Analytics Nick Anderson IBM Business Analytics Banking Solutions for Financial Performance Management Business Analytics software

2 Business Introduction Analytics software Supporting a broader enterprise focused role requires Banks to have core Finance efficiency and strong business insight Addressing the Broader Enterprise Focused Role of Finance Demands on Finance Help drive enterprise cost reduction Improve access to and reduce cost of capital Finance Capabilities Needed Finance Efficiency Support risk management Provide performance insight and anticipate Partner in strategy and value creation Business Insight Source: IBM Institute for Business Value, The Global CFO Study 2010

3 Business Introduction Analytics software Four Finance profiles emerge when considering capabilities on both dimensions. In Banking, on average, there are more Disciplined Operators and Value Integrators, compared to Global results Finance Profiles High 32% 23% Finance Efficiency 38% banks 33% 26% banks 12% Low 26% banks 10% banks Low Business Insight High Banking N = 118; Global N = 1,478 Source: IBM Institute for Business Value, The Global CFO Study 2010

4 Business Introduction Analytics software Value Integrators in the Banking industry outperform, on average, other Finance profiles Efficiency + Business Insight Contributes to Outperformance 67% better 18,2% 25% better Value Integrators All other banks 14,7% 14,6% 8,8% 8,4% 5,6% 50% better EBITDA Revenue Growth ROIC 5-year CAGR, year CAGR, year average, Revenue Growth: N =72; EBITDA: N = 58; ROIC: N = 73 Source: IBM Institute for Business Value, The Global CFO Study 2010 Value Integrators in Banking also have a more than 5% better operating efficiency ratio than all other banks.

5 IBM Business Analytics Banking Solution Areas IBM has a global, dedicated banking team focused on developing best practice templates and solution accelerators for key business needs in the areas of: Operational effectiveness Integrated risk management Customer care and insight 5

6 Helping bankers become smarter with business analytics from IBM IBM Business Analytics software Actionable insights for better business outcomes Business intelligence Instant information about how the business is doing and why Focus area for this presentation Financial performance and strategy management Financial and operational planning, budgeting and forecasting which includes scenario and what-if analysis Advanced analytics Predictive modeling and what-if analysis to predict opportunities and threats and confidently take action Analytic applications Best practice based industry solutions and accelerators Governance, risk and compliance OpenPages and Clarity acquisitions build IBM s capabilities in governance, risk and compliance 6

7 IBM Financial Performance Management capabilities Close the books, consolidate results and report performance. Set performance targets, align resource plans and forecast business results to meet or beat expectations. Define, understand and lead your company's decision-making for better performance management. To help with this last challenge, we suggest seven areas within Finance to focus on for your goals, plans and measures: Income statement: How did the business team score? Where was performance strong or weak? Drill-down variance: What causes changes in financial performance? Operational plan variance: How do we best support, coordinate and manage the delivery of meaningful plans? Cash flow and working capital: How do we manage working capital, collect accounts receivables and monitor cash use effectively? Balance sheet: How do we balance and structure the financial funding options, resources and risks of the business? Capital expenditure and strategic investments: What are the investment priorities and why? Treasury: How can we efficiently manage cash and liquidity requirements? 7

8 Business analytics in Banking from IBM 4 of the 5 top Top 5 Top 10 world s largest banks 2 North American banks 2 European banks 2 A proven solution Envision Credit Union Achieved a 178 percent return on investment (ROI) in seven months on a risk and operational efficiency project UBS Gained portfolio aggregation views to counterparties to exceed risk and reporting guidelines First Tennessee Bank Lowered direct marketing costs and boosted response rates 2 IBM Cognos customers on the Forbes Global 2000 list of largest banks 8

9 Proven success in CEE Banking Industry Komerční banka Gartner award Gartner Business Intelligence Excellence Award 9

10 Informed, aligned decisions and actions IBM Cognos 10 software independent, SOA-based platform Allows decision makers at virtually all levels of the organization to gain insight into business performance and data to support and guide actions. How are we doing? Deliver immediate insights into business performance Why? Deeper analysis of trends and patterns What should we be doing? Foresight to plan and allocate resources? $ Dashboards/ Scorecards Reports Ad hoc Query Content & Trend analysis Planning/ Budgeting Predictive Modeling 10

11 A Common Challenge Business processes designed for: Low volatility Slow pace of business Technology designed for individual productivity - not dynamic, enterprise-wide collaboration GOALS & STRATEGY PEOPLE & EXECUTION SCORECARDS, REPORTS, PLANS & FORECASTS

12 New version Illustrative

13 Update Models New version

14 SAP HR DW Update Models New version Load Actuals

15 Update Models Distribute Models New version Load Actuals

16 Corporate BU's Update Models Distribute Models New version Load Actuals Collect Data

17 Corporate BU's Update Models Distribute Models Aggregate data New version Load Actuals Collect Data

18 Update Models Distribute Models Aggregate data New version Load Actuals Collect Data Report & Analyze

19 Update Models Distribute Models Aggregate data What-if & Optimize New version Load Actuals Collect Data Report & Analyze

20 How do we spend our time? Financial Analyst Time Providing value-added analysis 23% Collecting and validating the data 47% Administering the process 30% Source: APQC

21 Organizations are wasting valuable time MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY Illustrative

22 Spreadsheet, manual processes are holding costs higher 1.89% 1.46% Spreadsheet, Manual Planning Environment Automated Planning Environment Spreadsheet, Manual Planning Environment Automated Planning Environment Cost of Finance as a percent of Revenue Source: IBM Benchmark Program FTEs for planning process (per $1B/yr In revenue)

23 More time on Monday SAP HR DW Automated Data Interfaces Workflow & Right Participation Centralized model maintenance

24 Tuesday looks better as well Automated reporting Dynamic What if Analysis

25 More time for discussion MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY

26 More efficient and effective Reduce cycle time by up to 70% Re-allocate analyst time from 65% collecting/validating data to 65% creating value-added analysis Sustain best-practices Driver, statistical & judgment based Rolling horizons Right participation Right frequency Improve accountability Improve forecast reliability

27 IBM Cognos TM1 Use Cases Financial Financial Financial Financial Consolidations Consolidations (The (The Hartford) Hartford) Financial Financial Reporting Reporting (Viacom) (Viacom) Planning Planning (Bristol (Bristol Myers Myers Squibb) Squibb) Driver Driver Based Based Budgeting Budgeting (Huntsman) (Huntsman) Rolling Rolling Forecast Forecast (Biovail (Biovail Pharm.) Pharm.) Risk Risk Analysis Analysis (Barclay (Barclay Card) Card) Operations Operations Demand Demand Analysis Analysis (Scottish (Scottish & Southern) Southern) Inventory Inventory Optimization Optimization (Lowe s) (Lowe s) Logistics Logistics Planning Planning (Lufthansa) (Lufthansa) Product Product Profitability Profitability (Cadbury (Cadbury Schwepps) Schwepps) Production Production Planning Planning (GM) (GM) Workforce Workforce Compensation Compensation Management Management (Oxy) (Oxy) Sales Sales Performance Performance Management Management (Varicent) (Varicent) Staffing Staffing Optimization Optimization (Interstate (Interstate Hotels) Hotels) Training Training Certification Certification (Anhueser-Busch) (Anhueser-Busch) Customer Customer Retail Retail Sales Sales Analysis Analysis (Sainsbury) (Sainsbury) New New Product Product Planning Planning (SunCorp) (SunCorp) Customer Customer Profitability Profitability (Citigroup) (Citigroup) Customer Customer Churn Churn Analysis Analysis (Pelephone) (Pelephone)

28 IBM Cognos TM1 The scalability and flexibility to start with a single planning application and then expand it for use in your entire enterprise Read/Write at speed of thought for Planning and Budgeting A flexible modeling environment that requires no programming or traditional IT skills Centrally-managed business hierarchies, rules and calculations Blueprints to help provide best-practice reference points and speed up implementation A choice of interfaces in familiar formats; Microsoft Excel, TM1 Web and a built-in client for managed participation

29 Unique Value 1: Deploy Easier User-Driven Design Maximum leverage of business knowledge Minimal coding and IT resources Rapid Time to Value Point-And-Click Development Data Integration Wizards Expressive Modeling Integrated Workflow Simplicity One Technology One Database One Set of Skills

30 TM1 Unique Value 2: Deploy Faster Leverage Excel Formulas Formatting Charting Leverage the Web Reach Every User Zero Footprint Minimal Training Empower All Users Interactive Analysis Advanced Visualization Automated Data Entry

31 TM1 Unique Value 3: React Faster Work Interactively In-memory modeling Concurrent write then read Grow Exponentially Extensible solutions Mainstream 64-bit hardware Re-usable Technology Planning, Analysis, Modelling, Reporting & more One skill set One investment

32 IBM Financial & Operational Analytic Solutions Built with IBM TM1 software Capital Project Planning Expense Planning and Control Product Profitability Analytics Integrated Financial Statements Strategic Finance Workforce Planning Assortment Management Cost Transparency Sample Optimization Allocations Planning Workforce Management Sales Compensation Planning Sales Planning & Forecasting Strategic Investment Management Financial Planning Scorecard Store Operations (P&L) Planning Strategic Promotion & Marketing Planning Branch Performance Risk Modeling Demand Planning Provider Planning Customer Profitability 32 Access these Blueprints at:

33 Banking solutions/accelerators for customer care and insight Featuring IBM TM1 software Customer profitability analytics Increased profitable growth of customer base by 15%- 20% by measuring and identifying customer profitability Reduced servicing costs by using predictive analytics to focus attention on most profitable customers Create an ideal customer profile using lifetime value models - and migrate existing customers to this profile. Relationship pricing for commercial banking Pricing solution to support daily credit and noncredit pricing decisions to large and small business banking customers Branch Performance Establishes corporate targets and develops integrated top down/ bottom up functional and operational plans. Provides profitability planning and analysis by product and customer segment using activity-based drivers and rates. 33

34 Ondrej Bothe IBM Business Analytics Financial Performance Management Solution Specialist Planning project experience

35 Content: Successful Planning tools implementation Concept Concept of planning tools Approach to project What is important Implementation from the beginning to the end Project cycle CEE team Who is who References Planning Alternative usage of planning tools 35

36 Concept: What is important? Business users Application owned by Business department, not by IT IT is responsible for connection to potential data sources New concept of RESPONSIBILITY Modeler and Contributor Easy to use, Easy to change Cooperation from the beginning Customer should participate from early start Transfer know how Participate on development Validate steps Understand possibilities Know what is goal Planning process redesigned business analysis Implementation of current planning process into new tool 36

37 Implementation: For who? Different users has got different views Participants: Managers Detail: Revenue, EBIDTA, Approach: Helicopter view Goal: Maximal revenue Communication is key for success. Planning and Controlling department Detail: Accounts, Balance sheet, Profit and Lost statement, Cash Flow Approach: Accounting point of view Goal: Easy process, Quick Standard users Detail: Revenue, EBIDTA, Approach: Easy to use, not a complicated Goal: Easy to fulfill 37

38 Implementation: How? Identification of dimensions, facts, calculation What should be planned and how Identification of data sources Where are data Identification of work flow Who are participants Creation of model Model design Data load Integration into regular data processes Start of planning process Planning itself Contribution of users Model redesign Update of model, based on experienced Implementation Regular usage 38

39 Implementation: Key problems? Specialty of time dimension Changing of actual during planning Communication is key for success. Detail of data Not to much detail data Actual and Plan data integration Where reporting layer, database, planning tool How relative comparison, absolute comparison MARKETING EXECUTIVE MANAGE- MENT FINANCE SALES Forecast and Rolling Forecast Different detail PRODUCTION AND DISTRIBUTION FINANCE PURCHASING Work flow Top down, bottom up or combination CUSTOMER SERVICE TECHNOLOGY IT/R&D HUMAN RESOURCES 39

40 TM1 technology Close, Consolidate, and Report Performance Business Reporting Drivers and Scorecarding Analyze & Optimize Plan, Budgeting, and Forecasting IBM Cognos TM1 A patented 64-bit read-write in-memory OLAP engine that provides compact data storage and exceptionally fast performance Model design and data access that presents business information in familiar formats Ease of use, thanks to a development environment that enables users to create sophisticated applications with no need for programming or traditional IT skills An intuitive, flexible approach, which enables users to easily express complex, multi-dimensional business rules Fuses Analysis & Planning together to provide greater accuracy A component of Cognos Performance Management Platform Strategic Finance Revenue Planning and Forecasting Expense Planning & Control Workforce Planning Capital and Initiative Planning

41 TM1 roles Contribute Familiar Web & Excel Deployment Rich Workflow Enterprise in scope with Application linkage Start small and expand enterprise wide Analysis Embedded in Contribution Process Model Centralized meta-data, data and business rule definitions Owned by Office of Finance Support of Planning Best Practices Driver based Planning Rolling Forecasts

42 IBM Cognos TM1 Managed Contribution Workflow Pick lists (driver execution) Undo/Redo feature End User Personalization (Multi pane docking) Multiple Personalized Scenarios based on statistical base-line forecasts Personalized Hierarchies Color code data changes Charting Drill down Support

43 TM1 Architect Capabilities: Centralized meta-data, data and business rule definitions Owned by Office of Finance Support of Planning Best Practices Statistical & Driver based Planning Rolling Forecasts Benefits: Ability to meet the dynamic needs of the organization Flexible to meet the broad requirements of financial & operational planning solutions Adapts to your business process Single version of the truth for all planning processes

44 Flow example VI. CREATE TARGETS & TEMPLATES AGGREGATE PLANS ANALYZE TARGET VS. PLAN FINALIZE PLAN? Q1 Forecast AGGREGATE PALNS DISTRIBUTE PLAN TEMPLATES SUBMIT PLAN REVISE PLAN REVISE PLAN SUBMIT PLAN COMPLETE/ DISTRIBUTE TEMPLATES REVISE PLAN REVISE PLAN COMPLETE TEMPLATES REVISE PLAN

45 Work Flow - real example

46 Data Flow - real example, one department

47 Data Flow - real example, complex view CDR CDR Currency CDR CDR

48 Team: Not only Czech republic, but also CEE regional team also available. Ondřej Bothe BAO solution leader Tomáš Bernard Cognos consultant Martin Pavlík Informtion Agenda solution leader Community of practice: Ksenija Rusak Taha Ermis Klement Koselj Peter Fedoročko Cognos TM1 consultant Jan Jurečka Cognos BI consultant 48

49 Team: Ondřej Bothe Summary Experienced BAO (Business analytics and optimization) consultant Both technical and business knowledge Experiences projects: FSS planning project Complex analysis of planning process FSS Cost allocation implementation in planning tool Fakultni nemocnice u Svate Anny Complex MIS solution Career history: IBM Deloitte RDC ČSOB Certification Cognos TM1 certified developer and analyst Cognos Planning certified developer 49

50 Team: Tomáš Bernard Summary Experienced Business Analytics consultant and developer Strong technical knowledge and industry experience Experiences latest projects: Standard Profil, TR Complex planning solution implementation Rompetrol, RO Planning solution implementation FSS Cost allocation implementation Fakultni nemocnice u Svate Anny, CZ Cost allocation implementation Business Intelligence Environment Integration Career history: IBM, Prague, Czech republic SWG Senior Consultant Deloitte Service Centre, Prague, Czech republic Senior Programmer Continuing Legal Society of BC, Vancouver, Canada IT Coordinator Certification Cognos TM1 certified developer Cognos TM1 certified data analyst 50

51 Team: Martin Pavlík Summary Experineced data integration and data warehousing specialist Both technical and business knowledge Experiences projects: Generali pojistovna project of single view customer integrating data from 5 different insurance systems into one unified client database Ministry of Interior Data cleansing in register of inhabitants DHL Information Services Complex data integration solution, design of solution for cleansing delivery addresses for more then 220 countries where DHL is present Fakultni nemocnice u Svate Anny Complex MIS solution Career history: Arbes Technologies Certification IBM InfoSphere QualityStage IBM Certified Solution Developer 51

52 Team: Peter Fedoročko Summary Experienced TM1 consultant Both technical and business knowledge Experiences projects: FSS Cost allocation implementation in planning tool Fakultni nemocnice u Svate Anny Complex MIS solution Career history: IBM Certification Cognos TM1 certified developer Team: Jan Jurečka Summary BI (Business Intelligence) junior consultant Both technical and business knowledge Experiences projects: Fakultni nemocnice Brno Complex MIS solution Fakultni nemocnice u Svate Anny Complex MIS solution Fortuna PoC Bet reporting Career history: IBM

53 References: FSS - planning project Goal: Analysis of complex planning process Project: Complex analysis over all departments, design of complex data flow and workflow Best practices integration into standard planning processes Outputs Full planning process description Proposal of best practices implementation into regular planning process CDR Currency CDR CDR CDR FSS - cost allocation project Goal: Complex cost allocation solution, including methodology Project: Analysis, development and implementation of complex cost allocation solution Order Relations Parameterization cube Main Allocation Data set I. Data set II. Data set III. Data set Results Outputs Flexible cost allocation engine covering best practices, ready for reuse Drivers Drivers loaded Drivers calculated Drivers manual Drivers previous step Tracer (full) Tracer (Ad-hoc) 53

54 References: Fakultní Nemocnice u Svaté Anny Goal: Complex MIS solution Project: Complex delivery Data warehouse model ETL Reporting tools Cost allocation implementation Outputs Fully implemented MIS system Economy reporting fully delivered 54

55 What is Performance management? What could be done in planning tool? Automated data Regular reporting Statistic models Past What if analysis Future Data collection Planning Data Collection

56 Next Steps How are you running at the moment? What are you looking to acheive? Any specific goals? What is important to you? How can IBM help you? Do you have any expectations? Timelines? What actions can we agree on to move forward?

57 For more information ibm.com/software/analytics $ 57