May 25, 2016 Why Finance Should Automate Management & Regulatory Reporting Processes
connecting senior-level financial executives since 1931 CPE Credits Today s webcast is worth 1 Continuing Professional Education (CPE) credit. To be eligible for CPE credit, you must: Answer at least 3 of the 4 polling questions (during the webcast) and have a total viewing time of at least 50 minutes. Participants will have the opportunity to download their CPE certificate immediately following the webcast if above requirements are met. In accordance with the standards for the National Registry of CPE Sponsors, CPE credit will be granted based on a 50-minute hour. We are unable to grant CPE credit in cases where technical difficulties preclude eligibility. CPE Program Sponsorship guidelines prohibit us from issuing credit to those not verified by the technology to have satisfied the minimum requirements listed above. slide 2 www.financialexecutives.org 877.359.1070
Advancing Analytics Sherri Liao
Sherri Liao Performance Management & Business Intelligence Advisory Practice Lead The Hackett Group sliao@thehackettgroup.com 4
World Class Performance Reporting Leaders achieve effective and efficient reporting by optimizing the entire framework User Interface Information Architecture IT Infrastructure Reports, Scorecards & Dashboards Metrics & Alignment Business Reporting Processes Reporting Definition & Rules Information & Controls Data Systems & Operational Processes Standard Reporting Packages aligned to Executive Needs Drill-downs & analytic capabilities Consistent business conversations Key drivers of performance mapped to strategy Common and specific reporting metrics identified Alignment of metrics cascaded through the organization End-to-end reporting processes mapped to business cycles Standardized processes and automated workflow Data Governance s Reporting hierarchy, data and calculations management Business rules management and enforcement Master Data Maintenance and change control Access control & security enforcement Integrated single source of truth Web-based distribution of dynamic reporting Shared reusable data optimized for reporting & analysis Reporting Best Practices Focus on key information that drives the business Leading indicators / predictive measures Link operations and strategic information Emphasis on forecasting Unifies functional units and products around strategy Provides executives with summary information and the option to drill down to problems Clarifies trade-offs between long and short term decisions Focus on capital structure, shareholder value Integrated with other finance/it systems Standardized reporting & analysis processes 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. 5
Enabling World Class Reporting Harmonization & Integration of Reporting Streams Leaders achieve effective and efficient reporting by optimizing the entire framework External Reporting Segment Reporting Management Reporting Key Design Principles: One single owner for system and end-to-end process (Corporate Accounting) Corporate Accounting Organization ensures compliance and acts as service provider for Controlling / FP&A Corporate Controlling / FP&A is responsible for plausibility check of segment detail Consolidation & Reporting System Base Data: Common Chart of Accounts, Common Methods One single Consolidation and Reporting System One integrated Consolidation and Reporting Process One single set of data sent Front end data validation to ensure that content is consistent across reporting lines Common data collection tool Integrated local ERP System Common Chart of Accounts Common Set of information standards (methods, definitions) Built-in automation of text, narratives for external / regulatory reporting 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. 6
Key Enabler Integrated EPM Technology Platform To ensure one version of the truth, World-Class companies build common data definitions and rules into a centralized data repository Percent of business performance reports generated from a central data repository Percent of companies with enterprise-wide, common data definitions and methodology 85% 84% 95% 54% Peer Group World Class Peer Group World Class Source: Hackett Finance 2015 Benchmarks 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. 7
Key Enabler Integrated EPM Technology Platform High use of central data repository leads to shorter reporting cycle times, enabling companies to invest more effort in conducting analysis Impact on efficiency of leveraging central data repository 2.2 days Days to produce ad hoc business performance reports 1.6 days 45.0% 55.8% % time spent collecting and compiling data (vs. analyzing to provide insight) High use of central data repository Low use of central data repository Source: Hackett Finance 2015 Benchmarks 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. 8
Top Performers Generally Report Faster with 90% Reporting to their Executive Board by Day 10 vs. 49% at Peers Q: In the case of monthly or quarterly reporting, what business day of the month do you release your Standard Reporting Pack to the Executive Board? Day 5 or earlier 14% 14% Day 6 to 10 35% 76% Day 11 to 15 10% 36% After Day 15 0% 15% Peer Top Performer Source: Hackett Business Performance Reporting and Analysis Study 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. 9
Most will Consolidate/Rationalize Volume of Reports and Further Automate to Improve Focus and Time Spent on Analysis Actions are Being Taken or Have Been Taken to Increase Time Dedicated to Analysis and Deriving Insight Rather Than Collecting Data Consolidate or rationalize the volume of standard reports produced 67% 72% Automate data gathering and standard report production to remove manual effort 56% 81% Provide management with direct access to information via self-service tools to reduce 33% 42% Delegate standard reporting and data gathering activities to a Share Service/Global Business Services 0% 39% Other 6% 11% Peer Top Performer Q8.5 What actions are being taken or have been taken to increase time dedicated to analysis and deriving insight rather than collecting data? 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. 10
Management & Regulatory Reporting Driving reduced workload, enhanced control and better decision making Justin Lai 11
Today s Organizations Face Many New Challenges but Continue to Depend on Outdated Tools and Practices 1 Abundance of Labor-intensive applications 2 processes 3 Abundance of reports of managers surveyed cite the primary business application 74% for generating management reports as spreadsheets. SOURCE: The Hackett Group 12
Many Organizations Continue to Depend on a Manual Record-to-report Process 1 No time to 2 No control over 3 prepare the process No confidence in the process Finance is often consumed with tedious, time-consuming tasks Little or no visibility into the ongoing status of different steps in the preparation process No way to track tasks, identify bottlenecks and manage all areas of the preparation process Preparation activities can be inefficient and costly when handled manually 13
What are best-in-class organizations doing to streamline their enterprise reporting processes? 1 2 3 Realizing that reporting automation is important across the entire organization Enabling more robust, cross-functional business reporting to key stakeholders in an efficient and effective manner Creating a large performance gap of seven days, on average, in report cycle times between themselves and their peers* SOURCE: The Hackett Group 14
IBM is Helping Organizations Transform Their Reporting Processes to Become Best-in-class Reduce production costs for the organization Empower specialists to work simultaneously on one component of a report Drive automation to reduce errors and improve speed 15
Corporate Reporting Requirements How is your organization managing its reporting processes today? Organizations often have the following reporting requirements Management reports Internal reports External and regulatory reports Worldwide tagging Close, consolidate and report Examples Briefing book Financial statement reporting Key performance indicator (KPI) reporting Board books Variance reporting Occupational health and safety incident reporting Examples Treasury management Cash management Account reconciliation Budget books Manuals Examples Industry: airline form 41, bank regulations Public sector: comprehensive annual financial report, budget books Tax and statutory reporting Examples U.S. Securities and Exchange Commission Solvency II International Financial Reporting Standards Common reporting (COREP) and financial reporting (FINREP) Examples Internal management reporting Disclosure management reporting Recurring, multiauthor reports create the same problems Time is spent on low-value work (data, text and commentary editing and validation) Limited time for specialists to make insightful decisions based on analytics Slow, manual, recurring process Numbers or facts within final reports can be out of date before the report even published No compliance or control during close to disclose period 16
Management and Regulatory Reporting Solution Overview An interactive report production management lifecycle tool Management discussions and analysis Simultaneous authoring with workflow and audit trail Streamlined assembly of reports and presentations Automated text and narrative generation Publish to regulators, shareholders and others (including extensible Business Reporting Language [XBRL], inline XBRL [ixbrl], common reporting and financial reporting, Solvency II) Key IBM capabilities Management, performance, regulatory and compliance reporting and financial close management Key features and benefits Enables specialized professionals to work on their component of the final product Decreases production costs for organizations Helps ensure quality Automation to reduce costs and human error, and improve speed Controls, audit trail and transparency into each step of the reporting process 17
Workflow 18
Audit Trail 19
Publishing 20
Automated Text / Number Generation 21
Collaboration / Dashboard 22
Management and Regulatory Reporting Solution from IBM Can Help You Address These Challenges Automate text and narrative generation Collaborate with multiauthor, crossfunctional teams Track and control document lifecycle with workflow, audit trail and version compare Link to your existing data sources directly Load and leverage your existing spreadsheets On-premises and cloud deployment Provide worldwide tagging functionality (XBRL, ixbrl, COREP, FINREP, Solvency II and more) Provide integrated tagging to save time at the end of the cycle Enable tag-once and roll forward for the next filing 23
24
Legal Disclaimer IBM Corporation 2015. All Rights Reserved. The information contained in this publication is provided for informational purposes only. While efforts were made to verify the completeness and accuracy of the information contained in this publication, it is provided AS IS without warranty of any kind, express or implied. In addition, this information is based on IBM s current product plans and strategy, which are subject to change by IBM without notice. IBM shall not be responsible for any damages arising out of the use of, or otherwise related to, this publication or any other materials. Nothing contained in this publication is intended to, nor shall have the effect of, creating any warranties or representations from IBM or its suppliers or licensors, or altering the terms and conditions of the applicable license agreement governing the use of IBM software. References in this presentation to IBM products, programs, or services do not imply that they will be available in all countries in which IBM operates. Product release dates and/or capabilities referenced in this presentation may change at any time at IBM s sole discretion based on market opportunities or other factors, and are not intended to be a commitment to future product or feature availability in any way. Nothing contained in these materials is intended to, nor shall have the effect of, stating or implying that any activities undertaken by you will result in any specific sales, revenue growth or other results. If the text contains performance statistics or references to benchmarks, insert the following language; otherwise delete: Performance is based on measurements and projections using standard IBM benchmarks in a controlled environment. The actual throughput or performance that any user will experience will vary depending upon many factors, including considerations such as the amount of multiprogramming in the user's job stream, the I/O configuration, the storage configuration, and the workload processed. Therefore, no assurance can be given that an individual user will achieve results similar to those stated here. If the text includes any customer examples, please confirm we have prior written approval from such customer and insert the following language; otherwise delete: All customer examples described are presented as illustrations of how those customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics may vary by customer. Please review text for proper trademark attribution of IBM products. At first use, each product name must be the full name and include appropriate trademark symbols (e.g., IBM Lotus Sametime Unyte ). Subsequent references can drop IBM but should include the proper branding (e.g., Lotus Sametime Gateway, or WebSphere Application Server). Please refer to http://www.ibm.com/legal/copytrade.shtml for guidance on which trademarks require the or symbol. Do not use abbreviations for IBM product names in your presentation. All product names must be used as adjectives rather than nouns. Please list all of the trademarks that you use in your presentation as follows; delete any not included in your presentation. IBM, the IBM logo, Lotus, Lotus Notes, Notes, Domino, Quickr, Sametime, WebSphere, UC2, PartnerWorld and Lotusphere are trademarks of International Business Machines Corporation in the United States, other countries, or both. Unyte is a trademark of WebDialogs, Inc., in the United States, other countries, or both. If you reference Adobe in the text, please mark the first use and include the following; otherwise delete: Adobe, the Adobe logo, PostScript, and the PostScript logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States, and/or other countries. If you reference Java in the text, please mark the first use and include the following; otherwise delete: Java and all Java-based trademarks are trademarks of Sun Microsystems, Inc. in the United States, other countries, or both. If you reference Microsoft and/or Windows in the text, please mark the first use and include the following, as applicable; otherwise delete: Microsoft and Windows are trademarks of Microsoft Corporation in the United States, other countries, or both. If you reference Intel and/or any of the following Intel products in the text, please mark the first use and include those that you use as follows; otherwise delete: Intel, Intel Centrino, Celeron, Intel Xeon, Intel SpeedStep, Itanium, and Pentium are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries. If you reference UNIX in the text, please mark the first use and include the following; otherwise delete: UNIX is a registered trademark of The Open Group in the United States and other countries. If you reference Linux in your presentation, please mark the first use and include the following; otherwise delete: Linux is a registered trademark of Linus Torvalds in the United States, other countries, or both. Other company, product, or service names may be trademarks or service marks of others. If the text/graphics include screenshots, no actual IBM employee names may be used (even your own), if your screenshots include fictitious company names (e.g., Renovations, Zeta Bank, Acme) please update and insert the following; otherwise delete: All references to [insert fictitious company name] refer to a fictitious company and are used for illustration purposes only. 26