How to make planning a value-add process. Introducing Agile Planning, the most important activity for finance in the 21st century.

1. The Planning Maturity Curve
Where Are You?
Where Do You Want to Be?
Ben Lamorte
VP Marketing, Alight Planning
AGILE

2. Why Agile Planning?
3-Minute Overview
AGILE

3. The Value of Traditional Planning Over Time
But ROI
diminishes
quickly
over time.
VALUE
High ROI at
the early
stages of
planning…
TIME
Source: The Agile Planner Blog
AGILE

4. The Value of Agile PlanningTM Over Time
Long-term
VALUE value from
planning
increases
significantly
ROI remains
high in the
early stages
of planning…
TIME
Impactful planning that addresses the right business issues at the right
time with the right people. Unlike budgeting, it is a continuous process
that adds increasing value over time.
AGILE Source: The Agile Planner Blog

5. The Subtle Message
1: Is it EVEN worth it to replace
spreadsheets with a planning
tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
AGILE

6. The Subtle Message
1: Is it EVEN worth it to replace
spreadsheets with a planning
tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
AGILE

7. The Subtle Message
1: Is it EVEN worth it to replace
spreadsheets with a planning
tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
AGILE

8. Rand Heer (He‘s ―Heer‖ In Spirit)
 Business Activities
 CEO, Alight Planning (Planning software)
 Co-Founder, Aspirity (Microsoft BI consulting)
 Founder, FP&A Train (Essbase training)
 Founder, Pillar Corporation
 CFO for 2 public companies
 Rockwell Int‘l, Business Unit CFO and Corporate
 Publications
 Author: The Planning Maturity Curve: Where Are You? Where Do You Want
to Be?
 Author: How Agile is Your Planning: Find out by Measuring the ROI of Your
Planning Software
 Coauthor: “Business Intelligence: Making Better Decisions Faster”.
Published by Microsoft Press.
 Education
AGILE
 MBA degree Harvard Business School

9. Ben Lamorte (He‘s a Talker)
 Business Activities
 VP Marketing, Alight Planning
 VP Business Development, Alight Planning
 Principal, Decision Consulting (Adobe, Kaiser)
 Manager, Business Intelligence, planetrx.com
 Management Consultant, APM/CSC Healthcare
 Editor of “The Agile Planner” Blog
 Yes! Planning can be a Positive Experience
 Why Financial Reporting Software Delivers No Value?
 The Value of Agile Planning Over Time
 Driver Based Planning: How is it Defined?
 Education
 MS Management Science & Engineering, Stanford University
 BS Mechanical Engineering, UC Davis
AGILE

10. Agenda
 The Planning Maturity Curve
 Level One: Seat of the Pants
 Level Two: Budgeting
 Level Three: Reporting
 Level Four: Forecasting
 Level Five: Agile Planning
 Case Study in Agile Planning: Pittsburgh Mercy
 5-Minute Break
 4 Steps to Agile Planning
 Out of Excel
 Level of Detail
 Driver-Based Planning
 Integrating Actuals
 Scenario Analysis
 Agile Assessment + Free ASMI Event Winner?
 Cocktails
AGILE

11. Stuff for After this Presentation -- Slides Coming in
Email and posted to SlideShare
 Follow up with Alight
 BLamorte@AlightPlanning.com
 Telephone: (415) 456-8528
 Join us! The Agile Planner Blog
 Blog.alightplanning.com
 Webinar Resources
 Transforming Planning at Pittsburgh Mercy
 www.Alightplanning.com/Webinars/PM/Video.html
 Application Requirements for Rolling Forecasts
 www.AlightPlanning.com/Workshop/Requirements-for-Rolling-Forecasts/Video.html
 FOCUS Podcast Featuring Sid Ghatak & Ben Lamorte
 http://www.focus.com/roundtables/avoiding-business-performance-
mangement-software-failure-4-t/
 6% is not enough! The Case for Driver-Based Planning in 2012 with
Rob Kugel, Ventana Research and John Miller, Arkonas moderated by
Ben Lamorte
AGILE

12. Capability Maturity Model for FP&A
Seat of Pants Budgeting Reporting Forecasting Agile Planning
Goals
Why Do It?
Effectiveness
Key Process Areas
The Capability Maturity Model
Who Drives Carnegie Mellon University
Who Participates First described by Watts Humphrey
Frequency
Cycle Time
 Capability Maturity Model applied to financial
Features planning and analysis.
Data Type
Data Entry
Level of Detail
Practices
Modeling
Data Integration
Iteration Tools
Presentation
AGILE

13. Business Value from Planning
Insights Actionable Financially-
Understanding things Knowledge Sound Decisions
we didn‘t see before
Understanding and Scenario analysis gives us
acting upon the financial impact of choices
operational drivers
AGILE

14. KEY POINT: TYPE 1 & TYPE 2 Benefits
Effort
Type 2: Introduce New
Forecasting Processes to Add Value
Reporting
Budgeting Type 1: Streamline
Existing Processes
Reduce Effort
Business Value
AGILE

15. Type 1 Benefits of Planning System
 Finance
 No more consolidation errors; formulas don‘t break
 Slice and dice the data with dimensions versus pivot tables
 Automate data integration—e.g. actuals
 Automate security/process
 Line Managers
 Add line item detail
 Document assumptions
 C-Level
 CFO Audit
 Automated Reporting
AGILE

16. Type 2 Benefits of Planning Systems
 Insights (I)
 The numbers help us understand
things we didn‘t see before
 Actionable Knowledge (A)
 The numbers to tell us what to do,
or more importantly, what our
choices are
 Decisions (D)
 Having financially backed up
choices sets up decision making
AGILE

17. What “They Say”
All Planning Software Claims
Effort
Every Vendor Says They Do Budgeting & Reporting
Reporting
Every Vendor Claims:
• Saves Time
• Adds Business Value
Budgeting
AGILE
Business Value

18. Question!
For those who SUCCESSFULLY replaced
spreadsheets with a financial reporting solution,
what best describes your success:
1. Saves time BUT does not add Business Value
2. Saves time AND adds Business Value
3. Adds Business Value BUT does not save time
AGILE

19. ―Actual‖ Value of Budgeting & Reporting
Typical Budgeting & Planning Software
Effort
―What FP&A Customer Says‖
about Impact of Dedicated
Budgeting & Reporting Tool:
Reporting • Saves Time
• BUT DOES NOT ADD
Business Value
Budgeting
Just Doing Budgeting
is Not Enough
AGILE
Business Value

20. The Big ROI – Agile Planning
Effort
THE BIG ROI COMES FROM ADDED BUSINESS VALUE
Forecasting
Reporting
Agile PlanningTM
Budgeting
Real-Time
Scenario Comparison
Budgeting Forecasting
& Reporting Adds Real Value
AGILE
Business Value

21. Planning Maturity—Seat-of-Pants
The Happy Caveman
AGILE

22. Planning Maturity—Budgeting
The Happy Accountant
AGILE

23. Planning Maturity—Reporting
The Reluctant Managers
AGILE

24. Planning Maturity—Forecasting
The Grumpy CFO
AGILE

25. Where Are You on the Curve?
AGILE

26. Planning Maturity—Agile Planning
The Happy Team
AGILE

27. The Need for Real Time
 The Excel PowerPoint Cycle
AGILE

28. Let‘s Hear from You!
Turn to your neighbor for the 3-minute drill
Is your management prioritizing Type 1 or 2
Improvements in budgeting & forecasting?
Type 1: Do what we‘re already doing, but do it more efficiently
Type 2: Introduce new planning processes that enable better business
decisions throughout the year
Please report back a Type 2 Benefit that is important.
AGILE

29. Examples of Type 2 Benefits
 Specialized Functionality
 Roll the Forecast
 BS/Cash Planning
 Integrate Short/Long Range
 Operations Integration
 Integrate Drivers
 Volume/Rate Causal Analysis
 Capture/Calculate KPIs
 Profitability Analysis
 Complex Allocations
 Analyze Customer Profitability
 Analyze Product Profitability
 Decision Support
 Interactive Dashboards AND Real-Time Planning
 Scenario Analysis On-the-Fly
 Strategy Analysis
AGILE

30. Planning Maturity—Agile Planning
Planning Maturity Curve (PMC)
Effort
Forecasting
Implement driver-based planning
Integrate (don‟t just import) actuals
Reporting Implement scenario analysis
Forecasting/Agile Planning
Move out of Excel
Reduce level of detail
Budgeting
Seat of Pants
AGILE Business Value

31. Case Study: Pittsburgh Mercy
Ray Wolfe, CFO (now CEO)
 Business Activities
 Chief Financial Officer, Pittsburgh Mercy Health
System 2006-present
 Director of Fiscal and Information Systems– Mercy
Behavioral Health 1996-2006
 Chief Fiscal Officer, Summit Center for Human
Development, 1988-1996
 Awards: Ventana Leadership 2010
 Education
 Juris Doctorate, West Virginia University 1977
 BA, Marshall University, 1974
AGILE

32. Case Study: Pittsburgh Mercy
 Community Mental Health and Health Care Related
 Mental Health, Mental Retardation, Drug/Alcohol, Homeless
 Prevention Services and a Private Foundation
 Serving Southwestern Pennsylvania
 Business Metrics
Pittsburgh Mercy Health System has
 3 subsidiary corporations
 60 community locations
 27 major programs product lines
 260 revenue/cost center
 1,700 employees; 106 Managers & Supervisors
 Funded through traditional insurance billing, government grants and
capitation contracts, Private Foundations
AGILE

33. Case Study: Pittsburgh Mercy
 Demographic Problems
 Managers with only clinical backgrounds/ no business skills
 60 sites yielded communication barriers and no common language
 Excel based —
 Overload mode of worksheets with link and formula errors
 Too much time to maintain and no certainty of integrity
 No way to import and compare actual data to the budget design
 Budgeting became a ritual without meaning
 Budgeting full-year totals with no seasonality
 Tops down budgets w/o manager buy in
 No P&L visibility by critical factors
 No operational integration
AGILE

34. Agile Planning Case Study: Pittsburgh Mercy
 Organization of Forecast Groups and Processes
 Group managers by functional areas—e.g.
 Community Treatment Teams
 Outpatient Clinics
 Child Services
 15 Groups each meet once a quarter
 3 to 12 managers per group
 4 members from accounting/finance
 Real time process elements
 Alight Planning displayed on Overhead Projector with Smart Board
 CFO is facilitator; Alight Admin on the mouse and keyboard
 Review/ make changes in real time
 Everyone sees everything!
AGILE

35. Level of Detail (from 10k to 3k line items)
 Technical Issues
 What level of detail? Actuals and plan (STARTED AT „DEFAULT
LOW LEVEL” Moved to:
AGILE

36. Using Actuals ―Rates‖ to Drive Plan ―Rates‖
AGILE

37. Case Study: Pittsburgh Mercy
 Progress to Date
 Financial Results
 $600K annual savings in revenue increases and cost cuts
 Process Results
 No budgeting
 Global updates twice a year – detailed updates quarterly
 Forecast accuracy to 2%
 Manager commitments based on demonstrated best practices
 Understanding the business as an operating entity
 Reaction to issues on a two year horizon, e.g. present cut plan
 Model Status
 Now on third model iteration built from scratch
AGILE

38. Advantage from responsiveness and adaptability rather than scale
―It is not the strongest
of the species that
survive, nor the most
intelligent, but the one
most responsive to
change.‖
AGILE Source: Commonly misattributed to Darwin, this quote was actually
written/said by Clarence Darrow

39. Guidelines for Agile PlanningTM
1. Move Out of Excel
 Deal with structure issues
 Deal with modeling issues
2. Reduce Level of Detail
 Plan the way managers think; not the Happy Accountant
 Reduce detail to better integrate strategy
3. Implement Driver-Based Planning
 Reduce direct input data volumes
 Increase ‗modeled elements‘—operational/driver based planning
4. Integrate (Don‘t Just Import) Actuals
 ―Rolling over‖ actuals in plan files—apples to apples
 Using actuals to understand trends—focus on rates
5. Implement Scenario Analysis
 You can‘t predict the future, but you can construct scenarios
 You‘re looking for easy maintenance and comparisons at all levels
AGILE

40. 1. Out of Excel
 Structure Issues
 Bound by templates: can‘t add line items on-the-fly
 Rollup structures with dimensions are difficult to create and maintain
 No multi-user security/process controls
 Importing (rekeying) actuals is error prone/cumbersome
Structure problems
Save As
relate to budget
templates where you
need to build in
structure and
financial intelligence
from scratch.
Version A Version N…
AGILE

41. 1. Out of Excel
 Modeling Issues
 Formula and structure errors—aka #Refs
 Dependency on key individuals—Lone Ranger Syndrome
 Line manager spreadsheet skills are limited; untrained/dangerous.
Modeling problems: cell-
based linking which
discourages driver-based
planning which is the
source of most errors.
AGILE

42. 1. Out of Excel
 What to Look for in Planning Applications
 You can build rollup structures with multiple dimensions/attributes
 Application incorporates multi-user security and process controls
 Users can create line items on-the-fly without breaking things
A fundamental deliverable
of a Planning Application is
user security and process
controls.
AGILE

43. 1. Out of Excel
 What to Look for in Planning Applications
 You can build rollup structures with multiple dimensions/attributes
 Application incorporates multi-user security and process controls
 Users can create line items on-the-fly without breaking things
 Importing capabilities—aka ETL (Extract, Transform & Load)
 Object-based linking with audit trails
Object-based linking is
critical for implementing
driver-based planning.
AGILE

44. 2. Reduce Level of Detail
 Plan at the Right Level
 Lowest level natural class accounts create too much detail
 Let managers plan the way they think
 Set the stage for driver-based planning
It‘s the data that‘s the killer
7 T&E accounts *
100 cost centers *
12 months = 8,400
AGILE

45. 2. Reduce Level of Detail
 Guidelines for ―Right Level‖
 Plan/report at a higher level—especially for natural accounts; or
 Set up a dual system: traditional budgeting plus forecast at higher level.
 Do the math for various alternatives; test imports for a ‗visual picture‘.
 Go step-by-step: not everything need be done all at once.
 The planning application must have line item detail
Example of an account
structure at a higher
level with line items
created by managers.
AGILE

46. 2. Reduce Level of Detail
 Benefits of Reducing Level of Detail
 Better operational connection for line managers
 Reduces overall data volumes; better visibility
 Set the stage for driver-based planning
Reducing level of detail
along with moving out of
spreadsheets reduces
Effort and enhances
Business Value.
AGILE

47. 3. Driver-Based Planning
AGILE

48. 3. Driver-Based Planning
Software Conversion # Services Hours Per Billable Bill Rate Billable
Licenses rate Customers Customer Services Services
Sold Revenues
Hours
Staff
Utilization
Rate
Predictive logic Services Hours Services
Staffing
diagram for a software Hours
Per Staffing
Heads
Month
& services business Services Expenses
 Salaries
It‟s all about Activities  PR taxes/ benefits
 Supplies
 Travel
& Rates  Recruitment
Training
 Etc.
Services
Profitability
AGILE

49. 3. Driver-Based Planning
 Benefits of Driver-Based Planning?
 Tight turn-around for forecasting has a chance
 Enforces focus on important operational drivers
 Visibility into the numbers—allows meaningful causal analysis of variances
 Sets up ―real time planning‖ for scenario analysis
Driver-based planning
delivers a significant
increase in Business
Value
AGILE

50. 4. Integrate Actuals
 Integration Issues
 Data spread across multiple sources
 Actuals and Plan at different levels
 No underlying activity drivers
 Actual and plan structures out of sync
AGILE

51. 4. Integrate Actuals
 Import Actuals
 Metadata and data imports based on chart of accounts structures
 Monthly updates from the general ledger
 Automated with ―connectors‖ or semi-automated with ETL tools
 Integrate Actuals
 Any source—GL,HR, CRM, RDBMS, OLAP
 Any data type—text, number, currency, percentage
 Any level—line item, natural accounts, cost center, etc.
 Any modeling—simple of complex linking, back calculate rates
AGILE

52. 5. Implement Scenario Analysis
 Deliverables
 Insights: What‘s Going On with the Numbers
 Actionable Knowledge: What Are Our Choices Between Things To Do
 Decisions: ―OK gang, here‘s what we‘re going to do!‖
About the Future
“Trying to predict the future is like driving down a
country road at night with no lights while looking
out the back window.”
Peter Drucker
“The future ain’t what it used to be…”
Yogi Berra
AGILE

53. 5. Implement Scenario Analysis
 Types of Scenario Analysis
 Manage Resource Allocations: Adjust Short Term ―Who Gets What‖
 Strategic Planning: Extend Time Frames; Same Model As Short Term
AGILE

54. 5. Implement Scenario Analysis
 Implementation Guidelines
 Easy to Create: On-the-Fly; No IT; Selectively Include Line Managers
 Easy to Maintain: Change Data and Structure in Near Real Time
 Real Time Feedback: The Planning Tool is the Presentation Tool
 Scenario Drill Down: Comparison & Analysis at All Levels
AGILE

55. Planning Maturity—Full Matrix
AGILE

56. Agile Planning: How to do it
5-Minute Overview
AGILE

57. The 4 Steps to Agile PlanningTM
4. Implement
Scenario
Analysis
2. Implement
Driver-Based
Planning
3. Integrate
(Don‘t Just
Import)
Actuals
1. Reduce
Level of Detail
AGILE

58. Agile Planning in the Cloud
WEB FORMS?
Planning Objective
Private Cloud Public Cloud
NO YES
Annual
Budget
Agile
Planning
AGILE Source: The Agile Planner Blog

59. Finance on ―Agile Planning over the Web‖
“I have used SaaS [Requires Web Forms] planning programs - and
dislike them for a few reasons:
1. Latency
2. They can be ‘squirrely’- in terms of saving/not losing entered
data (notably copied and pasted)
3. File access without having to be connected”
-Stu Abrams, CFO/Controller, Magnet Systems
(Former User of Cloud-Based Planning App)
Source:
http://www.capterra.com/budgeting-software/reviews/52811/Alight%20Planning%20Enterprise/Alight
AGILE

60. Follow Up with Alight Planning
 Follow up with Alight
 BLamorte@AlightPlanning.com
 Telephone: (415) 456-8528
 Join us! The Agile Planner Blog
 Blog.alightplanning.com
 Webinar Resources
 Transforming Planning at Pittsburgh Mercy
 www.Alightplanning.com/Webinars/PM/Video.html
 Application Requirements for Rolling Forecasts
 www.AlightPlanning.com/Workshop/Requirements-for-Rolling-Forecasts/Video.html
 FOCUS Podcast Featuring Sid Ghatak & Ben Lamorte
 http://www.focus.com/roundtables/avoiding-business-performance-
mangement-software-failure-4-t/
 6% is not enough! The Case for Driver-Based Planning in 2012 with
Rob Kugel, Ventana Research and John Miller, Arkonas moderated by
Ben Lamorte
AGILE

61. Why 1 in 3 Budgeting Software
Solutions Fail, What to do about it!
A 5-Minute Overview
AGILE

62. Worst Practice #1: Software on the Shelf
 Situation: Management thinks buying software licenses for everyone will
somehow get everyone more involved and create a culture of
collaborative budgeting.
 Problem: Buttonwood Group Survey examined 100 companies who
deployed budgeting software to replace spreadsheets:
 44% of companies reported complete failure to get anybody outside of
Finance to actually log into the system in the past 12 months.
 How to Avoid: Start with a ―Minimal Configuration‖ ADD Non-Finance
USERS LATER!
NOTE: Get a analysis of % users of ALIGHT who actually use it
AGILE

63. #1 Software on the Shelf
Source: Planning Software Usability Survey
AGILE
By Buttonwood Group

64. Worst Practice #2: Go over your budget!
 Problem (Quote below from real customer interview!)
 “Our software will be just $2,000. We forgot to tell you it costs $10,000 for
consulting help to build your model – oh yeah, it‘s really easy to use. Of
course, that‘s just to get you going, it could take $18,000 for it to be fully
deployed.‖
 How to Avoid (Send me an email with other ideas)
 Build discounts into pricing if vendor goes over the price!
 Example: ―Great! So, if we do in fact pay $10,000 upfront for the 50 hours, can we get a
bill-rate of $100/Hr thereafter if additional consulting is requested? After all, it is unlikely we
will need more than 50 hours.‖
 THINK OF HOW TO DEAL WITH TOC and POSSiBLY INCOLVE DON BEFORE
GETTING INTO THIS
AGILE

65. Worst Practice #3: Wrong Consultant
 Problem
 A month after you buy software, you find out you‘ve been assigned to a
consultant who's built one model as practice and recently completed an
MBA degree!
 How to Avoid
 Do not agree to purchase any software until you’ve at least met the
consultant assigned to your project. If you don‘t click with your consultant,
the project may be doomed from the start .
AGILE