Corporate Performance Management

1. Corporate Performance Management Chris Evers Director, Strategic Initiatives May, 2003

2. "Each problem that I solved became a rule which served afterwards to solve other problems.“ ---- Descartes

3. Agenda Performance Management Delivery Challenges Next Steps Brio Metrics BuilderTM

4. Performance Management Themes • How can our business processes best be aligned to achieve our strategy? • How can we get employees to focus on achieving the strategy? • How can we drive accountability? • How can we optimize visibility to information to improve our ability to manage business performance? • How do we know we are making desired progress to strategic goals?

5. Which accounts drag down margins? Which accounts drive revenue & margin growth? What do they have in common? What are we doing differently there? What are we doing wrong with them? Action Plan: Find more accounts like them Action Plan: Replicate our successful approach Action plan: Eliminate our mistakes Managing Performance with Metrics Are our profits growing enough from key accounts?

6. Performance Management Makes a Difference Measurement-managed companies outperform the competition Source: American Management Association

7. Performance Management Applications • Regulatory Requirements • Sarbanes-Oxley; Basel II Accord; HIPAA • Operational Management • Six Sigma; ISO 9002; Human Resource Mgmt • Competitive Position • Sales; Marketing; Customer Satisfaction

8. Effect of Sarbanes-Oxley Act • CEOs and CFOs of publicly traded companies must certify financial statements, and those who knowingly certify falsely are liable for criminal and civil penalties. • Auditability requires companies to develop and publish internal processes such that outsiders can attest to the existence of appropriate controls. • Under the act’s disclosure mandates, companies must report financial results and material changes in corporate financial condition or operations “on a rapid and current basis.”

9. The Sarbanes-Oxley Act of 2002 • Sarbanes-Oxley requirements may be divided into three categories: certification, auditability, and disclosure. • Accuracy and visibility are the two touchstones of Sarbanes-Oxley. Accuracy refers to the quality of the financial information a company reports to the public. Visibility means that the internal information processes that make accuracy possible must be transparent.

10. Barriers to Sarbanes-Oxley Compliance “…while 81% of CFOs regard accurate earnings and revenue forecasting as a corporate priority, 63% are saddled with inadequate, non- or partially-integrated budgeting, forecasting, and decision support systems.” - CFO Research Services, Inc.

11. Barriers to Sarbanes-Oxley Compliance • When CFO Research Services, Inc. surveyed 277 senior finance executives about hinderences to financial accuracy and visibility, 56% cited technology.

12. Sarbanes-Oxley Compliance Fact 90% of the S&P 500 companies in the U.S. do not meet the shorter 10-Q filing deadline of 35 days. - Parsons Consulting

13. Strategic/ Finance Revenue, Margin, Growth performance Lifetime customer value Products and Services BBB (Bookings, Billings, Backlog) Product configurations and bundles Order fulfillment Clinical Trials Service calls Sales Direct sales Web Sales Sales pipeline Channel sales Marketing Campaign analysis Product forecasting Customer Call Center Customer behavior Lifetime customer value Logistics Routes Distribution channels Waiting queues Human Resource Manpower allocation and utilization More Performance Management Apps

14. Metric Examples • Traditional Metrics • Booking $, Billing $, Units • Avg. order size, Avg. sell price • % of shopping carts abandoned • Headcount, Business Days • Temporal Metrics • % of GM growth • Booking $ YTD, GM QTD • Period over Period quality target • Advanced Metrics • 3 mo. rolling average revenues • Cumulative revenue as a % of forecast compared to average of the same week of the last 4 qtrs. • Key Functionalities: • Across all relevant facts • Time Series • Drillable • Sliceable • Unsupported dimensions handled gracefully • Granularity differences handled gracefully • Metrics on metrics

15. Agenda Performance Management Delivery Challenges Next Steps

16. Typical Business Intelligence Pain • The BI Tool promise: “Informed decision-making” • Some Success, Some Failure • Typical Failure Reasons: • Technical/project failure • Failure to deliver business value • Spreadsheet Hell

17. “BI is Failing Firms” • January 31, 2002: Frank Buytendijk, Gardening Group • "… even now the best vendors have only 80 to 90 percent of the functionality in the Web-enabled software that they had in the desktop-based versions." • Most damagingly, these Web versions actually took control away from users. Before 1998, business intelligence was largely user-driven. "Departmental heads could buy a nice little OLAP tool, ask the IT department to provide the links to the corporate data, and with a few days of training were able to generate their own reports," said Buytendijk. "Now everything is on the Web, so all of a sudden you have this notion of centralizing everything, which is good for IT departments, but the users have been left with nothing."

18. Business Intelligence Lessons • Dimensional Modeling is Key • Extract-Transform-Load tools are necessary • Analysts need to be owners • IS impact must be managed/minimized • “Ease of Use” has value • TCO/TTV are critical to Project success • Value is incremental, contiguous

19. Business Intelligence Challenges • Business Value Focus • Root Cause Analysis • Process Improvement • Technology Vertigo • Metric Management • IS impact • Excel or ”Not Developed Here” syndrome

20. Who is in need? • Executive Level • Enable executives, managers and analysts to interactively collaborate to accelerate business insight and enhance competitive advantage, thereby improving business performance • Product Level • Integrate existing enterprise data with decision processes to create business metrics that are delivered through personalized dashboards for all levels of the enterprise. • Create, configure, and deliver business metrics that enable interactive, real-time strategic decision-making for improved business performance.

21. What do they need? • Metrics-based performance management system • Made for business decision makers • Execs, LOB Mgrs, Project Mgrs, Product Mgrs, Analysts • Daily insight to KPI’s and metrics crucial to the business • Business process driven • Pre-established • Environment of dynamic, cascaded metrics • Common analytic library of reusable metrics • Embedded analysis methods • Personalization beyond metrics delivery

22. Agenda Performance Management Delivery Challenges Next Steps

23. When Is Your Business Ready for Metrics- based Performance Management? • Managing with Metrics • Top down initiatives • Process driven metrics & goals • Trending & root causes • Managers answer own questions Increasing Information Maturity • Measuring • Basic metrics & goals • Fact based, snap shots • Analyst-based access & reporting • Initial • Anecdotes • Individual heroics

24. Leveraging the Data Customer Sales Support Organization Marketing Product Strategic Diagnostic RootCause A typical data repository is defined by subject areas, dimensions, and facts (or details)

25. Leveraging the Data Customer Sales Support Organization Marketing Product • Need:Corporate reporting baseline • Audience:Creation: IT analyst • Use: Individual and departmental business info consumers • Product:Reporting Tools • Portals Strategic Diagnostic RootCause A report encompasses dimensions, subjects, and detail for a focused business audience with a specific information purpose

26. Leveraging the Data Customer Sales Support Organization Marketing Product Need:Data exploration and analysis Audience:Creation and use: Business analyst Product:BI Tools Strategic Diagnostic RootCause A query enables the business analyst to analyze data, explore new questions, and deliver analysis results to business information consumers

27. Leveraging the Data Customer Sales Support Organization Marketing Product Need:Information distribution Audience:Creation: Business analyst Use:All employees, customers, suppliers Product:Reporting Tools BI Tools Portals Strategic Diagnostic RootCause A broad library of reports can be distributed to thousands of users over the web

28. Leveraging the Data Customer Sales Support Organization Marketing Product Need:Centralized business metrics and methods for analysis Audience:Creation: IT and business analysts Use: Executives, business line managers, departmental business info consumers Product:Metric Mgmt Tools Strategic Diagnostic RootCause Centralized metrics management can span all dimensions and detail needed for a specific subject or groups of subjects

29. Complete Picture of Leveraging the Data Customer Sales Support Organization Marketing Product Strategic Diagnostic RootCause The flexibility in accessing the entire data repository based on varying user needs is accomplished through the complementary capabilities of the entire Brio Performance Suite

30. Corporate Performance Management Chris Evers 952-476-2729 chris.evers@brio.com