Driving Accountability Through Disciplined Planning at Abercrombie & Fitch

Driving Accountability Through Disciplined Planning at Abercrombie & Fitch Robert Ball Senior Manager FinanceAbercrombie & Fitch Co.robert_ball@abercrombie.comSession 8454

Outline • Profiles • Project Lifecycle • Business Problem • Vendor Selection • Project Scope • Project Objectives • Design • Implementation • Benefits • Lessons Learned • Q&A

Presenter Profiles • Robert Ball • Senior Manager of Financial Reporting for Abercrombie & Fitch Co. • Responsible for rolling up P&L from sales through tax provision on the Income Statement • 8+ Years with Abercrombie • 3 years with Real Estate Audit Group • 5 years with Financial Reporting • Kyle Goodfriend • Manager for Rolta • 15 years of technology experience. • Working with Essbase since late 90’s • Designed/ Managed 100+ forecasting, Planning & Reporting applications • Joshua Forrest • Senior Consultant for Rolta • 10 years of technology/ implementation experience • Worked with Hyperion/Oracle products for 6 years • Experience in multiple verticals including Banking, Retail, Insurance & Manufacturing

Abercrombie & Fitch Co. Profile • Headquartered in New Albany, Ohio • Store count worldwide (all companies) 1070, A&F alone 325 • Sales in 2010 $3.5 Billion • Employees 7,500+ (including stores)

Rolta International Profile • Rolta International is a global market leader and solution provider of insightful impact based upon innovative information technology solutions, services and software. We have a heritage of providing unique solutions for globally among many industry sectors including Retail. Rolta International acquired Whittmanhart Consulting (Formerly Infinis, Inc.) in 2008 and in doing so added a leading provider of Enterprise Performance Management and Business Intelligence services. Rolta International is an Oracle Platinum Partner. • Founded 1981 • Headquartered Alpharetta, GA • Revenues in 2010 ~$275M • Employee count 4,500

Project Lifecycle

The Business Problem • The original Abercrombie & Fitch Co. budgeting and forecasting system was manual in nature consisting of multiple offline processes and disparate logic which lead to numerous issues: • Heavy dependency on Excel spreadsheets. • Lack of data transparency hampering accountability. • Concern over data accuracy. • Difficulty in producing reports, especially that of the ad-hoc nature. • Lacking supporting detail at appropriate levels. • Unable to easily collaborate across departments. • Complicated data acquisition. • Lengthy budgeting time frame.

The Business Problem Input Sheets Excel Excel Excel Excel Excel Excel Excel Essbase Models Excel Excel Excel Canned Reporting Environment Excel

Vendor Selection • The final Abercrombie & Fitch Co. vendor selection process consisted of an in-depth assessment between two products, IBM’s Cognos and Oracle’s Hyperion Suite. The assessment compared the 2 products in areas such as: • Key differentiators • Gartner group rating • Implementation time • Existing application integration • Overall cost • Pros/Cons • User interface • Market share • End user experience • Reference calls

Vendor Selection • Existing Application Integration • Hyperion Planning provides a robust integration with ERP systems and other sources. A&F required a two-way integration with PeopleSoft GL and HR. • Integration with PeopleSoft to pull Actual and send Budget data. • User Interface • Hyperion Planning provides users an easy to use web interface. The end-user experience was important and A&F placed much weight on the user transition. • Able to leverage existing user competencies with Microsoft Office based tools such as Excel, Word and PowerPoint.

Project Approach Rolta approaches projects by utilizing a proven and well defined methodology that has been successfully utilized at numerous clients. This approach has proven to be an effective way to manage scope, design and implementation of this type of project. An important component of this methodology includes the partnership created with our clients, a partnership that ensures both parties remain fully engaged during each phase of the project. The result of such a partnership is an environment that encourages collaboration, knowledge transfer and joint system deployment.

Project Approach • When Rolta conducts a project, it does so in a manner in which it accepts full responsibility for the successful delivery of a system. The successful delivery of a system often includes the implementation of a prototype along with application installation. • Application prototype • Not a complete representation, rather a shell of the system • Involve users at an early stage • Client exposure to Hyperion technology and processes • Use feedback to help system design • Application installation • Evaluate client standards • Recommend configuration that promotes scalability • Validate & tune appropriate applications • Involve client IT department • Knowledge transfer

Project Scope • Implementation of a financial budgeting and forecasting system that: • Allows for annual financial planning by responsibility (a team member from leadership) with versioning and data integrity. • Eliminates reliance on Excel spreadsheets while moving towards web-based financial planning, allowing for detailed budget builds. • Is web-based allowing the company to complete monthly projections with proper versioning, giving users the ability to perform projections more frequently with little additional effort. • Enhances the A&F financial reporting capability.

Project Objectives • By selecting the Oracle Hyperion Planning Suite, Abercrombie & Fitch Co. took the first step in realizing their goals of replacing their existing, spreadsheet driven, budgeting system with a centralized, enterprise wide solution. • Establish the system as the financial planning platform for A&F. • Minimize manual processes. • Reduce complexities in data acquisition and manipulation. • Ability to build plans based on assumptions/ drivers. • Access to historical actual data from PeopleSoft GL. • Ad-hoc analysis. • Web access for data entry and financial reporting. • Store level planning. • Variance Analysis reporting. • Support for multiple currencies/ Report in USD or Local. • Support top-down & bottom-up approaches. • Train 250+ users

Design Today’s unpredictable economy and highly competitive retail industry requires the ability to quickly react to changes in consumer behavior, and the original A&F spreadsheet-based process made reaction to these changes, even simple ones, difficult and error-prone as they could effect hundreds of spreadsheets. The A&F design phase relied on the prior phases of the project, including the project approach, to design a system the met the needs and expectations of the finance community.

Design • Rolta worked closely with A&F resources to ensure a design that both met current requirements but also permitted future growth. The end product resulted in a multi-cube design that integrated existing data sources and allowed for web-based user interaction. • Single application, 3 database design • 12 dimensions (Employee, Pay_Type, Vendor) • 60+ web forms (Standard & Composite), Excel data entry • 30+ Financial reports • Heavy MaxL automation • Multi-dimensional security • 75+ Calculation scripts, 90+ Business Rules • 2500+ Accounts, 1100+ BUs, 6000+ Departments, 8000+ Vendors • 250+ users

Design Oracle Hyperion Planning Source Interfaces Input Forms PeopleSoft GL Essbase Web Forms PeopleSoft HR Excel Forms Reporting Environment Web Reports Ad-hoc Reports

Implementation • During the implementation phase of the project, the system components defined during application design are constructed. All the normal/routine implementation steps were followed including the database construction, data extraction routines, the planning application build, and report construction. In addition to these steps Rolta and A&F focused on a few key objectives defined below: • Data input flexibility • Supporting detail • Multi-currency • Custom data spread functionality • Financial reporting enhancement • Process automation (environment recycle) • Essbase Add-in ribbon

Implementation • Data Input Flexibility • Giving end-users multiple methods of input provides flexibility while helping to promote a new budgeting and Planning system. This ultimately increases consistency and confidence as users recognize standard planning methodologies across the application. • Web forms • Excel web forms • Excel lock & send templates

Implementation • Data Input Flexibility

Implementation Supporting Detail • As noted in the project objectives, one of the A&F priorities centered around the use of supporting detail. Supporting detail provides users a mechanism for entering detail during their budget entry. This feature is one of Hyperion Planning’s strong points, giving end-users multiple avenues for entering such detail. • Types of supporting detail: • Cell text • Supporting detail • supporting documents (Excel, Word, PDF, Text etc.) • Useful for: • Travel • Consulting • Marketing • Supplies

Implementation Supporting Detail– Cell Text

Implementation Supporting Detail– Supporting Detail

Implementation Supporting Detail– Supporting Documents (via Workspace)

Implementation • Multi-Currency • Abercrombie & Fitch Co. has a large international presence, with stores in over 15 countries. With budget owners in many counties, the Planning application needed to support multiple currencies. • A&F loaded actual data from PeopleSoft into USD. • Converted back to local currency in the application. • A&F entered budget for many expenses for ALL entities in USD. • Entering data in base currency would have been more difficult. • Able to write currency conversion calculations more efficiently

Implementation Custom Data Spread • One of the Abercrombie & Fitch Co. requirements centered on the data spread capability, a feature which Hyperion Planning offers out of the box, but the A&F requirement took the built in spread one step further. • Their request allowed end-users the ability to follow their current planning techniques. These techniques which calculated and spread data across the Time dimension are displayed below, and detailed on the following slides: • Types of custom spread methods: • % of Department Sales • % of Total Sales • % of Department Units • % of Total Units • Last Years Trend • 4-5-4 calendar • Evenly • Fill

Implementation Custom Data Spread

Implementation • Financial Reporting • Reporting in general was an area needing improvement for A&F. All reporting for their previous budgeting application resided in Microsoft Excel, a model that was prone to user error and difficult to support. Modifications to reports often resulted in changing numerous Excel sheets, which brought data integrity into question. • The new financial reporting solution provides: • Ability to view reports at total company or detailed levels. • 30+ Financial Reporting (FR) canned reports. • Smart View for Ad-Hoc analysis. • Support for multiple alternate hierarchies.

Implementation Financial Reporting

Implementation • Process Automation • As the new Budgeting application moved into a production state, the need for process automation became obvious. The ability to utilize MaxL allowed the financial reporting department to focus on the budget process and data analysis, and less on routine system maintenance. • Processes automated: • Nightly level-0 data backups (all cubes). • Actual data loads from PeopleSoft • Budget data extracts to PeopleSoft • Nightly defragmentation • Data clear • Planning metadata/security refresh • Data loads • Application restart • System aggregation • Environment restarts (Windows & UNIX)

Implementation Process Automation

Implementation Hyperion Essbase Add-In Much like the Smart View Excel ribbon, a ribbon was developed during the A&F budgeting project for the Essbase Add-In. This ribbon allows users of the Essbase Add-In to easily access functionality while building data retrieve and submission sheets. The Essbase Add-in can now be downloaded at http://www.in2hyperion.com/.

Benefits • Ability to quickly slice and dice data via Smart View. • Prior state took 8-12 hours for International vs. Domestic breakout. • Critical to understand where spending money. • Store types vs. brands vs. geographies. • Supporting Detail. • Critical to organization. • Efficiency – users not asked to provide analysis multiple times now. • Had supporting detail before but not standardized/structured. • Can now export a formatted export of all Supporting Detail. • Planning by Vendor. • Structures provide more insight. • More accuracy. • Able to find and correct data entry mistakes.

Benefits • Consistency in Store Planning. • Prior state gave way to disconnect. • Budgeting for incorrect stores. • Not budgeting for correct stores. • No longer situations where users are missing sales. • Insight into Store Contribution. • Can now provide a store P&L. • Previously only able to supply sales. • Can now determine which stores will: • Make money vs. lose money. • Make key management decisions on: • Opening vs. Closing stores. • Modifications to payroll models. • Understanding staffing structures. • Expenses. • Opened lines of communication with finance.

Lessons Learned • Essbase audit logs. • Recover to a point-in-time. • Must restart Planning application. • Strong Functional and User Acceptance Testing process. • Dedicated business resource. • Training before project begins. • Strong transition associate/team. • Realistic timeline. • Understand the intricacies involved. • Standardized Chart of Accounts. • Clearly Defined Roles & Responsibilities

Questions & Answers

Driving Accountability Through Disciplined Planning at Abercrombie & Fitch