confidently provide guidance with ibm cognos tm1and what-if analysis

8/2/2019 Confidently Provide Guidance With Ibm Cognos Tm1and What-If Analysis

1/23

Confidently Provide Guidance with IBMCo nos TM1 and What-if Anal sis

Speaker:Date:

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2/23

Confidently Provide Guidance withIBM Cognos TM1 and What-if

Business analysts are continuallymaking recommendations on where

articulating the value and/or cost ofmaking a change vs. staying with thestatus quo.

Learn about what-if scenario modelingvia a demo and real customer storiesthat showcase just how easy it is to

crea e scenar os n a san oxenvironment and then share theresults with others in the organization

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3/23

A What-If Analysis definition to set the stage

Business Problem: Unable to accurately identify the business

SalesBy what percentage does marketing need to increase our number of lead over the next 2

Operations

What-if our labor and distribution costs continue to increase by 10% over the next year,how does this im act our o eratin and roduction costs?HR

What-if we reduce our headcount by 10%, would this lower our human capital costs to thedesired level?

FinanceWe have not met revenue targets, what-if we lowered forecasted costs across differentgroups? What adverse impact, if any, will this have on revenue and how much closer willthis et us to our ex ected mar ins?

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4/23

Agenda

Understand: Where lack of analytical insight comes from The What-If Analysis business problems and the Cognos Software

solution

Assess: Understand where What-If Analysis fits in the Cognos Product Portfolio Solution demonstration: a day in the life

Inspect: Talk about 2 real world customers Solution capabilities TM1

Summarize: Recap What-If Analysis value Provide information on where to find more details

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5/23

Today brings an explosion in informationyet

or anizations are o eratin with blind s ots

Lack of insight1 in 3 managers frequently make

Inefficient access

information they needVolume of digital data

information across their organization

needed to do their jobsVariety ofiInformation

Inability to predict3 in 4 business leaders say morepredictive information would drive

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etter ec s onsVelocity of decision making

Source: IBM Institute for Business Value


6/23

Companies that invest in business insight

consistentl out erform

Return on investedcapital5 Year Average (2004-2008)

Revenue growth5 Year CAGR (2004-2008) EBITDA5 Year CAGR (2004-2008)

7.3%

11.9%

9.0%

12.5%

9.4%

more>more more

0.6%

Finance organizations with business insight

All other enterprises

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Revenue Growth: N = 580; EBITDA: N = 435; ROIC: N = 606Source: IBM Global Business Services, The Global CFO Study 2010


7/23

Business insight is critical for driving

com etitive advanta eAt a time when companies in many industries offer similar products and use comparable technology, high- per ormance us ness processes are among e as

remaining points of differentiation. Tom Davenport, Competing on Analytics

76%

80%

77%

86%

Virtualization

Business Intelligence and Analytics

Interviewed CIOs could select as many as they wanted

BI/Analytics #1

investment to

64%

66%

70%

71%

73%

71%

73%

Customer and Partner Collaboration

Mobility Solutions

Risk Management and Compliance

Lowrowth

competitiveness -- IBM Global CIO Study 2009

55%

61%

62%

63%

68%

70%

67%

SOA/Web Services

Business Process Management

Application Harmonization

-

Highgrowth

7

57%63%Unified Communication

Source: IBM Global CIO Study 2009; n = 2345


8/23

How does What-If Analysis support the

PM a enda?

Finance How are we doing?Scorecards and Dashboards

SalesDashboard shows Store Profitability forcurrent quarter is below plan

Why?

Marketing

Report or Data exploration shows the Storeis unprofitable due to a particular customersegment and product combination

Reporting & Analytics

What If we?Scenario Modeling & Analysis

HR

IT/S stems

CustomerService

most profitable customer profile in astores capture area?Reduced our costs by cutting our staffand labor hours by 20%?

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Stopped selling poorly performingproducts altogether?


9/23

The existing need for analysis

Everyone needs greater understanding to

drive better decisions in the organization All decision makers need insight beyond dashboards

and managed reports

How much do we need to increase pipeline or conversion rates to impact sales for poorly performing

segments by $X? Sales Manager

beyond reporting numbers

Advanced Analysts want to uncover patterns andrelationships beyond information manipulation

Organizations need to expand the

If we reduced materials and inventory holding costs by 5%, how much would this reduce our total inventory costs? - Operations Manager

information set they consider for analysis Analyzing all available information to drive informed

decisions

Organizations must infuse analysis

If we decreased campaign and promotional spending by x%, how much would this impact our lead generation numbers? - Marketing Manager

throughout decision-making to sustaincompetitiveness

Ability for all users to analyze information to drive betterbusiness decisions

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How would a 10% reduction in our sales workforce potentially impact sales performance? - HR Manager

us ness users wan o se - scover, man pu a einformation, model data to create scenarios


10/23

IBM Cognos 10 Analysis

Enable individuals to outperform with full

Executives : timely and reliable view of business andtake action to drive better business outcomes and

Business managers : single, reliable view ofinformation at their fingertips that can help themfocus on issues that need attention and action

Business analysts can quickly and effectivelyconduct in-depth analysis and share results easilywith broader business communities

IT professionals: apply their knowledge, expertiseand investment in corporate data to advance thebusiness, rather than having to manage a backlog ofre uests for information

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11/23

What-If Analysis is relevant throughout the

entire or anizationCustomer

ServiceSales Marketing FinanceHuman

ResourcesProduct

Develo ment Operations IT/Systems

Revenue AnalysisInventory Management

IT Efficiency

Cost Analysis

How much do we need toincrease pipeline or conversionrates to impact sales for poorlyperforming segments by $X?

Cost & Quality

Purchasing &Procurement If we reduced materials andinventory holding costs by 5%,how much would this reduce our

MarketOpportunities

Profitability Analysis

Customer Profitability

Sales Results

Production & Capacity

Distribution & Logistics

Process Efficiency

Business Efficiency

BusinessEffectiveness

What can a 5% increasein revenue deliver tobottom line? Can we cut$2M in SG&A ? What is

CompetitivePositioning

Information, Complaints,Claims

Market & CustomerFeedback

Product DevelopmentMilestones

Organization & Staffing

Sales Tactics

Plan Variance

Product LifeCyclePricing

On-Time Delivery

Service Benchmarks &Value

Talent & Succession

Compensation

the affect on GM?

How would a 10% reductionin our sales workforce

How would a 10%increase in calls/claimsimpact our support andoperational costs as

How much would a X%increase in portfolio

DemandGeneration

Innovation

ra n ng & eve opment

Benefits

If we decreased campaignand promotional spending

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potent a y mpact sa esperformance?

well as response times? nvestments narrow ourportfolio gaps?

y x , ow muc wouthis impact our leadgeneration numbers?


12/23

Why does the business typically need

What-If Anal sis?

Business Needs

Build strong business cases well-

Business Value

More nimble business, enablinginformed changes

Make strategy change grounded in facts

Articulate the value/cost of making

competitive advantage

Respond more quickly to internal and

external business driverschange vs. staying with the status quo

See the direct impact of scenarios onother areas of the business in real time

Optimize business and financialperformance

Strong recommendations to management

y o crea e mo e s an c angeassumptions quickly and easily

change based on facts and strategic risk-taking

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13/23

Example A day in the life: Retail Company

BackgroundFluctuation in product sales with little advanced Business Manager

Marketing promotions typically run to increase salesvelocity of poorly performing products or with excessinventory

Marketing promotions based on gutfeel around poorly performingproducts.Standard discounts vs. targetedpromotions due to lack of timelyinsi ht.

Current ProcessLegacy BI produces weekly reports with Actual results

Actual and Plan exported into spreadsheet to uncovervariance a s underl in data trends

Difficulty answering the What-If wediscount product X by 5 or 10% -what type of sales increases can weexpect?

Models created and tested to understand the impact ofspecific marketing programs against these trends

Key Challenges Lack of timely insight at product levelmeans Finance stru les with

Finance Manager

Manual, labor intensive and error prone data extractionand analysisDifficult to create new models and test assumptions

targeted guidance to CFO and LoB.Analysis accuracy creates issues inagreements on profitability initiatives.

Plans and Forecasts are often

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,questioning of numbers and hesitant to make decisions

naccura e w w e var ance gapsto Actuals.


14/23

Typical processes for What-If Analysis

stakeholdersExecutiveExecutive Line of BusinessManager

Line of BusinessManager

BusinessAnalystBusinessAnalyst

model to understand the

corresponding business impact

FinancialAnalystFinancialAnalyst

Develop model and set ofassumptions

Export the data to a spreadsheet

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Transaction

Systems

Warehouses(Relational & OLAP)

Legacy

Sources

PM

Systems


15/23

Challenges with the typical process

The lack of integrated, end-to- end processes leads to very heavy people costs AND scepticism throughout the entire organization

ExecutiveExecutive Line of BusinessManagerLine of Business

ManagerBusinessAnalystBusinessAnalyst

consuming and error-proneDisconnected from the data and process

used for BI and trending analysisu t p e scenar os typ ca y requ re mu t p e

spreadsheetsReasoning and rules are buried in cellformulas

FinancialAnalystFinancialAnalyst

Can only share scenarios by sharingspreadsheetsPerformance against large data sets

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Systems (Relational & OLAP)

SourcesSystems


16/23

Demo What-If Anal sis

1. Monitor and track performance

.

3. Model and develop alternative scenarios

4. Analyze results and corresponding business impacts

5. Execute strategy by updating scenarios in plan

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17/23

Blue Mountain

Business Requirement

Marketin views historical data and erform what-if anal sis a ainst dailrevenue reports to manage its campaign and labor spending more wisely

e.g. If a specific room type isnt selling well, a manager can look at whichvariables have remained constant and which ones have changed

Solution Capability

What-if Analysis from IBM Cognos delivers the means to review the data froma variety of angles to isolate the particular variable that is a drag on sales.

,years rates, wait out a spell of bad weather, or implement a newmarketing campaign featuring the affected area

Benefits

Managers can now determine how to alter their campaigns and labor spendingand then provide detailed analysis of which marketing campaigns have had themost impact in driving sales for a particular room type in a given season

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18/23

Cicis Enterprises

Business RequirementDetermine more accurately how much food supplies are being used at specific stores in

certain timeframes. CiCis tracks item usage and average tray cost as they test a redesigned buffet to include a

h brid salad bar and u dated stations to reduce waste and increase rofits for stores.

Solution Capability

IBM Cognos TM1 to determine if trends in usage are making this change a profitable

BenefitsWe can now run through a few what-if budget scenarios in a day, and be prepared

for questions we think management and investors will ask.Jessica White, Operations/Financial Analyst, CiCis Enterprises

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19/23

IBM Cognos TM1: A better way for What-If

Anal sisContinuous, effortless, integrated creation and management of business scenarios to support decision-making

Search Browser Email

Single, Complete,Consistent, and

Secure ViewFinancialAnalystFinancialAnalyst ExecutiveExecutive



BusinessAnalystBusinessAnalyst

BusinessUser

BusinessUser

business scenarioswith write-back

64-Bit OLAP tohandle large,

complex data sets

ata ntegr ty,Confidence

integrated with PM

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Transaction

Systems

Warehouses(Relational & OLAP)

LegacySources

PM

Systems


20/23

Summary

What-If analysis as a driver of your decision making process- .

All decision makers need insight beyond dashboards and managed reports Analysts need to inform the organization with insight beyond reporting numbers Advanced Analysts want to uncover patterns and relationships beyond

information manipulationExpand the information set considered for analysis

Analyzing all available information to drive informed decisions- - . Ability for all users to analyze information to drive better business decisions Business users want to self-discover, manipulate information, model data to

create scenarios

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21/23

Where to go for more information

For more information on What-if with TM1TM1 Home Page on IBM.com

Needs new links

TM1 Online Demo

Client References and Case StudiesContact a Cognos Software sales representative

For additional resources

CIUG Cognos International Users Groups

a worldwide or anization for users of IBM Co nos solutions

Membership is FREE join today!

Information Champions

Information Management community

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22/23

Business Analytics Software Services

Maximize your software investment and drive better business outcomes with Business Analytics Software Services.

Take the right training at the right time:ibm.com /cognos/training

Engage a technical product expert:ibm.com /cognos/consulting

Find knowledge and resources at your finger tipsibm.com /cognos/customer center


23/23

Join our community!

@IBMCognos and @IBMSPSS on Twitter

On the web:ibm.com /software/analytics/community

confidently provide guidance with ibm cognos tm1and what-if analysis

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