ibm business analytics – banking solutions for financial ... · pdf file... banking...

© 2010 IBM Corporation

Business Analytics software

IBM Business Analytics – Nick Anderson

IBM Business Analytics – Banking Solutions for Financial Performance Management



Supporting a broader enterprise focused role requires Banks to have core Finance efficiency and strong business insight

Introduction

Addressing the Broader Enterprise Focused Role of Finance

Source: IBM Institute for Business Value, The Global CFO Study 2010

Finance Efficiency

Business Insight

Demands on Finance

Help drive enterprise cost reduction

Support risk management

Partner in strategy and value creation

Improve access to and reduce cost of capital

Provide performance insight and anticipate

Finance Capabilities Needed



Four Finance profiles emerge when considering capabilities on both dimensions. In Banking, on average, there are more Disciplined Operators and Value Integrators, compared to Global results

Finance Profiles

Banking N = 118; Global N = 1,478Source: IBM Institute for Business Value, The Global CFO Study 2010

Introduction

Finance Efficiency

Business InsightLow High

Low

High

26%banks

10%banks

38%banks

26%banks

23%

12%

32%

33%



Value Integrators in the Banking industry outperform, on average, other Finance profiles

Efficiency + Business Insight Contributes to Outperformance

Revenue Growth: N =72; EBITDA: N = 58; ROIC: N = 73Source: IBM Institute for Business Value, The Global CFO Study 2010

Introduction

Value Integrators in Banking also have a more than 5% better operating efficiency ratio thanall other banks.

14,7%

18,2%

8,4%8,8%

14,6%

5,6%

EBITDA Revenue Growth ROIC

67% better

25% better

50% better

5-year CAGR, 2004-2008 5-year CAGR, 2004-2008 5-year average, 2004-2008

Value Integrators

All other banks



IBM Business Analytics Banking Solution Areas

Integrated risk management

Operational effectiveness

Customer care and insight

5

IBM has a global, dedicated banking team focused on developing best practice templates and solution accelerators for key business needs in the areas of:



Helping bankers become smarter with business analytics from IBM

IBM Business Analytics softwareActionable insights for better business outcomes

• Business intelligence− Instant information about how the business is doing and why

• Financial performance and strategy management− Financial and operational planning, budgeting and forecasting which

includes scenario and ‘what-if’ analysis

• Advanced analytics − Predictive modeling and what-if analysis to predict opportunities and

threats and confidently take action

• Analytic applications − Best practice–based industry solutions and accelerators

• Governance, risk and compliance− OpenPages and Clarity acquisitions build IBM’s capabilities in

governance, risk and compliance

6

Focus area for this

presentation



IBM Financial Performance Management capabilities

Close the books, consolidate results and report performance.

Set performance targets, align resource plans and forecast business results to meet or beat expectations.

Define, understand and lead your company's decision-making for better performance management.

To help with this last challenge, we suggest seven areas within Finance to focus on for your goals, plans and measures:

– Income statement: How did the business team score? Where was performance strong orweak?

– Drill-down variance: What causes changes in financial performance?– Operational plan variance: How do we best support, coordinate and manage the delivery

of meaningful plans?– Cash flow and working capital: How do we manage working capital, collect accounts

receivables and monitor cash use effectively?– Balance sheet: How do we balance and structure the financial funding options,

resources and risks of the business?– Capital expenditure and strategic investments: What are the investment priorities and

why?– Treasury: How can we efficiently manage cash and liquidity requirements?

7



Business analytics in Banking from IBM

Envision Credit Union Achieved a 178 percent return on investment (ROI) in seven months on a risk and operational efficiency project

UBSGained portfolio aggregation views to counterparties to exceed risk and reporting guidelines

First Tennessee BankLowered direct marketing costs and boosted response rates

world’s largest banks2

of the top 4 5

European banks2

Top 10North American banks2

Top 5

2 IBM Cognos customers on the Forbes Global 2000 list of largest banks

A proven solution

8



Proven success in CEE Banking Industry Komerční banka

– Gartner award 2010 - Gartner Business Intelligence Excellence Award– http://www.kb.cz/en/about-the-bank/press-room/press-releases/komercni-banka-wins-an-

important-gartner-award-784.shtml– http://www.gartner.com/it/page.jsp?id=1298513

9



Informed, aligned decisions and actions

IBM Cognos® 10 software – independent, SOA-based platform

Ad hoc Query

Reports

Allows decision makers at virtually all levels of the organization to gain insight into business performance and data to support and guide actions.

How are we doing? What should we be doing?Why?

Deliver immediate insights into business performance

Deeper analysis of trends and patterns

Foresight to plan and allocate resources

?Planning/ Budgeting

$Predictive Modeling

Content & Trend analysis

Dashboards/ Scorecards

10



A Common Challenge

Business processes designed for:– Low volatility– Slow pace of business

Technology designed for individual productivity - not dynamic, enterprise-wide collaboration

GOALS & STRATEGY

PEOPLE & EXECUTION

SCORECARDS, REPORTS, PLANS

& FORECASTS

GOALS & STRATEGY

PEOPLE & EXECUTION

SCORECARDS, REPORTS, PLANS

& FORECASTS



New version

Illustrative



New version

Update Models



New version

Update Models

Load Actuals

SAP

HR

DW



New version

Update Models

Load Actuals

Distribute Models



New version

Update Models

Load Actuals

Distribute Models

Collect Data

Corporate

BU's



New version

Update Models

Load Actuals

Distribute Models

Collect Data

Aggregate data

Corporate

BU's



New version

Update Models

Load Actuals

Distribute Models

Collect Data

Aggregate data

Report & Analyze



New version

Update Models

Load Actuals

Distribute Models

Collect Data

Aggregate data

Report & Analyze

What-if & Optimize



How do we spend our time?

Source: APQC

Financial Analyst TimeProviding

value-addedanalysis

23% Collecting andvalidatingthe data

47%

Administeringthe process

30%



Organizations are wasting valuable time

MONDAY WEDNESDAY THURSDAYTUESDAY FRIDAY

Illustrative



Spreadsheet, manual processes are holding costs higher

11.259.27

1.89%

1.46%

Spreadsheet,Manual Planning

Environment

AutomatedPlanning

Environment

Cost of Finance as a percent of Revenue FTEs for planning process(per $1B/yr In revenue)

Spreadsheet,Manual Planning

Environment

AutomatedPlanning

Environment

Source: IBM Benchmark Program



More time on Monday

Workflow & Right Participation

Automated Data Interfaces

SAP

HR

DW

Centralized model maintenance



Tuesday looks better as well

Automated reporting

Dynamic What if Analysis



More time for discussion

MONDAY WEDNESDAY THURSDAYTUESDAY FRIDAY



More efficient and effective

Reduce cycle time by up to 70%

Re-allocate analyst time – from 65% collecting/validating data – to 65% creating value-added analysis

Sustain best-practices– Driver, statistical & judgment based– Rolling horizons– Right participation– Right frequency

Improve accountability

Improve forecast reliability



IBM Cognos TM1 Use Cases

Financial Financial Consolidations (The Hartford) Financial Reporting (Viacom) Planning (Bristol Myers Squibb) Driver Based Budgeting (Huntsman) Rolling Forecast (Biovail Pharm.) Risk Analysis (Barclay Card)

Financial Financial Consolidations (The Hartford) Financial Reporting (Viacom) Planning (Bristol Myers Squibb) Driver Based Budgeting (Huntsman) Rolling Forecast (Biovail Pharm.) Risk Analysis (Barclay Card)

Operations Demand Analysis (Scottish & Southern) Inventory Optimization (Lowe’s) Logistics Planning (Lufthansa) Product Profitability (Cadbury Schwepps) Production Planning (GM)

Operations Demand Analysis (Scottish & Southern) Inventory Optimization (Lowe’s) Logistics Planning (Lufthansa) Product Profitability (Cadbury Schwepps) Production Planning (GM)

Workforce Compensation Management (Oxy) Sales Performance Management

(Varicent) Staffing Optimization (Interstate Hotels) Training Certification (Anhueser-Busch)

Workforce Compensation Management (Oxy) Sales Performance Management

(Varicent) Staffing Optimization (Interstate Hotels) Training Certification (Anhueser-Busch)

Customer Retail Sales Analysis (Sainsbury) New Product Planning (SunCorp) Customer Profitability (Citigroup) Customer Churn Analysis (Pelephone)

Customer Retail Sales Analysis (Sainsbury) New Product Planning (SunCorp) Customer Profitability (Citigroup) Customer Churn Analysis (Pelephone)



IBM Cognos TM1

The scalability and flexibility to start with a single planning application and then expand it for use in your entire enterprise

Read/Write at speed of thought for Planning and Budgeting

A flexible modeling environment that requires no programming or traditional IT skills

Centrally-managed business hierarchies, rules and calculations

Blueprints to help provide best-practicereference points and speed up implementation

A choice of interfaces in familiar formats; Microsoft Excel, TM1 Web and a built-in client for managed participation



Unique Value 1: Deploy Easier

User-Driven Design– Maximum leverage of business knowledge– Minimal coding and IT resources– Rapid “Time to Value”

Point-And-Click Development– Data Integration Wizards– Expressive Modeling– Integrated Workflow

Simplicity– One Technology– One Database– One Set of Skills



TM1 Unique Value 2: Deploy Faster

Leverage Excel– Formulas– Formatting– Charting

Leverage the Web– Reach Every User– Zero Footprint– Minimal Training

Empower All Users– Interactive Analysis– Advanced Visualization– Automated Data Entry



Work Interactively– In-memory modeling– Concurrent write then read

Grow Exponentially– Extensible solutions– Mainstream 64-bit hardware

Re-usable Technology– Planning, Analysis, Modelling,

Reporting & more– One skill set– One investment

TM1 Unique Value 3: React Faster



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Capital Project Planning

Expense Planning and Control

Product Profitability Analytics

Integrated Financial Statements

Strategic Finance

Workforce Planning

Assortment Management

Cost Transparency

Sample Optimization

Allocations Planning

Workforce Management

IBM Financial & Operational Analytic SolutionsBuilt with IBM TM1 software

Sales Compensation Planning

Sales Planning & Forecasting

Strategic Investment Management

Financial Planning Scorecard

Store Operations (P&L) Planning

Strategic Promotion & Marketing Planning

Branch Performance

Risk Modeling

Demand Planning

Provider Planning

Customer Profitability

Access these Blueprints at: http://www.ibm.com/cognos/innovationcenter



Banking solutions/accelerators for customer care and insight

• Customer profitability analytics– Increased profitable growth of customer base by 15%-

20% by measuring and identifying customer profitability

– Reduced servicing costs by using predictive analytics to focus attention on most profitable customers

– Create an ideal customer profile using lifetime value models - and migrate existing customers to this profile.

• Relationship pricing for commercial banking– Pricing solution to support daily credit and noncredit

pricing decisions to large and small business banking customers

• Branch Performance– Establishes corporate targets and develops

integrated top down/ bottom up functional and operational plans.

– Provides profitability planning and analysis by product and customer segment using activity-based drivers and rates.

33

Featuring IBM TM1 software



Ondrej BotheIBM Business Analytics – Financial Performance Management Solution Specialist

Planning project experience



Content:

• Concept– Concept of planning tools

– Approach to project

– What is important

• Implementation – from the beginning to the end– Project cycle

• CEE team– Who is who

• References– Planning– Alternative usage of planning tools

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„Successful Planning tools implementation“



Concept:

Business users– Application owned by Business department, not by IT

• IT is responsible for connection to potential data sources• New concept of RESPONSIBILITY• „Modeler and Contributor“

– Easy to use, Easy to change

Cooperation from the beginning– Customer should participate from early start

• Transfer know how• Participate on development• Validate steps• Understand possibilities

Know what is goal– Planning process redesigned – business analysis– Implementation of current planning process into new tool

36

What is important?



Implementation:

„Different users has got different views“

Participants:– Managers

• Detail: Revenue, EBIDTA,…• Approach: Helicopter view• Goal: Maximal revenue

– Planning and Controlling department• Detail: Accounts, Balance sheet, Profit and Lost

statement, Cash Flow• Approach: Accounting point of view• Goal: Easy process, Quick

– Standard users• Detail: Revenue, EBIDTA,…• Approach: Easy to use, not a complicated• Goal: Easy to fulfill

37

For who?

Communication is key for success.



Implementation:

38

How?

– Identification of dimensions, facts, calculation• What should be planned and how

– Identification of data sources• Where are data

– Identification of work flow• Who are participants

– Creation of model• Model design

– Data load• Integration into regular data processes

– Start of planning process

– Planning itself• Contribution of users

– Model redesign• Update of model, based on experienced

Implementation

Regular usage



Implementation:

Specialty of time dimension– Changing of actual during planning

Detail of data– Not to much detail data

Actual and Plan data integration– Where – reporting layer, database, planning tool…– How – relative comparison, absolute comparison

Forecast and Rolling Forecast– Different detail

Work – flow– Top down, bottom up or combination

39

Key problems?Communication is

key for success.

EXECUTIVEMANAGE-

MENT

EXECUTIVEMANAGE-

MENTMARKETINGMARKETING

PRODUCTIONAND

DISTRIBUTION

PRODUCTIONAND

DISTRIBUTION PURCHASINGPURCHASING

TECHNOLOGYIT/R&D

TECHNOLOGYIT/R&D

CUSTOMERSERVICE

CUSTOMERSERVICE

MARKETINGMARKETING SALESSALESSALESSALES

FINANCEFINANCEFINANCEFINANCE

EXECUTIVEMANAGE-

MENT

EXECUTIVEMANAGE-

MENTMARKETINGMARKETING

PRODUCTIONAND

DISTRIBUTION

PRODUCTIONAND

DISTRIBUTION PURCHASINGPURCHASING

HUMANRESOURCES

HUMANRESOURCES

HUMANRESOURCES

HUMANRESOURCES

TECHNOLOGYIT/R&D

TECHNOLOGYIT/R&D

CUSTOMERSERVICE

CUSTOMERSERVICE

SALESSALES

FINANCEFINANCE



• Strategic Finance• Revenue Planning

and Forecasting• Expense Planning

& Control• Workforce

Planning• Capital and

Initiative Planning

TM1 technology

IBM Cognos TM1 A patented 64-bit read-write in-memory OLAP engine that

provides compact data storage and exceptionally fast performance

Model design and data access that presents business information in familiar formats

Ease of use, thanks to a development environment that enables users to create sophisticated applications with no need for programming or traditional IT skills

An intuitive, flexible approach, which enables users to easily express complex, multi-dimensional business rules

Fuses Analysis & Planning together to provide greater accuracy

A component of Cognos Performance Management Platform

Business DriversClose,

Consolidate, and Report

Analyze &Optimize

Plan, Budgeting , and Forecasting

Performance Reporting and Scorecarding



Contribute• Familiar Web & Excel Deployment• Rich Workflow• Enterprise in scope with Application

linkage• Start small and expand enterprise wide• Analysis Embedded in Contribution

Process

Model• Centralized meta-data, data and

business rule definitions • Owned by Office of Finance • Support of Planning Best Practices

• Driver based Planning• Rolling Forecasts

TM1 roles



Workflow Pick lists (driver execution) Undo/Redo feature End User Personalization (Multi pane docking) Multiple Personalized Scenarios based on statistical

base-line forecasts Personalized Hierarchies Color code data changes Charting Drill down Support

IBM Cognos TM1 Managed Contribution



TM1 Architect

Capabilities: Centralized meta-data, data and business

rule definitions Owned by Office of Finance Support of Planning Best Practices

– Statistical & Driver based Planning– Rolling Forecasts

Benefits: Ability to meet the dynamic needs of the

organization Flexible to meet the broad requirements of

financial & operational planning solutions Adapts to your business process Single version of the truth for all planning

processes



Flow example VI.

CREATE CREATE TARGETSTARGETS

& & TEMPLATESTEMPLATES

DISTRIBUTEDISTRIBUTEPLANPLAN

TEMPLATESTEMPLATES

COMPLETE/COMPLETE/DISTRIBUTEDISTRIBUTETEMPLATESTEMPLATES

COMPLETECOMPLETETEMPLATESTEMPLATES

AGGREGATEAGGREGATEPLANSPLANS

SUBMITSUBMITPLANPLAN

ANALYZEANALYZETARGETTARGETVS. PLANVS. PLAN

FINALIZEFINALIZEPLANPLAN

REVISEREVISEPLANPLAN


Q1 ForecastQ1 Forecast




AGGREGATEAGGREGATEPALNSPALNS

SUBMITSUBMITPLANPLAN

?



Work Flow - real example



Data Flow - real example, one department



Data Flow - real example, complex view

CD

R

CD

RC

DR

CD

R

Cur

renc

y



Team:

Ondřej Bothe– BAO solution leader

Tomáš Bernard– Cognos consultant

Martin Pavlík– Informtion Agenda solution leader

Peter Fedoročko– Cognos TM1 consultant

Jan Jurečka– Cognos BI consultant

48

Not only Czech republic, but also CEE regional team also available….

Community of practice:– Ksenija Rusak– Taha Ermis– Klement Koselj



Team:

Summary– Experienced BAO (Business analytics and optimization) consultant– Both technical and business knowledge

Experiences – projects:– FSS planning project

• Complex analysis of planning process– FSS

• Cost allocation implementation in planning tool– Fakultni nemocnice u Svate Anny

• Complex MIS solution

Career history:– IBM– Deloitte RDC– ČSOB

Certification– Cognos TM1 certified developer and analyst– Cognos Planning certified developer

49

Ondřej Bothe



Team:

Summary– Experienced Business Analytics consultant and developer– Strong technical knowledge and industry experience

Experiences – latest projects:– Standard Profil, TR

• Complex planning solution implementation– Rompetrol, RO

• Planning solution implementation– FSS

• Cost allocation implementation – Fakultni nemocnice u Svate Anny, CZ

• Cost allocation implementation• Business Intelligence Environment Integration

Career history:– IBM, Prague, Czech republic – SWG Senior Consultant– Deloitte Service Centre, Prague, Czech republic – Senior Programmer– Continuing Legal Society of BC, Vancouver, Canada – IT Coordinator

Certification– Cognos TM1 certified developer– Cognos TM1 certified data analyst

50

Tomáš Bernard



Team:

Summary– Experineced data integration and data warehousing specialist– Both technical and business knowledge

Experiences – projects:– Generali pojistovna – project of single view customer integrating data from 5 different

insurance systems into one unified client database– Ministry of Interior

• Data cleansing in register of inhabitants– DHL Information Services

• Complex data integration solution, design of solution for cleansing delivery addresses for more then 220 countries where DHL is present

– Fakultni nemocnice u Svate Anny• Complex MIS solution

Career history:– Arbes Technologies

Certification– IBM InfoSphere QualityStage IBM Certified Solution Developer

51

Martin Pavlík



Team:

Summary– Experienced TM1 consultant– Both technical and business knowledge

Experiences – projects:– FSS

• Cost allocation implementation in planning tool

– Fakultni nemocnice u Svate Anny• Complex MIS solution

Career history:– IBM

Certification– Cognos TM1 certified developer

52

Peter Fedoročko

Summary– BI (Business Intelligence) junior consultant– Both technical and business knowledge

Experiences – projects:– Fakultni nemocnice Brno

• Complex MIS solution– Fakultni nemocnice u Svate Anny

• Complex MIS solution– Fortuna

• PoC – Bet reporting

Career history:– IBM

Team:

52

Jan Jurečka



References: FSS - planning project

– Goal:• Analysis of complex planning process

– Project:• Complex analysis over all departments, design

of complex data flow and workflow• Best practices integration into standard

planning processes– Outputs

• Full planning process description• Proposal of best practices implementation into

regular planning process

CDR

CDR

CDR

CDR

Curre

ncy

53

FSS - cost allocation project– Goal:

• Complex cost allocation solution, including methodology

– Project:• Analysis, development and implementation of

complex cost allocation solution

– Outputs• Flexible cost allocation engine covering best

practices, ready for reuse

Main AllocationParameterizationcube

Relations

Drivers

Order

Drivers loadedDrivers calculatedDrivers manualDrivers previous step

Results

Data set I.Data set II.Data set III.Data set …

Tracer (full)

Tracer (Ad-hoc)



References: Fakultní Nemocnice u Svaté Anny

– Goal:• Complex MIS solution

– Project:• Complex delivery• Data warehouse model• ETL• Reporting tools• Cost allocation implementation

– Outputs• Fully implemented MIS system• Economy reporting fully delivered

54



What is Performance management?

Data Collection

Past Future

Automated data

Regular reporting Statistic models

PlanningData collection

What – if analysis

What could be done in planning tool?



Next Steps

How are you running at the moment?

What are you looking to acheive? Any specific goals?

What is important to you?

How can IBM help you? Do you have any expectations?

Timelines?

What actions can we agree on to move forward?



For more information

ibm.com/software/analytics

5757

$

ibm business analytics – banking solutions for financial ... · pdf file... banking...

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