Statement of Direction How to handle business decisions in the future

Martin Richmond-Coggan FCMAEMEA Lead Financial Performance Management

Trusted Information

Actionable Insights

SmarterDecisions

BetterOutcomes

According to the 2010 IBM CFO study, CFO’s are taking a more prominent role in enterprise decision making

Advisor (e.g., analysis and insight)Decision Maker (e.g., create a plan)

Enterprise cost reduction management

Selection of key performance indicators

Capital asset management

Risk management

Prioritization of resource allocation

Strategic revenue planning

Business model innovation/ reshaping

Information management strategy

Elevated Role of FinanceRole of Finance in Driving Decisions Across the Enterprise

45%

47%

34%

41%

53%

54%

59%

39%

44%

41%

50%

42%

26%

24%

19%

33%

Over 70% of CFOs believe they have an advisory or decision making role on the Enterprise agenda.

Source: 2010 IBM Global CFO study

However, Finance needs to improve effectiveness on the enterprise agenda

34%

28%

26%

21%

16%

9%

28%

35%

23%

Core Finance

EnterpriseFocused

CFO Agenda: Importance vs. Effectiveness

22

GAP

11

33

Importance

Effectiveness

Driving integration of information across the enterpriseProviding inputs into

enterprise strategySupporting / managing / mitigating enterprise risk

Driving enterprise cost reduction

Strengthening compliance programs and internal controls

Driving Finance functioncost reduction

Executing continuous Finance process improvements

Developing your people in the Finance organization

Measuring / monitoring business performance

RANK

0% 20% 40% 60% 80% 100%Source: 2010 IBM Global CFO study

The 2010 IBM CFO study identifies four Finance profiles segmented by efficiency and business insight

Finance Efficiency

Business InsightLow High

Low

High

23%

12%

32%

33%

Finance Efficiency and Business Insight

Corporate philosophy of information standards

Standard Chart of Accounts

Standard processes

Standard data definitions

Operational planning and forecasting capability

Financetalent

development

Common planning platform

Source: 2010 IBM Global CFO study

Finance continues to struggle with structural complexity due to issues related to automation and standards

Efficiency Challenges

Source: 2010 IBM Global CFO study

Finance continues to spend nearly 50% of time on transactional activities

Over 25% lack the necessary common data

definitions and processes

Nearly 40% of enterprises produce financial metrics

manually

Over 35% lack a common reporting platform

The majority of enterprises are not able to effectively deliver business insights

Business Insight Challenges

Source: 2010 IBM Global CFO study

44% are poor to average at anticipating

external forces

Over 50% manually producing operational

metrics

Nearly 50% lacka common

planning platform 55% not satisfied withtheir operational planning

and forecastinganalytical capability

The study revealed the three most prevalent things companies with higher Business Insight have done to improve

Business Insight AcceleratorsAutomate Production of

Operational Metrics

73%

57%

Financeorganizationswith strongbusinessinsight

All otherenterprises

FinancialMetrics

28% more

61%

43%

Financeorganizationswith strongbusinessinsight

All otherenterprises

OperationalMetrics

42% more

53%

35%

Financeorganizations withstrong business

insight

All other enterprises

51% more

Establish Non-Financial Data Standards

66% improvement in satisfaction with operational

planning and forecasting analytical capability

Automate Production of Financial Metrics

Source: 2010 IBM Global CFO study

Value Integrators implement a common reporting platform and a common planning platform to a greater extent

Technology: Applications Rationalization

Source: 2010 IBM Global CFO study

85%

79%

65%

46%

65%

65%

46%

27%

Common reportingplatform

Commonplanningplatform

Value Integrator Disciplined Operator Constrained Advisor Scorekeeper

Advancing analytical capabilities improves the Value Integrator’s effectiveness against the #1 CFO agenda priority – ‘providing inputs into enterprise strategy’

Evolution of Analytics and ValueIntegrator’s Effectiveness in

Providing inputs into Enterprise Strategy

ANALYTICAL CAPABILITY

E F

F E

C T

I V

E N

E S

S

OperationalPlanning andForecasting

ScenarioPlanning

PredictiveAnalytics

+65%

+75%+89%

Source: 2010 IBM Global CFO study

Risk has never been a bigger challenge

Supporting / managing / mitigating enterprise risk Source: 2010 IBM Global CFO studySource: 2010 IBM Global CFO study

Integration – Key to Performance Management

Source: Gartner - Top Four CPM Processes for 2009 to 2014 (Sep09)

IBM Cognos solutions – Enabling Finance to drive PM

Consolidation (Consolidation System)

Reporting(Consolidation System)

Reporting(Reporting Systems)

CLOSECLOSE CONSOLIDATECONSOLIDATE REPORTREPORT

• Data Input & Changes

• Collect From Subsidiaries

Closing Process(Consolidation System)

• Close Sub Ledgers and Systems

• Account Reconciliation

• Intercompany transactions

• Prepare journal entries: accruals& adjustments

Closing Process(Accounting Processes)

Compliance & Control

• Create single currencies

• Minority interest holdings

• Intercompany eliminations

• Group closing adj.

• Management adjustments

• Allocations

• Advancedformula calculations

Internal controls &compliance

Consolidation (Consolidation System)

Reporting(Various – incl. Excel

and Word)

Reporting(Reporting Systems)

External Reporting

• Financial reporting adjs

• Cash flow & other preparation

• Financial statement prep

• Publish quarterly, annual reports

• Electronic –XBRL

Internal Reporting

• Management/ self-service

• BI

DAY-TO-DAY

DAY-TO-DAY

Day-to-day analysis of ledgers/ transactions: G/L, AP, AR

Examples:

• Ad-hoc analysis• Drill through to

transactions• Day-to-day

performance• Invoice activity• Risk measures• Efficiency

tracking

Operational/ Finance Analysis

Operational

Day-to-Day First Mile Consolidation Wider Enterprise

Last Mile

• Analytics

• Forecasting

• Budgeting

• Scenario Modeling

• Predictive Analytics

• Risk Management/ Stress-Testing

• Strategy Planning

Analytics/Planning

Analytics/ Planning

ANALYTICS/ PLANNING

ANALYTICS/ PLANNING • IBM Cognos BI/ FPADay-to -day

Wider Enterprise Reporting

• IBM Cognos TM1/ BI• Clarity FSR

Analytics/ Planning/ Modelling

• IBM Cognos TM1• SPSS• IBM Cognos BI

• IBM Cognos Controller

First Mile

• Clarity FSR• TM1• BI

Last Mile

• IBM Cognos Controller Consolid’n

Strategic

A Historical Perspective…

Late 2008Late 2008

IBM Cognos Financial Performance Management Core Values

A number of core values have shaped, and will continue to shape, our innovation:– A complete solution that enables finance to create strategy, plan,

monitor, analyze and control the business– A strong balance of ease-of-use, flexibility, and manageability for IT

and Finance administrators– An adaptive, extensible solution that can respond quickly to changing

business dynamics– An integral link between financial and operational systems, to align

and add value to the core business– A strong environment for compliance and security to safeguard your

financial processes and data assets.

Solutions

IBM Cognos Financial Performance Management solutions today, and in the future, focus on four primary areas: – Enterprise Planning – Link financial and operational plans – Financial Analytics – Perform financial analytics, profitability and cost

analysis and allocation modeling– Financial Management and Control – Consolidate and report legal,

management and statutory financials– Strategy Management and Performance Reporting – Collaborate and

communicate strategy through standard reports and dashboards as well as ad-hoc reporting and analysis

Enterprise Planning

Financial Management &

Control

Strategy & Performance

ReportingFinancial Analytics

CommonUser Experience

Data Infrastructure

Next Major Milestone: Unified FPM System

Business Modeling• Dimension Management• Data Orchestration• Cube Building• Business Rules

Web Rich Client Web Thin Client Excel / Office Business Intelligence

Relational Repository - RDBMS• Deployment Management • Transactional Data• Audit functions• Model & Object persistence • Application Content

OLAP Repository – TM1• Multi-dimensional • Complex business logic• High data scalability• In-memory architecture, real-time

calculation and reporting • Unicode

Solutions

Delivery

Process Management• Delegation & Workflow• Deployment Controls• Contribution & Signoff• Event Management

Universal Capability• Reporting, Analysis & Dashbds• Portal & Content Mgmt• Security• Data & Metadata Access

FPM Open API ServicesExtensibleProgramInterface

Cognos 10 Performance Management Services

Product Direction is subject to change. All forward-looking statements are subject to the IBM Cognos Safe Harbor Statement.

Enabling Full Financial Transformation

TM1 OLAP64-bit in-MemoryHigh PerformanceAnalytic & Planning Server

Budgeting & Target Setting(Bottom-up, high participation, workflow)

Group and Country Financial Planning

(Top-down, driver-based, collaborative)

Forecast & Estimate(Iterative, scenarios, sandboxing)

Legal Consolidation Management &

Statutory Reporting

High performance applications requiring real-time contribution (e.g. planning, profitability analytics, scorecarding…)

High performance in-memory cache for Business Intelligence (e.g.reporting, analysis, dashboarding…)

Financial Performance ManagementStrong Product Advances Drive New Opportunity

IBM Cognos TM1 • Personal Scenarios• Contribution and Workflow

IBM Cognos 8 Controller• Enhanced Global Consolidation• Extended Financial Analytics

(w/TM1)

• Extended collaborative Planning for TM1 customers

• Analytic Server (PVU basis) role for “What-if” analyticsfor BI and Cognos Planning Customers

• Extended collaborative Planning for TM1 customers

• Analytic Server (PVU basis) role for “What-if” analyticsfor BI and Cognos Planning Customers

IBM Cognos 8 BV• Enhanced business driven user

interface & collaboration • Relational, MDM Adapters

19

• Extended FPM Process in Controller prospects / customers with TM1 (planning, analytics, etc)

• High performing data source for financial reporting with BI

• Extended FPM Process in Controller prospects / customers with TM1 (planning, analytics, etc)

• High performing data source for financial reporting with BI

• Extended analytics and performance management dimensional governance

• Improved appeal in larger information governancecontext

• Extended analytics and performance management dimensional governance

• Improved appeal in larger information governancecontext

An exceptional business analytics partner

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