April 23, 2014

Outside-In Planning: The growing importance of external Big Data

Ashmi Chokshi

Financial and operational planning activities traditionally depend upon information that comes from within the company. Strategic plans, budgets and forecasts utilize a variety of data. This includes data from sales, workforce and facilities expenses, other general ledger (GL) data, and customer, product and supplier information.

What’s often missed, however, is external data.  Some types of external data are considered static (e.g. global drivers), while some (e.g. competitor information) are altogether missed when plans are created. But external factors can play a big role in the success and accuracy of any plan.  Because relevant and time-sensitive data is readily available or being continuously generated outside the walls of the organization, ignoring such data can lead to major strategic gaps in planning and performance analysis.

Consider the following examples of financial and operational planning processes where external data has significant impact, but may be insufficiently considered:

  • Traditional three-year or five-year strategic planning activities make assumptions about external factors such as prices of commodities (sugar, electricity, gasoline) and currency exchange rates. These assumptions are not updated frequently. Yet updated commodity prices are available quarterly from the World Bank and exchange rate forecasts are readily available. Basing assumptions on outdated commodity pricing or incorrect exchange rates leads to inaccurate plans and is completely avoidable.
  • If a sudden drop in competitor prices forces a company to slash its own product prices, this can have a significant impact on achieving a sales forecast or evaluating current results against historical sales performance. In most plans and forecasts, however, competitor pricing is a static input.
  • Promotion planning can benefit greatly from mining social media (Twitter, Yelp, Facebook, etc.) for product or brand references, which can be used to identify new promotional opportunities or inform a plan for future campaigns. However, few companies can easily tie back social media insights into their promotion planning process.

There are several reasons, which contribute to creating the current “norm,” where external data is mainly used as static inputs or not at all. Legacy analytics and performance management solutions traditionally made it difficult for business users to easily access and use external data. Maintaining consistent, accurate and clean internal data has itself been a difficult task! Also, a lot of external data is unstructured, and correlating structured and unstructured data has until recently been a difficult technology challenge. All these factors can corrupt the quality and accuracy of financial and operational plans.

With new technologies enabling easier access to real-time data, and a pressing business environment that requires constant awareness of external factors, enterprises now need to reimagine their planning solutions. Cloud-first planning and analytic solutions are a perfect way to address this challenge:

  • They have the elasticity to scale to large volumes of internal and external data.
  • If they are built with Big Data in mind, they can leverage technologies such as Hadoop/HDFS and real-time processing with in-memory data analysis techniques. These techniques can efficiently correlate structured and unstructured data.
  • They can take advantage of the analytical context of the planning process. Due to the proliferation of external data, context becomes both more accessible and even more critical, and these solutions are easily able to leverage the most relevant data from within the abundant volumes available.

Enterprises are quickly realizing the importance of making planning and performance analysis a strategic activity. CEOs are demanding both short- and long-term planning horizons, and they expect the kind of flexibility that can only come from continuous planning.   By opening the door to contextual external data and solutions that allow enterprises to make easy use of it for planning and analysis, companies can improve the accuracy and quality of plans and forecasts.

April 10, 2014

My thoughts from this week’s FP&A for High-Tech Summit

Colby Moosman

On Tuesday I was in San Francisco addressing an audience of finance executives at The FP&A for High-Tech Summit, a two-day conference designed to address the unique challenges of financial planning and analysis in Silicon Valley. The tech industry is a distinct creature. I say this having served as a finance executive for one of the nation’s biggest homebuilders and one of the world’s largest airlines – industries with substantial fixed asset bases and typically slow growth. But, what businesses in these industries have in common is the same critical focus on strategic planning and operational analysis to drive performance.

Before I jump in, I’d like to thank the FP&A for High-Tech Summit for a great event and for having me speak among a great lineup of speakers. Tidemark was also proud to serve as a Silver Sponsor of this week’s event.

If you weren’t able to attend, let me provide a recap. I spent about 20 minutes on a discussion that I called “The Next Generation of FP&A.” I started with a real-world example of where a high-customer-volume company (+200,000 customer interactions every day) was crippled by its inability to really know anything of substance about its customers. All of the customer data was locked away in legacy transaction systems. Nobody could get to the data to analyze it, and so this company had practically no understanding of customer preferences, buying patterns, loyalty… things that might interest you as a business manager!

The solution at the time was to bring in a top-tier consulting group to access the data and develop an analysis that provided some customer insights to executives. It took a small army of consultants almost a year to come up with conclusions, and then another year to implement the findings into the company’s products. That’s two years before a single customer was impacted by the study. And if conditions warranted a refresh of the analysis? That’d be more time lost and more money spent.

Timeframes like this are unacceptable in today’s business environment.  Can you imagine running your company based on your understanding of the business environment two years ago? Last year? Last quarter? Even month-old data seems stale in many of our businesses today.

What I offered the audience was a look into the future and the next generation of FP&A solutions. In my view, there are three fundamental pillars: cloud, mobile and collaboration. Everybody is talking about these, but reconsider them in light of managing your business. In my talk, I described the advantages of approaching business management based on 1) the power and flexibility of the cloud via real-time access to unlimited data volumes and high-speed (i.e. in-memory) calculations; 2) the mobile enablement that puts true performance-impacting management tools in the hands of the people making the frontline decisions via easy-to-use apps; and 3) the world of opportunity that emerges as cloud and mobile intersect to link corporate performance management and the frontline on a real-time basis.  Imagine frontline people (e.g. sales, production managers) making decisions based on profitability!  Imagine having a real-time read on your financial and operational forecast!

Those days are here. As finance professionals, our challenge is to lead the team to the best decisions we can with the information at hand. Our information is about to get a whole lot better.

April 2, 2014

A Big Week for Tidemark at Workday Rising Europe

Stephen Rituper

It’s been a quick but exciting and productive trip to London for the Tidemark team at Workday Rising Europe. First, congratulations to Workday on a great event. Tidemark was a Silver Sponsor, and our role in the event afforded us some wonderful opportunities to meet with Workday sales and product team members, and to make many new connections. It’s always exciting to meet with new people and learn about challenges that Tidemark can help solve.

One highlight: the Tuesday Super Session, where Workday presented a message of a unified platform between finance and HR.  Tidemark complements both sides of the Workday house by extending capability in budgeting, forecasting and planning. One of the key takeaways of this session was the message that cloud- and mobile-first solutions – designed expressly for cloud deliver and access on any mobile device – represent the future for the enterprise – a message that should sound very familiar to Tidemark customers.

Tidemark Financial Consolidation App and Expansion into Europe

Tidemark’s own highlight was today’s sneak peek into our Spring ’14 Release featuring the new Financial Consolidation App, along with our expansion into the European market.

Tidemark is heading into Europe with an initial presence in the UK, France, Germany and Benelux, as well as working with a growing ecosystem of global partners. Turns out we didn’t just come to Europe this week to visit; we’re here to stay.

Tidemark’s Product Manager for Consolidation Apps Jerome Cukier led an exciting session on Financial Consolidation for the Modern World, featuring the new Tidemark Financial Consolidation App, which has taken the traditional consolidation process and turned it upside down and inside out. The new app transforms consolidation from a laborious, endlessly iterative process involving just a few group controllers into a collaborative experience that engages stakeholders throughout the organization, captures and keeps all crucial contextual information, and updates consolidation data in real time. This application allows group controllers and executives to not only see consolidated data, but also drive context within analytic processes and collaborative workflows so that their organizations can focus on making data-driven decisions on what’s important to the business.

As Workday Rising Europe attendees discovered this week, there’s a better way to approach business planning and analytics.  Now it’s up to us to make sure the rest of Europe makes the same discovery.

March 6, 2014

The Death of the Business Intelligence Competency Center – The Boom of Cloud Analytics

Guest Blog

The following is a guest blog post by Darren Cunningham, VP of Marketing at SnapLogic

The Business Intelligence Competency Center (BICC) is a long-established concept in the world of analytics. The BICC is meant to encourage collaboration around which tools to use for different use cases. The idea is that a physical or virtual team within the business (primarily IT) is formed to establish and enforce standards, SLAs, and governance policies. A key theme has always been about enabling some degree of self-service when it comes to data access and analysis without losing IT control.

But then along came cloud computing, and more specifically software as a service (SaaS). Along came No Software and The Subscription Economy.

Fast-forward to today and the pundits are calling for the decentralization of IT. Shadow IT is out of the closet and it’s no longer seen as such a scary idea. It is now the norm for best-of-breed SaaS applications to be purchased and implemented by the line of business and IT organizations have seen bring your own device (BYOD) evolve to bring your own cloud.

So if decentralization is now an IT mandate not an option, what is the future of the BICC? Is it dead or must it simply be re-imagined in the social, mobile, analytics, and cloud (SMAC) era?

Here are a few suggestions for the BICC to regain relevance:

1)   Focus on analytical innovation over standardization.

2)   Prioritize speed of information delivery and insight over governance and control.

3)   Accept the inevitability of the cloud and embrace it.

4)   Empower “citizen integrators” with self-service tooling.

5)   Drop the name BI and become the Analytics Competency Center (ACC) or Analytics Center of Excellence (ACOE).

I’m looking forward to discussing the future of the BICC and analytics in general with Howard Dresner and Tidemark’s Phil Wilmington on March 19th. We’re hosting an interactive webinar titled, “How a Modern Approach to Analytics Drives Success in the Enterprise” that will focus on 3 key enablers of business intelligence:

  • Cloud to enable speed and big data management
  • Collaboration and in context analysis to drive value
  • Mobile-first design for agility

I hope you can make it.

February 20, 2014

A Change in Plan

Christian Gheorghe

“I love it when a plan comes together.”               

- Colonel John “Hannibal” Smith 

CEOs don’t plan the way they used to. They can’t.  Business today moves too fast, which makes adapting and pivoting in real time the new way to work.

Not long ago, it was typical for a company lock down a specific time horizon for business planning. For some, it was a year. For others, three years or more. It made sense; some companies are primarily cash-flow driven and have no choice but to operate by short-term plans, and others are more defined by long-term investments and R&D projects.

But as the 17th Annual PwC Annual Global CEO Survey reveals, at least half of all CEOs are thinking that, no matter what their current planning time horizon happens to be, they’d be better off with a different one.

As the graph shows, many CEOs seem to believe their planning horizons are in need of some adjusting. PwC surveyed more than 1,300 company leaders from 68 countries. Twelve percent of those CEOs operate on a one-year planning timeframe – but of those, 70 percent would like to increase their horizons to three, five or more than five years. And of the 51 percent of chief executives whose plans look three years into the future, more than a third (38 percent) want to increase their planning timeframe to two or more years. About one in four of all CEOs surveyed (24 percent) head companies that operate on a five-year plan, but 19 percent of them would like to shrink that timeframe down to one or three years.

Is this just a case of the grass always being greener? I don’t think so, and neither does PwC. In presenting its CEO Survey data, PwC suggests CEOs can meet the demands of an always-changing business environment by adopting multiple planning horizons.  That isn’t as easy as it sounds, since it requires the ability to balance short- and long-term planning. Public companies in particular are expected to plan three to five years out. But they also must perform quarterly. They are punished mightily by investors if they fail to do either.

Operating on multiple planning horizons isn’t impossible, but for many companies, it will require the adoption of modern financial planning and analytics solutions that are capable of keeping up with the pace of business today and anticipating the challenges of tomorrow. So what should CEOs and CFOs look for in a planning platform?

  • Agility. A responsive, nimble organization requires continuous forecasting based on real-time data.
  • Ubiquity. You can’t be agile if a small handful of financial analysts are manually feeding the plan with information they’ve painstakingly collected from the edges of the organization. The latest financial planning solutions are intuitive enough so any stakeholder in the company can input forecasts or actuals for sales orders, headcount, or capital and operating expenses – or run what-if scenarios to analyze the potential implications of their actions. This accelerates collaborative planning and produces plans that are relevant in the near term or years from now.
  • Mobility. Want to ensure your plan includes the latest, more accurate information? Make sure your planning solution works with the mobile devices your employees carry all day, every day.
  • Scalability. Cloud-first platforms can easily scale as organizations increase their sources of structured and unstructured data, or broaden the use of their planning platform to more users.

I read the PwC survey as a wake-up call to CFOs: If your boss thinks your company’s planning horizon is wrong, are you making the changes necessary to change it?  As the PwC report itself states: “The future has an unfortunate way of sidelining those who simply wait and see.”