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BSC/ BI presentation

Controllersmeeting January 2012
by

Milou Huijs

on 14 November 2012

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Transcript of BSC/ BI presentation

Balanced scorecards &
business intelligence Explain the relation between strategy measurement, standard reporting and BI concepts Goal of the day History 7 Februari 2012

Presentation by:
Mirjam van der Hoeven
Charlotte Reiding
Nicole Wiggers-Nederpel Defenition and trends Balanced Score Card Wrap-up Over time the focus has shifted from traditional indicators systems to balanced performance measurement systems with enhanced stakeholder focus Relation BSC & BI Source: Financial Statement Close Process Methodology, FSC02 – FSCP Scope, Components and Leading Practices, Pg 3., 2009; Process Design session conducted with John Hatcher, Matt Pagac, Jay Buser, Janelle Gruneisen, Dec. 2009; Industry Overlay Sessions with Andrew Kaven, Mike Runfola, Anita Sahai, and Mike Avery, June 2010 Reporting components Norton & Kaplan’s BSC definition is the following:

“At the highest conceptual level, the Balanced Scorecard is a framework that helps organizations translate strategy into operational objectives that drive both behavior and performance” (BSCol 2000) Link strategy to four building blocks
in order to extrapolate actionable plans Basics of BSC Link organization’s strategy to its performance and execution.
basis for Performance Measurement and reminds management which activities are vital to achieving success
The scorecard is split in financial and non-financial elements; non-financial elements being customer satisfaction, internal business process, learning and growth
Driven by the depth of understanding of all managers on how the organization should get close to its customers/goals
Provides integration and collaboration across all functions
Converts key elements of the departmental process and strategic plans into actionable work plans
These plans can be, and should be, periodically adjusted for business volatility A scorecard development process should start with a basic SIPOC (Supplier, Input, Process, Output, Customer) analysis to identify the customer and inputs BSC Implementation The main leading practices regard clarity and alignment BSC Leading practices Have a clear and constantly communicated sponsorship

Cleary defined strategy and articulate the strategy through strategy maps

Develop balanced and strategically aligned measures for each strategic objective

Align reward systems with strategy and measures

Implement supporting technology to deliver the scorecards

Cascade the strategy and measures down the organization These maps are useful in MT discussions about what objectives to choose, and subsequently to support discussion of the actual performance achieved. Strategy maps Examples of Consistent build up of kpi tree KPI KPI KPI KPI KPI (cc) photo by theaucitron on Flickr (cc) photo by theaucitron on Flickr P&L Sales Costs Volumes Prices Outcome metrics: the "few" measures of success for the company's strategies
Business driver metrics: the internal and external factors that have a significant and direct influence on business outcome metrics The art of Metrics There are two main types of metrics;
Driver and outcome metrics Driver & outcome metrics BU and Function drivers should include relevant cascaded Corporate drivers KPI Tree Metrics and drivers are utilized to develop a Metric Library Template to assist with consistent governance, data collection processes, business rules and calculations Metric Library Management reporting should include scorecards, standard and ad-hoc performance reports – each with a distinct purpose Management reporting 1919 2001 1989 DuPont System of financial control Organizational Performance Measurement Balanced Scorecard 1992 Performance Pyramid System Performance Measurement Matrix Indicators system ZVEI 1969 1991 Traditional indicators system Performance measurement (balanced) Focus on stakeholder The Performance Pyramid (Cross & Lynch) BSC and BI are closely linked. Combined, they make up for a large part of managment reporting Link between BSC and BI Reference architecture Defining reporting requirements is one of the first steps necessary to drive process improvements and data standardization Goal of center of excellence is to optimize BI Trend towards CoE People Reporting & analysis Policy Data &
Hierarchy Process & controls Systems & functionality Centralization of Data - Data needs to be centralized and linked between key Finance systems (i.e. - source systems, GL, consolidation, & data warehouse, etc.)
Transparency of Data - data need to contain more detail, have drill down capability at multiple levels (i.e. - activity, product, history, trade level) and include detailed commentary where applicable to support inquires
Ability to keep historical data structures and hierarchies is desirable to facilitate historical queries of data (using old structures and rollups)
Getting source systems data right first time to flow through accurately into various reports Implementation of new applications such as a driver-based planning, budgeting and forecasting tool, automated reconciliation tools and an allocations tool
12 month rolling forecast - supported by 15 months of financial data
Use of multiple hierarchies (region, country, T code) and SEC line item categories
Automate distribution of outputs such as plans, budgets and revisions
Multi GAAP and multi dimensional reporting capability
Focus on key performance measures such as growth, sales, income expense drivers, etc.
Automated interfaces to source systems required to eliminate manual effort and make data easily available via drill down functionality
Integration of systems such as consolidation and management reporting tool or cost allocations and Planning, Budgeting and Forecasting tool
Implementation of automated workflow and exception management
Implementation of Intercompany functionality Clearly defined roles and responsibilities, ie distinction in roles and skills sets between those responsible for the production of management reporting and those responsible for analysis and usage
Planning, Budgeting & Forecasting process managed centrally, however significant input from BU heads via business partnering model
Training requirements for new Planning, Budgeting and Forecasting systems and processes for staff with and outside of Finance. Develop a reporting strategy to deliver information to judge past performance, predict future and drive decisions that are more effective
Create accountability in the allocation process and hold corporate or other overhead cost centers responsible for their controllable expenses and budgets
View planning and forecasting as a continuous, iterative process to guide business decision-making, not as a once-a-year administrative exercise
Utilize common / standardized timelines and assumptions which are clearly communicated to the businesses Local management reporting needs to be aligned to group reporting (layout, content)
Action plans created to support the delivery of the Plan, Budget or Forecast
Clearly defined cost allocations process and methodology including allocation drivers
Regular update of cost allocations drivers
Incorporate cost allocations process into financial close process, consider running allocations in advance of period end
Variance analysis of allocated vs. actual cost
Ability to measure performance of the Finance function (KPIs) Standardized reporting formats and outputs (i.e. - Group and Local Reporting)
Increased time spent on analysis of results and decision support and a reduction in time spent on report production
Development of KPI Reporting It enables to steer more timely to-wards meeting strategic objectives Why a BSC? The upward commitment by each level of the firm to meet/exceed an agreed set of performance measures that are aligned. Performance contracts Sounds easy making dashboard and scorecards
based on IT tooling, however.. BI is the capability to capture, transform and report data into
valuable information to enable decision makers to make fact-
based, objective, actionable decisions. Today we will explain the relation between:
- strategy measurement by tools such as BSC,
- link this to standard reporting
- supported by BI concepts
- and highlight practicalities based on SNS REAAL experience More about BI Performance management design is the main role for the business partner Business partner Fictieve cijfers Fictieve cijfers
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