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© 2014 IBM CorporationIBM Confidential

Realizing Benefits While Transforming Governments and Business – Conflicting Priorities?

Of Course!

IBM Confidential © 2014 IBM Corporation1 @itsbethbell


Presentation Objectives

Challenges facing Finance professionals

The journey for creating value

Finance Transformation in Practice

–IBM’s Transformation Story

–Public Sector Finance Transformation

Next Steps – Your Action Plan

Lessons learned


We have been there… IBM’s Finance Transformation


We have been there… IBM’s Finance Transformation

But… more

about this

later


The Challenges Facing Government CFOs - Does this sound familiar?

The Finance organization needs to

adjust to a budget cutting culture vs a

culture of 10-15 yrs of growth.

Demand for transparency is

increasing, but it brings about

other problems.

It will be necessary to change the

present rigid human resources structure

to address the future challenges.

Regulatory concerns are the

number one important external

forces.

We expect an increased mandate and

budget cuts - we will be expected to

do more for less.

Canadian CFO Canadian CFO

Spanish CFO US CFO

UK CFO

We need to focus on using

technology to deliver services and

drive costs down.

Australian CFO

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


Finance executives report that almost all aspects of their role have increased in importance over the past three years

The 2013 CFO study found that finance executives are increasingly focused on:

– Measuring and monitoring their company’s performance

– Providing strategic input

– Finding and developing people with the right financial skills

– Managing enterprise risk

– Integrating different sources of information to generate meaningful business insights

Areas of importance–historical

Measure/monitor business performance

Provide inputs into enterprise strategy

Develop talent in the financial organization

Optimize planning, budgeting and forecasting

Drive enterprise cost reduction

Support/manage/mitigate enterprise risk

Drive integration of information across the enterprise

Execute continuous finance process improvements

Strengthen compliance programs/internal controls

Manage investor/stakeholder relations

Process transactions

60%

50% 80%70% 100%

90%

Importance 2010 Importance 2013


The CFO Study identified 4 Finance profiles - Where do you fit?

Value

Integrator

Performance optimization

Predictive insights

Enterprise risk mgmt

Business decision making

Disciplined

Operator

Finance operations focused

Information provision

Performance Interpretation

Scorekeeper

Data recording

Controllership

Multiple version of the “truth”

Constrained

Advisor

Analytics focused

Sub-optimal execution

Fragmented date

Low

High

High

Business InsightOperational planning and forecasting capability

Finance talent development

Common planning platform

Finance EfficiencyEnterprise-wide information standards

Standard financial chart of accounts

Common finance data definitions

Common data governance

Standard/common finance processes


Where do global governments fit?

Value

Integrator

Government

22%

Disciplined

Operator

Government

39%

Scorekeeper

Government

31%

Constrained

Advisor

Government

8%

Low

High

High

Business InsightOperational planning and forecasting capability

Finance talent development

Common planning platform

Finance EfficiencyEnterprise-wide information standards

Standard financial chart of accounts

Common finance data definitions

Common data governance

Standard/common finance processes


Three key themes emerged from examining the four profiles

Delivering efficiency through standards

matters more than ever

Providing business insight drives

performance improvement beyond

Finance

The greatest rewards come from doing

both well


1

2

3


1. Delivering efficiency through standards matters more than ever


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

Nearly 40%of Enterprises

produce financial

metrics manually

(50% in Canada)

Over 35%lack a common

reporting platform

Finance continues

to spend nearly

50% of time

on transactional

activities

Over 25% lack the necessary

common data

definitions and

processes


2. Providing business insight drives performance improvement beyond Finance

Rear View Forward-Looking View

What happened?

How many, how often?

Where exactly is the

problem?

Why is this happening?

What actions are

needed?

What will happen next?

What if these trends

continue?

What are the risks or

opportunities?

Key

Business

Questions

Examples

of Business

Insight

Current View

Balance sheet, gain and loss,

and cash flow statements

Revenue and cost variance

analysis

Customer, product and

market cost

Spend optimization

Working capital analysis

Market, customer and

channel pricing

Sales and supply chain

effectiveness

Cash forecasting

Scenario-based planning and

forecasting

Strategic investment decision

support

Volatility and risk-based

predictive and behavioral

modeling

But what is Business Insight?



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

“I live in a data-

free zone.”CFO, Canadian Healthcare

Provider


55% not satisfied with their operational planning

and forecasting analytical capability (60% in Canada)

44% are poor to average at anticipating

external forces (55% in Canada)

53% manually producing operational metrics

(67% in Canada)

Almost 50% lack a common planning

platform (61% in Canada)


3. The greatest rewards come from doing both well Be a Value Integrator

Finance Efficiency + Business Insight = Outperformance

You are a Value Integrator if you:

• Have implemented common

process and data standards

across your organization

• Depend on reliable, integrated

information as your springboard

• Perform proactive analysis to

drive future improvements

• Have developed the talent,

technology and analytical

capabilities to proactively

uncover and communicate

business insight.


But how...What is finance’s role in creating value for the organization?

Demands on Finance

Provide performance

insight

Help drive enterprise

cost reduction

Support risk

management

Provide transparency

and accountability

Finance Capabilities

Needed

Integrate information

Partner in strategy and

value creation

Finance Efficiency

Business Insight

In order to provide greater

insight and more value to

the organization and to the

public

Finance organizations

need to be more agile,

efficient and effective

Finance professionals

must innovate,

transform and seek

continuous renewal

Finance must align to the

business objectives and

look for innovative ways

to support them

Creating Value


Create Value By Operating More Efficiently

Simplify and

Standardize

Forge seamless links between

the different parts of the

business

Common technologies and

processes

Develop common financial data definitions,

processes and reporting procedures to deliver a

single version of truth

Automate wherever possible

Use a shared services center

Encourage a culture of continuous improvement

Create a single global operating

model

Establish centers of excellence to

ensure a consistent approach

and generate economies of scale

Go

Enterprise-

Wide

Integrate


Create Value By Generating Deeper Business Insight

Integrate Data

Use advanced analytical

techniques to predict future

trends

Analyzing all the variables

Analyze resulting options

Integrate financial and operational data

Employ common analytical platforms

Align your data platform with

your business priorities

Embed analytics in every process

Automate recurring analytical

processes

Analyze

Data Faster

Predict the

Future


Don’t forget about the people – Increasing value creation will result in changing focus of Finance’s job requirements and skills

Skills need to evolve from Core to Consultative

Skills

Str

ate

gic

In

sig

ht

Quantitative Qualitative

Core Leadership

ConsultativeAnalytical

Pulling

Reports

Performing

Ledger entries

Accounting

Principles

Reconciling

Data

Project

Management

Building Trust

Data Modelling

Trend Analysis

Forecasting

Statistical

Techniques

Packaging &

Presenting

Negotiating

Problem

Solving

Listening

Business

Acumen

Partnership

InfluencingRisk Management

Invoicing

Financial

Concepts

Insight

Generation

Change

Management

Scenario

analysis

Business

Ethics

Persuasive

Communication

Competence / Skill Level

Trusted Advisor

Gather Data – What happened?

Administrative

Report – How many, how often, where?

Analysis – Why is this happening?

PredictiveWhat will happen next? –

What‘s the best that can happen? –

Co

mp

eti

tiv

e A

dva

nta

ge


Value Creation in Practice

No transformation story is complete without talking about our own


What we did?Why?

IBM Finance was highly decentralized

14K finance employees was 2 times competition

High percent of time spent on administrative

tasks

Lack of integration and unique measurement

systems led to inconsistent data

Finance viewed as low value add

Case Study: IBM Finance Transformation

Setting the stage for IBM’s Finance Transformation

Single source of truth – one ledger; one financial

data warehouse; common definitions

Introduced enterprise-wide processes – owners

responsible for technology and data quality

Created Centers of Excellence providing

financial skills and standardized support


The Finance technology architecture was a maze of financial systems

IBM Financial systems built on commonality,

in support of an integrated management system

Became a Disciplined

Operator

Drove a 3-prong approach:

process, data, IT

Formed 8 process teams,

driven by external

benchmarks and best

practices

Created common chart of

accounts, information

warehouse and productivity

workbench

Standardized controls,

reduced data centers and

key applications

What we did

Financial

Planning

Corporate

WhseGeo

Whse

Acctg

Whse

Ledger

Employee

Disbursements

Accounts Payable IntercompanyAssets

Accounts

Receivable

Common data definitions and processes

Corporate data standards-financial elements

Single worldwide chart of accounts

Finance lead client

Financial Information Strategy

Business

Management

Info

Treasury

Management

Info

Common Worldwide Planning System

Single worldwide consolidation system

Single worldwide financial information

warehouse (FIW)

Common Geographics mega-

centers

Common

Information

Common

Ledger

Common

Transaction

Applications

Common

Data

Definitions


Capturing the benefits of centralization (shared services) for transactional activities and decentralization of decision support

IBM's Finance Model

Units control

priorities

BU's have

ownership

Responsive

Scale

economies

Control of

standards

Critical mass

of skills

Excessive

cost

No standards

Reinvention

of wheel

No synergy

or integration

Unresponsive

No BU

ownership

No BU

control

Vision and leadership

Corporate-wide strategy & architectureCentralized

Finance

Decentralized

Finance

Common Standards

Synergy

Transactions Decision Support


The results of transformation on the Finance Function

ImpactHow we have evolved?

Focused on the basics (’94 – ’98)

Standard / Common Process

Automation

Functional Best Practices

Financial Reporting

Integrated the Enterprise (’98 – ’02)

Shared Services

Web Enablement

Core Competency

Decision Support

Moved to globalization (’02 – ‘10)

Process Outsourcing /Global COEs

Technology Exploitation

Rationalized ERP

Information On Demand

Making things smarter (‘10 – present)

Predictive and forward-looking insights


Automated production of key metrics

Analytics to enable self service

Optimized global capability

Increased use of global support from

12% in ’05 to 50% in ’12

Shift to higher value work

Increased decision support work from

30% in ’94 to 70% in ’12

Lowered expenses

Lowered expense to revenue share

from 3% in ’94 to 1% in ’12

$5.3B spending reduction in Shared

Services from 2005 through 2011

Improved Productivity

$2.8B productivity improvement from

End-to-End Process Transformation

and Integrated Operations

Focused on employee development

New career paths inside and outside

of Finance organization

Case Study: IBM Finance Transformation


IBM has been a part of many government transformations


Case Study – Government of Saskatchewan

Decentralized payables across 20 ministries, each with its own

processes and technology

Over 500K invoices are being

processed annually by 40 less

FTEs

All invoices can be

electronically monitored and

tracked

Consistent approach for

employee expense processing

across the Province

Recipient of the Premier’s

Award for Excellence in the

Public Sector for innovation

Centralized AP processing unit

Technology for invoice imaging, electronic invoice approvals

Oracle iExpenses for employee expense claim processing

Business Model: In-house

Business Areas: Finance, Payroll, Change Management

Challenges

Solution

Expected Benefits


Case Study – Government of Alberta

The Government of Alberta (GOA) needed a way to increase the

availability of information to better manage their $22 billion in

expenditures and take advantage of financial and HR systems that are

more cost effective.

Consistently stable

production environment at a

predictable fixed cost

Increase availability and

quality of information to

support decision making in

a timely and cost effective

manner

Awarded Gold medal for

Government transformation

excellence.

Implementation of a common platform:

SAP – Finance and HR

Workbrain - Payroll and Rostering

Business Model: In-House

Business Areas: Finance, Procurement, IT, HR, Payroll

Challenges

Solution

Expected Benefits

RecruitASP – Recruitment

SABA - Learning & Knowledge


Case Study – Province of Nova Scotia

The province of Nova Scotia wanted to implement common business

processes and system platform to better facilitate management of all

business/operational functions and decision making across the Gov

Departments & Entities.

Significant cost savings

consolidating one support

organization

Increased efficiency of core

process

Using savings to help fund

transformational initiatives

New technology

Standardized business

processes

Awarded Premier’s Award

for Excellence in the Public

Sector for innovation

The Ministry of Finance consolidated the accounts payable

functions from 11 ministries into a single shared-service unit.

Single SAP instance

The project was complex involving such work as business process

redesign, technology enhancements, transferring 37 positions into a

new service centre, along with providing training and support for

9,500 ministry clients on new technology and standardized

processes.



Challenges

Solution

Expected Benefits


Case Study – US Agency for International Development

Disparate financial systems and fax-based data calls from missions

worldwide resulted in a manually intensive process for the annual

reporting cycle and the inability to provide transaction-level data to

support auditable financial statements.

USAID has now achieved

seven years of unqualified

audit opinions from USAID’s

Office of Inspector General

Year-end reporting is now

done 75 percent faster, and

data transparency has

increased by 50 percent Common accounting processes governed by global process

owners.

New financial system – common platform for more than 50

overseas missions

New standardized financial processes



Challenges

Solution

Expected Benefits


Transformation is a journey…


Transformation Framework

Business

Process Excellence

Organizational &

Culture Change

Information Technology

Enablement

Strategy Guided by the

organization’s strategy

and values

Enable transformation at

the intersection of

business process,

technology and culture

Values

Proven principles from

IBM’s own experience

and our experience with

clients

5 Principles of Smarter Transformation

Create a

movement

Build a platform

for continuous

improvement

Pursue growth as

well as

productivity

Apply technology

for smarter

transformation

Establish an

enterprise change

capability

…. and one size does not fit all


Depending on where you are, there are things you can do….. and you may already be doing it

Call to Action


RECALL – Where do you fit?

Government

39%

Government

22%

Government

31%Government

8%


Value

IntegratorDisciplined

Operator

IBM’s Finance Transformation Strategy offering helps CFOs to identify the path to higher value

Corporate

philosophy of

information

standards

Standard

Chart of

Accounts

Standard

processes

Standard

data

definitions

Operational

planning and

forecasting

capability

Finance

talent

development

Common

planning

platform

Finance

Efficiency

Business

Insight

Low High

Low

High

12%33%

Scorekeeper Constrained

Advisor

Value

Integrator


Predictive insights

Enterprise risk management


Disciplined

Operator



Performance interpretation

Constrained

Advisor

Analytics focused


Fragmented data

Scorekeeper

Data recording

Controllership

Multiple versions of the “truth”

Source: IBM Institute for Business Value, The Global CFO Study 2010. Percentages relate to global sample of almost 2,000 enterprises, cross-industry.


Value

IntegratorDisciplined

Operator

IBM’s Finance Transformation Strategy offering helps CFOs to identify the path to higher value

Corporate

philosophy of

information

standards

Standard

Chart of

Accounts

Standard

processes

Standard

data

definitions

Operational

planning and

forecasting

capability

Finance

talent

development

Common

planning

platform

Finance

Efficiency

Business

Insight

Low High

Low

High

12%33%

The most prevalent

transformation path

Scorekeeper Constrained

Advisor

Value

Integrator


Predictive insights

Enterprise risk management


Disciplined

Operator



Performance interpretation

Constrained

Advisor

Analytics focused


Fragmented data

Scorekeeper

Data recording

Controllership

Multiple versions of the “truth”

Source: IBM Institute for Business Value, The Global CFO Study 2010. Percentages relate to global sample of almost 2,000 enterprises, cross-industry.


The Scorekeeper is characterized by low efficiency and business insight capabilities, suggesting three possible paths to Value Integrator


The Paths Forward

Establish process owners and drive to process commonality

Benchmark processes to identify underperforming areas and redesign

Rationalize and deploy a common Finance technology platform

Increase automation of data acquisition and integration

Drive error processing and reconciliation functions close to the source

Consider accelerating the journey with less risk and cost by migrating to an established and proven

platform

Build upon improved Core Finance infrastructure to deploy leading analytical capabilities

Call to Action - Suggested Focus Areas


The Constrained Advisor has low efficiency and high business insight, so the focus should be on standards and efficiency to reach Value Integrator

Drive data standards for financial and operational

metrics and analysis models

Leverage commonality to automate more with

technology

Establish process owners for core Finance and

decision support processes

Target core Finance processes to improve efficiency

and speed



The Paths Forward


The Disciplined Operator is characterized by high efficiency but low business insight, so the focus should be on business insight driving to a Value Integrator

Apply process ownership and standards to decision

support processes

Apply data ownership and standards to analytical

data and operational metrics

Attract and retain higher order talent and deploy

decision support COEs

Drive commonality into the decision support

technology platform

Deploy advanced analytical models such as

predictive modeling as deeply into operational

systems as feasible

Call to Action – Suggested Focus Areas


The Paths Forward


The Value Integrator is characterized by both high efficiency and business insight capabilities, so the focus should be on capitalizing on data


The Paths Forward

Adopt a continuous improvement program to sustain

and expand current capabilities

Deploy a robust governance and succession

program for process and data management

Increase focus on attracting and retaining talent

Expand focus on value creation analysis to drive

further performance improvements

Protect from downside performance by embedding

risk into performance analytics

Embed risk measures and predictive analytics into

operational systems and processes



Lessons Learned


Finance Transformation Lessons Learned

Strong executive support and governance

Clear targets and measurable objectives

Set priorities and apply laser focus

Broad enough scope to deliver clear value

Foster trust and collaboration in order to

work horizontally effectively

Continuous effort – need to dedicate

resources to get results

Workforce impacts

Communicate, communicate,

communicate…

Standardizing Data and Systems

Reengineering Common Enterprise-

Wide Processes

Consolidating Core Functions into

Shared Services

Establishing Centers of Excellence

Implementing and Promoting Self-

Service

Exploiting Business Analytics

To look at Data, Processes and

Tools and balance across all three

with a focus on the cost of delivery

Transformation has been, and is, an Evolutionary process…

Transformation requires…


Dare to imagine…. You….Chief Financial Officer of the FutureBringing the pieces of the puzzle together



PerformanceAccelerator




SupportBusinessDecisions



Anticipatethe

Future





SingleVersionOf theTruth

Anticipatethe

Future






Anticipatethe

Future

Minimize EnterpriseRisk






Anticipatethe

Future



Strong Fiduciary Controls




SteerBusiness Performance


Anticipatethe

Future









Anticipatethe

Future



Transform the

Enterprise







Anticipatethe

Future



Transform the

Enterprise


DriveEnterprise

Agility






Anticipatethe

Future



Transform the

Enterprise

Lead Business Model

Innovation


DriveEnterprise

Agility






Anticipatethe

Future



Transform the

Enterprise

Lead Business Model

Innovation


DriveEnterprise

Agility


Standardize Processes Common Data





Anticipatethe

Future


TrustedAdvisor


Transform the

Enterprise

Lead Business Model

Innovation


DriveEnterprise

Agility


Standardize Processes Common Data


Thank you!

For additional information and support, please contact:

Beth Bell – Partner, Government Transformation and Growth Initiatives, IBM

Global Business Services

– [email protected]

– (204) 938-7948

Kim Butler – Associate Partner, Strategy & Analytics, IBM Global Business

Services

– [email protected]

– (613) 249-2273

mailto:[email protected]

mailto:[email protected]

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