cpmt3_Driscoll_Profitability Management-How Financ

ProfitabilityManagement—HowFinanceCanHelpDeliveronStrategicPromisesDeliveronStrategicPromisesCFO Magazine CPM ConferenceNew York CityyJanuary, 2012 Today’sDiscussionModeratorMary DriscollSeniorResearchFellowSenior Research FellowAPQC25jlitd25+ years journalist and researcher with focus on strategy, performance mgt., and the finance function.Book author, lecturer, educatorContact: [e-mail]2©2011 APQC.  ALL RIGHTS RESERVED.APQC:Whoarewe?Nonprofit with 35‐year legacyHighly respected and trustedIndependent business research pProcessproductivityProcess productivity benchmarkingProcess improvement assessments3©2011 APQC.  ALL RIGHTS RESERVED.FP&AExperts:Simon Robinson             Tony CarrabbaSenior Vice President Corporate Financial Senior Director, Strategic FinancialPlanningpPlanning & AnalysisDiFinancial PlanningDiscovery CommunicationsGiant Eagle, Inc.Email:[e-mail]:[e-mail]4©2011 APQC.  ALL RIGHTS RESERVED.Today’sAgendaygAPQCreportonFP&AcurrenttrendsAPQC report on FP&A current trendsSurvey results: 410 completed surveysTwo views from the front lines:Giant EagleDiscoveryCommunicationsDiscovery CommunicationsFfid5©2011 APQC.  ALL RIGHTS RESERVED.Free‐form questions and answersDefinitionofFP&A(surveypurposes)yppAny combination of:strategic financial planning budgeting and short‐term resource allocation   forecasting (demand, cash flow, performance)performance assessment and review closing the books and consolidation internal and external reporting trend analyses and/or scenario modeling ownership of core processes and enabling  thl6©2011 APQC.  ALL RIGHTS RESERVED.technology 7©2011 APQC.  ALL RIGHTS RESERVED.8©2011 APQC.  ALL RIGHTS RESERVED.HowbigistheFP&Ateam?gPrimarily:smallfocusedteamsreportingtoPrimarily: small, focused teams reporting to senior finance leadersDependingonbusinessmodel:HQorBUsDepending on business model: HQ or BUsTwo‐thirds = less than 10 people One‐half = less than 5 people9©2011 APQC.  ALL RIGHTS RESERVED.10©2011 APQC.  ALL RIGHTS RESERVED.CommonPriorities:1Linkingthestrategicplanbudgetsand1.Linking the strategic plan, budgets, and forecasts (systems and process harmonization orstandardization)or standardization)2.Profitability analysis (segment, geo., brand)3MdlitCl3.Modeling return on Capexproposals11©2011 APQC.  ALL RIGHTS RESERVED.BiggestBarrierstoProgressgggLackof:Lack of: system integrationddlcommon data modelcommon data repositoryoperating data for advanced modelingalternativetospreadsheetsasprimarytoolalternative to spreadsheets as primary tool12©2011 APQC.  ALL RIGHTS RESERVED.BiggestFrustrations:ggFinancetalentisanalyticalbutnotcuriousFinance talent is analytical but not curiousOrganizational resistance and data hoardingSiihdldlllSenior mgt. ignores the model and lets Wall Street dictate budgets and forecasts Decision support from finance still needs to be “evangelized” and “socialized” 13©2011 APQC.  ALL RIGHTS RESERVED.Summaryofsurvey:yyDittlkffbdtFP&ADespite talk of frozen budgets, FP&A investments are taking placeSome, not all, senior management teams warming up to analyticsFrustrations stem from cultural resistance and focus on annual performance paradigmFP&A Now Rising—Hire MBAs or CPAs?14©2011 APQC.  ALL RIGHTS RESERVED.BusinessGrowth:TheRoleoftheBusinessGrowth:TheRoleoftheStrategicFinancialAnalysisFunctionTONYCARRABBA,SENIORDIRECTOR,STRATEGICFINANCIALPLANNINGGIANTEAGLE,INC.1GiantEagle,Inc.BackgroundFiveRetailBanners:Foundedin1931Rankednumber36onForbesmagazine'slargestprivatecorporations$10Billionannualsales5MillionCustomers397SupermarketsandFuelStations/ConvenienceStores2Over36,000TeamMembersTimeline•Weconductedalargeassessmentprojectondevelopingandexecutingstrategy,itsconnectiontotheplanningcycleandtherelatedtechnologyinfrastructure2007SltdHidiltdHiSttiFi(HSF)f“iki”fSttiPli•SelectedHyperionandimplementedHyperionStrategicFinance(HSF)fora“quickwin”forourStrategicPlanningProcess•Beganimplementationof“IntegratedPlanningPlatform(IPP)”2008•MergedBusinessPlanningandBudgetingintooneAnnualOperatingPlanningProcess(AOP)•ImplementedHyperionEssbase,Smartview,FinancialReportingandPacePlanningtocompleteourIPP2009•SimplifiedHSFModeltobefasterandmoreefficient•EnhancedPace/Essbasefunctionality•ImprovedReporting•ImplementedaStoreLeaderP&LreviewtooltocollectcommentsandsuggestedchangesIldClbllhSlfi2010•ImplementedCrystalballtoenhanceSalesforecasting•UpgradedtoHyperionVersion11•ImplementedHyperionPlanningforthemonthlyforecastprocess3pypgyp•Wentlivewith18monthrollingforecast•IntegratedHyperionPlanningandHSFsothatStratPlanbuildsoffmostrecentforecast•IntegratedStratPlanandAOPprocesses2011ForecastThe18MonthForecastprovidesthebaseforthethreeyearStrategicPlanofwhichyearonecascadesintheThe18MonthForecastprovidesthebaseforthethreeyearStrategicPlan,ofwhichyearonecascadesintheAnnualOperatingPlanForecastdataiscollectedinHyperionPlanningandthenexportedtoHSFforadditionalmodelingandconso