Greetings from Shanghai. For the past seven days, I have had the pleasure of working with the thought-leader, book author and consultant David Parmenter. He is also known as the King of KPIs based on his best-selling book Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs. David and I have been traveling through Asia to speak at various IBM Finance Forums and to meet with great customers. Most Asian IBM Finance Forums feature David Parmenter as the external keynote speaker this year. As part of his presentation called ‘The CFO as Chief Performance Officer’, David urges the audience to spend more time reading and studying the great business thinkers and writers. He goes further in his presentations and presents the audience with a few specific recommendations. I thought it might be worth sharing these.
Winning: “Jack Welch is often regarded as one of the greatest managers. This book provides some profound wisdom that every manager should be aware of.”
The 80 year-old company Mueller Inc is a a leading manufacturer of pre-engineered metal buildings and metal roofing products. Mark Lack is responsible for performance management at Mueller Inc. He delivered a great presentation about their IBM Cognos implementation at the recent IBM Vision 2012 event in Orlando. Following his session we sat down for a short interview.
Christoph Papenfuss: Mark, tell us about your role at Mueller Inc.
Mark Lack: I was hired to manage the planning and forecasting function and as my role evolved Strategy Management and Business Analytics became a natural extension.
Christoph Papenfuss: Did Mueller already have established performance management processes when you joined the company. Can you provide examples?
Mark Lack: Yes, it was Excel based. I can’t say it wasn’t sophisticated because it was. Lots of automation and VBA scripts to manage the roll-ups. The problem with the system was the inordinate amount of time it took to perform manual manipulations. Ultimately it rolled up to a series of financial performance items. The process was long and complicated, and in the end we had difficulty matching the output with the actual drivers of the performance.
Christoph Papenfuss: Reporting and Analysis was difficult then. What about the planning and forecasting process? Did you encounter any difficulties?
Mark Lack: The budgets weren’t kept in our main ERP system, only in Excel. We had to manually type in 300 lines of actuals each quarter in order to run variance reports. Invariably we would encounter that someone inserted a new line and it flowed through the rollup. Forecasting was done by evaluating what could be done, backing it off 10% and seeing if that could get passed. Often times when a number or a project was accepted, every other plan would magically look similar.
Christoph Papenfuss: You decided to implement new performance management processes. How did you go about that? Did you use a big bang or a phased approach?
Mark Lack
Mark Lack: We had just come off of an ERP implementation that was big bang, so we realized that this next project should be phased. Actually, when working with PM, you have to be careful of what you incentivize (to avoid bad behaviors) so it lends itself to a more phased approach. We began by implementing a corporate balanced scorecard. This became the framework for which the organization’s activities would be managed around, so this became the parameters. The scorecard reporting at first was done in Excel with Red yellow green traffic lights as the metrics success and failures. The first question when we reviewed these was always “What caused the target to be off?” We realized that we had to put a better system in place to manage and automate the PM if we were to be able to communicate what was important about executing our strategy and drive behavior.
Christoph Papenfuss: What does you current solution look like? What have you implemented and which processes are automated?
Mark Lack: We have an integrated system that uses the strategy as the foundation of our company. All of our PM processes are integrated from the balanced scorecard, to reports that indicate why we met or missed a target, to a planning system to help us get back on track. We try to allow the data to flow systematically with little to no intervention. We’re pretty close to an entirely closed loop system and the told we have provide the ability to automate the dissemination of important information needed to run the organizations. The goal is to get relevant information to decision makers when and how they need it. We’re pretty close to that goal and automation of information delivery against our “big data” has helped us in this regard.
Christoph Papenfuss: One of the key problems companies are struggling with is target settings. Managers tend to fight for lower targets. Their argument is that their goals are arbitrary. Do you have similar issues?
Mark Lack: We did for a while, and for the most part they have a point. If the goal is 15 % and they are at 5% now, a 3 times jump can be difficult to obtain if looked at from a high level. What we were able to do with our analytics tools was to analyze organizations around a common theme, such as revenue. By breaking them into groups and analyzing the processes within the groups, the result in target setting is less arbitrary. In our case if 7 organizations have a similar revenue level and 5 are performing at a high level in regards to customer satisfaction scores, all things being equal, the remaining 2 orgs should be as well. So we set the target within the per group range as an expectation. The top 5 in the peer group set the target and then the conversations switched from “That target is arbitrary” to “This was set by your peer’s performance”. The idea here is that now we can remove the distraction of who set the target (now it is the peer group) to what are the best practices that drive this performance? If 70% of your peers can perform, what keeps you from performing? Ultimately it changes the conversation for the better.
Christoph Papenfuss: Implementing a solid performance management platform requires resources. What is the benefit for your organization? Have you ever attempted to calculate the ROI?
Mark Lack: We always knew the answer was positive, because you can see results, right? The problem we always had was how do you quantify it? We had a research study done by Nucleus Research and the direct benefits were 113% per year. If we add the indirect benefits of a better informed workforce, I’m guessing it would have to be 10x that figure.
Christoph Papenfuss: What are your future plans?
Mark Lack: I’d like quote Jeff Spicoli and say “me and Mick are going to wing on over to London and jam with the Stones” but I can’t. There are too many opportunities to use the tools available to continue to maximize the value out of our system.
Christoph Papenfuss: Thanks much for your time, Mark
This has been an extremely busy but exciting week. It seems like the whole world is full of energy. Here are a few things you might want to be aware of.
CFO.com Webinar Forecasting
If you are interested in forecasting, make sure to register for the upcoming CFO.com webinar ‘Forecasting in turbulent times‘. Together with Tom Willman (Principle, The Hackett Group), I will discuss trends and best practices for improving your forecasting processes. The webinar is scheduled for Thursday, March 15th.
Cognos Insight & TM1 10.1 launch
Yesterday was the official launch event for Cognos Insight and TM1 10.1. I was blown away by how many people participated. As a track host, I was especially excited to see so many questions coming through. In case you missed it, you can still watch most of the sessions on demand. I highly recommend the keynote. Robby Meyers from DirecTV gave a fantastic demo of Cognos Insight. Make sure to watch that one. It’s great to see how a successful company like DirecTV leverages Cognos Insight.
Analyticszone.com
There is a great new website and community entirely dedicated to Cognos Insight. Make sure to check it out. The new site provides you with a bunch of great stuff: sample Insight models, tutorials, discussion forums etc.. You can also download a revised version of the famous IBM Cognos Blueprints. Yes, they have been redesigned to work in Cognos Insight. Make sure to also upload your files and share your experiences!
Updated iPad app
There is an updated version of the Cognos iPad app. You can downloaded it directly from the iTunes store. The latest version has a slightly different look and feel. It also feels snappier. There are also a bunch of other enhancements under the hood. And there is also additional demo content in there. The upgrade takes about a minute. And….can you imagine how awesome all your Cognos report will look on the new resolutionary iPad?
Harriet & Christoph – the story continues
Want to see me as a bobble head? Some of you may have watched the Cognos Insight demo at the IBM BA Forum in October 2011. My colleague Harriet Fryman and I demonstrated how the business and IT can get along using Cognos Insight. Our creative team took that story and has created a series of hilarious bobble head movies. The latest edition was released last night. In the prior video, Harriet put Sleep-eeze into my coffee. Time to get even! The other parts are also available on You Tube.
About six months ago, I had the honor to write a short article for the business magazine SUCCEED which is distributed via Austrian Airlines. Succeed is actually one of the frequent flier magazines that I love reading. There is a ton of valuable business content in there. The purpose of the bilingual post (German & English) was to explain what Business Analytics is all about. (There is a download link at the bottom of this post)
New Rules of the Game – English version
Business intelligence: Simply relying on gut feeling and limited information is dangerous. Successful businesses today work differently.
Think back 15 years ago: many of us had just gotten our first email account. Fewer people had mobile phones and the internet was just taking off. Many companies knew their competition pretty well and change usually happened slowly. Decision making was often slow due to a lack of information systems and we had to rely on intuition. Fast forward to 2011: Competition is intense, volatility is at an all-time high and constant change has become the new normal. Stakeholders, governments and customers are more demanding. To survive and thrive in this environment, different rules apply. Simply relying on gut feeling and limited information is dangerous. Successful businesses today work differently!
Wow. I cannot believe it. The Gartner BI Summit 2012 is already over. The event raced by like a bullet train at full speed. Time flies when you are having fun. Last Wednesday, I sat down with the conference agenda and developed a nice plan. I had grand visions of collecting lot’s of information and creating several posts for this blog. But things turned out differently……wait a second. Let’s back up.
Uncertain times
One of the recurring themes at the conference was uncertainty. Ironically, that uncertainty applied to the event as well. 2cm of snow created massive problems at Heathrow. Many attendees got stuck and arrived late. Two flight cancelations and another major delay did not prevent me from arriving right in time to see the BI Excellence Award finalists present their case. But I did miss the Gartner keynote which was supposedly outstanding.
Gartner BI Excellence Award
Our session was packed. I really enjoyed showing IBM's latest technology
One of the true highlights of the Gartner BI Summit were the presentations by the three BI Excellence Award finalists. This was really exciting for me as a member of the global IBM Business Analytics team: two of the 2012 finalists are IBM customers. Spanish insurance giant MAPFRE presented an awesome case. They have standardized on IBM Cognos 10 and developed a rock-solid global BI standard with massive ROI. Marcos Garcia March delivered a stunning presentation of their case. He was followed by the winner: Medway Youth Trust. This is a 2M GBP foundation focusing on helping kids avoid unemployment. The CEO demonstrated a highly innovative use case for predictive analytics (using SPSS). Counselors log conversations with kids to detect patterns that can help them not only better identify kids at risk but to also fine-tune their strategies in dealing with them. The audience was impressed. London Transport was the final case. They use Business Intelligence to better guide and observe traffic in London.
Congrats to Medway Youth Trust for their win. Also, congrats to Mapfre and London Transport. Awesome achievements! Make sure to read the Medway Youth Trust case study.
Random Observations
Here are a few brief observations. I actually ended up having a lot of customer meetings and did not have time to attend too many session:
Technology has come a long way. There are so many cool and amazing solutions out there. But many organizations are still struggling with basic things like user adoption, missing analytical skills, data quality, design of driver-based plans and such. We cannot afford to ignore these issues. Technology alone won’t fix them for us.
It’s all about decision making. Never before have people put so much emphasize on the idea that business analytics must help organizations make better business decisions.
More and more people speak about Business Analytics. I suspect that the term BI will gradually disappear over the next few year. Most vendors including IBM and also Gartner now exclusively speak about Business Analytics.
Predictive analytics is hot. The relevant sessions that I attended were packed. And the interest is also evidenced by Medway’s win. I did sense, though, that most organizations are still trying to figure out how to embed and use predictive capabilities. It’ll be interesting to watch the progress next year.
Big data is getting bigger. There is a lot of buzz around this topic. Is this warranted? Many organizations are still struggling with basic issues. Is there too much focus on advanced topics? Shouldn’t we spend an equal amount of time on fixing the foundation first?
The customers that I met with have made amazing progress in the past few years. I do think that we are at an inflection point for business analytics.
Gartner BI Summit 2012
The Gartner BI Summit was a great success. Great discussions, interesting sessions and lot’s of positive energy. Looking forward to next year in Barcelona!
Last year, severe knee pain caused me to completely stop running for two months. The physical therapist I started working with quickly came to a conclusion about my problems. It took him two minutes. Over the course of six sessions he developed an intricate training program that consisted of various stretches and exercises. It looked awesome but it was complex. We never had the opportunity to completely work through it together as it took so much time. Guess what happened. It frustrated me and I gave up after a week. It took too much effort and I did not know whether my movements were correct. Plus, I travel a lot and setting up in a hotel room late at night is not practical. Luckily, the pain gradually disappeared for a while.
SIMPLICITY APPLIED
Four weeks ago, the pain reappeared and I cannot go running again. I decided to see another physical therapist. The first session was yesterday and I am optimistic about the recovery. Why? He did a thorough exam and really listened to me to understand the core problems. He then decided to focus on four simple exercises to get me started. That’s all I have to do for the first three weeks. Four exercises, three times per day, six days per week. We had ample time to practice. And it paid off: I am already comfortable with the routine. The simplicity of the program makes it feel very do-able. And I bet that I will be ready for the harder stuff in 1-2 weeks from now.
Simplicity is the ultimate sophistication
SIMPLICITY AROUND US
There are two lesson.
Listen
Keep it simple
Speed without purpose and unnecessary complexity might initially look impressive. But long-term success is doubtful.
Let’s take time to listen to our business partners. Let’s break complex projects into a few simple initiatives. Keep applications simpler. Cut out unnecessary buttons, tables, logos, process steps.
It will pay off. I am sure about that.
Less, but better — because it concentrates on the essential aspects, and the products are not burdened with non-essentials. Back to purity, back to simplicity.
Cognos User Groups are quickly gaining a lot of interest from IBM customers around the globe. These groups provide users with the ability to learn, to connect and to share experiences. A few weeks ago, I had the honor to meet with one of North America’s largest Cognos User Groups – the ‘Groupe d’utilisateurs Cognos du Quebec‘. The president of this group, Steve Veilleux and I sat down for a quick interview.
Christoph: What is the purpose and mission of your Cognos user group?
Steve:The « Groupe d’utilisateurs Cognos du Quebec »has a clear mission. We primarily want to provide the Quebec BI community with networking opportunities around IBM Cognos technologies and BI concepts. We typically do that by organizing two full-day events per year (in Montreal and Quebec City). Our members help each other to gain new knowledge they can apply at work. We also share the latest news about IBM Cognos. Members frequently share case studies as well.
Christoph: Is this a new initiative or does this user group have a longer history?
Steve:I am proud to say that our Cognos user group has a long history in the IBM Cognos world. We were founded over 15 years ago! I personally joined the group in 2002 and have played the role of the president since 2007.
Christoph: How many members do you have and how do you communicate with each other?
Steve:We currently have around 450 people. Our meetings typically attract around 100 attendees. To communicate with each other, we established a group on LinkedIn. Members and non-members can also use our web site: www.gucquebec.org . We also publish a newsletter and share the results from our different meetings.
Christoph: Who participates in the user group?
Steve:We have a well-balanced mix of members. The majority are IBM Cognos customers or prospects from the business or the IT side. There are also consultants and some IBM employees.
Christoph: What are the benefits of being a member in a Cognos user group?
Steve:A user group is definitely very beneficial for its members. I personally see three main benefits:
The ability to stay informed about IBM Cognos products
The ability to networking with other business analytics professionals
Privileged contact with IBM employees
Christoph: What is your relationship with IBM through the group?
Steve:We have a very close relationship with IBM. They actually sponsor us to a certain degree and provide us with resources for our meetings. We typically invite speakers to help us understand the latest news about the technology and services.
Christoph: There are some regions that do not have a user group. What advice would you have for IBM Cognos sponsors and users who are thinking about forming or joining a similar user group?
Steve:My clear advice: Start or join a Cognos user group! First of all, you need to find a few like-minded people. Once you have made up your mind, make sure to share responsibilities. A successful user group requires some time and effort. People need to provide some help with organising meetings, managing contact lists, finding and selecting presentation topics and speakers, reserving the facilities, etc.. Our “Groupe d’utilisateurs Cognos du Quebec” is managed by an executive committee for that purpose. Once the user group is up and running I recommend to take care of a few things:
Listen to your user community. If possible, try to find conference topics they ask for (we frequently conduct a survey).
Avoid consultant-only presentations. We strongly prefer customer presentations and we think this is one a the reason why our Cognos user group is so successful.
Encourage your members to actively participate. It can be a challenge to find and convince customer “champions” to prepare materials and to present them. To encourage them we offer free registrations to our meetings and also offer them a gift for their effort.
Work with IBM. We have had great IBM people present at our meetings. Exactly like you, Christoph!
Charge a registration fee for your meetings. Not only does this help cover fixed expenses (room, audio/video, meals) but it also helps us get some prestigious speakers. We were able to attract influential experts like Wayne Eckerson, Shawn Rogers, Brett Knowles, Philippe Nieuwbourg, Naomi Robbins and some others. Interest in our events has significantly increased since we started bringing in these prestigious speakers (+40%).
Try to have fun and share the good news! This is really important! Once you start having fun and people get value out of the community, word of mouth will bring in new members.
Christoph: Tell me about your career in Performance Management and Cognos
Steve Veilleux
Steve:I started my career 17 years ago at Groupe Canam Inc.. Until 2000, I was involved in payroll, manufacturing and financials systems development. With all the knowledge I had gained on those systems at Canam Group Inc, I started a Data Warehouse project in 2000. And for the past 11 years I was thus responsible for the development of the BI environment. Can you believe it – I started with Cognos 6.6 back in 2000. I guess that makes me an “early adopter”. I have hands-on experience with almost all versions between Cognos 6.6 and IBM Cognos 10.1. During those years I also participated in Customer Reference and IBM Cognos Beta Programs. You can even find my profile on the IBM website. I recently decided to make a major change in my career by join Keyrus Canada as a Business Intelligence Consultant.
A few months ago, I wrote about my personal use of analytics to improve cycling performance. This post continues to be quite popular. There are indeed a lot of parallels between the use of analytics in sports and in business. So, I thought why not learn a few things from one of the leading experts in this area? Why not learn from somebody who is driving the use of analytics in sports? Why not listen to the person who has developed one of the first software packages for analyzing cycling and workout data?
Please meet Hunter Allen. He is widely known as one of the top experts in the world in coaching endurance athletes using power meters in combination with powerful analytical software. Hunter and I met almost six years ago. He hosted a cycling camp in Solvang, California. During those seven days out on the road, he taught me a lot about using analytics to improve my cycling performance. And I was lucky to catch Hunter over the phone the other day.
Christoph: You started your career in professional cycling. Professional cycling, like other sports, has a lot of old-fashioned traditions. What led you to take a fresh look at the traditional training methods? Hunter: Actually one of my coaching clients asked me to train them with a power meter and I figured what the heck, I can do that! He was a VERY early adopter of the technology and that forced me to really learn it and figure out how to understand what it meant from a coaching, sports science and racing perspective.
High Tech in Sports – A Cycling Power Meter
Christoph: You advocate the use of high-tech training devices like power meters for cycling, GPS and accelerometers for running. These devices record a lot of data about each workout: heart-rate, power output, pace and cadence to just name a few. Why record so much data? Shouldn’t an experienced athlete know how to listen and react to his/ her body? Hunter: We have to listen to our body, but sometimes our bodies don’t tell the truth or can’t give us enough information to help us make the right decision. For example, this past summer, I was training for the Masters Nationals races and I was in the last two weeks of the hardest part of the training. Normally my Heart Rate would be in the 170-174 range when I am riding at threshold power (equivalent to your highest avg. power you can maintain for an hour), but my cardiovascular system was quite fatigued and I could barely get my heart rate to come over 158bpm. However, my watts were higher than ever and I was doing more work than I had in a long time. Had I been going on heart rate, I would have rested and denied myself optimal training. The more data the better, because it allows us to organize it into useful information from which we can make correct training decisions.
Christoph: Back in 2002 you started developing a popular and sophisticated software package called WKO+ (Workout Plus). It allows athletes to upload the data from their power meters and running watches. What happens with the data in the software? Hunter: Our Software is no more than a fairly sophisticated program that can take multiple ‘channels’ of data, organize it into charts and graphs which are presented in an easy to understand fashion. One of the keys to this is the ability to chart the data over any time period you want to chart it. So, I can tell if an athlete has improved in their sprint power over the last year, last six months, last month or even week to week. Data is useless until you can intelligently turn it into information and we’ve done that through a visual software package that allows the user incredible flexibility.
Christoph: Can you give us an example of what athletes can learn from the huge amount of data? Can even highly experienced athletes that really know their body well use these insights to their advantage? Hunter: One of the greatest things that an athlete can learn is their own personal relationship between a ‘training dose’ and their bodies ‘response’ to that training load. Once they know that two weeks of training in the mountains and one week of rest will give them the fitness needed for a race, then they can begin to plan and predict a peak performance. This is the biggest revolution that we have been able to create: Peak performance prediction. If I have enough data from an athlete, I can plan their training nearly perfectly so that on the exact day or week that they want to have the best ride of their life, they will. That’s “powerful”! 😉
Christoph: Athletes often have to make critical decisions about their training schedules, their race tactics and their general behavior out on the road? Does the information provided by your software help athletes make better decisions? If yes, can you provide an example? Hunter: For sure, this is something that can help them make decisions. Some of the best data is their race data. We can learn if they are pedaling too much for example! It seems counterintuitive, but the best, most winningest road racers often pedal the least in races. Cycling is a sport of energy conservation and the best racers save the most energy and then use it when they need it. Another example could be in a long solo ride, as a rider might use their power meter for pacing their energy output so that they can finish strong.
Analytics in Cycling – Software provides critical insights
Christoph: Athletes often work as a team. The team includes coaches and other athletes. Does your software make a contribution towards better communication and collaboration between these different parties? Hunter: One of the benefits of using these devices is the added sense of accountability that an athlete has, since they have been given a workout prescription and if they don’t do it, then when they upload their completed training file to me, then I’ll know exactly what they didn’t do. So, it helps the athlete with program adherence and the coach with communication. Without this information, I can only guess if the athlete is training correctly.
Christoph: We see more and more athletes train and race according to your methods. Would you say that training and racing with a power meter can lead to a competitive advantage? Hunter: It’s a competitive advantage if you learn how to use it properly. Just sticking one of these on your bike isn’t going to make you a faster cyclist. You have to know some of the basic power training principles and then follow them. If you do that, then yes, absolutely it’s an advantage.
Christoph: The world of sports is often characterized by a culture of old traditions. Do you find it hard to promote these new training approaches? Hunter: I don’t find it hard, because I am by nature a very flexible and open minded person. I am always open to new ideas, thoughts and approaches, but not everyone is. Any change takes time and here we are nine years after our first software version came out and still I am teaching new coaches, new athletes about it. I look forward to learning about the next tech tool that will help my athletes as well!
Thanks for your time, Hunter!
About Hunter Allen:
Hunter Allen’s goal has always been to teach athletes how to maximize their training and racing potential through professional analysis of their power data. Hunter’s power training method has built success at all levels of cycling and endurance sports, training such well known professional & Olympic athletes such as Jeremiah Bishop (Volkswagen-Trek), 2008 US National Champion Mountain Biker, Daniel Lloyd (CerveloTest Team), 2008 Vuelta de Extremadura, Sue Haywood, 2007 World Mountain Bike 24 Champion, Dan Fleeman (CerveloTest Team), 2008 Winner of Tour of Pyrnees and with the 2008 USA Olympic BMX Team. Hunter is himself a former professional cyclist for Team Navigators and has raced for over 17 years in Europe, South America, U.S. and Canada and has over 40 career victories to his credit. Considered a great all-rounder, he was able to learn a wide variety of race tactics and skill necessary to succeed at the professional level.
Please meet Pieter Coens. Pieter is the Director of Finance & Control at Landal GreenParks in the Netherlands. He started his career in public accounting and joined Landal over 16 years ago. Pieter has held various positions in finance at Landal.
Landal GreenParks is a leader in bungalow-park management and rental. Landal has over 65 parks with a total of approximately 11,000 chalets. With 47 parks in the Netherlands, Landal leads the Dutch bungalow -park market. Outside the Netherlands, Landal has parks in Germany, Belgium, Austria, Switzerland and the Czech Republic.
Pieter gave a great presentation about Landal’s planning and forecasting processes at the IBM Finance Forum in Amsterdam on May 24th, 2011. We were able to have a quick chat at the event.
Christoph Papenfuss: You have implemented IBM Cognos to automate your budgeting and forecasting processes. What have you accomplished so far?
Pieter Coens: IBM Cognos currently helps us create an annual budget along with a monthly forecast. For that purpose, we have implemented several elements including models for Rental Revenue and our P&L.
Christoph Papenfuss: How did you manage your processes before that?
Pieter Coens: We used to manage our processes with a myriad of Excel files. It was very difficult. We ran into various issues such as managing excessive file sizes that slowed down the network, dealing with sluggish recalculations, difficulties tracing interdependencies etc.. Aggregating the different files was extremely cumbersome and time-consuming. And of course, there are the associated audit issues with spreadsheets.
Christoph Papenfuss: How are you benefiting from the implementation?
Pieter Coens: IBM Cognos has allowed us to automate a lot of the steps in the process such as preparing, distributing and aggregating planning templates. We are also able to develop more intricate models that provide us with better insights. Overall, we feel that our finance team and the business users are now able to focus more on the actual planning activities rather than the administrative tasks that I described earlier. My team is much more productive.
Christoph Papenfuss: You have an annual budget and also a monthly forecast. Who is involved in the process?
Pieter Coens: Finance is in charge of executing the process. But the business owners have to work and develop their own budgets and forecasts. They are in charge of entering their data in the models. Finance plays the role of the coach: we help the business make sense of the numbers and we guide them through the forecasts and budget iterations. This approach provides us with several advantages: By actively involving the business we can obtain more accurate and timely data. We also feel that the business is able to gain better business insights by actively working with their budgets and forecasts and the associated monthly actuals. Last but not least, Finance has more time to focus on value-added tasks such as performing analysis.
Christoph Papenfuss: You have a solid forecasting process. How often do you update the forecast and how far do you look into the future?
Pieter Coens: We currently use a monthly forecast. This allows us to anticipate and react to market changes. We ask the business to perform a detailed forecast for the next two months only. The remaining months until year-end are automatically calculated as a trend of the 2-month forecast. We found that creating a detailed forecast further out than 2 months does not necessarily result in very accurate data and it also takes a lot effort. We want the business to focus their energy on the short time-horizon and only forecast the know effects throughout the Full Year.
Christoph Papenfuss: You are proponent of driver-based models. Can you give us an example of how you have implemented this? Also, what are the benefits for the organization.
Pieter Coens: Driver-based models allow us to increase the speed of the budgeting and forecasting exercise. Also, we are able to perform better analysis at month-end and during the planning activities: Instead of just looking at an absolute variance, drivers allow us to review this from different angles such as price or volume effects. Food & Beverage Revenue, for example, can be calculated as Number of Guestnights * Average Spend on Food & Beverage. The associated Cost of Sales are a percentage of the Food & Beverage Revenue that has been calculated.
Christoph Papenfuss: How did you go about implementing the IBM Cognos solution?
Pieter Coens: We decided to follow a modular approach and started with a few smaller projects. This allowed us to build critical skills and develop success much earlier. This in turn led to a situation where the business heard about our accomplishments and they started asking for additional projects e.g. forecasting on Operational Management Information.. Change management is a lot easier if the business users ask for projects instead of us pushing them to accept
Christoph Papenfuss: What else are you planning to do?
Pieter Coens: We are definitely looking to reduce the level of detail in our models. More detail does not mean higher accuracy. On the contrary, more detail requires more work and it does not necessarily drive accuracy. We are also looking to implement additional models such as cash flow and predictive modeling/forecasting for our Yield department.
Christoph Papenfuss: Thank you very much, Pieter! Good luck with your implementation.
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. I just downloaded it for my Kindle and will post a review as soon as possible.
