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AGILE
The Planning Maturity Curve Where Are You?
Where Do You Want to Be?
Ben Lamorte
VP Marketing, Alight Planning
AGILE
I want to be in San Diego!
Quick Reminder:
Why Rolling Forecasts
&
Agile Planning?
3-Minute Overview
AGILE
The Value of Traditional Planning Over Time
Source: The Agile Planner Blog
TIME
VALUE
High ROI at
the early
stages of
planning…
But ROI
diminishes
quickly
over time.
AGILE
The Value of Agile PlanningTM Over Time
Source: The Agile Planner Blog
ROI remains
high in the
early stages
of planning…
Long-term
value from
planning
increases
significantly
TIME
VALUE
Agile Planning Defined: Impactful planning that addresses the right
business issues at the right time with the right people. Unlike
budgeting, it is a continuous process that adds increasing value over time.
Rolling Forecasts SHOULD ENABLE Agile Planning
AGILE
1: Is it EVEN worth it to replace
spreadsheets with a planning
tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
The Subtle Message
AGILE
1: Is it EVEN worth it to replace
spreadsheets with a planning
tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
The Subtle Message
AGILE
1: Is it EVEN worth it to replace
spreadsheets with a planning
tool?
2: If you already bought software,
was it worth it?
3: Either way, how do we make
planning ADD VALUE?
The Subtle Message
AGILE
Business Activities
CEO, Alight Planning (Planning software)
Co-Founder, Aspirity (Microsoft BI consulting)
Founder, FP&A Train (Essbase training)
Founder, Pillar Corporation
CFO for 2 public companies
Rockwell Int‘l, Business Unit CFO and Corporate
Rand Heer (He‘s ―Heer‖ In Spirit)
Publications
Author: The Planning Maturity Curve: Where Are You? Where Do You Want
to Be?
Author: How Agile is Your Planning: Find out by Measuring the ROI of Your
Planning Software
Coauthor: “Business Intelligence: Making Better Decisions Faster”.
Published by Microsoft Press.
Education
MBA degree Harvard Business School
AGILE
Business Activities
VP Marketing, Alight Planning
VP Business Development, Alight Planning
Principal, Decision Consulting (Adobe, Kaiser)
Manager, Business Intelligence, planetrx.com
Management Consultant, APM/CSC Healthcare
Ben Lamorte (He‘s a Talker)
Editor of “The Agile Planner” Blog
Yes! Planning can be a Positive Experience
Why Financial Reporting Software Delivers No Value?
The Value of Agile Planning Over Time
Driver Based Planning: How is it Defined?
Education
MS Management Science & Engineering, Stanford University
BS Mechanical Engineering, UC Davis
AGILE
Day 1 Agenda: Take a step back!
The Planning Maturity Curve
Level One: Seat of the Pants
Level Two: Budgeting
Level Three: Reporting
Level Four: Forecasting
Level Five: Agile Planning
Case Study in Agile Planning: Pittsburgh Mercy
5 Steps to Rolling Forecasts & Agile Planning
Out of Excel
Level of Detail
Driver-Based Planning
Integrating Actuals
Scenario Analysis
Agile Assessment + Free ASMI Event Winner?
Cocktails
Day 2 Before Lunch: Best Practices for Rolling Forecasts Demo
AGILE
Follow up with Alight
Telephone: (415) 456-8528
Join us! The Agile Planner Blog
Blog.alightplanning.com
Webinar Resources Transforming Planning at Pittsburgh Mercy
www.Alightplanning.com/Webinars/PM/Video.html
Application Requirements for Rolling Forecasts www.AlightPlanning.com/Workshop/Requirements-for-Rolling-Forecasts/Video.html
FOCUS Podcast Featuring Sid Ghatak & Ben Lamorte http://www.focus.com/roundtables/avoiding-business-performance-
mangement-software-failure-4-t/
6% is not enough! The Case for Driver-Based Planning in 2012 with
Rob Kugel, Ventana Research and John Miller, Arkonas moderated by
Ben Lamorte
Stuff for After this Presentation -- Slides Coming in
Email and posted to SlideShare
AGILE
Business Value from Planning
Insights Understanding things
we didn‘t see before
Actionable
KnowledgeUnderstanding and
acting upon
operational drivers
Financially-
Sound DecisionsScenario analysis gives us
the financial impact of choices
AGILE
KEY POINT: TYPE 1 & TYPE 2 Benefits
Business Value
Effort
Budgeting Type 1: Streamline
Existing Processes
Reduce Effort
Type 2: Introduce New
Processes to Add Value
Reporting
Forecasting
AGILE
Type 1 Benefits of Planning System
Finance
No more consolidation errors; formulas don‘t break
Slice and dice the data with dimensions versus pivot tables
Automate data integration—e.g. actuals
Automate security/process
Line Managers
Add line item detail
Document assumptions
C-Level
CFO Audit
Automated Reporting
AGILE
Insights (I)
The numbers help us understand
things we didn‘t see before
Actionable Knowledge (A)
The numbers to tell us what to do,
or more importantly, what our
choices are
Decisions (D)
Having financially backed up
choices sets up decision making
Type 2 Benefits of Planning Systems
AGILE
What “They Say”
All Planning Software Claims
Budgeting
Reporting
Effort
Business Value
Every Vendor Says They Do Budgeting & Reporting
Every Vendor Claims:
• Saves Time
• Adds Business Value
AGILE
Question!
For those who SUCCESSFULLY replaced
spreadsheets with a financial reporting solution,
what best describes your success:
1. Saves time BUT does not add Business Value
2. Saves time AND adds Business Value
3. Adds Business Value BUT does not save time
AGILE
Typical Budgeting & Planning Software
Budgeting
Reporting
Effort
Business Value
―Actual‖ Value of Budgeting & Reporting
―What FP&A Customer Says‖
about Impact of Dedicated
Budgeting & Reporting Tool:
• Saves Time
• BUT DOES NOT ADD
Business Value
Just Doing Budgeting
is Not Enough
AGILE
The Big ROI – Agile Planning
Budgeting
Forecasting
Reporting
Effort
Business Value
Agile PlanningTM
THE BIG ROI COMES FROM ADDED BUSINESS VALUE
Budgeting
& Reporting
Forecasting
Adds Real Value
Real-Time
Scenario Comparison
AGILE
Planning Maturity—Seat-of-Pants
The Happy Caveman
AGILE
Planning Maturity—Budgeting
The Happy Accountant
AGILE
Planning Maturity—Reporting
The Reluctant Managers
AGILE
Planning Maturity—Forecasting
The Grumpy CFO
AGILE
Where Are You on the Curve?
AGILE
Planning Maturity—Agile Planning
The Happy Team
AGILE
The Excel PowerPoint Cycle
The Need for Real Time
AGILE
Let‘s Hear from You!
Turn to your neighbor for the 3-minute drill
Is your management prioritizing Type 1 or 2
Improvements in budgeting & forecasting?
Type 1: Do what we‘re already doing, but do it more efficiently
Type 2: Introduce new planning processes that enable better business
decisions throughout the year
Please report back a Type 2 Benefit that is important.
AGILE
Specialized Functionality
Roll the Forecast
BS/Cash Planning
Integrate Short/Long Range
Operations Integration
Integrate Drivers
Volume/Rate Causal Analysis
Capture/Calculate KPIs
Profitability Analysis
Complex Allocations
Analyze Customer Profitability
Analyze Product Profitability
Decision Support
Interactive Dashboards AND Real-Time Planning
Scenario Analysis On-the-Fly
Strategy Analysis
Examples of Type 2 Benefits
AGILE
Planning Maturity—Agile Planning
Planning Maturity Curve (PMC)
Budgeting
Forecasting
Seat of Pants
Reporting
Effort
Business Value
Move out of Excel
Reduce level of detail
Forecasting/Agile Planning
Implement driver-based planning
Integrate (don‟t just import) actuals
Implement scenario analysis
AGILE
Ray Wolfe, CFO (now CEO) Business Activities
Chief Financial Officer, Pittsburgh Mercy Health
System 2006-present
Director of Fiscal and Information Systems– Mercy
Behavioral Health 1996-2006
Chief Fiscal Officer, Summit Center for Human
Development, 1988-1996
Awards: Ventana Leadership 2010
Education
Juris Doctorate, West Virginia University 1977
BA, Marshall University, 1974
Case Study: Pittsburgh Mercy
AGILE
Case Study: Pittsburgh Mercy
Community Mental Health and Health Care Related
Mental Health, Mental Retardation, Drug/Alcohol, Homeless
Prevention Services and a Private Foundation
Serving Southwestern Pennsylvania
Business Metrics
Pittsburgh Mercy Health System has
3 subsidiary corporations
60 community locations
27 major programs product lines
260 revenue/cost center
1,700 employees; 106 Managers & Supervisors
Funded through traditional insurance billing, government grants and
capitation contracts, Private Foundations
AGILE
Demographic Problems
Managers with only clinical backgrounds/ no business skills
60 sites yielded communication barriers and no common language
Excel based —
Overload mode of worksheets with link and formula errors
Too much time to maintain and no certainty of integrity
No way to import and compare actual data to the budget design
Budgeting became a ritual without meaning
Budgeting full-year totals with no seasonality
Tops down budgets w/o manager buy in
No P&L visibility by critical factors
No operational integration
Case Study: Pittsburgh Mercy
AGILE
Organization of Forecast Groups and Processes
Group managers by functional areas—e.g. Community Treatment Teams
Outpatient Clinics
Child Services
15 Groups each meet once a quarter 3 to 12 managers per group
4 members from accounting/finance
Real time process elements Alight Planning displayed on Overhead Projector with Smart Board
CFO is facilitator; Alight Admin on the mouse and keyboard
Review/ make changes in real time
Everyone sees everything!
Agile Planning Case Study: Pittsburgh Mercy
AGILE
Level of Detail (from 10k to 3k line items)
Technical Issues
What level of detail? Actuals and plan (STARTED AT „DEFAULT
LOW LEVEL” Moved to:
AGILE
Using Actuals ―Rates‖ to Drive Plan ―Rates‖
AGILE
Progress to Date
Financial Results $600K annual savings in revenue increases and cost cuts
Process Results
No budgeting
Global updates twice a year – detailed updates quarterly
Forecast accuracy to 2%
Manager commitments based on demonstrated best practices
Understanding the business as an operating entity
Reaction to issues on a two year horizon, e.g. present cut plan
Model Status
Now on third model iteration built from scratch
Case Study: Pittsburgh Mercy
AGILE
1. Move Out of Excel
Deal with structure issues
Deal with modeling issues
2. Reduce Level of Detail
Plan the way managers think; not the Happy Accountant
Reduce detail to better integrate strategy
3. Implement Driver-Based Planning
Reduce direct input data volumes
Increase ‗modeled elements‘—operational/driver based planning
4. Integrate (Don‘t Just Import) Actuals
―Rolling over‖ actuals in plan files—apples to apples
Using actuals to understand trends—focus on rates
5. Implement Scenario Analysis
You can‘t predict the future, but you can construct scenarios
You‘re looking for easy maintenance and comparisons at all levels
Rolling Forecasts & Agile PlanningTM
AGILE
1. Out of Excel
Structure Issues Bound by templates: can‘t add line items on-the-fly
Rollup structures with dimensions are difficult to create and maintain
No multi-user security/process controls
Importing (rekeying) actuals is error prone/cumbersome
Structure problems
relate to budget
templates where you
need to build in
structure and
financial intelligence
from scratch.
Version A Version N…
Save As
AGILE
1. Out of Excel
Modeling Issues Formula and structure errors—aka #Refs
Dependency on key individuals—Lone Ranger Syndrome
Line manager spreadsheet skills are limited; untrained/dangerous.
Modeling problems: cell-
based linking which
discourages driver-based
planning which is the
source of most errors.
AGILE
1. Out of Excel
What to Look for in Planning Applications You can build rollup structures with multiple dimensions/attributes
Application incorporates multi-user security and process controls
Users can create line items on-the-fly without breaking things
A fundamental deliverable
of a Planning Application is
user security and process
controls.
AGILE
1. Out of Excel
What to Look for in Planning Applications You can build rollup structures with multiple dimensions/attributes
Application incorporates multi-user security and process controls
Users can create line items on-the-fly without breaking things
Importing capabilities—aka ETL (Extract, Transform & Load)
Object-based linking with audit trails
Object-based linking is
critical for implementing
driver-based planning.
AGILE
2. Reduce Level of Detail
Plan at the Right Level Lowest level natural class accounts create too much detail
Let managers plan the way they think
Set the stage for driver-based planning
It‘s the data that‘s the killer
7 T&E accounts *
100 cost centers *
12 months = 8,400
AGILE
2. Reduce Level of Detail
Guidelines for ―Right Level‖ Plan/report at a higher level—especially for natural accounts; or
Set up a dual system: traditional budgeting plus forecast at higher level.
Do the math for various alternatives; test imports for a ‗visual picture‘.
Go step-by-step: not everything need be done all at once.
The planning application must have line item detail
Example of an account
structure at a higher
level with line items
created by managers.
AGILE
2. Reduce Level of Detail
Benefits of Reducing Level of Detail Better operational connection for line managers
Reduces overall data volumes; better visibility
Set the stage for driver-based planning
Reducing level of detail
along with moving out of
spreadsheets reduces
Effort and enhances
Business Value.
AGILE
3. Driver-Based Planning
AGILE
Software
Licenses
Sold
Conversion
rate
# Services
Customers
Services
Staffing
Hours
Services Expenses
Salaries
PR taxes/ benefits
Supplies
Travel
Recruitment
Training
Etc.
Predictive logic
diagram for a software
& services business
It‟s all about Activities
& Rates
Hours Per
CustomerBillable
Services
Hours
Staff
Utilization
Rate
Bill Rate Billable
Services
Revenues
Hours
Per
Month
Services
Staffing
Heads
Services
Profitability
3. Driver-Based Planning
AGILE
3. Driver-Based Planning
Benefits of Driver-Based Planning? Tight turn-around for forecasting has a chance
Enforces focus on important operational drivers
Visibility into the numbers—allows meaningful causal analysis of variances
Sets up ―real time planning‖ for scenario analysis
Driver-based planning
delivers a significant
increase in Business
Value
AGILE
4. Integrate Actuals
Integration Issues Data spread across multiple sources
Actuals and Plan at different levels
No underlying activity drivers
Actual and plan structures out of sync
AGILE
4. Integrate Actuals
Import Actuals Metadata and data imports based on chart of accounts structures
Monthly updates from the general ledger
Automated with ―connectors‖ or semi-automated with ETL tools
Integrate Actuals Any source—GL,HR, CRM, RDBMS, OLAP
Any data type—text, number, currency, percentage
Any level—line item, natural accounts, cost center, etc.
Any modeling—simple of complex linking, back calculate rates
AGILE
5. Implement Scenario Analysis
Deliverables Insights: What‘s Going On with the Numbers
Actionable Knowledge: What Are Our Choices Between Things To Do
Decisions: ―OK gang, here‘s what we‘re going to do!‖
About the Future
“Trying to predict the future is like driving down acountry road at night with no lights while looking
out the back window.”
Peter Drucker
“The future ain’t what it used to be…”
Yogi Berra
AGILE
5. Implement Scenario Analysis
Implementation Guidelines Easy to Create: On-the-Fly; No IT; Selectively Include Line Managers
Easy to Maintain: Change Data and Structure in Near Real Time
Real Time Feedback: The Planning Tool is the Presentation Tool
Scenario Drill Down: Comparison & Analysis at All Levels
AGILE
Planning Maturity—Full Matrix
AGILE
Follow up with Alight
Telephone: (415) 456-8528
Join us! The Agile Planner Blog
Blog.alightplanning.com
Webinar Resources Transforming Planning at Pittsburgh Mercy
www.Alightplanning.com/Webinars/PM/Video.html
Application Requirements for Rolling Forecasts www.AlightPlanning.com/Workshop/Requirements-for-Rolling-Forecasts/Video.html
FOCUS Podcast Featuring Sid Ghatak & Ben Lamorte http://www.focus.com/roundtables/avoiding-business-performance-
mangement-software-failure-4-t/
6% is not enough! The Case for Driver-Based Planning in 2012 with
Rob Kugel, Ventana Research and John Miller, Arkonas moderated by
Ben Lamorte
Stuff for After this Presentation -- Slides Coming in
Email and posted to SlideShare
