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Contents 4

Mary Driscoll looks at performance management in FP&A going mobile

We talk to Gorka Hermann, Finance Director, Paramount , about financial forecasting in the film industry

Krysha Shahi talks to Brian Christiansen about his work as Director of Finance and Operations at the Nike Foundation Emma Flanagan discusses streamllning FP&A at Intel with Intelâ&#x20AC;&#x2122;s TMG Director of Finance, Greg Ricks

Managing Editor George Hill Assistant Editor Kathryn Wilson Art Director Mark Lacey Advertising Hannah Sturgess Contributors Mary Driscoll Krysha Shahi Emma Flanagan All Enquiries ghill@theiegroup.com

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Performance Management Goes Mobile Mary Driscoll, Senior Research Fellow, APQC

The pundits are abuzz: business management will be forever changed by the proliferation of mobile devices. According to Gartner, the IT research and advisory firm, â&#x20AC;&#x153;Enterprise mobility that is well-implemented can show a significant return on investment in 12 months. The business value of mobilization is derived in the core business processes. Not embracing enterprise mobility can put an organization at a competitive disadvantage.â&#x20AC;?

5 It’s easy to imagine how an industrial sales person could benefit. Armed with a tablet that’s connected to the HQ servers, the sales person could access up-to-the-minute data—for example, inventory availability, sales runrate for the month—and come up with a price that pleases the customer and complies with the CFO’s parameters for operating profit margin. What’s not to like?

truly meaningful conversations about how operating decisions shape financial outcomes.

According to Accenture’s David Axson, known in the corporate finance community as a preeminent thought leader on performance management, “mobile technology can provide access to information that can be both simple and secure. It can provide a flow of data equal to that availBut how will the growing able through a workstation, penchant for mobile comput- without the geographical and ing effect finance managers? technological limitations of According to APQC research, workstation access.” Working the impact will be unavoid- in a mobile information enviable and, for savvy teams, ronment, the FP&A manager a welcome event. Finan- can ensure version control cial planning and analysis and engage counterparts in (FP&A) directors who have rich scenario planning. already embraced innovations such as rolling forecasts and driver-based planning A note on terminology: It’s will want to leverage the in- important to distinguish beformation-delivery mecha- tween mobile devices (smart nisms of mobility. Here’s one phones, tablets, laptops, scenario. An FP&A profes- wearable computers, etc.) sional working alongside op- and mobile computing caerating managers trying to pability. Mobile computing— determine, say, which cus- sometimes called mobility—is tomer segments to support the ability to gather, process, with better service will find it and/or deliver information a boon to power-up a tablet using such a device out in the and direct everyone in the field. What is truly compelling room to one performance is the ability to be as effective picture—thereby avoiding de- working remotely as you are bate about who’s numbers when sitting at a desktop that are current and correct. With is hard-wired to a server. indisputable facts on display, Survey Results: The Game is the finance analyst can spark On for Finance

6 To learn just where things stand for finance, APQC teamed up with IE. - Innovation Enterprise in March 2013 and fielded a cross-industry survey. Responses came in from 165 people, mostly finance and accounting professionals. Fifty six percent of the organizations reported annual revenues of more than $1 billion. The sentiment is strong and clear (see Figure 1). A whopping 87 percent of survey respondents agree with the following statement: â&#x20AC;&#x153;Within the next five years, mobile solutions will completely transform the way companies operate, manage, and monitor the work-

Figure 1: 8% Disagree Somewhat

2.5% Disagree Fully

40% Agree Fully 47% Agree Somewhat

place.â&#x20AC;? The Big Question: Who Gets to Go Mobile? When asked if mobile computing is currently being discussed by finance people in their organizations, 71 percent said yes. They are engaged in either active planning, or they are exploring concepts. The survey also delved into this trendâ&#x20AC;&#x2122;s underlying drivers. Over 50 percent of organizations said the primary push comes from the need to improve performance reporting to the senior executive team. Anecdotal data show this breaking two ways: providing regular performance reports to board members via tablets

or giving senior executives who make the mistake of creating a globe-trot access to up-the- corporate-centric system, one that benefits headquarters but minute performance data. But be aware of the need for is not aligned with the requirecareful up-front planning. ments of people in the field, he “Some senior-level executives notes. “And if operating manlook at mobile computing as a agers feel they’re getting limitnew and attractive toy,” says ed value, they’ll just grudgingly Craig Schiff, president and CEO input data when told to. “That’s of BPM Partners. (Mr. Schiff, a bad investment for the coma pioneer in business perfor- pany. So, the application of mance management, helped mobility to performance mancreate and define the space known first as analytic applications, then business intelligence and now BPM.) “There is no ‘if’ in this picture. It’s clearly the next wave. But not everybody’s going to be successful.” Who is on the right track? Mr. Schiff believes that “the FP&A managers who will make it work are right now very focused on the question: ‘How do I provide information access to all the people who need it, in the formats best suited to their roles?’” Some FP&A groups will

Some senior-level executives look at mobile computing as a new and attractive toy agement comes with the usual design challenges.” Finally, the survey respondents had major concerns about data security. Understandably, finance managers are pained by the thought that hackers could use mobile devices to get their hands on non-pub-

lic financial performance data. On this score, Gartner urges CFOs to work closely with CIOs and CSOs and â&#x20AC;&#x153;detach from the hype of the technology, and match the maturity of mobile device offerings against the enterpriseâ&#x20AC;&#x2122;s risk profile and business strategy, and then move forward as appropriate.â&#x20AC;? In all, the march of mobile computing, along other high-impact IT innovations such as Cloud computing and predictive analytics, will give finance teams new opportunities to increase their relevance to decision-makers at the front lines of the business. This trend may be still in its early stages, but its promises are obvious. ABOUT APQC

APQC is a member-based nonprofit and one of the leading proponents of benchmarking and best practice business research. Working with more than 500 organizations worldwide in all industries, APQC focuses on providing organizations with the information they need to work smarter, faster, and with confidence. Every day we uncover the processes and practices that push organizations from good to great. Visit us at www.apqc.org and learn how you can make best practices your practices.

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Interview: Gorka Hermann, Finance Director Paramount Pictures George Hill, Managing Editor

I spoke to Gorka Hermann, Finance Director at Paramount Pictures, about FP&A in the film industry and the unique challenges that he faces in his role. With the unpredictability of the film industry with major films flopping and minor films making millions, I was interested to see what kind of experiences Gorka had working within forecasting in this complex industry.

One of the main challenges that Gorka finds is that given the nature of the business in terms of financial reward often being spurred by emotive reactions, most of the forecasting needs to take place through 'gut feeling'. The use of high tech forecasting systems are used in the same way as other large corporations although given the nature of the business, gut feeling needs to play a part. Having moved from another industry this was probably the hardest adaption that Gorka had to make, but at the same time he and his team have managed to create systems where these gut feelings can be backed up through precise modelling.

for Paramount have stayed steady throughout the past 5 years. What Gorka has found is that during times of recession numbers at the box office actually tend to stay strong. He puts this down to people being more willing to essentially go for smaller luxuries such as restaurants or cinemas rather than more expensive luxuries such as an expensive holiday or a car.

Also one of the elements of working in the European market that he has found to reduce the impact of piracy is a short lag time between the US release of a film and the European release date. Especially for films with a large following for instance Transformers or Star Trek, For instance despite the where the fans are normedia's perception of pira- mally excited about the film cy and the widely held be- and not willing to wait for lief that it is destroying the 1-2 months if there are verindustry, box office sales sions available online.

In recent years, one of the ways that this has been combated is through the use of new technologies. Although it was possible for 35mm films to be released on the same day either side of the atlantic, digital has made it easier. For instance the use of digital films and screens has meant that films can be distributed for less and can also be moved between screens quicker and more easily. This has allowed the transfer between screens to be easier and also printing costs to be reduced. Another element that Gorka discussed is the financial forecasting process for Paramount. Original films are difficult to forecast for, compared to a sequel. It is possible to use the success of the previous films to help predict how successful the other films will be, sometimes these can even exceed the original film's revenues. Not only does this make the success of a film more predictable, but it also mitigates risk to a certain

extent, as there is a benchmark for expected revenue. Technology is also likely to affect the way that Gorka does his job in the coming years, with developments in financial forecasting software. Although this is the case Gorka makes the argument that regardless of the new technologies, forecasting will still use the same processes and this is unlikely to be effected by faster technologies. It may make the forecasting process quicker or more convenient, but the changes in this will not effect that actual core forecasting process. We then went on to discuss what advice Gorka would give to somebody who is looking to start a similar career to him. Gorka claims that working for a consulting firm for a few years then moving into an industry that has a genuine growth potential is the best way to make the move. He also mentions that rather than choosing a job which has simple fore-

casting processes, choose a job which requires more complex forecasting. This way, Gorka says, you are more likely to make an easier transition to CEO if the chance ever arose. One of the key takeaways that I have from Gorka is the unpredictability of films, which naturally make financial forecasting within the industry difficult. I think he expresses it best: "You can do a good analysis, aim high but there will always be films that don't do so well."

FP&A in Charity An interview with Brian Christiansen Director of Finance and Operations at the Nike Foundation Krysha Shahi, Finance Leader

Brian Christiansen is the Director of Finance and Operations for the Nike Foundation, an international organization dedicated to unleashing the Girl Effect at Scale to help eliminate global poverty. Prior to this experience, Brian worked in centralized global finance roles at Nike, Inc, and in a variety of positions at Intel Corporation.

He also serves on the Pitzer College alumni and Harambee Center boards. Brian received his BA in Economics from Pitzer College and an MBA from Duke University. Brian is originally from Seattle, WA and now lives in Portland, OR with his wife and son. What kind of unique challenges are there working for the Nike Foundation?

ly is? I don't think the challenge itself has changed but technology changes how we approach it and to me it is a process of acquiring data and turning that into information and exact knowledge and climbing that ladder of utility. I think that our technology gets better and better and so we have the opportunity to do that more effectively and efficiently but organisations grow increasingly complex and I think our's is a pretty good example of that what with going overseas with different organisational structures and all those kinds of variables. I think it is the same challenge but it constantly evolves which is what makes the job interesting.

I think the big challenge for us was making the move from a traditional grant making organisation to much more of an operational organisation across 5 countries including 3 in sub saharan africa so it was a matter of acquiring the knowledge and skills to execute that vision versus our former incarnaIn your presentation you tion effectively. gave a case study of What do you think the how you have effectively biggest challenge facing used FP&A at Nike, what people in FP&A current- kind of thing did people

take away from this?

in your week to week, month It is a little bit of a case study to month, quarter to quarter it is a bit broader than FP&A. processes gives you an opFP&A was the centre piece of portunity to drive the finance it and hopefully people relat- agenda and increase your influence in the organisation. ed to different aspects that we have gone through and learnt from our mistakes, benefit from our successes and thought about how they can frame up their challenges in a fresh way and so they can do things differently when they head back from the conference. What is the key lesson you What advice would you have have learned from your time for somebody looking to start working at the Nike Founda- a career in FP&A?

You have to be comfortable in an influence role and for me that translates to "you are not always out in front of the camera"

tion? Leveraging other functions apart from finance to drive the finance agenda and influence. An example might be something like risk management, which is a topic much broader than finance but incorporating risk management

I think that you have to be comfortable in an influence role and for me that translates to "you are not always out in front of the camera". If you are a person who wants to make all the decisions then I am not sure finance is necessarily the way to have that happen in a lot of industries, but if you

want to be a part arindambanerjee / Shutterstock.com of decisions and have a really broad really dynamic business like view of the business then I think finance is a great the Nike's or foundations the place to go, but you have to technology is going to have be comfortable being behind to acknowledge that reality the camera as opposed to in to the extent that systems can be flexible but maintain front of it sometimes. the integrity, I think that is The last 10 years have seen going to be the nut to crack. considerable technological Frankly, I have not found fiadvances in the finance secnancial systems that do that tor, what kind of technology as well as I would like yet, its do you see innovating the not that they are ineffective function in the next decade? its more that it gets really I think that change is the laborious to make structural norm in terms of structure changes within systems. So and the business is always technologically I think that changing but we would all like the system vendors have a at one point to think we are real opportunity to acknowlall operating in a fairly con- edge that reality. sistent environment for multiple years. I just don't know if that is ever going to happen. I think that things change to rapidly now especially with a

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Streamlining An Interview with Greg J. Ricks, Director, Finance at Intel Emma Flanagan, Finance Leader

Greg J. Ricks is director of Finance for Intel’s Technology Manufacturing Group (TMG). He is responsible for FP&A for TMG which is the majority of Intel’s Cost of Sales, for Intel’s capital budgets, and for Human Resource Finance. In addition he oversees TMG’s risk

management and Sarbanes Oxley’s financial controls, and TMG’s hedging programs. Ricks joined Intel in 1996 and has held a variety of positions including working in Factory Finance driving down the costs and capital spending, he was the 300mm program finance manger as Intel transitioned to 300mm wafer manufacturing and was the controller for Intel’s Strategic Capacity planning. Ricks received his bachelor’s degree from BYU in 1991, and his MBA from Purdue University in 1996. He sits on the Valley of the Sun United Way’s Ending Homelessness Advisory Council and is the father of 6 children. FP&A Innovation - What unique challenges have you found from working at Intel? Greg Ricks - From a finance point of view one of the big challenges is that you have to go learn the technology to inform decisions. It is certainly the focus for me at intel the technology is very complex, made by PHD electrical engineers at the top of their field. We are drawing lines that are the size of atoms of waifers. It is complex technology but with me being a finance guy, I want to go influence business decisions that underlines our profit, be that reducing costs or increas-

ing revenue and to do that I have to go understand the business. I am in the manufacturing side and have been for most of my career so it has been important for me to go and understand as much about that as I can. Some of the ways I have done that for example is when I was a capital manager early on in my career I would go down onto the manufacturing floor every month and grab either a process engineer or an industrial engineer to have them teach me about the tools, the processes, the technology and what was going on, what was working and what each area did. That was important for me then to be able to go influence decisions that were made about how many tools we needed to buy. I needed to understand how our manufacturing flow was set up, how we used the theory of constraint etc to really go and influence. It is probably more complex that trying to make a soft drink or something! The manufacturing has been hard to understand and thats a challenge, and without that knowledge I don't think I am as good an influencer. You recently gave a presentation at the FP&A Innovation Summit in San Diego, what lessons do you think your audience learnt from your talk?

I think that theres a couple of elements you have to have the feel for what's possible and what the problems are. An easy way to find out what the problems are is to find out what everybody hates, so thats at least a way to start. I think that the second thing is you have to be brave enough to set a big goal or vision. With that you have to be committed yourself. So setting a goal off one hundred thousand hours which is more than double what we had ever done before was a big goal. People need to also understand that you need to walk the talk, we had a watershed moment in my group where we had established a hotline where people could send in ideas about how to fix issues that they saw all over finance. I remember my very first meeting we sat down and started going through the ideas. There were about thirty that we were going through and sat there and watched as my team said 'well we can't do number one, or two, or three and all the way down to about number 10'. There were lots of good reasons about why we couldn't implement these, but I said ok, stop, we need to go back up and find a way to implement every one of these ideas.

how to do that. This was a big deal because we had started down the path of how we could really transform what we are doing. What do you think a company needs to consider before they take on similar streamlining initiatives?

You need more than just a commitment from yourselves, you also need some commitment from management. Although that can come and to get management on board we had to gather a lot of data on what people were saying, the hours that tasks were taking and some of the absurdities of the things that take a lot of hours. You need to have a message and a vision that you can sell thats backed up by some data, at least at Intel, here nothing gets done without data. You also have to have a desire to be more efficient but also to do things faster, to turn decisions faster, to do analysis a bit faster and so that played an important part. Then you have to communicate with the people involved that this isn't a headcount reduction programme, everyone shouldn't be scared for their job. We painted a vision of taking out some of the lower value added stuff to concentrate on the higher value That was a big moment for us added work that people want to because I think my team realised work on but don't have time. Peo'oh, something really has changed ple need to feel safe about finding here' and we need to go figure out

a way to dramatically improve this. There are some areas that could improve themselves right out of a job so we need to communicate a commitment to our employee that take this kind of bold action and we will reward you for it. Technology has had a profound effect on the FP&A role in the past 10 years, what effect do you see it having in the next decade? The technology is a huge help but it is only an enabler for what you are willing to do already and the business processes you are willing to put into place. Here's an example we are looking at implementing, a brand new budgeting and planning system and it has a lot of cool features that we haven't had before and as I look at it, a lot of opportunities to save us time. However, we can also implement that same system and keep doing business in the same way we are doing today, and that will result in saving us nothing. So you have to have a combination of both and a willingness to do both, but I do think that technology is there or will get good enough. Financial results will be a lot more instantaneous, we

will know where we stand at every second. Some companies already today are carrying around iPads with dashboards on them that tells them where they stand at every second. The challenge is, what is relevant and what isn't? Its like the internet, there is a lot of data an knowledge out there but it does no good if you can't figure out what's relevant. I don't know where we will be in 10 years. Will things dramatically change? Maybe, but you are still going to have all the basic stuff. You have to do good budgets and planning, we need to have data to go influence decisions, business partnerships are still going to be very important. I look at it as the core, which will stay the same, the tools we use may change and they change things faster than we have ever had it before and because we have some much more data it may make it more of a challenge. What do you look for when hiring people into an FP&A role? What I am looking for as we hire people in this field is certainly the basic skills that people need, solid finance skills and accounting skills. I am much more interested in good

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problem solving skills. Also Leadership skills, the ability to take something on and take ownership as well as the importance of influencing skills are important. The ability to take data and turn it into an analysis that you can go sell and becoming creative about how you go and sell it. Those things are more valuable to me. We are really paid, finance professionals at Intel, to go influence decisions. That is what I am most interested in. Yes we need to close the books, yes we need to cost products but those are not the ends in themselves, in my opinion. My number one certainly is keep Intel legal, my number two is go have an impact on shareholder value. I think it makes the job much more attractive, sexy and impactful if we can go and help the business get a better result.

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