Mining companies have little control over the demand for, supply of, and pricing of their product. Even more so over the last few years, the level of uncertainty has increased significantly, and there is always a degree of risk due to constant changes in global mining policies. Because of this, there is clear opportunity for mining companies to add value to their businesses by having the ability to react quickly to market changes. Even in situations with a robust underlying demand, having the ability to improve productivity, efficiency and profit margin can be the difference between attracting and not attracting capital, not only for newcomers but also for those well established in the mining industry.

There are many challenges facing mining companies today

Mining companies need to make strategic decisions that involve the allocation of significant amounts of capital at all stages in the mining process from exploration through to production. All along the way, they must also make operational decisions designed to maximize return on their investments on an ongoing basis. Small improvements in efficiency in the production line can have a fairly large impact on the bottom line. But to truly achieve operational efficiency, information and data must be shared across the operation, between departments, and between management levels.

Often complex and large in terms of both organisational and budget requirements, projects in the mining industry are often in remote locations. Because of this, the ability to track operations closely and quickly is a key to success. ASX listed mining companies also contend with providing accurate, forward-looking financial guidance to the capital markets, where results are highly scrutinised and “missed quarters” can have a negative impact on stock price. This is yet another reason why having accurate and timely data is critical for mining companies.

Move from siloed data sources to Integrated Planning in mining

A cloud-based connected planning platform unifies data, people, and plans within a single system. From an operational and tactical perspective, the Chief Operating Officer, together with regional and mine management teams, need specific and accurate financial and operational information to assess each situation and make the right decisions regarding different mining sites.

Changes in commodity prices, or currency fluctuations coupled with changes in production costs (i.e. fuel increases), can impact the overall mining plan as well as the financial plan. Having the ability to quickly, easily, and accurately assess the necessary data to alter assumptions used to plan and forecast and to keep key stakeholders aware of any changes is critical to business success. When you can confidently and transparently keep track of all the resources going into various capital projects, it makes it easier for the entire organisation to plan its allocation of resources and communicate progress to investors and key stakeholders.

Empowering mining companies to make better more timely decisions.

A Connected Planning approach for mining companies means that all relevant data is modelled in a single, centralised platform. In addition to traditional financial planning, a connected planning platform can be used to plan for, and link together plans from every functional area of the business, including production, Supply chain,  HSEC, Workforce planning etc..

This empowers businesses to make quicker and better-informed decisions, creating a competitive advantage. Models can be built quickly and without dependence on IT or advanced coding skills to connect different time horizons. This allows users to predict monthly and quarterly production figures on the fly, based on actual daily production.

Because all relevant data is stored within the same system and shared collaboratively, it improves the natural downstream flow of information in the production process and stockpile management.

Bi5 Solutions has built a reputation based on many years of experience working with mining companies in Australia to improve the enterprise performance management processes.

We’ve partnered with mining and mining services companies on improving the following: strategic and long-range planning, financial close and consolidation, detailed mine site planning, reporting and analysis of various aspects of mining operations (both financial and operational), and detailed business intelligence (BI) projects at mine-site level.

Contact us at bi5.com.au to find out more.

The post Integrated Planning and Forecasting for Mining Companies appeared first on bi5.

Over the past few years, the term ‘finance transformation’ or ‘financial digital transformation’ has gained traction in the finance sector much the same way as ‘digital transformation’ has. If you play any role in a finance team, you’ll at least have heard of this approach, if not attempted to initiate it in your own organisation.

The problem is that where ‘finance transformation’ once had a clear, targeted meaning, the waters have now become muddied. This means that in place of the expected transparency and optimism around updating the way you work, there is often now a sense of scepticism and anxiety.

Based on our discussions with many CFOs, either they’ve tried it before, with disappointing results from the technologies or provider they worked with, or they’ve heard of negative experiences from peers and want to avoid making the same mistakes.

True finance transformation comes from a combination of process, system and cultural change. It doesn’t make good financial sense to spend thousands on a technology overhaul if your finance team cannot then use that technology. Likewise, a change in your business doesn’t count as finance transformation if your team still feels overworked, stressed and pressured at month end.

A successful finance transformation positively impacts everyone across your business on a day-to-day basis. It lowers your costs and allows you to reduce headcount, doing even more with fewer people. Not only this, but it gives you greater insights into your business, offering easy-to-use data and reporting, ultimately lowering risk to make you more compliant.

With competitors raising their game, now is the time to act.

What is finance transformation

In simple terms, finance transformation, of financial digital transformation, is the combination of process, system and cultural change across the finance operations of a business, which is then implemented through new technologies, training and analysis. As a practice, it is suitable for finance teams seeking to streamline, simplify and optimise their systems through a shift in their approach, to drive strategic value.

Many vendors claim to offer finance transformation, but what this often means is that they’ll sell you the technologies to update your internal finance systems, without the operations training that your team requires. Without enabling strategic change, this often reults is businesses might spend a lot of their budget on the latest technology without being provided with a complete roadmap to transform their systems.

In additiona, it’s easy to be persuaded by ‘quick-win solutions’ which may be more affordable in the short term, but which you will outgrow quickly. CFOs know they need to make changes, but it can feel overwhelming to initiate an “overhaul” when a simpler, more affordable solution might keep problems at bay for a while. These options regularly don’t scale with your company though, and merely tick a box to help you feel like you’re taking steps forward.

Over the long term, what many businesses don’t realise is that they are going to end up spending more money with short term solutions. Proper finance transformation is an initial investment, but over five years the way they are currently doing it works out far more expensive. Sadly, a lot of finance teams work on such a ‘hand to mouth’ way that they don’t often have time to look into better ways of working.

Feeling overwhelmed by your options

Having spoken to many CFOs, we see patterns in the things they tell us: for many, they recognise that their business needs to make a considerable investment but are reluctant to initiate it. Many businesses still rely on convoluted, outdated processes which are potentially damaging to their business – but the alternatives seem too immense to get a grip of.

Being able to predict future outcomes and planning for growth are two activities that often fall by the wayside because completing the current workload feels too all-consuming. This is a regular pattern for many organisations, many CFOs don’t know where they’ll be in the next three to five years, and instead they would like to be able to picture that. To get there, many need help accessing the appropriate technologies that are available and navigating in the right direction for their business.

How financial transformation looks practically

Some practical examples of the changes finance teams can expect from finance transformation include:

• Your finance processes and systems are standardised and automated to avoid error and increase efficiency.
• Your month-end reporting becomes automated, instead of a week or more spent creating a board pack.
• Further automation across business functions will ensure cost-saving opportunities across your department.
• Collaboration across the team becomes far easier: you’re equipped with a centralised finance data hub which enables collaboration.
• Opportunities to operate as a remote team – this means potentially lower wages and more savvy payroll planning.

Understandably, CFOs need a quick, reliable and thorough service. Their team requires training, onboarding, consultation and a ‘people element’ which is often missing from finance transformation offers – it’s a change in attitude as well as a physical process.

Want to read more?  check out our other blogs

How to get the most from your Digital Transformation journey

The growing role of Finance and Accounting in Digital Transformation and business success.

The post Finance Transformation – what is it and can I achieve it ? appeared first on bi5.

Just when the term FP&A, Financial Planning and Analysis, is starting to get some traction there’s a new kid in town, xP&A, or Extended Planning and Analysis.

But what is xP&A, and why is it different to FP&A?

At their core xP&A, and FP&A are both Planning and Analysis processes, or to use a more common term, Budgeting, Planning, Forecasting and Reporting.  So what is the difference between Extended and Financial planning and analysis, and why the need to differentiate?

Well there is a growing consensus that financial planning alone isn’t enough. If you want to succeed you need to do more than just plan in a financial sense, you need to ‘extend’ your planning processes beyond purely financial planning, into extended planning

At least that is what leading analyst firm, and master of the acronym, Gartner revealed in 2020 when they introduced the new xP&A acronym. According to Gartner, 

“xP&A is a response to the challenges faced by enterprises seeking to exploit new digital business models and navigate current economic uncertainties… It is a platform-centric enterprise planning strategy that extends FP&A use cases beyond finance by adding other key operational applications that use the same composable vendor platform, architecture and data model in order to improve alignment. Newly added planning disciplines beyond those of the finance department include supply chain, sales, marketing, HCM and IT.”

What this is saying is that companies now need a comprehensive view of their business, across multiple lines of business and operations, and linking corporate strategy and execution. That is across both finance and operations. 

Where should the responsibility for xP&A sit?

With xP&A (extended planning and analysis) requiring a comprehensive view of the business, the responsibility should rest with the department with the widest view of the company, and that is the finance domain.  Finance teams are ideally positioned to deliver this unified view, since they often are already gathering company-wide financial data, and performing the resource allocation, planning, forecasting, and reporting functions for the business. The xP&A approach helps to further empower CFOs to lead company-wide strategic initiatives and help optimise business outcomes.

According to Gartner’s estimates

“By 2024, 70% of new financial planning and analysis projects will become extended planning and analysis (xP&A) projects.” 

In other words, xP&A is the way of the future. This is something we wholeheartedly agree with, and is something we have been working with our customers on for several years now.

How xP&A can help every business

While the functions provided by finance teams are critical, a company’s profitability depends on much more than their budgets and spreadsheets. At its simplest, business success depends on how a business actually operates, but how do you make sure your business operates successfully?

In today’s competitive, and more recently pandemic affected, environment, planning and adjusting for change takes on even greater emphasis.  With increased competition, smaller margins, and more uncertainty, both operational planning and financial planning take on even more importance.  The ease and speed with which finance professionals can incorporate the latest operational data into their planning process, and then adjust their budgets and forecast accordingly, will be a major determinant in ensuring success with your business operations.

Consistent and continuous planning must consider at a minimum;

Supply chain and sourcing

• Where can we get the products we want, cost-effectively? How will they be delivered, and when will they arrive?

Workforce planning

• How many people will we need during peak season, and with what skills? How will we recruit and train them? What is a competitive rate of pay to keep good people on staff? How do we measure performance?

Operations

• Are our factories, warehouses, and offices placed where we need them? What resources will we need to keep the lights on and everything looking fresh and festive?

Marketing and Sales

• What are the hot trends? What are consumers likely to demand? What themes do we want to promote? What is the sales team view of the market?

A good CFO understands the need to factor in all these departments’ needs and outputs, and their financial impact, in order to make the best financial decisions for the business.

Creating a clear path forward with xP&A

At bi5 we believe in a cross-functional, continuous approach that we call Integrated Business Planning. A successful Integrated Business Planning environment opens up clear sightlines throughout the entire business. It does this through the integration of  both financial and operational data so the finance department can see in real-time what is going on with their financial and operational activity across sales, HR, operations, and all other business domains and areas.

Whereas many organisations are just beginning to consider more modern and leading-edge integration and analytics, Integrated Business Planning, or xP&A,  delivers it

bi5’s approach to integrated planning looks at key business drivers (internal and external) to discover relationships that might otherwise be overlooked. When data from various systems are integrated into a ‘single source of the truth’, scenario planning and what-if analysis with your business plans becomes much more effective.

In our opinion, the bi5 approach is reflected in Gartner’s recommendations that organisations should develop an xP&A strategy that “enables finance to lead and coordinate broader, companywide continuous planning and performance management initiatives.” Empowered with greater visibility into live, dynamic enterprise data streams xP&A platforms let businesses “exploit rapid change and achieve improved business outcomes.”

As new xP&A tools give the finance office greater access to real-time data throughout the enterprise to help remove data silos, Gartner suggests the office itself will transform and take on an expanded role. Using xP&A, finance professionals can guide and improve company wide planning and financial budgeting processes, helping the business as a whole to run more effectively and improve business performance and ultimately financial performance.

xP&A puts everyone on the same page

Leading-edge xP&A platforms can deliver improved analysis solutions, with the ability to continuously access and analyse a depth and breadth of data throughout the organisation. Finance and business leaders can collaborate, forecast, analyse, and plan using a single source of truth.

Since everyone has access to the same data, analysis is dramatically faster and more accurate. It becomes possible to recognize patterns and influences, test various scenarios and assumptions, and anticipate emerging risks and opportunities.

Today’s environment of continuous change means businesses must find ways to become more agile and resilient—and anticipate what’s ahead. The Integrated planning and xP&A approach leverages the latest integration capabilities to deliver a holistic view of business performance. This unobstructed view possible with xP&A lets finance professionals make richly informed decisions more quickly to achieve improved financial success.r before

More important now than ever

The many shocks of the early 2020s have demonstrated why xP&A is the way forward, since resilience and agility are essential qualities in today’s business climate. Connected Planning and xP&A let you see clearly to meet current challenges and craft your vision of the future.

bi5 Solutions is a leading provider of modern Budgeting, Forecasting and Reporting (xP&A) systems and can help your business achieve

Want to read more?  check out our other blogs

ERP or EPM….which should you do first?

The post What is xP&A, and what was FP&A? appeared first on bi5.

As a Finance Professional, at some point in your career you will be part of an Enterprise Resource Planning (ERP) implementation. Those that have experienced one will tell you that it will be expensive, and time consuming, and possibly stressful, but if it’s done right it can be very transformative, and deliver significant value to your business through the improvements in your data and processes.

Very often the upgrade of an accounting or ERP system forms part of a bigger digital transformation project, where the other significant component is the implementation of an EPM (Enterprise Performance Management) solution.  It is here where bi5 Solutions is generally involved in the discussions, and the one thing we have picked up over the years is business uncertainty as to if they need both, and what the correct order should be.

When we talk to businesses about EPM and CPM (Corporate Performance Management), if they’re not currently in an ERP implementation process, there is often one in the pipeline, where it has generally been for a few years already.  No matter how pressing the need for upgrading their ERP, the business has often deferred the decision on platform and implementation several times, citing the time, effort and costs involved.

The deferral of an ERP implementation often further delays the digital transformation project, as the general view is that the ERP is the backbone and must be done first.  But we are here to say that is not always the case, and in many situations it makes more sense for ERP to not be first.  Why?  Well first let us look at the two systems.

Are ERP and EPM the same?

The short answer is no, ERP (Enterprise Resource Planning) has as its primary focus transactional processing, and transactional data, with end users being those who process transactions. EPM (Enterprise Performance Management) and its related CPM (Corporate Performance Management) are more of a managerial tool, with the focus on managerial information and data.

So what exactly are they?  Let’s look at each one in more detail.

ERP Systems – business operations

At their simplest, ERP systems are about operational efficiency. ERP systems help organisations run their operations and related processes, and it does this through automating transactional processes and flow.

For those that remember, the precursor to ERP systems were Manufacturing Resource Planning (MRP) systems, which as the name suggests were specific to manufacturing businesses.  In the 1990s the term ERP first came into use to extend the capabilities of MRP systems beyond just manufacturing businesses to encompass any ‘enterprise’.

ERP is generally referred to as a category of business software. They are most commonly a suite of integrated applications which businesses use to collect and store their business activity data. You’ve most likely been exposed to ERP platforms even if you didn’t know they were an ERP platform. They can help automate and track the below processes:

• Finance and Accounting
• Project Management
• Manufacturing
• Supply Chain Management
• Order Processing

The objective of modern-day Enterprise Resource Planning software systems is to help automate and integrate as many processes as possible across the enterprise, with the aim of improving efficiency in transaction processing and operations, whilst also providing increased accuracy and consistency across multiple functions of the business.  More recently ERP systems have added user experience as a key focus of development, with some even encompassing visualisations and metrics, in addition to their core transaction processing function.

EPM systems – business management

Where ERP (Enterprise Resource Planning) is about operational efficiency, EPM (Enterprise Performance Management) and CPM systems are focused on improving the management processes within businesses.  They are primarily used by management in the reporting and planning functions of an organisation to support management processes. Every business wants to see its results, and results are the outcome of decisions made by management, but how do you know if management decisions are actually improving business performance?  Through their ability to collect, integrate, and aggregate data from many disparate systems across your organisation (think ERP, CRM, HCM, IMS, HSE), EPM systems help to manage the processes of planning, monitoring and management of financial and operational results and performance, using both financial and operational data.

The lower your businesses organisational complexity, the lower your need for EPM. However as complexity increases, so does the benefits of an EPM system.  As you introduce additional product lines and groups, expand into multiple operations, regions, geographies, or currencies, your complexity increases, and this can impact the way data flows around the organisation. As your transactions increase, be that in type, details, or number, without the correct tools in place management’s ability to analyse all of this data and make decisions is limited.

Some of the key management processes EPM/CPM systems can help organisations automate include:

• Month End Close and Consolidation
• Financial Reporting
• Management Reporting
• Strategic Planning
• Rolling Budgeting, Planning and Forecasting – Financial and Operational
• Financial and Management Reporting
• 3-way modelling
• Analytics and Scenario Modelling

Is EPM a subset of ERP?

If you’ve ever started on the ERP software journey you’ll likely have heard a vendor say their products has inbuilt EPM (and BI) capabilities.  So does that mean EPM is a subset of ERP?  Quite simply no. Whilst some ERP software does have some EPM capabilities, as outlined above, ERP and EPM platforms are used for quite different things.  The end users of each will often be different, and the usage of each will be different.  You may be able to enter your budgets into your ERP, but can it do anything more than a simplistic budget? Can it do cashflow timing, driver-based budget entry, multi-level overhead cost allocation?

ERP and EPM are complementary

For those that don’t have an EPM solution a simple way to think of them is;

‘Enterprise Performance Management (EPM) will systemise the things that you currently do in Excel spreadsheets with data from your Enterprise Resource Planning (ERP)’

Both these software systems overlap. By now you hopefully understand that not every business will need an EPM and ERP solution. The more complex your business the more value you will derive from an EPM solution, because it adds an additional layer of information and analytical capabilities to your ERP.  In that sense they are complementary, without the transactions processing of the ERP there won’t be the data to report, analyse, and budget on.  Conversely, without EPM you will not be able to analyse your data fully and thoroughly, to compare performance against budgets and plans, and make decisions and allocate capital to improve your organisation’s performance.

Which comes first, ERP or EPM?

Understandably, any implementation of large systems designed to improve operational efficiency, such as ERP’s, are disruptive.  Anything that changes operations and processes will be disruptive. So how can you make sure it is as disruptive as possible? And if EPM and ERP are different, yet complementary, which should come first?

Organisations will generally prioritise ERP implementation, get the ERP in and then look at the EPM.  From organisations we’ve spoken with this is often driven by concerns that an EPM implementation needs a set ERP/structure to work off, and any change to ERP platform in future will incur additional costs to change the EPM. Sometimes EPM is not even considered as they have been sold on the idea that the ERP can do it all.

Hopefully you now understand that EPM is not a subset of ERP, and to get the full benefit of an EPM implementation you need a dedicated EPM system. However needing a ‘set in stone’ ERP to work off is rarely the case, and if your consultant says it is then we’d recommend finding a different EPM implementation partner.

A modern EPM solution is solely interested in data from the ERP. The structure of the data it is interested in can, and will, change over time. New accounts will be added, new entities, business units, products will be added, reporting formats and structures will change, these are all likely at some point with your ERP, and the EPM platform must, and will, accommodate that.

So not only do you not need to wait for your ERP implementation before commencing your EPM implementation, if you implement EPM applications before your ERP solution it may actually help keep time and cost down with your ERP implementation, which would make for a much happier CFO and finance department.

Below are the key points as to why we at bi5 Solutions always recommend organisations do EPM first, and how that can actually speed up your ERP implementation?

Cleanse your data with an EPM solution

One of the main reasons for an ERP implementation failing, or running over, is to do with the data.  There is no point in spending time and money on implementing a new ERP system to then go and put ‘bad’ data in it when you conduct your data migration process.

Cleansing the data post go-live is much more difficult and will take you longer than doing it before go-live. Post go-live there is much less urgency to correct the data, which is often why there is bad data there in the first place.  Depending on the quantum of incorrect data this can have impact your ability to use it for decision making later on.

EPM systems are often the first place that incorrect data it identified. There is barely an EPM implementation that we’ve done where the additional level of detail and analytics provided by the EPM platform hasn’t identified a data issue in the source/ERP system.  Often it is historical and hasn’t been picked up previously, sometimes it’s current and on-going and has been hidden or lost amongst the rush to get month end finished.

Migrate data with ease

Sometimes migrating data between your old and new platforms may be managed manually and require manual entry, or if you are lucky it can be loaded in via a batch file.  This is generally done at a point in time, where an opening balance is brought as the starting point of the new ERP. With an EPM platform already connected to your existing ERP this process can be streamlined. No more extracting from your ERP to Excel spreadsheet and then manually modifying it.  With an EPM platform your transactional data can be loaded directly into the EPM, any transformations or mapping between old and new accounts processed, and then written directly to a SQL DB, or extracted to a flat file (csv/xlsx) in an appropriate structure for batch loading into your new ERP.

Validate processes and historical data with an EPM solution

Once migrated to your new ERP, the data must be validated to ensure that totals match and that the processes have been set up correctly in your new ERP.  This can be a very manual and time-consuming process, often done in Excel. It is very likely you will need to continue until data and business processes have been validated, and the longer it takes to validate, the more you will need to validate.

The advanced analytics possible with a good EPM solution make them ideal for use in data validation, as they can provide high-level to transactional level detail within the same screen at the click of a button.  This enables you to identify high level numbers which may look incorrect, and then quickly drill down to see the transactional level detail that makes up those numbers.  There you can identify which transactions are incorrectly reporting and set about fixing them.

When it comes to matching or validating against historically reported numbers, with an EPM solution you can run multiple CoA’s (Chart of Accounts), in multiple hierarchies, and across multiple reporting formats and structures.  This capability allows you to load data from both your existing ERP and new ERP into the one EPM system, and report side by side in the same format, old or new. With data reported side by side you can very quickly see where new ERP data is not matching that previously reported.

Maintain historical data and reporting

When data is migrated as part of an ERP implementation you’ll normally only populate an ‘opening balance’ in your new ERP.  Your old ERP may have contained several years of data, but there’s a good chance that will all disappear when you migrate the data.  When that data goes so does your ability to analyse historical trends and patterns or compare multi-period values.

By implementing an EPM solution first all that historical data is captured and stored within the EPM platform’s central database, and will remain that way regardless of your future ERP movements.  As long as that data is there you will be able to report on it, and the flexibility of EPM solutions will enable you to view that historical EPM data in any new reporting format.

EPM will help identify your ERP requirements

As part of an EPM implementation there is often a roadmap put together. The aim of this roadmap is to identify all the data, integrations, and analytics that the organisation would like, so that the EPM solution can be developed accordingly. In doing so, multiple areas of the business must consider what information or metrics they would like to see, and what analytics they would like to have, in an ‘ideal’ solution.

Once this roadmap is developed it’s not unusual to find gaps in their current data. Where the metrics and analytics that one department has identified isn’t actually possible because the relevant information or detail isn’t capture within the ERP.

It is often not until the analytical piece is considered, that the real requirements of the ERP are determined, and it is often not until the first or second iteration of the EPM analytics where managers start to understand what is possible. It is not until managers use EPM for their analytics and budgeting that they start to identify other areas or analytics that they would like.  If this is not identified until after an ERP implementation has commenced it can be very difficult, if not impossible, to capture this data or detail in the ERP without adding significant time and expense.

EPM has a faster time to value

While an ERP implementation can take multiple years, a well-scoped and planned EPM project can take as little as a couple of months to go-live.  It is this fast development time that allows your EPM solution to be implemented while you’re still settling on your ERP upgrade process. Once you start your ERP journey your EPM solution is ready to assist with the items identified above, and with its flexibility new reports from the new ERP can be quickly developed and rolled out, ensuring you get more than just operational efficiency from your ERP implementation from the get go.

Even if you have already started along your ERP journey, it’s not too late to implement EPM software.  Not only will it provide all the benefits of an EPM software solution into the future, such as budgeting, forecasting, financial consolidation, financial close, reporting and analytics, as outlined above it can also help to ensure your ERP implementation project is a success.

Want to read more?  check out our other blogs

What is xP&A, and what was FP&A?

The post ERP or EPM….which should you do first? appeared first on bi5.

The quest for performance is a fundamental issue for companies and organisations, especially in an ever-changing economic and technological environment. To improve their financial performance, organisations must employ well-studied management strategies. In the field of FP&A specifically, that usually means implementing and strengthening best practices in the area of planning (budgeting and forecasting).

Uncertainty can take many forms. It can manifest in a natural disaster, the merger or acquisition of a competitor, geopolitical changes, or a global pandemic. In fact, the current (hopefully soon-ending) Covid-19 crisis has challenged the forecasting models used, especially when it comes to predicting the evolution of a company’s business in a highly uncertain environment.

Driver-based planning models enable companies to better understand the impact of variances in key business and value drivers on financial and operational KPIs. These models focus specifically on the drivers that have the greatest impact on business evolution.

FP&A Solutions in an Era of Uncertainty:

Driver-based planning is a financial planning and management approach that identifies an organisation’s key business drivers. It uses mathematical models that allow managers to run scenarios based on these drivers, which helps to understand the impact on projected business results.

Driver-based planning aims to focus efforts on the factors most critical to the organisation’s success. It, therefore, uses more advanced mathematical formulas, which model the relationship between independent and dependent variables. Models can be created with spreadsheets, or with more advanced data modelling software applications.

Business drivers vary from industry to industry. Drivers used to measure the level of activity include Market Share, Sales Volumes in Units, Number of Orders, Average Sales Price per Unit. With these business drivers, managers can save a lot of time and effort in creating and updating their financial forecasts. As a result, they can react more quickly in times of accelerated change.

 Continuous Planning and Rolling Forecast

Implementing a continuous planning process enables decision-makers to assess the company’s financial performance with more timely, reliable and accurate information. This agile forecasting tool improves performance through employee engagement and participation in achieving goals, while also supporting increased accountability.

Continuous planning helps managers react more quickly to potential problems. This innovative forecasting practice is based on making regular modifications in response to changes in the environment. Finance teams are not systematically tasked with an extensive re-forecasting process, but only need to make small adjustments. With more accurate and up-to-date data, managers can react more quickly and effectively to internal and external challenges.

Unlike annual plans, Rolling Forecasts are therefore a useful management tool and are not subject to the problem of traditional plans. With the rolling forecast method, companies develop a forecasting process over a rolling period (e.g. 12 to 18 months). The forecasts are updated on a monthly or quarterly basis, focusing on the most important variables “Key Performance Drivers”. In addition, the resulting forecast data is more up-to-date and reliable, providing the organisation with more complete information. This facilitates better decision-making.

Modern Flexible FP&A Systems

The finance team cannot be agile with a manual Financial Planning and Analysis (FP&A) process and system..

To react in real-time, managers need to be able to synthesise information from all data sources, discover trends, and provide insights more quickly. Practitioners emphasised the need for the FP&A team to have staff with data analysis skills, as well as technical skills in finance and accounting. In addition, a dynamic and modern solution is necessary for the agile transformation of FP&A processes.

Overall, companies that want to improve the effectiveness of their planning systems should place FP&A development at the top of the organisational priority list.

Conclusion

Unlike traditional management methods, Financial Planning and Analysis solutions are a new way to manage your business rationally. With the FP&A systems in place, business processes become more accurate and agile, preparing your company for the challenges and uncertainties of today’s economic climate.

The post Driver based planning – it’s not that hard appeared first on bi5.

In today’s complex global economy, transport and logistics are playing an ever-increasing role, and optimising this process is the key to success for business. In this blog we will highlight the importance of business intelligence in the logistics industry.

Improved technology has increased productivity in the supply chain and minimised costs and errors. Thanks to business intelligence tools, companies are no longer swamped with large amounts of data they don’t know what to do with. Instead, logistics managers are using BI technologies to find real meaning in their ocean of numbers—and take actions that boost supply chain efficiency and effectiveness. These advances benefit all areas of the logistics industry: trucking transportation, international transportation (ocean and air), supply chain management, and shipment tracking.

Interpreting data as an essential part in logistics processes

Transportation logistics is not any more limited only to the movement of goods across space and reducing time and costs along the supply chain. Its scope has expanded and now it is influencing decisions on what to produce, where to produce/store, in what quantities, who to choose for as the logistics provider, etc., which are parts of strategic management.

The complex and dynamic nature of logistics, along with the reliance on many moving parts that can create bottlenecks at any point in the supply chain, make logistics a perfect use case for big data and business intelligence applications. Establishing data analysis in logistics so it produces actionable insights regularly is essential in the logistics industry.

To make valuable decisions managers and supervisor need timely and accurate information and reporting environments. Vast amount of business data from disparate operating systems and applications, rapidly changing customer needs and market conditions, but also the hidden information like emails or excel spreadsheets hinder logistical efficiency. Therefore, we need integration of the core business information through an intelligent information systems and modern analytical tools to discover relevant knowledge from all of these sources, to manage uncertainty, and to create and reach our business intelligence as our main competitive advantage

A bright future…

Logistics companies are increasingly adopting business intelligence applications to manage their operations more quickly and efficiently, to further improve processes and stay ahead of the increasingly demanding market conditions.

In a survey conducted by fleetowner third party logistics companies and shipping companies both agree. 98% of 3PLs said that improved data-driven decision making is “essential to the future success of supply chain activities and processes”. Additionally, 81% of shippers and 86% of 3PLs surveyed said that using big data effectively will become “a core competency of their supply chain organisations”.

As for many other industries, data gathering and data management is becoming bigger and bigger, and professionals may need help in that matter. In any case, it looks like the future is bright for logistics companies that are willing to take advantage of better utilising their data and advanced information technology.

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Financial planning and analysis (FP&A) which is an important function within the Finance area, is responsible for providing the organisation with the insights they need to make operational, financial, and strategic decisions. Specifically, the main objective of FP&A is to transform the company’s business performance using digital, data and analytics. However, one key component that acts as a backbone for FP&A performance is the Key Performance Indicator (KPI).

What exactly is a KPI? 

Why are the KPIs an important component in FP&A? What can organisations do to design and build a robust KPI framework and deliver improved business performance?

Let us first start by understanding the KPIs. A KPI is a quantifiable measure used to evaluate the success of the FP&A organisation in meeting its performance objectives. A good KPI framework covers the leading (predictive and prescriptive insights) and lagging (descriptive insights) metrics. Descriptive insights help to answer the question “what happened?”, predictive insights answer the question of “what will happen?” and prescriptive insights answer the question “what should be done?” Basically, if a business entity including the FP&A function is using KPIs to measure its performance, those KPIs typically drive business behaviour, results, and the organisation culture.

What is the business impact of KPIs? Why should the FP&A team pursue KPIs?  

In other words, strong FP&A performance management is based on the fundamental principle that “what gets measured gets done.” KPIs provide the visibility to measure and manage business performance.  Aberdeen Group examined the use of KPIs in more than 350 enterprises and found that the best-in-class companies derive performance improvements, including of 10 per cent increase in the time-to-decision making; 9 per cent increase in other  profitability and revenue  growth; and customer performance improvements of 9 per cent in both net-new customers gained and customer satisfaction.

How can an FP&A organisation design and build a robust KPI framework? 

There is no one-size-fits-all when it comes to choosing the “right” KPIs for your business. Building the FP&A KPIs framework that is specific to your organisation starts by formulating powerful questions. Questions are important as they provide the context to the insights or KPIs. One important factor to consider while formulating good questions is the framing bias. The framing bias is a cognitive bias that impacts decision making based on the way the question is formulated. Given that we are all influenced by the way the question is presented. For example, take two vendors whose quality of delivery needs to be assessed. One vendor performance says, “10 per cent defects” and another says, “90 per cent defect-free”. The framing effect will lead to us picking the second option because human beings tend to value options that are framed positively. Hence having the KPI definition i.e., “defect-free” or “defect prone” is very important as it impacts the data selected and ultimately the decisions made from the KPIs.

So how can an FP&A function implement a good KPI framework?  First and foremost, the questions in formulating the KPIs should be tied to the strategic objectives of the business – the value drivers.  Once the right questions are selected for the KPIs, three foundational elements discussed below should be factored in building a strong FP&A KPI framework. FP&A teams should be very careful in selecting KPIs because the wrong KPIs can potentially harm the organisation.

Reliable Insights. While there is a natural inclination in every business and in every individual to know more, one needs to evaluate how these insights from the KPIs will be used for making decisions. Albert Einstein once said, “not everything that can be counted, counts.” However, trying to analyse all the data to derive insights might be expensive and time-consuming. Instead, try forming a hypothesis or a logical proposition as the hypothesis will provide you with an indicator of what data to acquire whilst helping you to stay focused. Once a good hypothesis is formulated, design the KPI model, by asking these important questions for an accurate and deep understanding. Why do you want to know – articulate the root cause? How much do you want to know – the scope? What is the value of knowing and not knowing – the strategy to convert insights into actions? This begs the question on the recommended number of KPIs in the framework. Cognitive science researchers believe that human beings can normally cope with just five to nine pieces of information at a time and this figure is popularly known as the “Magic Number”. This means 7 +/- 2 KPIs (leading and lagging) is the recommended count of KPIs in the KPI framework or FP&A dashboard.

Accountability. While designing and implementing the KPI framework is complex, more challenging than that is realising the change; integrating the insights from the KPIs into a business’s operating model is very difficult. While change is inevitable, it can often be uncomfortable. How effectively can we use these insights and bring change in operations, compliance and decision making? How can KPIs be an active part of FP&A operations?  Successful change initiatives are often associated to accountability. This means having an accountable FP&A leader who is close to the KPI being tracked for performance. For example, if the KPI is on “Days Payable Outstanding (DPO)” to improve the cash conversion cycle (CCC), it is advisable to have the Account Payable (AP) Manger track and improve the DPO KPI.

Quality Data. Finally, reliable KPIs are dependent on quality data given that most businesses are plagued with quality data. Research published in Harvard Business Review says that just 3% of the data in a business enterprise meet data quality standards. But how do you define quality data? Data is considered to be of good quality if they are fit for use in operations, compliance, and decision making. In this backdrop, while quality data in business is contextual (based on time, location, data consumers, business environment, and so on) and multidimensional (such as accuracy, correctness, completeness, timeliness, and more), defining the context and selecting the pertinent data quality dimensions will help decision-makers trust the insights offered to them thru the KPIs and ultimately help them make better decisions.

Summary 

While many FP&A teams do a great job in identifying the consumers of the insights coming from the KPIs, unfortunately, the goals of the insight consumers are often not very clearly defined and do not align with the larger objectives of the enterprise. In January of 2019, research advisory firm Gartner reported that 80% of data analytics insights did not deliver business outcomes. One effective solution is formulating a good objective statement by asking questions, formulating a hypothesis, and defining the performance KPI framework based on the three key elements discussed above. Management guru Peter Drucker once said – “You cannot manage what you cannot measure”. In other words, insights from KPIs offer FP&A performance visibility, and visibility provides business value.

The post Measuring Performance with Key Performance Indicators (KPIs) appeared first on bi5.

Executives need access to the latest business insights to make effective strategic, financial, and operational decisions. This becomes increasingly difficult to achieve as organisational data silos grow and make it harder to collate accurate data for enterprise reporting. Combine this with competitive, fast-paced markets and the need for constant innovation, and the decision-making process becomes a time-pressured minefield that puts undue stress on senior managers.

Despite this challenge, many management teams are still going into board meetings with static reporting booklets and presentations which have been manually collated by business analysts. It leaves them without the depth of information they really need.

The problem with traditional business reporting

Traditional methods of management reporting (usually spreadsheets, static presentations, or management reporting booklets) no longer cut it in the data-driven business world.  They are extremely time-consuming to create, become outdated as soon as they are released, lack the level of detail required to explain underlying causes, and usually rely on one, or more, analysts or data specialists to produce.

This causes several problems for members of the board:

• Outdated information – as soon as sales or production figures change, static reports from the day, week, month, or even night before lack the latest information, meaning decisions are made without the latest data
• Lack of deep insights – if a further level of detail is required, such as understanding what caused the generation of X revenue in the last month, it is not instantly available in a static report. This delays decision-making or forces decisions to be made on assumptions rather than fact
• Lack of a holistic view – despite every effort, masses of departmental data sources make it extremely difficult to gain transparency overall activities. The chance of missing data is high, affecting the accuracy of reports and therefore the accuracy of decisions.
• Lengthy waits for creation – end users may lack the skills or time to analyse data and produce their own reports, creating a reliance on others within the business and increasing waiting times. Furthermore, this can often result in conflicting reports as information gets pulled from different sources, slowing down decision-making
• Reports collated from different sources – often, enterprise reports are drawn together from multiple sources of information. This generates conflicting points of view and ultimately leads to a lack of trust in the final report. The solution is to invest in a unified decision-making platform which delivers a single version of the truth to executives

To combat these issues, senior management teams are enhancing their decision-making abilities by digitally transforming their boardroom reporting approach.

The benefits of a modern business reporting solution

For the digital boardroom to function effectively, senior executives need access to real-time insights and intelligence from across the business to aid decision-making.

The self-service nature of modern end-user reporting tools can drive transformation in the boardroom. C-suite executives can move away from static reports, replacing them with interactive dashboards, presentations, and report booklets which:

• Are based on aggregated, real-time data from across the business – meaning they provide an accurate and up-to-date foundation on which to base business decisions, removing the ambiguity caused by different data sources
• Enable executives to switch between strategic and operational data instantaneously – with the ability to drill-down and drill-through data to enable a deep-dive exploration of what is driving the numbers, right down to the transactional level
• Facilitate the discovery of hidden insights – by creating transparency across departmental data and enabling cross-function analysis which can highlight correlations which may previously have gone unnoticed
• Are produced and refreshed automatically at the touch of a button – making reporting instantaneous and accurate, removing the need to rely on data analysts or IT teams to deliver information, and improving business responsiveness
• Look forward as well as back – using advanced analytics and predictive technologies to simulate future trends which help to inform decisions based on solid insights

Only with access to accurate, timely information can senior executives hope to identify opportunities for growth, efficiency gains, and performance enhancement in increasingly faster timescales. What’s more, a competent enterprise reporting solution can create the foundation for Integrated Business Planning, creating a truly unified approach.

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A new way to budget and forecast for shift based employees

Over the last few years we have been working with a number of Aged/Disability care organisations to improve their budgeting and forecasting processes specifically around staff costs which is many cases accounts for 70-80% of total expenses.

There are many roster tools available in the market however they are mainly focussed on coverage rather than cost and having the ability to compare costs with funding and make adjustments to suit is vital.   

The importance of having an efficient and effective budget process and the ability to quickly run ‘what-if’ analysis and test multiple scenarios, has been brought into sharp focus for many businesses as a result of the uncertainty that exists as a fallout of the pandemic. This is especially important for businesses with shift based employees.

The majority of businesses that approach us about improving their budget and forecast process had been running their budgets in spreadsheets, and were finding the process very slow and time consuming. 

One of the most common issues with spreadsheet based budget and forecast models is that they are all individual spreadsheets which are commonly sent out to the relevant business managers for completion. These spreadsheets are very rarely linked back to any form of master or global input.

The more uncertainty there is, the more flexibility and speed you need

In the normal annual budget and quarterly (or more frequent) re-forecast, this de-centralisation of the global inputs doesn’t pose much of an issue. The budget administrator can take the time to ensure the global inputs are correct, wait for the completed budget to be returned, and then consolidate and report. 

In times of significant uncertainty, however, where conditions are changing dramatically between re-forecast cycles, more and more businesses are finding the lack of flexibility and speed in an Excel budget process cumbersome and inefficient, which can cost a business financially in the long run.

We’ve noticed particular interest for a faster and more flexible alternative from industries with a large number of shift-based employees (including community services, aged care and NDIS providers). These types of organisations are diverse and specialised in the services they provide, their employee mix, and in the way their employees are remunerated. On top of this, they often have reliance on government plans and fundings, which change regularly. 

For businesses where the major cost is staff, the spreadsheet approach is often not appropriate. The greater the percentage of total costs attributed to labour costs, the more importance should be placed on them. When the majority of labour costs are attributable to shift employees, managers can find themselves in a difficult spot if they’re relying on a spreadsheet model.

The complexities of shift based employees

Shift based employees often have more than 4 different effective rates of pay once shift loadings are taken into account. On top of that, there are often different allowances applicable and different coverages required for annual leave and public holidays.  Couple this with the fact that employees in these industries are often on Government awards, SCHADS or EBAs which have different levels and pay grades that may increment on an annual basis, and you have a complex labour cost calculation.

Staffing requirements, coverage and availability in these industries can change quickly in ‘normal’ times, so the ability to re-forecast these changes quickly and easily is now more important than ever. The ability to quickly adjust budgets and forecasts to reflect the latest shift and roster changes, to fill the gaps in staff shortages with agency staff who have different cost rates and allowances, is of paramount importance.

Many organisations, both for-profit and not-for-profit/for-purpose, currently rely on spreadsheet calculations. Spreadsheets, while easy to change for individual budgets and employees, have limitations when it comes to shift cost calculations. Often, organisations have to budget with ‘worst case’ costs as they are unable to calculate an accurate cost, and are unable to change global assumptions/rates/loadings and have these quickly applied to the underlying calculations.

So what’s the solution for better budgeting labour costs for shift based employees?

At bi5 Solutions, we’ve worked with organisations to provide a more efficient and robust budget process, with incorporated shift calculators providing faster and more accurate budget calculations and updates. Unlike spreadsheets, our solutions are able to easily calculate shift/labour costs by individual employees, or positions, by calendar day, allowing for more accurate weekend and public holiday loading application and cost calculation. The manager can easily adjust weekly or fortnightly shifts by individual employee or position, and have these costs instantly fed back into the consolidated budgets. They are now able to use employees’ exact cost rates, and apply annual pay grade/level increments accurately. This removes the need for the ‘worst case’ labour cost budgets that are often used due to the difficulty and complexity in doing a more accurate calculation in Excel.

In the current environment of uncertainty, planning and re-calculating to respond to staff absentees can happen much more quickly, allowing organisations to budget for agency staff with higher rates. For industries that are impacted by changes in government funding, or need to generate a budget/estimate quickly and accurately, these solutions allow organisations to lessen the risk of making the wrong calculation and wrong decision. 

Build a custom budgeting and forecasting solution on your chosen platform

Utilising our preferred EPM platforms (BOARD, Jedox) we can deliver a Budgeting and Forecasting solution that can integrate with your existing systems (ERP, Roster tools, payroll, HR, PowerBI…etc) to bring through data such as employee details, pay rates, shift details and actual financials, to further simplify the budget process. We work closely with managers and admin to ensure that it’s built in the way they need for their particular requirements. We can usually get budgeting and forecasting solutions up and running in the order of 1-2 months.  

Overall, with a budgeting and forecasting solution the ability to adjust/reforecast budgets more regularly and effectively is significantly improved, providing for faster planning and better financial management.

The post Forecasting Labour Costs for Shift Based Employees appeared first on bi5.

We have talked about the importance of data and data integration in many of our recent blogs, however we have never really discussed how we do it, so we thought it was about time we did.

Over the last few years, we have been working on a project for one of our mining services clients which involves integrating data from a number of different sources (Excel spreadsheets, Cloud and On-premise applications, Machine/Vehicle Sensor Data etc.) into a centralised data warehouse which is then used for invoicing, budgeting, forecasting, reporting and analytics.

On this project we worked together with another local company, who specialise in data science, AI and machine learning. We have recently formed a closer relationship with this company which enables us, together, to provide our clients with a full End to End Business Operations System (EEBOS). At the core of the EEBOS solution are two distinct tools, Datahub and Mailbot.  These technologies specifically addresses the data integration we are talking about.  This integrated data is then used to drive the reporting, analytics and budgeting/forecasting ‘front- end’ which the user sees and interacts with.

But what exactly is Datahub and Mailbot?

Datahub

DataHub was built from the ground up to seamlessly synchronise data from the various sources and systems. Datahub’s core engine automates record matching and data translations using state-of-the-art algorithms. Data then smoothly flows between synchronised systems to ensure all updates are translated and sent where they need to be. Administrators are kept in the loop with scheduled reports, notifications of edit conflicts via email and the ability to fine-tune the automatically learned translation mappings.

DataHub’s system-specific connectors means adding new systems to synchronise is not a problem cloud-based applications, on-premises systems and real-time (sensor) feeds are all able to be synchronised. Swapping systems from one vendor to another also becomes much smoother since DataHub seamlessly takes care of all the translations and matching, allowing clients to choose best-of-breed systems for each  function of your business and avoid vendor lock-in.

Also, when you need to put together data quickly to keep operations moving, you need to use whatever is at hand – whether it’s Excel spreadsheets, reports or CSV file dumps, you work with what can get you there. But afterwards you’ve got a problem: all these different pieces need to be consolidated back together so that you can summarise and quantify what has actually been happening and determine what needs to be done next.

Need to check the raw data that’s in the data warehouse? DataHub has a fully secure web site that lets authorised users view any data in the system. You can even have it configured so that administrative staff can manage the data directly in the DataHub, letting you store and maintain supporting data that you need but isn’t in your Excel spreadsheets.

DataHub isn’t just a data warehouse, it’s also a complete data integration and synchronisation suite that lets you share data across all your business systems, from third-party software packages to cloud-based apps, corporate data warehouses and even external partner’s IT systems. Make double entry a thing of the past and bring together all your data into a cohesive unit for whole-of-business reporting. It even makes swapping out one vendor’s system for another a seamless experience, so you can choose best-of-breed products for your company.

Mailbot

Most IT solutions expect you to manually convert your data into a format and naming convention that they will accept before allowing bulk import, or worse force you to manually type the data into their product. Wouldn’t it be great if you could instead just email your spreadsheets and reports to a central repository and dashboards and summary reporting? All by nothing more than sending an email with an attachment? Some of you would have heard of the term ’email scraping’.  In essence this is exactly what the MailBot is designed to do.

MailBot is an autonomous data-crunching robot (installed as a Windows service in your IT network) that monitors one or more mailboxes for incoming data in emails (Microsoft Exchange / Office 365 is natively supported). MailBot reads any attachments and automatically processes them, converting and validating the attachment’s contents into structured data and saving it to the DataHub data warehouse. Any dashboards or reports that run off of the data warehouse will immediately pick up the new data – all triggered from a simple email and without a single change to your existing processes.

So how does it work? We know that every company’s data will reflect their unique way of operating, so a one-size-fits-all approach to data processing will never work. MailBot is designed to handle this, being easily extensible with custom connectors tailored specifically to your data formats. Hence there is no need to re-format your spreadsheets.

MailBot will detect errors in data, collate them and automatically send error reports via email to the people who need to know. Fixing the problems and re-emailing in the attachment is all that is necessary to update the DataHub warehouse.

If you make a mistake, just fix it in your spreadsheet and re-email it in – MailBot will automatically notice what is an edit of existing data versus new records and update the warehouse accordingly.

With Datahub and Mailbot you can streamline your process without having to change your process.

To find out more about how Datahub and Mailbot can help your business get in contact with us.

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