Investigate the BPM systems and reporting processes of finance departments. Determine capabilities of finance departments.

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Charla Banks
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1 2010 BPM STUDY

2 METHODOLOGY Investigation conducted exclusively for Business Finance. Methodology, data collection and analysis by Penton Research, the research division of Business Finance s parent company, Penton Media. Data collected September 30, 2010 through October 6, Methodology conforms to accepted marketing research methods, practices and procedures.

3 METHODOLOGY Objectives Investigate the BPM systems and reporting processes of finance departments. Determine capabilities of finance departments. Methodology Response E mail survey. On September 30, 2010, Business Finance effectively e mailed invitations to participate in an online survey to a total 43,774 print and e newsletter subscribers and partner participants of Business Finance. To encourage prompt response and increase the response rate overall, the following marketing research techniques were used: A drawing was held for an ipad. A link was included don the invitation to route respondents directly to the questionnaire. The magazine name was used on the invitation to tie the study effort to the publication. Effective mailing: 43,774 Completed surveys: 326 Effective response rate: 0.7%

4 FINDINGS Survey respondents Job title and annual revenue 5 Geographic reach 6 BPM systems BPM system elements 7 Objectives of business 8 Information gathering 9 Planning/budgeting tool 9 Architecture of BPM 10 Integration and customization 11 Age of systems 12 Reporting process Tools used in reporting process 13 Variance reporting 14 Timing of and access to reports 15 Write in answers 16

While 28% of respondents indicate their company has an annual revenue of $1 billion or more, 41% have revenues under $100 million, and 27% have revenues between $100

5 SURVEY RESPONDENTS Respondents are high to mid level executives at a variety of firm sizes. 28% of respondents hold an top level position, such as CFO, CEO, President or Owner. An additional 46% are a mid-level executive, such as VP, Director or Manager. While 28% of respondents indicate their company has an annual revenue of $1 billion or more, 41% have revenues under $100 million, and 27% have revenues between $100 million and $1 billion. 37% of companies are publicly owned. JOB TITLE ANNUAL REVENUE Into which of the following categories does your job function fall? Which option best describes your company/ organization? Base for both charts: all respondents, 326. Page 5

6 SURVEY RESPONDENTS The majority of respondents work for companies that focus on U.S. operations. More than one in five have global operations, while 19% operate in multiple countries. GEOGRAPHIC REACH Which best describes your geographic reach? Base: all respondents, 326. Page 6

7 BPM SYSTEMS BPM systems are comprised of multiple elements. Budgets are most likely to be included as part of performance management systems, with four in five systems employing this element. Each element listed is employed by a majority of respondents. BPM SYSTEM ELEMENTS Which of the following elements of a performance management system do you currently employ broadly in your company/expect to employ broadly in the future? Base: all respondents, 326; multiple answers Page 7

8 BPM SYSTEMS Companies are likely l to report on key performance objectives. Nearly three in four respondents indicate that sales/sales growth are a key performance objective of their business. 78% include sales/sales growth in their reports. A disparity exists with customer service levels, as 48% consider it to be a key performance objective, but only 24% include a measurement of customer service in their reports. OBJECTIVES OF BUSINESS What are the key performance objectives of the business? Which of the following items are included in your reports? Base: all respondents, 326; multiple answers Page 8

BPM SYSTEMS Respondents collect information from various sources. However, the majority of respondents primarily use spreadsheets for planning/budgeting.

Three in four larger companies ($1 billion or more in annual revenue) are likely to consolidate information from multiple systems.

9 BPM SYSTEMS Respondents collect information from various sources. However, the majority of respondents primarily use spreadsheets for planning/budgeting. Among smaller companies (less than $100 million in annual revenue), 74% primarily use spreadsheets as their primary planning/budgeting tool. Three in four larger companies ($1 billion or more in annual revenue) are likely to consolidate information from multiple systems. This group is also more likely to use a more advanced tool, as 58% use something other than spreadsheets. INFORMATION GATHERING Which statement best describes the way information is gathered for reporting purposes? PLANNING/BUDGETING TOOL What is the primary tool for planning/budgeting? Base for both charts: all respondents, 326.; multiple responses allowed in chart on the left. Page 9

Among companies with $1 billion or more in revenue, 35% use multiple ERPs and 29% use multiple instances of the same

10 BPM SYSTEMS Half of respondents use multiple instances of enterprise resource planning. While 40% use a single instance ERP, 30% use multiple instances of the same ERP, and 20% use multiple ERPs. Among companies with $1 billion or more in revenue, 35% use multiple ERPs and 29% use multiple instances of the same ERP. ARCHITECTURE OF BPM Which of the following best describes the architecture of your performance management system? Base: all respondents, 326. Page 10

11 BPM SYSTEMS BPM systems have room for improvement. Current systems are likely to be moderately customized, and interfaced with other financial systems. Only 23% of respondents have highly customized systems, and even fewer (17%) are integrated with other financial systems. Smaller companies in particular have room for improvement, as 54% indicate their BPM systems are not at all integrated with other financial systems, and 35% have no customization of BPM applications. INTEGRATION CUSTOMIZATION How integrated are the business performance management systems with other financial systems? How customized are your business performance management applications? Base for both charts: all respondents, 326. Page 11

12 BPM SYSTEMS BPM systems are an average 5 years old. The majority of companies (52%) have BPM systems that are between 3 and 7 years old. AGE OF SYSTEMS What is the average age in years of your performance management systems? Base: all respondents, 326. Page 12

REPORTING PROCESS Large companies are most likely to use scorecards, data warehouses/datamarts and decision

Overall, 56% of companies have used a scorecard, 48% use a data warehouse/datamart and 41% use decision Among

and 56% use decision support and analysis tools, compared to companies with revenue under $100 million, where

THE REPORTING PROCESS Have you used a scorecard or similar process?

13 REPORTING PROCESS Large companies are most likely to use scorecards, data warehouses/datamarts and decision support and analysis tools. Overall, 56% of companies have used a scorecard, 48% use a data warehouse/datamart and 41% use decision support and analysis tools. Among companies with revenues of $1 billion or more, 75% have used a scorecard, 76% use a data warehouse/datamart and 56% use decision support and analysis tools, compared to companies with revenue under $100 million, where 41% have used a scorecard, 28% have used a data warehouse/datamart and 28% have used decision support and analysis tools. TOOLS USED IN THE REPORTING PROCESS Have you used a scorecard or similar process? Do you use a data warehouse/datamart to support the reporting process? Do you use decision support and analysis tools to support the reporting process? Base: all respondents, 326. Page 13

14 REPORTING PROCESS Companies are likely to report all variances. Overall, 73% of companies report all variances. 48% highlight material variances while 25% do not. 26% of companies only report variances that differ materially from targets. VARIANCE REPORTING Which best describes your reporting of variances? Base: all respondents, 326. Page 14

15 REPORTING PROCESS An average ten business days elapse between routine accounting close and the distribution of performance reports. An average 41% of report users can access the system for ad hoc inquiry. Larger companies report a quicker turnaround for report deliver an average 7 days, compared to 13 days for smaller companies. TIME REQUIRED TO DELIVER REPORTS For monthly reporting, how many working days elapse between the routine accounting close and the distribution of performance reports? ACCESS TO REPORTING SYSTEMS What percentage of report users have online access to some form of reporting systems for ad hoc inquiry? Base for both charts: all respondents, 326. Page 15

16 APPENDIX: WRITE IN RESPONSES

17 WRITE IN ANSWERS 1. What is your job title? Other responses: Accountant Accounting Manager (2 mentions) Accounting Manager Accounts Payable/Payroll Coordinator Administrative Assistant/PR/Marketing/Events Advisor Analyst Assistant Controller Assistant Treasurer Budget and Financial Manager Budget director Business Manager Business Performance Improvement Analyst CEO Chief Operations Officer CIO (2 mentions) CIO & VP Corporate Strategy Compliance Director Consultant (4 mentions) Corporate Finance, Treasury &Risk Mgt Proposition Mgr Cost Analyst Cost Consultant DBA Deacon Director Director Business Development Director of Financial Reporting and Control Director-Finance Committee Finance Administrator Finance Business Partner Finance support Finance Systems Manager Financial Advisor (5 mentions) Financial Advisor, Senior Partner Financial Advisor/Owner Financial consultant Financial Manager Financial Planner - Independent; Business Owner Financial Representative Financial services sales Financial System Administrator Financial Systems Manager First V.P. Investments Human Resource Analyst Internal Auditor IT Project Manager Managing Consultant Marketing Manager Operations Plant Controller Portfolio Strategist Pres. RIA Professor Sales Senior accountant (2 mentions) Senior Portfolio Manager Senior Tax Analyst Specialist Sr. Treasury Analyst (4 mentions) Sr. Financial Analysis Sr. Financial Systems Analyst Supervisor of procurement Treasury Treasury Analyst VP Corporate Controller VP Internal Audit and Continuous Improvement VP of Global Sourcing VP, Operations VP, Principal Accounting Officer 5. Which of the following elements of a performance management system do you currently employ broadly in your company? Other responses: Balances Score Card Division goal setting Financial Reporting Maintenance PMO Policy deployment 6. Which h of the following elements of a performance management system do you expect to employ broadly in the future? Other responses: All Dynamic Business Planning (or Continuous Planning)... getting rid of the annual Budget Formal risk assessment plan and reporting

18 WRITE IN ANSWERS 8. What are the key performance objectives of the business? Other responses: Broad measures across the business... we live in a Balanced Scorecard environment Cash conversion Cash flow (2 mentions) Customer satisfaction Free Cash Flow Government entity - stewardship of taxpayer dollars Growth Improved Cash Flow and lower working capital Mission Metrics [nonprofit] Operating profit Quality R & D progress/plan Return on sales ROA and Cash Flow Social impact Zero-Defect Manufacturing 9. Which of the following best describes the architecture of your performance management system? Other responses: ERP/MRP Five owners who are the only employees converse and analyze daily It is a 30 day world driven by sales Moving from old to new ERP No ERP system, common COA No ERP, loosely coupled systems Not sure how to answer - PeopleSoft GL is closest we have Nothing right now but databases and excel spreadsheets, Are shopping for a CRM Single ERP for finance multiple other fulfillment systems Single ERP w/ BPM Single ERP, multiple business systems, single COA, financial and operational BPM spreadsheets, QB TBD Very little integration, no legacy system in place Very manual We are currently in multiple instance of different ERP systems but are half way through transition to single instance SAP 15. Which of the following items are included in your reports? Other responses: ROA and Cash Flow Headcount Budget to actual

METRO MANAGEMENT RESPONSES TO FISCAL 2009 FISCAL 2012 STATE REQUIRED PERFORMANCE AUDIT OF THE METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY, TEXAS

METRO MANAGEMENT RESPONSES TO FISCAL 2009 FISCAL 2012 STATE REQUIRED PERFORMANCE AUDIT OF THE METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY, TEXAS I. INTRODUCTION Pursuant to Chapter 451, Section 451.454 of the Texas Transportation Code, METRO must have an independent auditor perform a management audit every four years. The audit must include three