Real Time Close Case Study and Demo November 2017 1
Session Overview The next step in the evolution of financial performance management is Real Time Close (RTC) RTC will enable delivery of continuous financial insights for organizations by leveraging elements of continuous accounting, real time reporting and predictive analytics powered by SAP Analytics Cloud, a next generation planning, predictive analytics, and business intelligence SaaS solution from SAP. Our RTC case study and demo will demonstrate how a visual interface, enabled by daily data feeds and sophisticated algorithms is able to support variance analysis and predict a financial performance on a daily basis with increased accuracy across financial and non-financial indicators. 2
How to better predict revenue, costs, and overall business performance? How to improve closing efficiency and accuracy? How to better anticipate financial risks? How to improve reporting efficiency and accuracy? How to better manage financials? Planning, Budgeting and Forecasting Financial Close and Consolidation Management Reporting and Analysis P&L Planning Rolling Forecasts Legal Consol. External Reporting Business Intelligence Data Warehouse Driver Based Planning Allocation Engines Scenario Planning Manage ment Consol. Matrix Consol. Visualisation Big Data The convergence of digital technologies opens new possibilities for Finance Performance Management Predictive Analytics Cognitive Technologies (Machine Learning) Natural Language Processing (NLP) Natural Language Generatio n (NLG) Voice and Facial Recognition Augmented Reality (AR) Sentiment Analysis Crowdsourcing Prescriptive Analytics Internet of Things (IoT) Virtual Agents (Chat Bots) Next Gen Finance Performance Management Robotic Process Automation (RPA) Virtual Reality (VR) Blockchain 3
REAL TIME CLOSE IS DRIVER BASED PREDICTIVE ACCOUNTING 4
Real Time Close / Driver-Based Predictive Accounting Sales Customers Predicted Close Inventory Milestones Continuous Accounting Daily drivers Predicted Financials Contract Build AR FTEs Real Time Reporting AP Locations Expenses Weather Predictive Analytics Retire Run Working Capital Seasonality D5 D10 D15 D20 D25 D30 Sample Business Life cycle + Daily Financials and drivers + Key Enablers = New Capability Features: Daily access to KPIs such as inventory and working capital Daily forecast of period-end via predictive analysis (e.g. daily flash ) Continuous monitoring along both management and legal views Potential for daily scenario planning and short term recommendations Single point of control over analysis rule-set (consistency) Benefits: Smoother workload profile throughout the period and during period end Effort reduction of repeatable analysis More time for analysis, identification of opportunities with short term benefits More frequent decisions capable of influencing positively on operations Issues & root causes identified earlier, leading to more proactive and efficient resolution 5
Building Blocks of Real Time Close CONTINUOUS ACCOUNTING Embed accounting tasks and reconciliation directly in daily business activities Key enablers Clear business drivers Data consistency Modern accounting engine Key outcomes Reconciled Financial information Quantified business events in real time REAL TIME REPORTING Visibility of performance on a (near) real time basis and enables corrective actions Consistency of data models Self service reporting tools Data reliability Control rooms for monitoring of process health Increased effectiveness of FP&A and BP s PREDICTIVE ANALYTICS Understand patterns and trends and apply cognitive rules to identify anomalies and outliers in financial data Availability of historical data Predictive engine Trust, built on accuracy Predictive reporting that focuses on outliers and anomalies Self learning setup that minimizes the gap between actuals and prediction 6
Reference Architecture Existing Systems RTC / Predictive Close Solution Operational Business systems Manuf. Logistics ERP CRM Payroll Financial systems EPM External Sources Procureme nt Other Data Warehouse Front End User Interface for control Room Generate Predictive and Real time reports Distributes outputs Predictive Engine Analysis Library Driver data Rules Engine Scripting Engine (optional) Tools like SAP Analytics Cloud can be leveraged to implement RTC as it embeds both reporting and predictive engine as part of managed analytics Social Media Weather Other Existing Elements New Elements 7
Example Delivery Approach 1 Assessment and Pilot 2 Implementation 3 Continuous RTC Improvement Define Analytical Model: Life Cycles, Events, Drivers and Data attributes Assess data availability Identify continuous accounting gaps Tool selection Business Case Deploy Pilot Address Gaps (systems, process & data) Define RTC governance Design and Implement RTC Solution Continuous improvement initiatives to improve accuracy of RTC solution Adopt (evolving) business scenarios to ensure RTC remains accurate Year 1 Year 1+ Pilot BU (incl. Baseline RTC Impl.) Continuous Accounting Gaps RTC Pilot Live BU 2 BU 2 on boarded BU 3 BU 3 on boarded Sprints BU 4 BU 4 on boarded BU 5 8
Key take aways Real Time Close is driver based predictive accounting What s happening? What s the root cause? What s the impact? Critical Success Factors are: Technology Data Mind set Leadership The first steps are: 1. Assess the potential of your data and systems for RTC 2. Develop an analytical model for your business 3. Understand the shift of mind set needed to make this work 4. Execute a pilot, learn from it 5. Scale it up, roll it out, manage the change 9
For more information: Mateus Begossi mbegossi@deloitte.co.uk Ritesh Bhushan ritbhushan@deloitte.nl 10
Important notice This document has been prepared by Deloitte MCS Limited (as defined below) for the sole purpose of providing a proposal to the parties to whom it is addressed in order that they may evaluate the capabilities of Deloitte MCS Limited to supply the proposed services. The information contained in this document has been compiled by Deloitte MCS Limited and includes material which may have been obtained from information provided by various sources and discussions with management but has not been verified or audited. This document also contains material proprietary to Deloitte MCS Limited. Except in the general context of evaluating our capabilities, no reliance may be placed for any purposes whatsoever on the contents of this document or on its completeness. No representation or warranty, express or implied, is given and no responsibility or liability is or will be accepted by or on behalf of Deloitte MCS Limited or by any of its partners, members, employees, agents or any other person as to the accuracy, completeness or correctness of the information contained in this document or any other oral information made available and any such liability is expressly disclaimed. Other than as stated below, this document and its contents are confidential and prepared solely for your information, and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person in whole or in part. Therefore you should not refer to or use our name or this document for any other purpose, disclose them or refer to them in any prospectus or other document, or make them available or communicate them to any other party. If this document contains details of an arrangement that could result in a tax or National Insurance saving, no such conditions of confidentiality apply to details of that arrangement (for example, for the purpose of discussion with tax authorities). In any event, no other party is entitled to rely on our documentation for any purpose whatsoever and thus we accept no liability to any other party who is shown or gains access to this document. This document is not an offer and is not intended to be contractually binding. Should this proposal be acceptable to you, and following the conclusion of our internal acceptance procedures, we would be pleased to discuss terms and conditions with you prior to our appointment. In this document references to Deloitte are references to Deloitte MCS Limited, a subsidiary of Deloitte LLP. Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited ( DTTL ), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. 2017 Deloitte MCS Limited. All rights reserved. Registered office: Hill House, 1 Little New Street, London EC4A 3TR, United Kingdom. Registered in England and Wales No 3311052.