2010 BPM STUDY

METHODOLOGY

• Investigation conducted exclusively for Business Investigation conducted exclusively for usinessFinance.

• Methodology, data collection and analysis by gy, y yPenton Research, the research division of Business Finance’s parent company, Penton Media. 

• Data collected September 30, 2010 through October 6, 2010.

• Methodology conforms to accepted marketing research methods, practices and procedures.

METHODOLOGY

Objectives•Investigate the BPM systems and reporting processes of finance departments.

•Determine capabilities of finance departments.

Methodology•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.

l k l d d h d d l h•A link was included on 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.

Response•Effective mailing: 43,774

•Completed surveys: 326

•Effective response rate: 0.7%

FINDINGS

Survey respondents

Job title and annual revenue 5

Geographic reach 6

BPM tBPM 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

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%

JOB  TITLE ANNUAL  REVENUE

have revenues under $100 million, and 27% have revenues between $100 million and $1 billion. 37% of companies are publicly owned.

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

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?Which best describes your geographic reach?

Base: all respondents, 326. Page 6

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

C i lik l t t k f bj tiBPM SYSTEMS

Companies are likely 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.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?

Page 8Base: all respondents, 326; multiple answers

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

INFORMATION  GATHERING 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.

Which statement best describes the way information is gathered for reporting purposes?

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

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?management system?

Base: all respondents, 326. Page 10

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

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 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 useddecision 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

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

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 toLarger companies report a quicker turnaround for report deliver – an average 7 days, compared to 13 days for smaller companies.

TIME  REQUIRED  TO  DELIVER  REPORTS ACCESS  TO  REPORTING  SYSTEMS

What percentage of report users have online access to some form of reporting systems for ad hoc inquiry?

For monthly reporting, how many working days elapse between the routine accounting close and the distribution of performance reports?

Base for both charts: all respondents, 326. Page 15

APPENDIX: WRITE‐IN RESPONSES

WRITE‐IN ANSWERS

1. What is your job title? Other responses:

Accountant Accounting Manager – (2 mentions) Accounting Manager Accounts Payable/Payroll Coordinator

Director-Finance Committee Finance Administrator Finance Business Partner Finance support Finance Systems Manager Financial Advisor (5 mentions)

Sr. Financial Analysis Sr. Financial Systems Analyst Supervisor of procurement Treasury Treasury Analyst VP Corporate ControllerAccounts Payable/Payroll Coordinator

Administrative Assistant/PR/Marketing/Events

Advisor Analyst Assistant Controller Assistant Treasurer

Financial Advisor – (5 mentions)Financial Advisor, Senior Partner Financial Advisor/Owner Financial consultant Financial Manager Financial Planner - Independent;

Business Owner

VP Corporate ControllerVP Internal Audit and Continuous

Improvement VP of Global Sourcing VP, Operations VP, Principal Accounting Officer

Assistant Treasurer Budget and Financial Manager Budget director Business Manager Business Performance Improvement

Analyst CEO

Business OwnerFinancial Representative Financial services sales Financial System Administrator Financial Systems Manager First V.P. Investments Human Resource Analyst

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 settingCEO

Chief Operations Officer CIO – (2 mentions) CIO & VP Corporate Strategy Compliance Director Consultant – (4 mentions) C t Fi T & Ri k

Human Resource AnalystInternal Auditor IT Project Manager Managing Consultant Marketing Manager Operations Pl t C t ll

Division goal settingFinancial Reporting Maintenance PMO Policy deployment 6 Whi h f th f ll i l t fCorporate Finance, Treasury & Risk

Mgt Proposition Mgr Cost Analyst Cost Consultant DBA Deacon Di t

Plant ControllerPortfolio Strategist Pres. RIA Professor Sales Senior accountant – (2 mentions) S i P tf li M

6. Which 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

C ti Pl i ) tti id fDirector Director Business Development Director of Financial Reporting and

Control

Senior Portfolio ManagerSenior Tax Analyst Specialist Sr. Treasury Analyst – (4 mentions)

Continuous Planning)... getting rid of the annual Budget

Formal risk assessment plan and reporting

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

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 andenvironment

Cash conversion Cash flow – (2 mentions) Customer satisfaction Free Cash Flow Government entity - stewardship of

taxpayer dollars

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 systemstaxpayer dollars

Growth Improved Cash Flow and lower

working capital Mission Metrics [nonprofit] Operating profit Quality

Single ERP, multiple business systems, single COA, financial and operational BPM

spreadsheets, QB TBD Very little integration, no legacy

system in placeQuality R & D progress/plan Return on sales ROA and Cash Flow Social impact Zero-Defect Manufacturing

system in placeVery manual We are currently in multiple instance of

different ERP systems but are half way through transition to single instance SAP

9. Which of the following best describes the architecture of your performance management system? Other responses:

ERP/MRP Five owners who are the only

15. Which of the following items are included in your reports? Other responses:

ROA and Cash Flow Headcount Budget to actualy

employees converse and analyze daily

It is a 30 day world driven by sales

g