Case Studies & Best Practices

Louisiana Workers’ Compensation Corporation Case Study: Linking Strategy to Operations with Driver-Based Budgeting

Larry Yuspeh, Director of Research, Development and Strategy Management

Louisiana Workers’ Compensation Corporation (LWCC) As a way to focus the enterprise and connect the strategy outlined in he Balanced Scorecard to our budget, Louisiana Workers’ Compensation Corporation (LWCC), a fully independent private mutual insurance company dopted the use of driver based budgeting in conjunction with its traditional budgeting process. In 2008 all business units were required to submit key activity drivers and driver models with their budgets. These models were used to focus the annual budget review meetings with the CEO and CFO, thereby framing those conversations around the activities that
drive expenses as opposed to the silo based discussions that did not explain what was behind the numbers. Through difficult times including the post Hurricane Katrina period, LWCC’s integration of driver based budgeting, strategy management, and the operating budget cycle has resulted in double digit rate reductions, record income and dividends, and low combined ratios that have driven down workers’ compensation rates

in Louisiana.

Key Issues

• The challenges and benefits of implementing and using driver-based budgeting
• Using driver based budgeting as a way to focus the organization by linking strategy
  to operations
• Making the traditional budgeting system more meaningful and less stressful 

General Dynamics Case Study: Enabling Decision Support by Moving to an Integrated Forecasting & Reporting Model

John P. Monczewski, Director, Enterprise Performance Management, General Dynamics Information Technology

General Dynamics Information Technology (GDIT) faced a problem common to many large organizations – how to meet the demand for rapid decision support through a disparate array of legacy systems and multiple budgeting & forecasting processes. There was a need to integrate into one, common platform and evolve the planning process to encompass multiple planning horizons ranging from multi-year strategic plans to extremely detailed annual operating plans. GDIT successfully met this challenge by utilizing a suite of products to integrate multiple heterogeneous backend systems into “one version of the truth,” successfully automating complex rate and cost allocations across multiple business units and planning horizons. In addition, they significantly reduced the overhead in dynamically comparing actual vs. budgeted revenue and expenses.
GDIT has laid the foundation for enterprise performance management enabling new divisions, such as Gulfstream, to dramatically increase their performance management capabilities.

Key Issues

• The challenges of re-engineering a manual process for multi-year strategic plans, annual
  operating planning and forecasting
• Multiple back-end ERP systems and other source systems forcing data streams with
  potentially many inconsistencies in reporting
• The ability to react to changing external market and internal business conditions

Innovate Forecasting with the Promise of Prediction Markets

Mat Fogarty, Co-Founder and CEO of Crowdcast, former Director of Corporate Financial Planning, Electronic Arts

When will the product really ship? How much will the new product sell? Prediction markets offer the ability to tap the wisdom of the corporate crowd to accurately forecast key metrics. Think of a betting exchange where
employees can wager on future metrics, “I bet $1,000 the product will launch in August” for example. By allowing employees to bet anonymously on future metrics, prediction markets offer an innovative alternative to the standard forecasting methodology. Mat will demonstrate the promise of prediction markets including best practice examples from the worlds of business, politics, sports, and corporate forecasting cases from Electronic Arts, HP and Google. Come see for yourself as results prove the power of the crowd, with
forecasting error reductions of between 20 and 65%.

Key Issues

• What is a prediction market? Review examples and demonstrations from political, sporting
  and business markets 
• How prediction markets can bring value to corporate forecasters? Hear case studies from
  Electronic Arts, HP, and Google
• Best practices for implementing a prediction market – Where to start, who to involve,
  what to ask?

Giant Eagle Case Study: Bubbles, Budgets, and Basket-Size: Linking Strategy and Finance to Improve the Bottom Line

Anthony Carrabba, Senior Director, Strategic Planning & Jane Ann Regan, Senior Director, Program Office Giant Eagle, Inc.

Giant Eagle, Inc., an $8B innovative regional food retailer, has improved their strategy management and financial planning processes to deal with dramatic changes in their industry, their competitors, and their customers. Implementing the Balanced Scorecard framework throughout the organization has allowed them to clarify their strategy and align the business units. New financial planning processes, coupled with advanced software technology, have shortened the annual budgeting process and increased the ability to develop multiple planning scenarios. Jane Ann Regan and Tony Carrabba will describe the journey they began two years ago and also highlight the challenges they overcame in linking strategy and operations, as well as the benefits they are starting to realize.

Key Issues

• Cascading Balanced Scorecards to both traditional business units and functions as well as
  new grocery formats
• Increasing the accuracy of the budgets and plans without sacrificing speed, and ensuring
  alignment to the strategy
• Developing alternative strategic scenarios and building the corresponding financial
  models as part of the overall strategy-development process

The Stanley Works Case Study: Linking Performance Measures to Business Plans for Impactful Results

Kenneth Kordana, Manager, Internal Reporting, The Stanley Works

Stanley Works is a multi-billion dollar global and diversified manufacturer of a wide array of products along multiple segments. In an ever changing environment there are constant challenges that require multiple levels of decision-making to ensure the best possible outcome for the company, its shareholders, and customers. In order to meet those challenges, Stanley has to identify performance measures that are critical points of focus, providing a catalyst for intelligent business decisions. The planning process is key to establishing goals based
on these performance measures, and aligning Stanley for success. Not every business can be measured in the same way, so it is vital to choose and capture the correct KPI’s for each unit, while maintaining a link to upper level KPI’s that meet corporate objectives. Gathering the proper data, setting realistic objectives, and facilitating standardization in reporting and communication, drive successful realization of budgets, forecasts, and decision-making.

Key Issues

• Establishing tiers of KPI’s to meet different managing level needs
• Aligning performance measures with the planning process
• Reporting & Analysis – efficiently leverage systems to unlock details for strategic review

Lenovo Case Study: Finance Transformation: A Worldwide Journey

Dennis Culin, rector, Business Transformation, Lenovo

The first merger of a Chinese company and an American company occurred wth the purchase of IBM’s Personal Computing Division by Lenovo. As a result, Lenovo was faced with creating a corporate infrastructure to support and manage the new worldwide company. Lenovo’s business model is built
on innovation, operational efficiency, and customer satisfaction as well as a focus on investment in emerging markets. Examples of sourcing decisions that will be discussed include the worldwide fulfillment hub located in Singapore, the worldwide Treasury organization also in Singapore, the Tax Center of Excellence in Amsterdam, the regional accounting teams located in Asia, the America’s and Europe, and the Cost Management Center of Excellence in Shenzhen. Discover how Lenovo’s worldsourcing strategy drove the creation of the Centers, the operational decisions made, and how they drive Finance forward.

Key Issues

• Lenovo’s worldsourcing strategy & the implementation of key financial business practices
• Key business decisions driving design considerations and the process implications
• Lenovo’s transformational journey to date and the roadmap for the future

Millipore Case Study: Performance Management – From Corporate Vision to Reality

Christophe Couturier, Vice President, Finance, Bioprocess Division, Millipore Corporation

Millipore, a leading bioprocess and bioscience products and services company, set an aggressive strategic goal in early 2005: Double the value of the company in five years. Executing the strategy to achieve this goal required a powerful set of management tools and a framework that set direction and ensured
everyone was in alignment. A program was launched with strategy maps, balanced scorecards, rolling forecasts, peer relative targets, initiatives, and strategy-based compensation programs to help the company navigate its strategic journey. Christophe Couturier will present the results of the program he led, the performance culture existing at Millipore today, and how the strategy translates into operations in the Bioprocess Division, as illustrated by one of Millipore’s key strategic initiatives focusing on working capital.

Key Issues

• Performance management is a journey – not a destination
• Strategy execution is a change in mindset enabled by a set of tools
• Performance management is everyone’s job and the results are achieved bottom-up