Measuring Success by Leveraging Technology

1. Measuring Success by
Leveraging Technology
A Presentation to FENG
Webinar Audio:
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Live Webinar:

2. 2
Introductions
Nicole Stone | Net@Work
Account Executive - NetSuite
Michelle Donaldson | Net@Work
Senior Solution Consultant - NetSuite
Amanda Weber | Adaptive Insights
Senior Solution Advisor
Bruce Lynn, CTP | FECG
Managing Partner

3. 3
Agenda
 Measuring Success
 Demonstration: Financial Foundation
for Measuring Success
 Demonstration: Planning,
Forecasting & Performance
Evaluation

4. 4
Webinar Details
• Presentation is roughly 1 hour
• All phone lines are muted
• If anyone has questions during this webinar – please type
them in your Questions Box located at the bottom of your
webinar panel

5. 5
Measuring Success
 Where We Are Today ?
 Outlook Next 12 months
 Measuring Success – Go Beyond
EBITDA
 Building A Business Case For Change
In 2017

6. Where are we today?
Source: Conference Board, May 2017
12 yrs to get
here, but :
Too high?

7. 7
Where are we today(2)
Source: BEA, Factset, JP Morgan Asset Management
Slow is the new normal ?

8. 8
Where are we today? (3)
Source: BEA, Factset, JP Morgan Asset Management
What are
best uses of liquidity?

9. S & P Non Financial Companies (428 companies)
Quarterly Trends as of 3/31/17
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
QTR8 QTR7 QTR6 QTR4 QTR5 QTR3 QTR2 Mar-17
$inBillions
0
20
40
60
80
100
120
140
160
FreeCashFlow($inBillions)
Cash & S/T Equiv. Total Debt EBITDA Free Cash Flow
9
How much liquidity is “enough”?
Cash trend flat; free cash flow trend
volatile. How much cash is enough?
Debt
Cash
Where Are We Today (4)
EBITDA

10. Outlook – Next 12 months
1QTR2017 1QTR2016
Rank Issues of Concern among Top Mgt Rank
1 Government policies (external) 5
2 Economic uncertainty (external) 1
3 Difficulty attracting / retaining qualified employees (?) 3
4 Cost of benefits (internal) 2
5 Regulatory requirements (external) 4
6 Data security (internal) 7
7 Weak demand for your products/services (?) 6
8 Employee productivity (internal) 8
9 Corporate tax code (external) 13
10 Rising wages and salaries (internal) 12
Source: Duke's Fuqua School of Business / CFO Magazine Business Outlook, May 2017; 325 firms

11. 11
Measuring Success
“If you don’t know where you are
going, any road will take you
there.”
The Cheshire Cat
“What gets measured
gets managed.”
Mr. Peter Drucker

12. Measuring Success (2)
 How should “success” be measured ?
• Internal vs External – both views needed
• Must identify and integrate key assumptions
 Profitability : Unit volume, prices, costs.
 Liquidity: Consider sources (financing) and uses
(investments) over time. Balance sheet & future
cash flows will “confirm” profits
 Risk : what are market exposures? Risks difficult
to control so must minimize them (e.g. FX rates,
Interest rates, Counterparty risk).
 Summary: Success is not just about the
P & L: integration of many views needed

13. Measuring Success (2)
 Many “drivers” can contribute to success. Must
juggle simultaneously
• Customer / Product matrix
• Time horizon - Short vs. long term perspective? Static vs.
dynamic horizon?
• Frequency – when do you want to know? Only after close
(every 30 days?)
• Culture & Organizational structure
 Centralized vs. decentralized management
 Number of business / legal units
• Countries / Currencies
• Bank & supply chain support
 When do I know it - Information “float” can mean
missing the off ramp to success
 Is technology part of the problem – multiple ERP
systems? Too many spreadsheets? GL accounts?

14. © The Financial Executives Consulting Group LLC 14
The Business Case for Change
 Find the right balance
• Integrate: Profit, Liquidity, Risk
• Measure against goals (dynamically?)
• Always be looking forward (as far as possible)
 Include liquidity & risk in the mix
• Liquidity
 Internal: Cash on hand + Cash flows forecasted
 External sources - borrow then invest to become more
competitive?
• Risk – minimize exposure to market & consider hedging
the rest
 Cost of constraints - What is needed now to
create future benefits?

15. 15
The Business Case for Change (2)
 Where to start
• Create cash flow ownership using operational cash flows
• Governance & Compliance are crucial
 Pay for performance from two perspectives:
• Top Down – link uses with sources by SBU
• Bottom up – link sources and uses at transactional level
 Think outside the silo and link:
• Operating units – they control operating cash flow
• Financial units – FP & A, Tax, Audit helps fin. cash flows,
banks
 Look for benefits using “Four Flow” Method

16. 16
Success Metrics Check List
Work
flows
Cash
flows
Accounting
flows
Information
flows
Profitability
Deadlines
Priorities
Utilization
Payments
Frequency
Purpose
GL Accounts
Deadlines
Position, Currency,
Targets, Forecasts
Liquidity
(Debt / Investments)
Due date,
deadlines
Borrow
Repay
Interest expense Covenants, terms,
maturity
Due date,
deadlines
Purchase
Redeem
Interest income Asset class,
maturity
Risk
Authorize
Compliance
Volatility
Hedges
Hedge accounting Exposure, targets
Structures
Legal Entities
Setup
Count
Interco. Fees Ownership
Parent/child groups
Staff &
Counterparties
Experience
Priorities
Deadlines
Beneficiaries
Deadlines
Info source, Bk
fees, penalties,
reconciliation
Banks, contacts
Policies / Ops.
Procedures
Responsibilities: FP&A, Audit, Tax, Treasury, Business units
(Key - one unit’s output is another’s input)
Technology
Integration: Market prices, In house, TMS, ERP, Portals,
Spreadsheets, Regulatory / management reports / DBs

17. © The Financial Executives Consulting Group LLC 17
1. Total Liquidity on hand (by curr., entity, bank, etc)
a. Cash in Banks – demand deposit balances at banks
b. Cash + Investments + Unused credit
2. Free Cash Flow ($FCF) = op cash flow – CAPEX – Dvds
3. Cash Conversion Cycle (days) = DSO + DIO – AP Days to
pay
4. Burn rate ($ / day) = Avg. current (total) liabilities / cash
on hand.
5. Debt headroom (% or $) = debt used vs credit limits
6. Leverage = debt / FCF; debt / equity
7. Weighted Avg Cost of Capital (AT) = Debt + Equity
8. Customer Profits
a. Revenue – Ops Exp. + FX losses
b. Revenue – Ops Exp. + FX losses + Cost of Capital
Success Metrics (Sampler Set)

18. NetSuite Business Technology to Manage and Measure
Logic of the
Technology
Logic of
Workflow
Processes
= Ease of
Adoption
Foundation
for Global
Business:
= LOB & Global
Business
Management
Michelle Donaldson
NetSuite Senior Solution Consultant

19. International Connectivity through
satellites and cloud technology
Global Air
DEMAND/SUPPLY
Raw Materials
Supplier
Component
Supplier
Retail Store
Raw Materials
Supplier
Component
Supplier
Global
Ocean
Global DC
Customers
Retail Store
Home Delivery
Global DC
DEMAND/SUPPLY
Home Delivery
Customers
Customer
s
Initial Premise driving NetSuite in 1998
Web-based technology + International Connectivity through
satellites and cloud technology

20. • Role-Based
-Speed up user adoption
• IAAS, PAAS, SAAS:
-Refocus IT on the business
• Extends out to your trading
partners for true End to End
process control
• Supports Vertical Solutions &
Advanced Functionality
NetSuite: Designed for Business

21. The Logic of NetSuite Business Technology
Real-time Business
Management.
Adapt to changes
in business
strategies & in
response to the
business
environments
Logic of the
Technology
Logic of
Workflow
Processes
= Ease of
Adoption
Employees
+
Roles
+
Navigation
Portlets
+
Workflow
Reminders
Foundation
for Global
Business:
Entity Records
+
Transaction
Records
+
GL Impact
Customize,
Standardize &
Differentiate
Automation of
repeatable
processes
Control &
Compliance
= LOB & Global
Business
Management
Country
+
Company
+
Currency
+
Account
+
Segment
+
Location

22. NetSuite Preview

23. Financial Planning, Forecasting & Performance Evaluation
Amanda Weber
Senior Solution Advisor,
Adaptive Insights

24. 24
 Treasury Consultation
• Bruce C. Lynn, CTP
• blynn@thefecg.com
• 203-655-4806
 Business Applications
• Nicole Stone
• nstone@netatwork
• 619-675-9934
Thank You for Attending!