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Cognos

Deluxe’s three business units provide personal andbusiness checks, business forms, labels, self-inking stamps, fraud prevention services, and customer retention programs to banks, credit unions, financial services companies, consumers, and small businesses through multiple distribution channels such as theInternet, direct mail, telephone, and a nationwide salesforce. The company’s plans to aggressively pursue newmarket opportunities have resulted in increasinglystringent business planning requirements. Armed withCognos Enterprise Planning, Deluxe has created andimplemented sophisticated business planning processes that deliver increased speed and accuracy to its enterprise-wide analysis and forecasting processes.

For large organizations-companies that have numerous products, customers, and channels-the planning and forecasting process is never easy. At $1.3 billion Deluxe Corporation, market pressures, industry deregulation, and changes to the corporate structure have made planning and forecasting even more challenging.

Deluxe's three business units provide personal and business checks, business forms, labels, self-inking stamps, fraud prevention services, and customer retention programs to banks, credit unions, financial services companies, consumers, and small businesses through multiple distribution channels such as the Internet, direct mail, telephone, and a nationwide sales force. The company's plans to aggressively pursue new market opportunities have resulted in increasingly stringent business planning requirements. Armed with Cognos Enterprise Planning, Deluxe has created and implemented sophisticated business planning processes that deliver increased speed and accuracy to its enterprise-wide analysis and forecasting processes.

Before adopting Cognos Enterprise Planning, Deluxe planning, finance, and accounting functions were highly decentralized. But by the mid-1990s, challenges to traditional revenue streams persuaded the company that its data collection processes should be standardized. After implementing an ERP system from SAP, Deluxe turned its attention to business planning and analysis. While SAP was proficient at collecting historical data, Deluxe needed faster analysis to produce accurate forecasts. At the time, plans and forecasts were propagated using Excel spreadsheets and e-mail, which meant that the finance department spent more than 80 percent of its time gathering information and less than 20 percent on analysis.

AUGMENTING SAP WITH ENTERPRISE PLANNING

Deluxe established a set of criteria for judging the success of an enterprise business planning platform, including such things as ability to model a rapidly changing business structure, time required for consolidation and closing, and data and forecast accuracy. The company considered using components of their SAP system for business planning and budgeting, but ultimately decided that SAP could not at the time match the functionality and flexibility of Cognos Enterprise Planning for an array of discrete business planning functions, including:

• Annual detailed financial planning
• Quarterly detailed reforecasting
• Development of pro-forma integrated financial statements (e.g., income statement, balance sheet, EVA, cash flow)
• Gathering work distributions for activity-based costing
• Project reforecasting
• Distribution of cost center-level monthly results via the company intranet

Among planning system alternatives considered, Cognos Enterprise Planning was the clear winner. At a high level, a number of technology and usability issues have served to validate the Cognos decision:

Processing requirements. While Deluxe's SAP system processes large volumes of transactions, its business planning system has to deal with fewer transactions, but transactions that involve applying complex logic to thousands of data points.

Peak-use handling. At Deluxe, as at most companies, planning is heavily deadline-oriented. Consequently, the loading on its business planning systems is heavily peaked. By using intelligent balanced servers and local processing, Cognos Enterprise Planning ensures rapid response times regardless of the number of concurrent users.

Integration with existing systems. Its open architecture enables Enterprise Planning to smoothly integrate with SAP by mirroring the appropriate SAP metadata. According to Deluxe Lead Business Support Analyst, Aaron Walcott, the monthly data exchange between systems that used to take 1.5 days takes just a few hours.

Real-time aggregation. By aggregating data in real time, Cognos Enterprise Planning avoids timeconsuming batch consolidations that would otherwise force finance to wait for consolidated results. A single pool of data is updated globally as users submit revised plans and forecasts. "Real-time aggregation, along with automatic consolidation of plan and forecast results, creates significant efficiencies for us," says Walcott. "Our ability to analyze the results and consider performance-enhancing alternatives has improved greatly."

Efficient workflow management. Cognos Enterprise Planning enables Deluxe managers to make sure data submissions are on time all the time. According to Ryan MacAskill, Senior Financial Analyst, "The workflow management capabilities within the Cognos Contributor module--along with the ability for a manager to cross over from reviewing contributions to modifying a plan--further improves the efficiency of the process and frees up scarce time for our operating management teams."

IT-free planning. "The minimal involvement of IT in the planning process allows us to build a planning model, create a Web site, and deploy an application to our user community in a matter of hours," says MacAskill. "This helps us meet the rapidly evolving needs of our business units, and frees our IT teams from the drudgery of supporting our planning system."

End-user acceptance. Most Deluxe employees are familiar--and happy--with the single-user spreadsheet experience: a brief delay while the spreadsheet loads, followed by rapid recalculation based on new data input. Cognos Enterprise Planning is able to replicate the response profile of a spreadsheet, ensuring painless user adoption. In addition, says MacAskill, "Business unit managers are on board as well. They feel strong ownership of their plans and ongoing forecasts. At Deluxe, the days of a finance-driven plan with no buy-in are over."

PAIN-FREE COGNOS ROLLOUT

Deluxe entered the first phase of its Cognos Enterprise Planning implementation during the first quarter of 1998. Rollout took just three weeks. Deluxe then expanded the Enterprise Planning implementation to incorporate the rest of its planning process, again taking just three weeks from initial design to introduction. Later, the company completed a third phase of the implementation in just a week and a half. Through all implementation phases, Walcott notes that Enterprise Planning required "minimal IT involvement, which has been very beneficial for us. Basically, they just have to let us into the [data center] room to get to the server."

ENTERPRISE PLANNING SAVES TIME, LABOR, MONEY

While Cognos Enterprise Planning met Deluxe's objectives-planning consolidation time shrank from 5-7 days to just 2-3 hours, for example--the greatest return on investment has been the transformation of the finance department's primary role from accounting to decision--support. According to Walcott, "Our ability to focus less on accounting and more on analysis has turned us into key partners with our business units' management teams. We're not viewed as simply 'bean counters' anymore, but as an integral part of the business strategy development and deployment processes."

By way of example, at the beginning of 2001, Deluxe finance noted a gap between detailed business unit plan roll-ups and targets established by the overall corporate plan. By analyzing trends in variable P&L line items--such as consulting--finance was able to make adjustments, extrapolate their impact over the fiscal year, and recommend downward adjustments to those items in the corporate plan, thus closing the gap between strategic plans and operational realities. By quickly analyzing multiple scenarios, Deluxe is able to set realistic goals and revisit and adjust those goals regularly, which means fewer surprises late in the quarter. The result is more predictable performance: the business unit that first implemented Enterprise Planning won the company's forecast accuracy award in four out of five quarters. Deluxe's ability to improve internal predictability translates into more accurate earnings projections, a key element to engendering stakeholder confidence.

CONTRIBUTOR FACILITATES ACTIVITY-BASED COSTING/MANAGEMENT

Deluxe relies on a complex Microsoft Access-based ABC/M system to gain a high degree of confidence and accuracy in their product costs. Cognos Contributor is the primary vehicle for collecting work distribution information (activities) across corporate and manufacturing operations. This information is transferred into the Access systems where actual cost allocations are handled. Deluxe's ABC/M system has significantly increased product cost accuracy, leading to improved pricing decisions and resource allocations for product line investment.

Success with Contributor on the ABC/M front-end has led Deluxe to consider migrating the back-end (allocations portion) of the ABC/M process into Cognos Analyst, given the complexity and effort required for allocations by Microsoft Access.

ECONOMIC VALUE-ADDED ANALYSIS

Deluxe uses EVA to track financial performance and to establish the corporate benchmark for evaluating senior management performance. While SAP is used to track actual EVA and to contain the static EVA plan based on the annual operating plan, Cognos Enterprise Planning proactively manages EVA: impacts occur directly through integration with the annual planning and quarterly reforecast plan processes and the project planning and forecasting process.

Other payoffs noted by Walcott are the enhanced skill sets demonstrated by business unit managers who use Enterprise Planning. By spending less time on low value-add processes like expense control, says Walcott, managers are more oriented toward uncovering and considering opportunities.

ENTERPRISE-WIDE PROJECT PLANNING AND FORECASTING

Before adopting Cognos Enterprise Planning, Deluxe managed its many cross-enterprise projects using Excel. Because every project was planned, run, forecast (or not), evaluated, and performance communicated differently, it was difficult to evaluate project impact on key financial measures like profitability, cash flow or capital requirements. At the urging of the assistant corporate controller, the Cognos solution was integrated into the Deluxe business planning process to drive consistency in planning, forecasting, measuring, and reporting project performance. The process is fairly simple. When someone comes up with a new idea--a product, a manufacturing change to save costs or improve quality, a business process improvement--they submit a business analysis, including rationale and a financial cost/benefit assessment, to an "idea warehouse."

After analysis, management selects projects from the "idea warehouse" to operationalize with staff, operating, and capital funds. Before applying Cognos Enterprise Planning to the task, a lack of consistent means to plan and monitor projects made it difficult to determine which projects were successful and which weren't. With Cognos Enterprise Planning, an approved project is modeled to reflect its unique characteristics. Further, each project includes a monthly forecast of financial and project performance using a traditional work breakdown structure cost/schedule. Says Walcott, "Enterprise Planning works so well here because of its ease-of-modeling and it great flexibility for project definition."

AROUND THE NEXT CORNER

To gain an even better view of the future, Deluxe used Cognos Analyst to develop a five-year strategic plan for 2003-07. The model is structured to include an operating baseline of costs, people, and capital investment, onto which are layered the implications of real and proposed strategic initiatives. The model separates corporate functions from all three Deluxe business units as it builds to a full P&L, cash flow, and balance sheet. Consideration is being given to integrating the strategic planning process with the quarterly forecasting process to develop a rolling cross-enterprise strategic plan.

MEANWHILE, OUTSIDE FINANCE …

According to Walcott, however, what really makes Cognos Enterprise Planning a world-class solution at Deluxe are the changes wrought outside the finance department. "It's been a change in paradigm," he says. "The rigor with which business unit managers now address planning and forecasting has been very beneficial. While the change in technology has allowed us to involve more people and achieve a greater level of detail, it's the change in culture that delivers the real benefits." He notes that business unit managers-who use Enterprise Planning to approve and reject forecast submissions-now take much greater ownership of their numbers. "Because we use one communications platform, and because the look and feel of the data is consistent, managers can move from discussion about the numbers to a dialogue about the business."

WHY COGNOS?

Only Cognos delivers a complete range of integrated, scalable software for corporate performance management. Cognos products let organizations drive performance with enterprise planning and budgeting, monitor it with scorecarding, and understand it with business intelligence reporting and analysis. Founded in 1969, Cognos now serves more than 22,000 customers in over 135 countries.