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Corporate performance management software helps bank conquer its budget woes

Learn how one bank cut its budget process time in half with CPM software from Applix.

When he joined New Alliance Bank (NAB) in late 2005 as vice president of financial systems, Jeff Hudson found a financial institution performing the most basic of financial functions – processing the budget – in the most primitive of ways: With Microsoft Excel.

That wasn't the only problem. In addition to using Excel for budgeting, the New Haven, Conn.-based bank was generating profitability numbers through a "stripped down" version of Hyperion's Essbase and printing out customer account histories with Macrofiche. NAB executives knew they needed a better strategy for managing their data. That's why they hired Hudson.

Prior to joining NAB, Hudson worked at rival Bridgeport, Conn.-based People's Bank "automating people's work," as he put it. The college psychology major taught himself to write simple code to automate transferring data from Excel to Microsoft PowerPoint, and in one instance saved the bank thousands of dollars and weeks of effort by creating automated financial reports. The experience prepared him well for his next job.

At NAB, "the budgets never got done at the end of the year because it was such a monster of a process," Hudson said during a recent interview at his New Haven office. "There were people emailing files everywhere."

Putting together the annual budget was a very manual process, he said, with some workers typing budget data into Excel rather than importing it from a database. Inaccurate, incomplete and redundant data was commonplace, not a good idea at a financial institution.

"The data is more critical in banks because our products are intangible," Hudson said. "People are moving their money, but they're not actually moving their money, they're moving information. So, to have control over the view of that information -- where it was, where it's going -- is invaluable."

Weighing OLAP options and a unanimous vote

Needing to update NAB's incoherent data management practices, Hudson knew NAB required a set of business intelligence and financial reporting tools that users were comfortable enough with to ensure adoption, but also flexible enough to meet the bank's evolving data demands. "I need to be able to build complex things, but make them simple," Hudson said, "and I don't want it to be complex from the perspective that it takes a special somebody to do it."

After taking an inventory of the bank's disparate internal systems, Hudson spent half of 2006 evaluating 20 to 30 online analytical processing (OLAP) vendors. He narrowed the competitors down to 15 and invited each one in for a lengthy Q&A session.

"I just drilled them with questions," Hudson said, asking each vendor if they offered pre-canned reports or if consultants would be needed to create reports, for instance, and what level of IT support was needed to manage their systems. He also asked about their auditing and data integration capabilities. A few of the vendors even installed their software on Hudson's PC for a test run.

From there, Hudson, who reports to both the finance and IT departments, put together a team of 26 NAB vice presidents. The team represented each of the bank's lines of business, including consumer lending, life insurance, and commercial real estate. Once Hudson and his team had winnowed the field to six, the vendors each visited NAB headquarters and made their case.

In the end, the decision wasn't even close. All 27 votes went to Westborough, Mass.-based Applix' TM1 reporting and analysis tool.

"I designed a whole set of preset questions…. We presented them to all of these companies coming in and nobody did near as well as TM1," Hudson said. A consultant from Parsippany, N.J.-based Revelwood, an Applix partner, presented TM1 to the bank. "[He] was really personable and he made TM1 seem so simple and elegant. He handled all our questions."

Two acquisitions later…

Another of the finalists was Cognos, but the Ottowa-based business intelligence specialist didn't fair quite as well. "Cognos couldn't do the things with their software that TM1 could do with their software. They couldn't handle it as well or they couldn't show it as easily to the audience," Hudson said.

By mid-2007, TM1 was up and running at NAB. The budget process grew smoother and significantly shorter, just as Hudson had hoped. But then the unexpected happened: Cognos acquired Applix in October 2007. Even more unexpected: IBM then acquired Cognos in February 2008.

A vice president of financial systems could be forgiven for growing a little nervous when his main reporting and analysis vendor gets acquired not once but twice, but Hudson takes a philosophical view. "I only worry about what I can control," Hudson said.The way Hudson sees it, IBM would be crazy to discontinue TM1.

IBM's running a business for profit, Hudson reasons. "And I know that TM1 is the most quality thing that they have, so it wouldn't make sense for them to get rid of it…I'm assuming that they're smart enough to keep it around."

In any event, the two subsequent acquisitions haven't affected TM1's performance at NAB, at least not yet.

With TM1, the bank has cut its budget processing time in half, from four months to two, thanks to TM1's ability to simultaneously run multiple scenarios and to add additional scenarios on the fly when needed, Hudson said. Its user interface is so simple that NAB's CFO even does his own ad hoc analysis directly in TM1. Hudson also just finished a payroll analytics cube, is in the middle of designing incentive tracking for the bank's branch network and is considering creating credit warehouse.

That's not to say that TM1 is perfect. Its response time is somewhat slower towards the end of budget season, Hudson said, when TM1 is overloaded with users scrambling to get their numbers in under the deadline. He is also disappointed that Cognos is doing away with Applix' concurrent licensing model, which NAB uses, replacing it with role-based licensing. Still, overall Hudson is satisfied with the bank's decision to go with Applix.

Hudson said he's particularly happy with TM1's ease of use and flexibility. He said TM1 can run as a standalone program (as it does at NAB) or on the Web, and it can be tailored to look and function like Excel. "That's part of the beautiful thing about TM1," Hudson said, and why it has been such a hit with NAB's 100 or so end-users, who represent every division and department at the bank.

"I haven't had one person say they don't like this system, which I think is tremendous," Hudson said. "It has a lot of popularity here, definitely among the executives….People are asking for more and more stuff built on it."

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