How An Innovative Organization Enhanced Its Investment In SAP Nike: A Case Study In Improving Planning And Performance Management

2008 IBM Corporation

IBM Cognos Business Intelligence and Performance Management for SAP

Karen Kirby IBM Cognos SAP Market Executive

2008 IBM Corporation

A Challenging Economic Climate

Industry Structure Can Change Significantly in Crisis

19%

2.3x
8%

15%

13%

12%

11%

11%

1989

1990

1991

1992

1993

1994

1995

N= 5,400 companies globally.

Source: The Corporate Executive Board, Executive Guidance for 2009
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Optimizing Performance
Performance

Decision Making

Information

Data

Growing complexity of business demands for information

INTERNAL DATA

How are we doing?

HR

Reporting
CRM BILLING

Why?

Analysis

EXTERNAL DATA

ERP

What should we be doing?

Planning

EXTERNAL MAINFRAME

Dashboarding Scorecarding

Budgeting

Open, enterprise-class platform increases business adoption and minimizes the burden on IT

Reach all information reliably and timely

Deliver a complete, consistent view of the business

Adopt infrastructure and adapt to change

Cost-effectively scale as user communities grow

SAP NetWeaver Components

SAP NetWeaver Portal

IBM Cognos 8 SAP Certifications

Enterprise Portal iViews (EP-BP)

SAP NetWeaver Application Server

SAP NetWeaver Application Server (J2EE-DEP)

SAP NetWeaver Business Warehouse

OLAP BAPI interface SAP BW (BW-OBI)

Summary of Capabilities Display Cognos BI content within an SAP NetWeaver Portal Single sign on and authorization using SAP security Option to run IBM Cognos 8 on the SAP web application server Use multiple versions, instances and all structures within the SAP NetWeaver Business Warehouse as a data source for IBM Cognos 8 content. (Patent Pending Next Generation Engine)

IBM Cognos 8 Performance Management for SAP

Efficiency: Make better decisions faster Faster more effective decisions from business user self service Flexibility: 24/7 Performance Management Faster reaction to change, less reliance on specialized resources. Agility: Timely and cost effective execution Instant on the fly modifications, alterations, and changes to reports, plans and financial models without growing IT service backlogs. Proven Capabilities: Performance Management today Turn your SAP infrastructure into a competitive weapon by embracing and extending SAP data to all business users. Predictable: High value without hidden costs Avoid ongoing custom development, data migrations, management and administration of multiple incompatible tools. Leverage your investment in SAP as a competitive weapon.

IBM Cognos 8 Planning for SAP

Cognos 8 Planning: a finance-managed planning, budgeting, and forecasting solution that supports driver-based plans, rolling forecasts, involving all the right people as frequently as needed.

Flexible Driver-based Planning High Participation/High Frequency Modular Distributed Global Administration Real-time workflow - enables superior collection, control & collaboration

BI and Performance Management Built for All Times Aligning Finance, Operations, and IT
Deliver trusted information with conformance, compliance and costeffective scale Drive effective, auditable processes that lead to better business outcomes

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IBM Cognos 8 - Differentiators

Unified Platform for Performance Management Lower TCO for development and maintenance One solution to learn, one place to go for any Performance Management capability Consistent Solution Roadmap Focused on Innovation Develop today without fear of future redevelopment requirement Patent-Pending Integration with SAP NetWeaver Optimized access to SAP NetWeaver BW Maximized leverage of existing structures and BEx queries Data Source Agnostic Broad heterogeneous application and data support Flexibility to adapt to evolving infrastructure landscape Business User Self-Service Increases business agility Reduces time to decision
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SAP Insider Events

Customer Webinars (registration is required) http://webinars.sapinsideronline.com/index.cfm?session Customer Tellabs First Energy Nike Other Events Date February 26, 2009 March 19, 2009 April 21, 2009 Time Available for replay on the SAP Insider site Available for replay on the SAP Insider site 11 AM 12 PM EST

http://www.sapinsideronline.com/events.cfm?session
Event
SAPPHIRE

Dates May 12 15, 2009

Location Orlando, FL

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Cognos on SAP User Group

Pre-requisites: Existing Cognos software customer Mandatory Non-Disclosure agreement

Meetings First Energy Cognos Forum Disney US Army ARDEC

Dates

Location

March 31, 2009 May 12, 2009 August 4, 2009 November 2009

Akron, Ohio Orlando, Florida Burbank, CA New Jersey

For additional information contact rrekstad@us.ibm.com

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Case Study: How Nike Is Using IBM Information Management Tools To Improve Planning And Performance Management

Ron Duckworth BW/BI Integration Director Nike, Inc

2008 IBM Corporation

What Well Cover Introduction Landscape/History Planning and Reporting Inputs Planning Reporting Solutions/Success/Next Steps Q&A

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Nike Inc. Profile

Corporate headquarters in Beaverton, Oregon, USA 30,000+ employees worldwide $18.5B Revenue

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What Well Cover

Introduction Landscape/History Planning and Reporting Inputs Planning Reporting Solutions/Success/Next Steps Q&A

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NIKE System Landscape

SAP is NIKEs strategic partner for ERP and BI One of SAPs largest SAP R/3 Apparel Footwear Solution clients NIKE runs 50+ countries on a single code two box instance Large BW installation Finance over 6TB with 600+ users SAP : NIKE jointly developed SAP Netweaver solution for direct supplier management. Cognos EP chosen over BPS and IP Business looked for top-down driver-based tool Business needed flexible solution

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Nike Cognos landscape

Cognos Planning (CP) 8.3 (Production) Used CP for 4+ years, around 40 Models 350+ Planning users, primarily Finance Two NT Server instances on MS SQL USA & Europe BI 8.3 (Production) 350+ users against PDM and SAP-BW Cognos Solutions developed with Cognos and Cognos partners

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Where weve been

The focus since 2004 has been to design, implement, stabilize, and improve our existing financial planning processes:

3 Year Strategic Planning Quarterly Landing Estimates CAPEX Planning Working Capital Planning Headcount Planning Category Planning 2005 2006 2007 2008 2009 2010
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Nike is progressively building its Cognos Planning footprint module by module to meet its planning process
3 Year 2 Year
Product Plan 24 month (Six Season) Three Year Strategic Plan (CSR)
Global CSR EMEA 3 Yr Application Category Planning Targets Demand Creation Capital Headcount

1 Year

<12 Month

<6 Month
Orders (Futures & Backlog)

<1 Month

Annual Targets & Budget

Forecasts (Monthly)
In Excel & SAP R/3 at current time

Landing Estimate

Futures Backlog

Landing Estimate

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Nike leverages Cognos EP for three key situations

Driver Based Planning What If capability Leverage instant currency translation and consolidation Deployed to multiple users around the globe using Contributor Typically build data requirements in under five business days Global planning applications such as 3 Year Planning and Target Annual Budget setting Example: EMEA Planning Application Data Collection Collect data / information quickly not held in SAP Replace MS Excel databooks and emails. Headcount statistics, Capital Planning templates, Quarter End Landing Estimates prior to fiscal close. Example: Demand Creation Model Detailed Business Unit Forecasts (short & long range) Standardize multiple inputs across multiple time horizons to consistent output Summary feeds summary inputs to Corporate templates Example: USA Footwear Model

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Financial Planning Processes Utilizing Cognos Planning Solution Current State

Strategic Planning
3 Year Corporate Strategic Reviews (annual & quarterly views)
Corporate Planning Model EMEA Strategic Planning Americas 8 Season Forecast Golf Bible

Monthly Forecasting & Annual Budgets

Futures: Gross to Net Backlog Reporting Americas Demand Creation Planning

Other Planning Activities

Quarterly Landing Estimate 10 Year Cash Planning

Corporate Target Setting Headcount Planning CAPEX Planning Working Capital Planning 10 Year Scenario Planning Global FW 8 Season Revenue Forecast INITIAL SCOPE

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Financial Planning Processes Utilizing Cognos Planning Solution Future State

Strategic Planning
3 Year Corporate Strategic Reviews (annual & quarterly views)
EMEA Strategic Planning Americas 8 season forecast Golf Bible

Monthly Forecasting & Annual Budgets

Driver-based models aligned across like businesses:
Wholesale Business Model (FW, AP, EQ) Licensed Business Model Retail Business Model

Other Planning Activities

Quarterly Landing Estimate 10 Year Cash Planning

Corp Target Setting Headcount Planning CAPEX Planning Working Capital Planning 10 Year Scenario Planning Global FW 8 season Revenue Forecast

All models include:

Rev/Cogs Planning Demand Creation Planning Functional Overhead Spending Working Capital Planning Investment / Project Planning

NEW

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Solution being considered leverages the reports already developed using our current suite of tools

BW BEx Reports

Portal

Cognos BI

(COPA, CCA, PCA, ECCS)

SAP-BW

PeopleSoft PDM

Cognos Analyst

Cognos Contributor

Planning Analyst / Power User - Use IBM Cognos 8 BI for direct access on the Planning Datamart Actuals Analyst / Power User Use existing SAP NetWeaver Business Warehouse reporting tool suite

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What Well Cover Introduction Landscape/History Planning and Reporting Inputs Planning Reporting Solutions/Success/Next Steps Q&A

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Planning and Reporting

INPUTS
Getting data into Cognos for Planning

PLANNING

REPORTING

Reporting of plan and actuals data for analysis

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History INPUTS

Manual excel uploads (decentralized) SAP Netweaver BW queries loaded via copy/paste (centralized) SAP Netweaver BW queries loaded to SQL published to CP Tested CP integration with SAP Netweaver BW Excel add-on for Contributor Cognos BI running on SAP Netweaver BW
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Key Learnings

INPUTS Align masterdata dimensions Minimize manual data loading Centralize the data staging required for planning Automate the data movement Reduce duplicate data storage Flexible filtering framework Maximize performance

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History

PLANNING

Driver Based Planning Data collection Detailed business unit forecasts (short & long range)

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Key Learnings

PLANNING

Focus on the regional requirements Create consolidation activities to roll regional models to global models Enable the planning process to move from Forecast to CSR to Budget to Forecast Excel enabled

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Financial Business Intelligence requires alignment of the three key Finance processes

REPORTING
Transactional Processing & Consolidation Business Planning Reporting & Analysis Business Planning Transactional Processing & Consolidation

Reporting & Analysis

To deliver a world-class solution requires alignment of Actuals (transaction data) with Plan (business planning data) Reporting tools only effective if integrated with Business Planning and Transactional Processing
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Key Learnings

REPORTING Certified reporting enabled Ad-hoc capabilities Standardized reporting available throughout the planning process Simple, easy to use experience Maximize performance

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Solutions for these challenges have been identified, but additional work is still required for success Inputs Outputs

Integration with SAP NetWeaver Business Warehouse

SOLUTIONS

IBM Cognos 8 BI

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What Well Cover

Introduction Landscape/History Planning and Reporting Inputs Planning Reporting There is no finish line Q&A

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Key Successes

Target setting / scenario planning that provides:

Transparency of assumptions Version management & control Limited IT dependence (quick turn-around for those ad-hoc urgent requests)

Distributed model development allowing users to take advantage of capabilities of Cognos Planning Instant consolidation of inputs & workflow mgmt Minimal, if any, training required for Contributors

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Change is needed now because

Our current planning processes are not integrated across business planning timelines (seasons) Our current planning processes are inefficient, inaccurate and not timely Planning the business through a globally defined category view in addition to a geographic and product engine view increases the number of dimensionsthis cannot be supported by current processes and technologies

37

We will eliminate redundancies and inefficiencies by changing the timing

From separate timelines

across Finance and the Category Game Plan

. . . to integrated timelines

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and both the frequency and level of detail in our financial forecast processes

Jun-08 FA '08

Jul-08 Fcst

Aug-08 Fcst

Sep-08 Fcst

Oct -08 Fcst

Nov-08 Fcst

Dec-08 Fcst

Jan-09 Fcst

Feb-09 Fcst

Mar-09 Fcst

Apr-09 Fcst

May-09 Fcst

C u r r e n t F in a n c e P r o c e s s e s

HO '08

SP '09 SU '09 FA '09

F Y 10

HO '09 SP '10 FA '10 SU '10 HO '10 SP '11 SU '11 FA '11

F Y 12

HO '11 SP '12 SU '12

3 Y e a r R e sp o n se

3 Y e a r T a rg e t s

O c t o b e r C SR

J u ly C S R

F Y 11

F Y 10 B u d g e t

From detailed forecast updates every month

FY0 9

Q BR

Q BR

Q BR

Q BR

Jun-08 FA '08

Jul-08 Lt

Aug-08 Lt Ctgy

Sep-08 Fcst

Oct-08 Lt

Nov-08 Lt Ctgy

Dec-08 Fcst

Jan-09 Lt

Feb-09 Lt Ctgy

Mar-09 Fcst

Apr-09 Lt

May-09 Lt

FY0 9

N e w F in a n c e P r o c e s s e s

HO '10 SP '11 SU '11 FA '11

F Y 12

HO '11 SP '12 SU '12

J u ly C S R

FA '10

3 Y e a r T a rg e t s

O c t o b e r C SR

SU '10

3 Y e a r R e sp o n se

to detailed forecasts only quarterly

HO '08

Q BR

Q BR

Q BR

SP '09 SU '09 FA '09

Q BR

F Y 10

HO '09 SP '10

F Y 11

F Y 10 B u d g e t

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We will standardize and align finance and operational planning processes Financial Inputs & Outputs for Category Gameplan

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We will create profitability driver-based solutions:

3 Year Strategic Planning

Focus on highest priority key drivers

Revenue Drivers
CONSUMER Sport Participation rates Market Size / Share Market Growth Price Points (Good, Better, Best) Frequency of Purchases (volume) Silhouette Trends

Financial Metrics
Futures Auto Replenishment At Once Cancellations ---------------------------Net Demand ----------------------------

By Category By Country

DISTRIBUTION New Doors Existing Doors Comp Doors Existing Doors Door Expansion Average Sales per door Units per door Discounts Marketing Spend (retail fixtures, co-op) By Category By Country By Channel By Account (maybe) By BU

Discounts Claims Returns Closeouts Licensee ---------------------------Net Revenue ----------------------------

Net Revenue Revenue Growth %

Demand Creation Drivers

Financial Metrics
Retail Brand Marketing Advertising Digital Brand Events Public Relations Other --------------------------------Brand Demand Creation --------------------------------Base Expense Bonus Comp Events ------------------------------Total Sports Marketing -----------------------------------------------------Demand Creation -----------------------Demand Creation Demand Creation as a % of Revenue Demand Creation Growth %

Cost Drivers
MACRO MARKET INDICATORS

Financial Metrics
ILLUSTRATIVE
FOB Duty Freight In ---------------------------Product Cost ----------------------------

BRAND CONCEPT MAP Initiatives (e.g. Cold Weather Pro, Nike +, World Cup) Consumer Insights / Trends Revenue Projections (CO-OP, etc)

ILLUSTRATIVE

Cost of Oil Labor FX Local for Local Duties Raw Materials

By Category By Country By Medium

By BU (maybe)

SPORTS MARKETING Existing Contracts (Terms) Potential New Deals Renewals Major Athlete / Term Performance Bonuses Prorations Divestments By Category By Region Committed vs. Planned

PRODUCT MIX New Innovations % of Carry Over product Airfreight assumptions By Category By Region By BU

Product Cost GPM%

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We will create profitability driver-based solutions: Performance Mgmt Quarterly Updates

Focus on bookings & invoiced sales plus the related costs to support the business
Seasonal Fiscal
Quarterly Forecast

P&L St at ement
Direct Indirect

k
Fully Alloc

Revenue
Gross Sales Discounts and claims Net Revenue

COGS
Product Cost Warehousing RD&D 3rd Party Royalty Other COGS Gross Margin Gross Margin % Gross Pricing Margin % Net Pricing Margin %

SG&A
Demand Creation - Sports Marketing Demand Creation - all other Operating Overhead Total SG&A Other (income)/Expense

EBIT
as % of revenues

Balance Sheet
Inventory (DII)
In-line Close Out

Direct

Indirect

Fully Alloc

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Benefits to the Business

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Question & Answer

Contact Information: Ron.Duckworth@nike.com

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 Copyright IBM Corporation 2008 All rights reserved. The information contained in these materials is provided for informational purposes only, and is provided AS IS without warranty of any kind, express or implied. IBM shall not be responsible for any damages arising out of the use of, or otherwise related to, these materials. Nothing contained in these materials is intended to, nor shall have the effect of, creating any warranties or representations from IBM or its suppliers or licensors, or altering the terms and conditions of the applicable license agreement governing the use of IBM software. References in these materials to IBM products, programs, or services do not imply that they will be available in all countries in which IBM operates. Product release dates and/or capabilities referenced in these materials may change at any time at IBMs sole discretion based on market opportunities or other factors, and are not intended to be a commitment to future product or feature availability in any way. IBM, the IBM logo, Cognos, the Cognos logo, and other IBM products and services are trademarks of the International Business Machines Corporation, in the United States, other countries or both. Other company, product, or service names may be trademarks or service marks of others.

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