Primary Matters

Download this document in pdf format


   What Management Needs for Planning, Budgeting and Assessing Business Strategies

Activity-based Integrated Planning and Budgeting Solutions

By: Greg Borton, CEO, Primary Matters
Copyright, August, 2003, Primary Matters, Inc.,

The Senior Vice President of a manufacturing and service company has responsibility for 2,500 employees. The division provides a range of corporate functions, including new product sales, installation services, customer training, customer support, technical support as well as handling on-site customer maintenance issues.

Let’s listen to a management meeting!

“The SVP turns to his financial analyst, “This proposal for our CRM system looks good. What impact will this have on our budgets and productivity, and how will it change our labor forecast?” The business analyst responds, “I’ll have the results to you next week!”

The next presentation proposes changes to the field organization and its phone-based technical support center. The SVP: “This is also a good idea. When can I see the likely business impact of this proposal?” The analyst replies, “I can have the first analysis done middle of next week, then start on this – I should be able to have it ready for you about three weeks from today.”

“Hmm . . . I also want to know what happens if we approve the first one now, and then start the second initiative seven months from now. I would also like to see what happens if we fund both projects to start two months from now.” The analyst looks at the CEO, “That’s pretty difficult. I could do that, but, to be honest, I’m not sure when it will be ready. This could take a few months.”

“We have eight other proposals to review today. . . . We can pick, at most, three of these projects. Which three will give us the highest return two Quarters from now?” 
Here, the analyst shrugs, “If you give me three or four full time analysts, I can develop a way of answering your questions, but this can’t be done without a team working with each of the proposing groups.”

At this point in the meeting, the management group realizes that it must make decisions based upon its members intuition and guesswork. They can’t wait for the business analyst to supplement what they have already learned about the possible strategies and investments. Although most management groups are pretty good at intuitive decisions, they know they could do better if they had better projections of their future performance. They will continue to wonder:

  • “Are we really picking the right projects to optimize our business goals and budget?”
  • “If we re-arranged the timing of these projects, could we do better?”
  • “Our performance would probably improve by at least a few percent if we also had good business impact analyses comparing and ranking the multiple strategies available to us.”
  • "Why does it take us so much work and time to understand what happens to us based on different opportunities?"


What is the Management Group Missing? - An Activity-based, Integrated Planning and Budgeting System

Organizations have customer transaction databases, CRM solutions, accounting systems, shipping and tracking systems, manufacturing processes, workforce scheduling and sales automation.. But very few have the tools to understand and forecast alternative business strategies.

The solution which provides management with the above abilities can be loosely referred to as an Activity-based, Integrated Planning and Budgeting Solution. The benefits of such a system were summarized by Ken Webb, Vice-President, ServiceFIRST, of McKesson, who is in charge of a customer support and CRM operations environment with several hundred employees. He uses The Primary Matters’ Guide™. He stated:

“Using The Guide, we were able to complete months of analysis in just three weeks. The benefit is not just in the savings in analysis costs. It is also the clarity The Guide adds to the planning for capital expenditures. We made cost and benefit assumptions that drove the analysis. These assumptions

The Primary Matters Guide™

The Guide is Primary Matters’ flagship software product. It is a next generation activity-based planning and budgeting solution now used in over 25 large organizations, revolutionizing the focus and quality of the management group as well as increasing their productivity.

were available for review by all stakeholders. The Guide offers the ability to easily alter any assumption, immediately updating the results. We wereAugust 23, 2005ed to everyone’s concerns. We now have an updated operational plan to use in managing our organization.”

What does an Activity-based Integrated Planning and Budgeting System Do?

An integrated planning and budgeting solution supports five themes major. The solution:

  1. Enables one to easily capture the goals of and the consequent demand on an organization. The goals may be meeting sales and customer forecasts, managing an installed base or evolving customer relationships. These goals and the demands they make on the organization are the ‘world outside’.
  2. Lets one easily capture the work processes, activities and costs of the business processes that are used to meet the demand on the organization. These may be sales calls, closing new customers, turning on new services, providing products, and supporting customer queries.
  3. Identifies the human, IT, facilities and other resources and costs incurred to meet an organization’s goals. This resource/cost mapping is then linked to the work being accomplished for a thorough work analysis and activity-based costing of work activities.
  4. The above information then automatically projects budgets and resource forecasts, and also links the organization’s financial information directly to the customer base and operational work activities.
  5. Enables Scenarios, such that by changing any of the goals, resource or cost factors, or customer relationships, the forward-looking changes to the group’s financial and resource performance becomes available. Then detailed Scenario Comparisons may be viewed, letting the management group examine the business impact of various strategies.


How The Primary Matters Guide provides Value as a Next Generation, Activity-based Integrated Planning and Budgeting Solution

The most important values that may be achieved by using an integrated activity-based planning and budgeting solution are summarized by users of The Primary Matters Guide (see overview in Appendix 1):

  1. Understand the Organization Strategically and Operationally. Obtain a transparent view of your organization showing what drives the demand for the work, how the work is done, how much it costs. This provides a common framework for viewing opportunities, creating budgets and understanding resource requirements and costs. As was stated by Beverly Adamo, Vice President, Client Services, Metromedia Fiber Network after implementing The Primary Matters Guide:

    “As a result of having implemented …the financial model, we now know the high cost of doing nothing. Our priorities are crystal clear. I had no idea that seemingly insignificant aspects of our operation could be such a rich source of opportunity. For the first time, we have the information we need to take specific, immediate action.” 

    According to Maurice Degley, SAIC’s Sr. Solutions Consultant for the Global Telecommunications Group

    “I regularly use The Guide in my consulting engagements, analyzing the impact of VOIP, organizational re-structuring, and developing IT strategies. For the first time, not only can I quickly identify a client’s cost structure, but I can also create alternative forward-looking plans and understand and compare their impact on customers, budgets and resource forecasts. I can adjustments to my assumptions, and in minutes see what the affect is on forward looking plans and performance.”

  2. Improve the Productivity of the Management Team. Current planning processes are not efficient. They require custom software development (often spreadsheets), do not communicate common assumptions well, and since they do not offer a standard set of reports and views, do not provide a consistent platform for discovering and qualifying opportunities. Brent Sypert, Analysis, of McKesson stated:

    "The Guide has enabled a new level of depth and accuracy in my analysis. It would take me months instead of weeks to produce the reports I get from The Guide. With The Guide, we know the results are accurate and produced with sufficient detail to satisfy any audience. The support I receive from Primary Matters in the use of The Guide is unparalleled."

  3. Make Better Decisions. Since management is able to view issues, options, alternative strategies and decisions from a common framework and set of shared information, decisions are better. Funds are allocated to projects that have higher ROI due to re-ordered priorities as well as scheduling project implementations better. 
    Rick Burgos, Manager, Global Customer Support Center of HP adds:

    “We are excited with the opportunities that Primary Matters will bring to us as we adapt to changing dynamics in customer support. The Primary Matters Guide™, in conjunction with our joint know-how, will allow us to rapidly evaluate and execute ever-improving support models. There is no doubt that Primary Matters, along with effective change management, will help us to quantify, communicate, and make those hard decisions easier. As one of the professors in the Master of Science in Science and Technology Commercialization program stated... ‘The right system makes you look smart.’ The Primary Matters Guide™ does exactly that.”

  4. Improve the Productivity of the Organization. The transparent view and linkage between business goals, work activities and resources will almost always reveal some ‘low lying fruit’, which is worth anything from 1% or 2% up to 20% productivity increases. Patty Kleinfeldt, Director, Quality and Education Services, AAA Automotive. Patty explains: 

    “The Primary Matters Guide offers AAA and Canadian Automobile Association clubs the ability to look at several different scenarios in determining budget and technology requirements, business opportunities and return on investment. The Guide is easy to use and can highlight opportunities in the call center environment that could save money or improve operations. Once we saw The Guide’s ability to provide data quickly and easily, we recognized the value this tool could offer our organization.”

  5. Enable Better Communications with Other Groups in the Organization. With a common set of reports, as well as capturing the demand that drives the organization, the management group is able to communicate better with the other groups in the company, expressing the consequences and opportunities in order to obtain better cooperation, forecasts and analyzed joint activities. A separate article, entitled “Is the Contact Center Strategic? (link), provides a short overview of the opportunities available from this enhanced information. As is summarized by Anne Stover of Roche Diagnostics Corporation:

    "We needed a method of analyzing the impact of technology implementations, marketing programs, contact volume changes and other business process and strategy changes. With The Guide, we are able to accomplish the business impact analysis we need and in the time frames promised by Primary Matters. Just the other day I was asked to develop several ROIs on implementing new IT solutions. The person requesting was thrilled when I provided the ROIs in the detailed, yet concise format that The Guide provides."

What are the Requirements for an Integrated Planning Solution?

In order for a planning system to support the management staff properly, there are a set of requirements. If a systems does not meet these requirements, it will either not give the management group what it needs, or it will require too much work to address the questions that come from the management group. These requirements are:

  1. The Solution must be easy to use and maintain by members of the management group. Staff should be able to be up to speed and obtain business benefits within only a few days, and be able to:
    a.  Quickly capture a view of your organization and its goals.
    b.  Drive down into more granular, detailed analysis, when necessary.
    c.  Use the system to evaluate a range questions, options and strategies.
  2. Must be able to capture demand on the operation. Demand may be, for instance, market driven factors, such as support of a customer base or the size of a target market, the forecast volume of new customers and sales, product shipment goals or provision of a service. Or it may be a ‘glimpse’ reflecting these factors, such as call volumes. “I want to see what happens if these external factors change.”
  3. Must be able to change and do scenarios on the range of factors that affect the business.
    a.  Labor
    b.  Work Activities
    c.  Manufacturing Process
    d.  Information Technology 
    e.  Sales
    f.  Products and Services Pricing, Revenues and Life Cycles
    g.  Customer Base, new sales, product shipments
    h.  Customer Relationships
    i.  Customer and Field Support
  4. Must be able to create and compare a wide range possible scenarios, with various projects & initiatives.
    a.  Ensure that the assumptions and effect of each scenario are clear and obvious. 
    b.  Pick and choose different combinations of projects and initiatives.
    c.  Easily change the start and production dates as well as define phase-in goals for multiple projects.
    d.  Be able to do many of these ‘on the fly’, so that fast response to questions from the management group is available.
  5. The solution must be an integrated model so that changes in one component automatically ‘ripple through’, updating the budget and resource requirements of all other parts of the company.
  6. Must be able to manage and communicate the planning process and its results.
    a.  Must be able to have a request/approval process for the various initiatives
    b.  Must be able to ensure that all the players, creating plans and budgets, are working off the same Baseline assumptions.
    c.  When have made a decision must be able to replace the Baseline with the new decision for the future, and run all pending scenarios against the new Baseline.
    d.  Must be able to receive information from other business systems as well as populate them.
    e.  Must be able to translate decisions into clear and concise goals for Operations Management, such that the plan can be implemented within the organization.
  7. Be able to ensure that forward looking plans are reasonable and that the results are traceable.
    a.  Be able to run sensitivity tests.
    b.  Must be able to track changes – where did they come from?
    c.  Must be able to compare forecasts with actual results, and isolate the variance for continuous improvement. 


Current Business Solutions Do Not Meet the Needs of a Planning Solution

Typically, sophisticated organizations have a number of systems used to manage parts of the group’s functions. In particular:

Financial and Accounting Systems hold exact details of all financial transactions, fitting into accounting principles. They do not link business goals, customers, and work processes into an integrated whole that creates budget forecasts, thus cannot address the needs of a planning solution. They cannot do scenarios. Forecasts are extensions of accounting group trends, and have only a partial relationship with the customer base and required work that drives the performance of the organization.

Budgeting Solutions are typically custom-built Excel spreadsheets, linking together data from different sources, for instance, accounting systems, sales forecasts and changes in labor. These custom solutions suffer from lack of a structured approach and do not support scenarios. When a question is asked by the management group, often new programming must be done on the custom spreadsheets, therefore the time lapse is several hours to a few weeks. If multiple questions or a multi-factor problem needs a solution, they are not able to answer the questions.

They take a significant amount of labor to maintain, update and use. Since they are not products, the solutions are difficult to transfer to another person, and it takes a great deal of effort to check for accuracy and trace the numbers to ensure they are correct.

CRM and Sales Management hold data about customers, sales prospects, and account information. As such they hold some of the data required for business planning – the new sales drivers of the business as well as revenue forecasts, but do hold work activities or other business planning data. They tend to be poor at doing scenarios except for narrow based questions, such as changes in sales forecasts.

Workforce Management and Scheduling Solutions take historical information and uses it to project optimal schedule for using workforce, ie, designs shifts, etc. Most users create forecasts (since history often does not capture future changes!) by creating custom Excel Spreadsheets, and then populating the forward looking demand into the scheduling solution. The scheduling system then determines the optimal way to use the workforce to optimally meet this demand.

In conclusion . . .

An Activity-based Planning and Budgeting solution enables a management group to very quickly create forward looking budgets and resource requirements, analyze the business and cost drivers in their organization and create multiple scenarios. They make better decisions and it takes much lessAugust 23, 2005

These benefits quickly lead to higher productivity, lower costs and more revenues.


Appendix 1: The Primary Matters Guide™ Decision Support Software

The Primary Matters Guide™ is a powerful activity-based integration planning and budgeting tool available to organizations. When employed to create budgets and resource requirements, or used as a diagnostic probe, a change management counselor, or a forward-looking planning tool, The Guide plays an important role in the management of organizations. The Guide is also Primary Matters' publishing platform. It holds information about typical systems, personnel and service costs, enabling the user to simply 'click and choose' what is most important for their environment, and to investigate potential changes to that environment.

The Guide is a sophisticated planning tool. Yet it addresses the biggest problems with tools of this nature--that of complexity, long time to benefit, high expense, and lengthy training requirements. It has been designed so that the user focuses only on the factors that will make a material difference to The Guides' results and its ability to support critical business decisions. Many organizations receive formal training and, literally, within three to five days, are obtaining significant business benefits from the environment.

What does The Guide Do?

The Guide provides a managerial tool and decision support system that enables executives and managers to create budgets & resource requirement forecasts, evaluate the current performance of their business operations, manage their business operations, plan for future growth, and test new scenarios. Just answer a few basic questions — projected activity volume, tasks that must be accomplished, technologies, and anticipated growth — the Guide builds a complete business model and produces a wealth of management information in hours rather than weeks or months. The Guide:

  • Provides an accurate, three -year, line item budget covering fully-loaded labor costs, external labor costs, technology operation and maintenance costs, telecommunication and other service costs, facilities, marketing, travel, and miscellaneous costs.
  • Unearths the fully allocated and variable costs of the Activities and Tasks a company must do to meet its goals, whether they be for sales, customer service, installation, or other functions.
  • Specifies resource requirements to achieve target growth objectives — staffing, skills, systems, equipment, facilities, etc.
  • Examines ‘what-if’ scenarios, showing the impact of alternative work processes, personnel programs, contact methods, and technology on resources and budget.

Historically, budgeting and forecasting have been the Achilles heel of managers, consuming hours of valuable time. The Guide delivers a quantum improvement in information richness, detail, and accuracy. Established companies, with large mature operations, as well as startup operations have embraced The Guide.

What Makes The Guide Unique?

The manner in which people, systems, and activities are defined and linked to enable forward looking projections of resource requirements and costs is patent pending.

  • The structured, easy to follow user interface creates Baseline Budgets and Resource Requirements in hours not weeks.
  • Activity-based costs are a part of the Baseline Reports, and enable targeted cost cutting at the task level.
  • Every single data element is a potential change scenario, with comparisons to the baseline produced in seconds.
  • System Categories and Templates are pre-populated with production data, producing ROI reports in seconds.
  • Activities can be reengineered and the results evaluated in minutes--prior to spending money and talent.
  • Business Drivers--your installed base, your new customers, your sales goals, etc., are linked to activities, anAugust 23, 2005erstand the impact of an improved sales process on your contact volume.

The Guide gives you revolutionary planning and decision support ability. We guarantee you will be up and running and receiving value from The Guide in days.

Questions or problems regarding this web site should be directed to SiteMaster
Copyright © 2006 Primary Matters, Inc. All rights reserved.  Site Map
Last modified: May 31, 2006 .