ADAPTIVE INSIGHTS GENTIVA

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1 ROI CASE STUDY ADAPTIVE INSIGHTS GENTIVA THE BOTTOM LINE Gentiva deployed Adaptive Insights Adaptive Planning solution to replace a number of solutions that made the budget process cumbersome, frustrated users, and were timeconsuming. Nucleus found that Adaptive enabled the company to support its growth and complex business model while increasing staff productivity. ROI: 751% Payback: 1.3 months Average annual benefit: $914,871 ANALYST: Nina SANDY THE COMPANY Gentiva Health Services, Inc., publically traded and headquartered in Atlanta, GA, is the nation s largest provider of home health and hospice services based on revenue, delivering innovative, high quality care to patients across the United States. Gentiva is a single source for skilled nursing; physical, occupational, speech and neurorehabilitation services, hospice services, social work, nutrition, disease management education, help with daily living activities, and other therapies and services. Gentiva has been in the home healthcare business since 1971 and in the subsequent years acquired several companies, creating the largest US healthcare provider of home health and hospice services based on revenue. THE CHALLENGE Like many organizations that are built through acquisitions, Gentiva had several tools being used for budget planning and reporting. It had 400 locations across the country, and the process of budgeting was a long and arduous one. End users were frustrated with the length of time it took to complete their budgets, rollups had a variety of rules that had to be incorporated which added to the complexity, and there was a high level of dissatisfaction overall with the entire process. Nucleus Research Inc. 100 State Street Boston, MA Phone:

2 Cost : Benefit Ratio 1 : 11.7 THE STRATEGY Gentiva began its due diligence in 2012, and evaluated a number of solutions including Adaptive Planning and Oracle. One of its acquisitions had been using Adaptive, and the success of that implementation helped drive the decision. The company ultimately selected Adaptive Insights for a number of reasons including: Gentiva found that Adaptive had been proven in one division already, and had provided the usability and flexibility it was looking for. Adaptive s cloud delivery model would enable Gentiva to reduce significant capital investment and long implementation time, and would also give the company the flexibility to grow by adding new offices and users with no additional IT investment. The ease of use of Adaptive reduced training requirements, improved engagement, and made deployment much simpler. Adaptive s pricing could be bundled into the operational budget. Types of Benefits Direct 46% 54% Indirect Gentiva began its implementation of Adaptive Planning in 2012 and began its phased-in deployment with its Home Health division. The deployment took only three months, and was very successful. Over the next year, the other divisions came on board in quick succession. This upcoming budget year will be the first with the entire company using Adaptive for its budgeting process, and it is already proving successful. Everyone in the organization is now using Adaptive for budget planning providing a holistic view of the entire organization that was never available before. Users are reporting significant time savings, and the process has reduced workloads by more than two months for the finance team. Page 2

3 Cumulative Net Benefit 2,744,614 1,748, ,679 Year 1 Year 2 Year 3 KEY BENEFIT AREAS Deploying Adaptive Planning has enabled Gentiva to improve visibility, increase engagement of its budget managers, and reduce the complexity of its budget process. Key benefits of the project include: Increased budget manager productivity. With the previous implementations, the budget managers found the process frustrating and time consuming. There were several rollup rules that complicated things and the interface was difficult. As the frustration levels increased, they looked to the regional financial team to take on much of the ownership of the budget process. Now with Adaptive, the engagement level of the branch managers has greatly increased and they ve taken ownership of the process, significantly reducing the time allocation of the regional team. As a result, there has been an increase in the branch managers productivity and visibility into the process. Increased Finance Director and Finance AVP productivity. Prior to having Adaptive, much of the consolidation and validation of the budgets across the company became the responsibility of the finance director and the Regional AVP. With the implementation of Adaptive Planning, the level of effort has been reduced from five months to three. Increased visibility. Prior to Adaptive, there were several tools being used for budget and planning purposes at Gentiva. Now, the entire company has a complete understanding and view of the entire process, as well as a consistent view across the organization. Reduced and eliminated software and consulting costs. With the elimination of its previous solutions, Gentiva was able to reduce the cost of software, as well as the need for consulting to support those systems. It was able to reallocate staff that supported the systems to other business initiatives with Gentiva. Page 3

4 Adaptive Planning has allowed us to increase engagement, and significantly reduce the time spent on the budget process. It is simpler, people are more involved, and it takes a lot less time. - Kevin Bradshaw, Finance Director, Gentiva KEY COST AREAS Costs of the project include software license subscription fees, personnel time to implement, employee training and consulting. Total 1,389,000 1,611, , ,974 Net Cash Flows 995, , ,564 Initial Year 1 Year 2 Year 3 BEST PRACTICES As one of Gentiva s divisions already had Adaptive Planning implemented, the finance team was able to leverage those previous experiences. As Adaptive was to be the corporate standard for all of Gentiva, the finance team developed a full project plan, and ensured the CFO had all the information and was behind the initiative. The team also developed a layout of the model and the calculations they wanted to see, to make sure the implementation team was up to speed at the beginning. Another best practice recommended by the team is to ensure the definition of an organizational structure in the beginning. This is critical to the success of a planning and budget model, and while is easy to do at the start, does present challenges when trying to implement those levels of changes while the budget process is in motion. As well, it is important to define naming conventions and metrics early on, so there is consensus and consistency throughout. Page 4

5 CALCULATING THE ROI Nucleus quantified the initial and ongoing costs of software license subscription fees, personnel time to implement and support the application, employee training time, and consulting over a 3-year period to calculate Gentiva s total investment in Adaptive Planning. Direct benefits quantified included the elimination of Oracle Hyperion license fees, consulting costs, and re-allocation of staff to other projects. Indirect benefits quantified included the increased productivity in the finance team, IT, and of the budget managers driven by the elimination of the previous solution, and the deployment of Adaptive Planning, and were calculated based on the average annual fully loaded cost of the employees. Not quantified were the additional efficiencies and savings Gentiva will gain from Adaptive Planning as it expands its use of the application. Page 5

6 FINANCIAL ANALYSIS Adaptive Planning Annual ROI: 751% Payback period: 0.1 years ANNUAL BENEFITS Pre-start Year 1 Year 2 Year 3 Direct 0 463, , ,000 Indirect 0 536, , ,769 Total per period 0 999,038 1,000,769 1,000,769 CAPITALIZED ASSETS Pre-start Year 1 Year 2 Year 3 Software Hardware Project consulting and personnel Total per period DEPRECIATION SCHEDULE Pre-start Year 1 Year 2 Year 3 Software Hardware Project consulting and personnel Total per period EXPENSED COSTS Pre-start Year 1 Year 2 Year 3 Software 56,988 56,988 56,988 0 Hardware Consulting 36, Personnel 29, Training 4,808 4,808 4,808 4,808 Other Total per period 127,564 61,796 61,796 4,808 FINANCIAL ANALYSIS Results Year 1 Year 2 Year 3 Net cash flow before taxes -127, , , ,962 Net cash flow after taxes -70, , , ,779 Annual ROI - direct and indirect benefits 735% 735% 751% Annual ROI - direct benefits only 315% 315% 329% Net Present Value (NPV) -70, , ,675 1,309,826 Payback period 0.1 years Average Annual Cost of Ownership 127, , ,578 85,321 3-Year IRR 734% 734% FINANCIAL ASSUMPTIONS All government taxes 45% Cost of capital 7.0% 2014 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. All calculations are based on Nucleus Research's independent analysis of the expected costs and benefits associated with the solution. Page 6

7 By the Numbers Gentiva's Adaptive Planning project Annual Return on Investment 1.3 Cost : Benefit Ratio months 751% 914,871 Average annual benefit The total time to value, or payback period, for the project 01:11.7 THE PROJECT Gentiva deployed Adaptive Insights Adaptive Planning solution to replace a number of solutions that made the budget process cumbersome, frustrated users, and were time-consuming. Nucleus found that Adaptive Planning enabled the company to support its growth and increasingly complex business model while increasing staff productivity. THE RESULTS Improved regional directors productivity Reduced AVP and Finance director time Reduced technology and outsourcing costs Number of users: Months Total time for the company to deploy Adaptive Planning Adaptive Planning has allowed us to increase engagement, and significantly reduce the time spent on the budget process. It is simpler, people are involved, and it takes a lot less time. - Kevin Bradshaw, Finance Director, Gentiva Copyright 2014 Nucleus Research Inc. Nucleus Research Report o237 - Adaptive Insights ROI Case Study - Gentiva