Julian Steenman 0:00:06.2:

When I walk you through the story of APG Asset Management and Anaplan. So what will I be talking about today? So I’m going to run you through the who, the why, the how, and the what of this journey that APG Asset Management has had with Anaplan. I’m going to talk to you about who APG Asset Management actually is, because, for some reason, we are quite unknown. I’m going to tell you why we started moving to Anaplan. So I’m going to talk to you about the problems that we were encountering, how we were searching for a solution, and how Anaplan provided us with this solution, and then I’m going to explain the logical next question, which is, ‘Okay, that is great, that this is your solution, but how are you actually using it?’ and then, wrapping it off with our little version of what is our roadmap for the future. 

Julian Steenman 0:01:03.5:

One important question that is not on here yet is the question of who I actually am. Yes, I am the person on that photo, even though I really need a new professional photo, because, well, my hairstyle has changed a little bit, but mental note for myself. My name is Julian, and I’m a quant portfolio manager in APG’s European real estate team. I have a master’s in mathematics and financial mathematics as a background, and this master’s in financial mathematics made me move to Amsterdam, and that has introduced me to APG Asset Management. But who is APG Asset Management? In really short, the answer to this question is that we are the asset manager of one of the largest pension funds in the world. This is a very dangerous thing to say, because I just said to you that I’m in a bit of a problem. I’m managing your concentration span, and I just mentioned the word pension funds, and typically, whenever I say the word pension funds, people drift off, they think about old people in grey suits, which is boring. So I hope to reinvigorate your interest a little bit by asking you a quick question, which is sort of illustrating the importance of the job that we actually do at APG Asset Management.

Julian Steenman 0:02:27.6:

I’m not going to quiz you on this. I just want you to think about this for ten seconds or so. When you retire, how is every €100 that you receive split across these three different components? Just give it some seconds of thought. [Pause] I hope, by now, every one of you has a guesstimate in their minds. So, this is actually the breakdown. From every €100, €7 comes out of your own pocket, and this is based on complex calculations by our economics team, who, even though I have a master’s in mathematics, are considerably smarter than me in doing these kinds of calculations. So I trust them, and I’ve checked their numbers. €7 is from your own pocket, €18 is your employer’s contribution, €75 comes from investment returns. This is something that we in the investment world love to talk about, which is the compounding of interest, which is a huge component if you invest for very long periods of time, which pension accruals typically are.

Julian Steenman 0:03:47.4:

So I hope this has triggered your interest a little bit, in terms of what we actually do at APG Asset Management. To give you a couple of KPIs, we invest €530 billion globally, and if you think back on one of the slides that [?Eva] just showed you, the 500-something with a lot of zeros, it comes really close to that. It’s just one or two zeros from that number. Every time I speak that number out loud, it makes me pause a little bit, because it is really a staggering amount of money that we invest. So we invest this for four clients serving 4.5 million pension fund participants, and this is actually one of the things that strikes home for me, in terms of norms and values, why I actually work for APG, because I really appreciate the fact that, as an investor, I am here for APG working for millions of people, instead of working for a few millionaires, which is typically what you do when you work in investing. So I won’t bore you with all these KPIs, but we have three different offices. The majority are in Amsterdam and Heerlen in the Netherlands. We have an office in Hong Kong, a small one in Singapore, and we have one in New York, and we have approximately 1000 employees.

Julian Steenman 0:05:09.8:

So I’m now going to bridge the gap a little bit, from this €530 billion that we invest, to what I actually do. So, how do we invest this €530 billion? We do that by investing it in three broad buckets. The first one, fixed income, loans, very simple. The second one, equities, which are stocks that you can buy on your Degiro app, or whatever app you are using - I am not, but you are - and this is the list of exchange. Then we have alternative investments, and that is my realm, because in there we have investment asset classes like private equity, infrastructure, and the light blue, which is real estate, where we invest €51 billion globally across this same universe as what you just saw on this global map. So, I operate within this light blue part of the pie chart on the right of this slide. We are tasked with investing this amount of money globally, so we need to decide where we are going to invest this in, and this breaks the story to answering the question of why we started using Anaplan, because we look at a number of considerations when we make these investments decisions, one of which is ESG, which is very high up our investment decision-making framework. The other one is cost-efficiency, and another one is risk-adjusted returns, because, in the end, we want to be sufficiently compensated for the risk we think we are running for each of these investments.

Julian Steenman 0:06:55.7:

So, imagine you have investment A and you have investment B. Investment A has a risk-adjusted return of ten per cent; investment B of five per cent. Brilliant. You invest in investment A, ten per cent, because that’s better than five. Really simple. You don’t need to study mathematics to make those decisions you would say, at least. In order to make these decisions, we created something which is called a discounted cashflow model. You can forget that term, but it is something that tells us what the risk-adjusted returns are for all of these investments. Of course, we did that in Excel, and we have an investment universe of about 350 investment opportunities, and that grows daily, because new investment opportunities are brought to us. So 350 investments in our universe. For each and every one of them, we have an Excel file that spits out an IRR and a required IRR, and that gives you a risk-adjusted return. Sounds great, right? Now we get into a little bit of a tricky part, because this summary sheet looks great, but you can imagine that these investment models in Excel are beasts. They are mazes in terms of complexity, they have hundreds of assumptions at different places, so it’s a maze to navigate, especially if you don’t know what you are doing, or if you are new to that model.

Julian Steenman 0:08:37.1:

But it gets even more tricky whenever we updated the investment model, because an investment model is never finished, and every portfolio manager, myself included, always thinks that his or her investment does not fit the standard model that we have built, because mine is special. Right? So we need to update our model. I don’t know over what timespan we’ve got to 11, but in a relatively brief period, we went to Version 11 of our model. So do the math really quickly. You have 11 versions of your model, which means that every time we update our version, everyone needs to go back to their investment model, needs to overhaul all of the assumptions to the new model, and only then are you whole again. I think you start getting where this gets a little bit complex, but 300 times 11, and I think this takes about one to two hours per time you need to overhaul this [?poor 0:09:38.9] investment, so count the hours, which is a lot. Time is one component. Another real problem that we identified, is that, going back to this investment A and investment B, if investment A is based on model Version 10, and investment B is based on model version 11, and if the update from 10 to 11 affects the logic that drives the risk-adjusted return calculation, then you get into incorrect investment decision-making, and then you lose apples-to-apples comparison. That was a real problem, because we are investing €50 billion, which, if we miss the mark by a percentage point, it’s millions of euros. 

Julian Steenman 0:10:31.1:

This is an issue, and I hope that you now understand, we were having an issue. This is a beautiful step to what was the solution. So, we started searching for potential ways to solve these problems for us, and we found Anaplan to be one of the solutions for us here, because I think, if I bring everything down that Anaplan brings us in one key thing, it is that it reduces complexity for us of having over 300 different investment models, to having one model, one single source of truth, in which over 300 investments live, if you will. Secondly - and Excel is in every organization, and I’m sure all of you, like whenever you have an Excel, you save it somewhere locally, maybe you save it somewhere on a OneDrive or on a company shared folder, or something like that - it doesn’t work. Especially not if you need to compile them together, you need to streamline and automate that process for investment decision-making KPI dashboards, you name it. A mess. So Anaplan is actually 24/7 accessible in the cloud, so whenever I’m travelling for my work, I can just run it on my iPad, which is, for me, a huge timesaver, because from iPad I’m not able to - or not allowed even - to use my company files, because of security issues.

Julian Steenman 0:12:05.6:

Going back to why is Anaplan our solution, I told you about these 100 or hundreds of assumptions that go into one of those investment models. You really quickly change one of those assumptions without thinking, because it’s just the sheer size of assumptions that you make. Oh, you change a four per cent growth for Year 25 to six per cent, but you forget quickly if you do not do good recordkeeping for yourself. So a lot of the time, people come to me and they’re like, ‘Yes, Julian, I lost where my return - the drivers of the change in return of my investment model,’ but with Anaplan we have a full audit trail of whoever makes a change, whenever, wherever, and that is also a huge benefit to us. Coming back to what is now this key value add, is that this has ensured that with this one single source of truth, we always know that whenever we make an investment decision, it is based on an apples-to-applies comparison, because the logic that is driving the risk-adjusted return, the cost-efficiency and the ESG KPIs, from investment A and investment B, are based on the same logic, and whenever I press the button to push a model from [unclear words 0:13:27.2] it is instantaneously effectuated across all the investments, and we don’t have to wait for people to update their models.

Julian Steenman 0:13:38.5:

So people like KPIs and numbers and what has this brought us. So what are the benefits that this has brought us, in very brief terms? So it has saved us reporting time next to the time that we have now completely eliminated that was needed to overhaul investment models from Version 1 to Version 2. We’ve also had more efficiency gains in reporting, which is over 200 hours saved on an annual basis, and that stacks up quite quickly, but the gem, and even though this is not the gem in the slide, but it’s the apple, but the gem of this slide is this apples-to-apples investment decision-making, because our process is now very much more streamlined. On top of that - and I think this ties nicely into also the story that Eva was telling earlier today - because Anaplan does not let you get away with having different definitions of certain data points, or data definitions, it sets this foundation of having this single source of truth from which you can build. You can use AI, but you can only use AI when your definitions are right, and when your data is of sufficient quality. 

Julian Steenman 0:14:59.2:

Because we have now used, or started using Anaplan, we have actually taken our investment decision-making process to the next level, that because we now have the single source of truth, we can take that data from that single source of truth, we can lay over all of the principles that we consider important in making investment decisions, so that a certain framework can spit out recommendations as to what we should be buying and what we should be selling. That, then, triggers a discussion. That, then, should, and I think it does, improve decision-making. Then, as I say already two times before, I think we reduced complexity by going from 300 models to one model in which these 300 investments live. So I think these are the three main benefits of our journey with Anaplan. This sounds great. Now I think a natural question is, how are we actually using this thing? So, in short, something that started relatively small in Anaplan terms, has grown quite quickly to something quite mature and quite large.

Julian Steenman 0:16:15.1:

So we started off with just having one single data hub, and having our investment model as one model in Anaplan. That is pretty smooth sailing from an Anaplan model-building perspective, even though that - so I am now responsible, if you did not think of this yet, for maintaining that investment model in Anaplan, also a beast, less complex beast than this Excel version, but still quite complex. However, because of this single source of truth benefit that Anaplan brought us, we started recognizing the value that it can bring us here, and because of that, it started as a magnet attracting new use cases for which we wanted to use Anaplan to enable those solutions. So just to name a couple of things for which we use Anaplan currently, we use it for our investment DCF valuation; we also monitor the exposure of our portfolio today, in the future as well. We use it for our investment budget management, which involves a little bit of cashflow planning. We do it for physical climate risk assessments, which involve geocoordinates, and we use it for our ESG KPI measurement. This is growing, and this is almost growing on a monthly basis with people coming with requests, like, ‘Hey, can we add this to Anaplan, yes or no?’ 

Julian Steenman 0:17:43.9:

So how are we actually managing that? It’s actually funny, because before I go into the details here, and it’s actually quite cool I think to share, is we started off with the real estate team with Anaplan, but recently, this year, also another team in the alternative investment space has started using Anaplan, which is our infrastructure team. The infrastructure team went through a POC. They also recognized the value that Anaplan was delivering for real estate, and in the POC it became apparent that they can leverage that as well. So consequently, they onboarded Anaplan as well, and they are currently building out, and quickly also realizing there, how Anaplan is, on the one hand making them more mature in their data technology in terms of definitions and maturity, in that sense, and on the other hand in terms of how critical it actually is to have your data foundations right, because only if those foundations are right, your decisions are right, because if they are not, there is noise between them, and that’s a difficult spot to be in.

Julian Steenman 0:18:57.6:

I think another interesting thing to tell you here, is that we actually build everything in-house, which means that I am a model builder, [?HN] in the back is a model builder for infrastructure. There is another colleague of mine in New York who is a model builder for the real estate team still. We create and build everything ourselves, and next to this, my job is also just being a regular portfolio manager. So I make these investment decisions, and because of that I’m forced to use the things that I’m actually building, and that’s quite handy sometimes, because sometimes I build something and then I’m forced to work with it and I’m like, ‘This is not working.’ So I need to go back to the drawing board, update the thing that I built in Anaplan, but in the end it makes sure that things are streamlined, but also useable, because the fact that we sit within the team that is actually using Anaplan as well, makes the communication stream between end user and developer a really short cycle, and because of that, iterations can happen really quickly, which is I think ideal.

Julian Steenman 0:20:14.6:

Just to name a couple of other things, we have now currently, instead of just starting off with this one model, which was this DCF model, we have now five models within the real estate team that have become business critical. The infrastructure team, currently, has two. We have a fully-automated push-and-pull from external data sources, such as Bloomberg, FactSet, you name it, SNL. It flows through our data hub directly to our models. This happens on an automated fashion multiple times a day, because on the one hand we do private investment, and on the other hand we also invest on stocks listed on exchanges, and those people really want their data to be up to date and accurate, so we need to have real-time data, almost, if you will, also in terms of share prices. So this is a little bit about our set up. Then, this is the bit looking back. Now, starting to look a little bit forward. So what is on our roadmap now? I think our main mission now is, as a real estate team, because we have now quite mature - or we have a feeling and we think, but I think if I talked to anyone of you, potentially, you have more complex Anaplan set-ups than we do at the real estate team - we think we are quite mature, but in a sense, within the investment universe, this allows us to now start also teaching the infrastructure team. For example, in their onboarding process for Anaplan, so that we guide them in order to make sure that the applications actually land correctly within the teams as well.

Julian Steenman 0:21:58.9:

But infrastructure has a lot of work to do, because they went live this year, and they wan to do a lot with Anaplan, so HN is working really hard, and we’re making him work really hard, but he’s doing a great job for that. But for real estate, actually, instead of building, our focus is more on simplification and efficiency, because it’s nice to build things, but it’s also, in my personal opinion, really important to take a step back, to reflect, and to strive for certain objectives, some of which are named here. For example, to strive to reduce the number of modules that you have in your model, because those things can grow quite quickly. The more modules you have, the more time someone has to press F8 until they get to the root source of a calculation, which people don’t like, because people are used to Excel. They want to understand where their numbers come from, and if they have to press F8 ten times, they don’t like that. So these are some things that we are now working on, and I think another important consideration, if you are ever thinking about or still on the ropes of starting with Anaplan, something that we actually learnt - and this is actually one of the value-adds of me being a user as well as a builder - we started off 100 per cent in Excel, we killed Excel, and we moved 100 per cent to Anaplan. Really difficult process to manage from a change management perspective.

Julian Steenman 0:23:38.8:

People are married to their Excel, but I am as well, so I noticed that, hey, this is not efficient, because I have an investment company, I receive Excels from them, those Excels I transform into assumptions that I make in Anaplan, but I now need to make a manual transformation, and then another manual copy/paste of my assumption into Anaplan dashboards, and that does not really work smoothly. So we have now actually created something that we call our Excel hybrid investment model, which is this old model again, but then completely linked up to Anaplan, that if you just press a button, everything automates, or at least is pushed automatically through Anaplan, but this means that every time you receive standard data from investment companies, the data you can add to your Excel, all the transformations happen automatically. They are transformed into assumptions. You click a button, you review the changes, and then you’re done. So I think the moral of this story is that we tried killing Excel. Don’t try killing Excel, because Excel will always be there somewhere, at least within the investment industry, because it’s difficult to get rid of. However, Anaplan now has ways in which this integration between the two, and the marrying up between the two is so efficient, that you can still leverage Anaplan and all the benefits that I mentioned before, but have it in a way that also is friendly to people and what they like to use it for.

Julian Steenman 0:25:28.5:

So that actually wraps it up for me. I want to say thank you for bearing with me, before your well-deserved coffee break. Thank you to Anaplan for inviting me to give a talk about what we actually do at APG Asset Management, and I hope that this has given you an idea, in terms of how this may be interesting for me and the way in which my company uses Anaplan. I’m happy to take any questions. I’m also happy to talk over coffee or drinks afterwards. So I hope you enjoyed it. Thank you very much.

[Applause]

Unknown Speaker 0:26:02.0:

Thank you so much, Julian.