Thursday Jul 11, 2013

The CFO as Catalyst for Change - Part 3

Over the past few months, we’ve taken a microscope to the role of the CFO. The changing economic environment is creating new demands and opportunities for CFOs around the world. At Oracle, we are committed to helping CFOs navigate and succeed, and recently partnered with Accenture on a global research study, “The CFO as Catalyst for Change.”

As the Wall Street Journal’s CFO Journal summarized, the study highlights the evolution of the CFO’s role from financial overseer to corporate strategist and change agent. I discussed the main findings in a previous blog post, but wanted to share some great insights on the study from industry influencers.

InformationWeek’s Doug Henschen discussed the increasing role CFOs are playing in the technology department, highlighting the similarity between what has also been happening with CMOs. I think the CFO’s role in technology decisions can have a bigger impact and is worth noting.

Without a doubt, CFOs are taking technology seriously! CFO Magazine highlighted the skills perspective in their article on the study, pointing out that when asked about where CFOs could improve their skills and capabilities, technology knowledge was ranked second only to industry knowledge. Now, that’s saying something!

But they are not just focusing on ways to enhance their knowledge base -- CFOs also understand the importance of new technology. A Wall Street & Technology article on the study stressed how CFOs are increasingly citing disruptive technology as critical for success. In fact, 79 percent of respondents viewed access to information as a key driver of organizational agility, while 57 percent viewed investments in big data and analytics as a key source of competitive advantage.

The study shows that the role of the CFO has dramatically changed and it continues to evolve at a rapid pace. Now, CFOs must be catalysts for change and help their organizations transform and thrive in today’s global economy. 



Oracle’s Business Analytics Customer Value Index Program – Part 1

To learn more about how Oracle customers perform Business Analytics processes (which includes Enterprise Performance Management, Business Intelligence and more), we launched the Oracle Business Analytics Customer Value Index (CVI) program in 2011, through which we collect valuable business process information from our customers, and share the results with them. This article will be the first in a series to share with you some of the results from each subject area.


Enterprise Planning, Budgeting and Forecasting


The first subject area being studied is Enterprise Planning, Budgeting and Forecasting. Our interim results, presented here, reflect the first 130 completed surveys of which approximately half use Oracle Hyperion Planning. Here is what we found out. Of the total population of members (those with and without Oracle Enterprise Planning solutions):

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63% perform monthly forecasting
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40% perform rolling forecasts
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63% perform quarterly forecasts
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33% perform event-based forecasting (or re-forecasting)
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59% perform driver-based planning and/or forecasting

The use of rolling forecasts has been steadily increasing each year and driver-based planning is also up significantly from previous years. Both of these processes have been shown to improve accuracy in forecasting and planning. One reason for the increase in organizations using rolling forecasts might be attributable to having efficient software to enable the process. For example, of the companies that now use Oracle Hyperion Planning, 79% of them did NOT perform rolling forecasts prior to implementing Oracle Hyperion Planning. It is a complex process made easier by capable software.

There was also a notable drop (31% fewer FTEs)  in the amount of administrative time needed for the budgeting and planning process for those members that adopted Oracle Hyperion Planning.  In addition, organizations with Oracle Hyperion Planning spent 38% less time per month in manual processes supporting monthly forecasts than they did prior to adopting the solution. Again, having capable software helped create a more efficient process.

In our survey, although Oracle Hyperion Planning is the solution of choice for budgeting (59%), forecasting (50%) and rolling forecasts (46%), spreadsheets still play a part for some companies for forecasting (18%) and rolling forecasts (25%). While the choice of using spreadsheets for these important processes may be acceptable for small companies, it can prove troublesome or even detrimental for medium, large and very large companies. Large and complex spreadsheets, broken links, dependency on the creator of the spreadsheet, and errors due to manual data entry and formula changes all contribute to the potential challenges faced from using them for these purposes. These results are not shocking as spreadsheets have been around for a long time, but they do confirm that organizations are slow to move away from spreadsheet technology for these important processes.

According to our survey, spreadsheets are also being used often for workforce planning (38%) labor costing (43%) and operational planning (39%). Although these numbers are reasonably low, they show that there are still a significant number of companies using them for very important processes that contribute significantly to accuracy in planning, budgeting and forecasting. This is troubling as disconnected spreadsheets can lead to more fragmentation in the planning process. Another significant change our customers experienced after implementing Oracle Hyperion Planning was that of the percent of time they spent in gathering data to analyze versus time spent actually analyzing the data.



Figure 1: Time to Gather and Analyze Data


From the graph it is apparent that, on average, our customers experienced a 23% decrease in the time it took to gather data and a 35% increase in time now available and used to analyze data, after implementing Oracle Hyperion Planning.

Although the average change for some of these processes may not seem overwhelmingly significant, average numbers tend to understate some of the dramatic changes individual organizations experience. For example one Oil and Gas company told us that they had experienced an increase in their forecast accuracy from 50% to 90% after adopting Oracle Hyperion Planning. A wholesale distribution company experienced a positive change in data gathering from 90% of their time to only 50% of their time leaving them with more time for valuable analysis. A Financial Services company experienced a 75% reduction in the time needed for administering their budgeting and planning process after adopting Oracle Hyperion Planning.

Stay tuned for more results in Part 2.

If you would like to become a member of the Oracle Business Analytics Customer Value Index Program (a free program), please contact me at toby.hatch@oracle.com. Please keep in mind that you must be an Oracle customer to become a member, however you do not have to be using any specific Oracle software to become a member.

To learn more about Oracle Business Analytics including EPM and BI, click here.

Tuesday Jul 09, 2013

Beware of Competitive EPM Migration Offers

Recently, one of the upstart, cloud-based EPM vendors announced a migration program for Hyperion EPM Application customers.  This was surprising to see since a number of EPM vendors have tried these programs in the past and they are rarely successful. The reason is that while on the surface software license fees, maintenance or subscription services seem like the largest cost components, much of a customer's investment in EPM applications is actually represented by implementation of the software and training of the users and administrators. 



At Hyperion and Oracle, through more than 30 years of working with Finance applications, we have found that when finance users have deployed a solution that works and addresses their needs, they will stick with the tried and true and are resistant to switching applications and, in many cases, even upgrading to new releases of the same application. In addition, EPM applications used for the financial close and reporting process, or ongoing forecasting and planning, have become mission critical so upgrades need to be carefully planned to avoid disruption.



From my perspective, Hyperion EPM application customers who are satisfied with their solutions (and most are) will be unlikely to switch to another vendor’s cloud-based solution. In fact, such a move could represent a step backwards in functionality. And, if a Hyperion EPM customer wants to move from an on-premise deployment to a cloud-based solution, Oracle provides options here. This includes Oracle Managed Cloud Services where the customer retains their software license, but Oracle hosts the EPM applications (and others) in our data center. Hundreds of Oracle customers are already using this service. In addition, Oracle recently launched a Planning and Budgeting Cloud Service which makes Oracle Hyperion Planning available as a Cloud-based Software as a Service (SaaS) offering.



The Oracle Planning and Budgeting Cloud Service speeds implementations and reduces the barriers to adoption for new customers. It also provides existing customers the option of moving their existing Hyperion Planning applications to the Oracle Cloud. If a cloud-based approach is of interest, moving Hyperion Planning from on-premise to the Oracle cloud will be a lot easier than moving to a competitor's offering – which requires a re-implementation and re-training of users and higher costs. But more importantly, the Oracle Planning and Budgeting Cloud Service will be most attractive to new customers who have outgrown spreadsheets and low-end planning applications and are ready for a world-class solution that’s part of a broader set of cloud-based applications.



Oracle is the market leader in EPM and is committed to meeting the current and future needs of our customers - with world class applications that can be deployed on premise, in the cloud, or via a hybrid approach.  
For more information about the Oracle Planning and Budgeting Cloud Service, and other Oracle Cloud solutions, click here.



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This blog will highlight key EPM market trends, recent events and other news of interest to our field, customers and partners.

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