Wednesday Feb 26, 2014

Are 90% of Companies Still Failing to Execute on Strategy?

“90% of companies fail to execute on strategy effectively.”  This statement was made over 30 years ago – but has nothing changed? Jennifer Toomey, Senior Product Marketing Director for Performance Management Applications at Oracle interviewed Denis Desroches, Director of Research for the Institute of Management Accountants (IMA), about this subject and got an update about current experiences on organizations’ ability to execute on strategy.

Denis is part of a volunteer research team called the Business Research and Analysis Group (BRAG) that, over the past 15 years, has done world-wide studies on a number of current business practices, including the adoption and use of performance scorecards, and issues in costing and profitability. The team’s results have been published in various magazines and journals and in a book called “Scorecard Best Practices; Design, Implementation and Evaluation.” In addition to Denis, Dr. Raef Lawson, Vice President of Research and Professor-in-Residence for IMA, and yours truly – Toby Hatch -  a Senior Product Marketing Director for Oracle Business Analytics, are also part of the research team.

According to Denis, the team chose to research the topic of executing effectively on strategy because during the 15 years of conducting research together, they continued to hear the same statement repeated again and again, in a number of settings, and therefore began to question its current legitimacy.  The quote, “90% of organizations fail to execute on strategy effectively,” originates from an article by Walter Kiechel III in 1982 article titled “Corporate Strategists Under Fire”. This number became a catalyst for businesses to seek improved methods for defining, articulating and, ultimately, executing strategy. This fact - less than 10% of organizations can fully implement their strategies - has been repeated, relatively unchanged, over the last 30 years.  

In our interview, Jennifer asked Denis what the BRAG team found out through their recent research activity. “Things do appear to be getting better,” said Denis. “Results of our on-line survey show that in 2012, a higher percentage of organizations were successful at executing their strategy”. In fact, about 40% of the survey respondents self declared that they were successful or very successful. “We did not define what constituted success; we let our respondents self-declare their own success level.” said Denis. Demographic characteristics like industry and company size didn’t appear to be predictive on which organizations would declare success or non-success.

“So what distinguishes successful organizations?” inquired Jennifer.

There are some cultural or organizational characteristics that appear to contribute to successful execution of strategy, and some technical issues and processes that need to be considered, Denis explained. For example, organizations who feel that they are very successful at executing strategy are more likely to have:

A supportive culture,
Effective leadership,
Clear communication to everyone about what the organization is trying to accomplish,
Clear links among strategy,  
Focus on organizational strengths,  
And align the initiatives to get it all done

Denis also offered several technical aspects of successfully executing on strategy that should be considered (hear more by listening to the complete podcast).

Although there are still a large number of companies failing to execute effectively on strategy, the number that are executing effectively is improving, and the checklist of items to consider for improving execution is fairly comprehensive. To read more about the results of this study, refer to the article called, “Are 90% of Companies Still Failing to Execute on Strategy?” in the March/April 2014 edition of the Journal of Corporate Accounting and Finance published by John Wiley and Sons.

To listen to the entire podcast, click here.

To learn more about the Business Research and Analysis group, click here.
To learn more about Oracle Scorecard and Strategy Management used to monitor the execution of strategy, click here.

Friday Feb 21, 2014

Oracle Planning and Budgeting Cloud Service -- What's All the Buzz About?

Earlier this week, Oracle announced the general availability of our first EPM application in the Oracle Public Cloud, Oracle Planning and Budgeting Cloud Service, thereby extending our existing portfolio of on-premises and managed /hosted applications with a SaaS offering.

I had the pleasure of speaking and demo’ing our solution to a group of customers that day at an event in Dallas, and there was clear enthusiasm about the ability to access world-class planning functionality in a SaaS-based model.  Our announcement also generated excitement in social media and news articles.  In addition, existing Oracle EPM partners, as well as partners who have worked with us in other product areas, are lining up and are in the process of becoming specialized for Oracle Planning and Budgeting Cloud Service.  Some have already launched their rapid start offerings.

So, why are customers and partners excited about Oracle Planning and Budgeting Cloud Service?  What’s new and differentiated about this offering?

Fast Adoption

This application is built for SaaS adoption to meet cloud user expectations around ease of use and self-service.  It includes a number of cloud-specific capabilities that make it easy to roll out planning and forecasting to your lines of business across the enterprise.  These include:

+ Extensive online help and video tutorials
+ Best practice design templates and guides that are based on years of experience with Hyperion Planning implementations
+ Guided application navigation features that literally take a new user through the whole process of building an application
+ Plus diagnostics and governors that assist with building and monitoring an application from the administrative side

During the 3-month customer and partner preview program that we ran last year, we received very positive feedback about how users could get up and running with virtually zero training needed.

First-in-Class Functionality

While Oracle Planning and Budgeting Cloud Service is a new product, it leverages the code base of the market-leading Hyperion Planning application, which has seen rapid adoption over the past 10 years, with close to 4K organizations implementing it.  Many of these deployments have become quite large with over 1000, and some even over 5000 users globally.  This is what sets Oracle apart in the marketplace -- proven on-premises technology, now optimized for the cloud.

+ Powerful multi-dimensional analysis capabilities and sophisticated rules framework for fast processing of complex calculations
+ Collaborative workflow and plan management capabilities, including powerful annotations, commentary, document attachments, task, workflow and burst reporting capabilities
+ Intuitive web interface with full MS office integration for driver-based modeling, rolling forecasts and analytics
+ On the fly models that can be created and shared collaboratively and validated against sophisticated predictive capabilities
+ Built-in management reporting capabilities

Flexible Deployment

Many companies today are assessing cloud options in parallel with traditional implementations of on-premises solutions.  They are concerned about potentially locking themselves into a single approach from vendors that can only offer either a cloud solution or an on-premises solution with no way back.

For most organizations today, flexibility of deployment holds the key to the way forward.  That is, the ability to adopt mixed mode deployments (public, private and hybrid clouds) as desired and to alter the mix when business circumstances dictate it.  Moreover, the Oracle Cloud offers security and encryption at every layer of the tech stack, utilizing the latest physical and logical data security and protection solutions. Oracle is the only vendor who can deliver this, leveraging our own hardware, database, and applications technology, plus the Oracle Cloud infrastructure.

Customers I’ve spoken with welcome this flexibility of deployment and see the Oracle Planning and Budgeting Cloud Service as an additional option to meet their planning and forecasting needs.  Customers have the ability to move applications back and forth between Planning and Budgeting Cloud Service and Hyperion Planning on premises, through Lifecycle Management (LCM) packages, which is proven technology from the Hyperion applications portfolio.

And, unlike niche cloud vendors, Oracle lets you decide when upgrades happen, so you don’t have to go through planned downtimes at a critical time. With Oracle’s flexible upgrade schedule, you can choose an upgrade window that best fits your business. Customers also have the ability to specify the 1-hour slot for daily maintenance and backups performed by Oracle.

So what’s all the buzz about?  Simply put, Oracle Planning and Budgeting Cloud Service offers world-class functionality with the simplicity of the cloud.

For more information about the Oracle Planning and Budgeting Cloud Service click here.

Wednesday Feb 12, 2014

Strategic P&L Statements and Opportunities for Improvement in Retail

Do you have strategic profit and loss statements for your customers, stores, and stock keeping units (SKUs) or products? Having little experience with this type of statement before, I was very fortunate to have two experts join me for a discussion about how strategic profit and loss statements can make a significant bottom line impact for Retail companies. Mark Wright, Principal Sales Consultant for Oracle EPM Applications and Bart Stoehr, Senior Director of Product Strategy Development, both specialize in the Oracle Hyperion Profitability and Cost Management Product. Both have an amazing depth of experience to share on all matters pertaining to profitability and cost management practices.

To start, I asked Mark to describe shortcomings he has seen in Retail company management practices. Mark explained that for decades retailers have been tasked to improve shareholder value by making decisions based on statutory financial statements and rarely do these mandated statements represent strategic views that embody the business.  Marketing, sales and operations often have to recreate their financials to better serve their decision needs.  Mark offered that “financial” profit and loss statements are generated from ERP systems designed to meet statutory reporting requirements, not the needs of strategic executives. Transactions are recorded in accounting structures by division, department and account with little linkage to profit dimensions such as customer, product, and vendor. When a customer pays for a product, key hidden expenses such as labor, warehouse, transportation, vendor, etc., are recorded in unrelated and separate accounting formats. This lack of linkage and transparency can lead to incomplete, inefficient and sometimes bad decisions.

Mark told us about a company that he had worked with that completely changed their product strategic direction by switching from product and SKU gross margin management to strategic profit and loss statements. This change resulted in driving .5% to 2.5 % profit points to the bottom line!

Diving deeper into this subject area, Mark relayed that marketing executives want to know where to make money so they can plan advertising budgets.  Sales organizations focus more on who is buying so they can set sales targets and quotas. Operational managers focus on what and how so they can balance supply to demand. Merchandisers focus on store floors and aisles so they can plan.  Corporate level executives just want to know when so they can set profit expectations.  Everyone wants different views of profitability.

Mark offered a good example of how a mistake can be made from too little information. Merchandisers want to turn over high volume products but likely don’t understand the hidden costs associated with them such as import fees and distribution costs.  Sales may want to push high revenue products to high volume customers even though the customer may be unprofitable because they tend to buy massive loss-leading products. These are very conflicting agendas and objectives and will not lead to profitability.

Bart provided good insight as to how Hyperion Profitability and Cost Management can transform traditional profitability information into strategic profit and loss reporting, giving execs and others the information they need to make good decisions. “Imagine an executive in your company pulling up a dashboard that has four different points of view into the same profit number”, Bart said. Views such as customer, product, channel (i.e. store), and warehouse all tying to the same bottom line with each view showing a color coded profit graph with the most and least profitable members. Continuing the story, the executive then clicks on the negative portion of the product graph and it displays an independent strategic profit and loss statement showing revenue, discounts, rebates, vendor costs, warehouse costs, transportation costs, store activity costs, cogs and negative income - all fully loaded with transparency and linkage to profit drivers such as quantity, activities, allocations, and other inter-dependencies.  

That sounded like utopia for executives, but Bart kept going…Now imagine further drilling into the strategic profit and loss  report and getting details on the store, SKU, vendor, customer, sales person, zip code, store isle and other profit measures important to decision making. I was hooked!

Bart told our listeners that this is just the tip of the iceberg.  This type of tool can also address:

SKU rationalization
Inventory reduction
Vendor negotiations
Bulk & benchmarking
Customer targeted marketing
Market basket & behaviors; sales incentives
Pricing & policy
Cost plus margin and minimum orders
Capital expense alignment
Return on Investment (ROI) alignment
Operating Expense resource alignment
Capacity and process improvements

I was amazed at the power of strategic profit and loss statements for executives. So you really need to ask yourself, “Can my profit and loss statements do all this?"

To listen to the entire podcast, click here.
To learn more about Hyperion Profitability and Cost Management, click here.


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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