Highly Visible Cost Allocations at a Global, Multi-Disciplined Bank

Being able to allocate costs with high visibility throughout a large, global, multi-disciplined bank may seem impossible, but that’s precisely what Qubix did very successfully. I had the great fortune to interview Roger Cressey, a Group Director and founder of Qubix - and find out how he and his team were able to automate, standardize, and make visible, complex cost allocations throughout the bank.

Qubix is a Platinum partner of Oracle’s, with offices in the US, UK, Australia, Dubai and, most recently, Japan. They deliver Oracle Enterprise Performance Management and Business Intelligence solutions to quite a range of customers, including those in film, airlines, banks, insurance houses, consumer products; pretty much anyone that has horrible numbers to crunch. 

In this interview, Roger talked about a large, global, multi-disciplined bank that they had been helping with various challenges for about three years. Originally, Roger was introduced to the Bank through an acquaintance that had become an employee of the bank, and then wanted to upgrade the bank from Essbase version 5 to release  Qubix was able to perform the upgrade in just three days and had time  to build an additional prototype Essbase model to enhance their ability to collate financial data, and then distribute their information from a single “version of the truth”. 

“We helped the Bank build monthly and daily Essbase models, and as the platform grew, they could now see data that they had not seen before!” said Roger. The Bank used to do a lot of analysis in spreadsheets, very LARGE spreadsheets – but could now do it more efficiently in Essbase. Allocations were still a challenge as they were still trying to do large, complex allocations in spreadsheets. One of the Qubix team found out what they were trying to do and introduced them to Oracle Hyperion Profitability and Cost Management (HPCM).  HPCM is an application which leverages Essbase as a very powerful calculation tool, with an extremely user-centric front end. Non-technical users can create allocation calculations and methods. One of the strongest features of the product is the ability to trace allocations.After a demonstration, the Bank was very enthusiastic to implement HPCM and had Qubix create a proof of concept for one of the divisions very quickly. 

 So, what were the Bank’s key challenges? According to Roger, they included:
A manual cost allocation process – error prone
Had to re-verify numbers because often the data available to the different entities was inconsistent, largely due to timing / information availability.
Difficult to show where the numbers were derived from, or how they had been  allocated (black box to the members of the Bank)
Multiple errors in their huge spreadsheets (due to human error, formula maintenance, etc)
Their review process was very difficult and time consuming – if they wanted to use a different driver to reallocate costs or revenues – or if they added new entities, they had to change these massive spreadsheets and hope to catch all the changes.
No single source of cost allocation data

Rollout to all the divisions of the bank was done in an interesting way. Roger explained that it was implemented with a rolling prototype built in partnership with the Bank. This meant that in the end, the Bank gained the expertise and owned the solution themselves rather than relying heavily on Qubix. “Rather than trying to automate the massive spreadsheets broken down across the divisions, we rolled out the Essbase and Hyperion Profitability and Cost Management solutions to the different divisions,” said Roger. The initial HPCM rollout across the world took approximately nine months and the Bank have additional plans to do even more.

What kind of benefits is the Bank experiencing? According to Roger, plenty! They include:
Largely automated allocations
Feeds directly from source systems, so there is very little room for error
Data is consistently sourced from the same Essbase sources
Bank now knows how the costs are broken down at a very granular level, and (most importantly) quickly
Accuracy is improved because it is from one source
When making changes – such as a driver or allocation algorithm -  it is a matter of minutes to make a change rather than days of work
Now have standardized calculation and allocation methodologies, and a clear data dictionary
“Recipients” of allocated costs can now see for themselves where costs have come from and how they were allocated. This has reduced the amount of time spent in cyclical reviews

As for lessons learned, Roger had some interesting ideas here too. “Process is very important,” he said. “Develop a long term relationship with your partner. A good partner will give you good advice – they should be able to say ‘no’ to a bad idea and not just say ‘yes’ to anything you ask them to do”. In addition, Roger suggested that when you go forward with an implementation, get internal ownership of the project and the solution. Get it and maintain it. The consultant should not own your solution, but you can and should ask for help for unusual circumstances (someone leaves your company and takes the expertise with them, new things you want to do, etc.). Lastly, Roger felt strongly that there is not enough education and training around Enterprise Performance Management solutions. What is his idea to resolve this dilemma? “When someone is inducted into the company, they should learn where to park their car, health and safety procedures, and then how to use Hyperion solutions.”

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


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