Why Are My Numbers Different From Yours?
By tobyehatch-Oracle on Jan 08, 2014
Happy New Year!
Organizations spend way too much time arguing about whose numbers are right, where they came from, and what they mean, rather than spending time discussing what to do about them. I had the pleasure of interviewing book author and consultant Ron Dimon, Enterprise Performance Management Advisory Services Partner at CheckPoint Consulting – an Oracle Platinum Partner – during a Podcast, and he provided some interesting insights into this topic.
Ron and I have been involved in Performance Management in one way or another since about 1999 and it amazes me that organizations today still rely so much on spreadsheets to do their planning and forecasting, profitability analysis, and even to record and report their financial and operational results. But, I am hopeful, as many companies and institutions now embrace the tools and processes of Enterprise Performance Management (EPM), that this will change, turning performance management into a discipline and a competitive advantage.To listen to the entire Podcast, click here.
I asked Ron to give his point of view on why people are still uttering “Why are my numbers different from yours?” With all the technology and systems we have now, why is this still an issue for many organizations? He told our audience that he believes much of the issue can be attributed to spreadsheets. “While great for some things, they were never meant to be collaborative, controlled, enterprise-wide consolidation and reporting engines or reporting systems. We have grown to rely on them, because they are pervasive and so easy to set up.” Ron explained that it is relatively easy to whip up a customer profitability spreadsheet, for example, in less than an hour. You just need to collect the sales and expense numbers, take a stab at indirect costs and voila! The problem, he suggested, starts after the report is set up and we need to share it, compare actuals to forecast, or include some historical trend data. Ron explained that, “When Finance gets a look at the spreadsheet, they have to reverse engineer it and will probably quickly find that my basis for allocating expenses is wrong, or I haven’t taken into account commission splits, or I’m not including a foreign subsidiary of the customer in the sales results…the list goes on and on.”
So how can this be corrected? Ron talked about a way of still using Excel to create easy, on-the-fly reports – but rather, using Excel directly connected to the central repository of data to ensure that everyone creating reports is starting from the same set of data. The Oracle solution he has used for this is called Oracle Hyperion SmartView for Office and is part of the Oracle EPM System. Because the spreadsheet is essentially connected to the underlying central repository of the EPM system, there is less time spent arguing about why numbers are different.
So is Oracle Hyperion SmartView for Office the answer? Does it solve the data problem all by itself? Ron explained to our audience that SmartView is the window to all that data; it’s one way to access it. But how and when the data gets into the central repository, and how it’s organized and transformed once it gets there requires an Enterprise Performance Management System (EPM). Oracle’s EPM system is both a collection of tools and a group of processes that govern how your data, especially financial data, is recorded, reported and used.
Ron explained that an EPM profitability application, like Oracle Hyperion Profitability and Cost Management (HPCM), is a much more disciplined way to truly determine customer profitability – unlike the spreadsheet example mentioned previously. Instead of the finance person making up formulas, allocations, and deciding what is included in that customer number or not, HPCM does it for you. So now you CAN spend more time on what do to with that customer: pay more attention, adjust prices, offer new services (or even fire them!) – and much less time arguing about why my numbers are different than yours.
To listen to the entire Podcast, click here.
To learn more about Oracle’s Enterprise Performance Management solution click here, and to learn more about HPCM, click here.