Monday Apr 25, 2016

New Revenue Recognition Guidelines: Who is Affected?

Part three of a 6-part series on new revenue recognition guidelines.

The new revenue recognition guidelines redefines “revenue” for every US GAAP and IFRS company.  But, its impact is more severe for companies who offer discounted goods and services alongside fully-priced goods or services, and for those who deliver to customers over extended time periods, or both simultaneously. 

There are exceptions; the guidelines do not apply to organizations covered by other standards (e.g., insurance or leasing contracts).


All companies need to review their revenue for hidden bundling and implicit performance obligations. These guidelines are likely to impact pharmaceutical companies, telecoms, construction contractors, real estate developers, auto companies, and other firms with multiple sources of revenue.

Organizations - Examples

1. A software company ships a new game, but some missions or episodes are missing: 


Under today’s GAAP, they would defer all the revenue until the missing episodes were published. 

Under the new guidelines, they recognize revenue that relates to the delivery they performed, and postpone recognizing the remainder of the revenue until the delayed missions are delivered. A key question is how to identify and value a performance obligation of this nature, especially since this company doesn’t sell missions separately.


2.

a. A cellular telephone sold under contract that includes automatic software upgrades for one year is considered a single performance obligation.
b. A phone with a list price of $600 is sold to a customer under a service contract for $200. The cell bandwidth revenue for that client must be recognized to include a “claw back” of the difference of the list and selling price of the device.

3. An auto dealer that includes maintenance services with the sale of a car can only recognize the service revenue once the owner of the car brings it in for maintenance.

4. Similarly, high-tech companies that include software licenses, consulting, and support services on sales contracts determined to be related will recognize service revenue once the services are delivered.

How will the new revenue recognition guidelines affect my organization? Look at part 4 of this series, “What are the challenges for affected organizations?” to answer this question. Other articles in the New Revenue Recognition Guideline series can be reviewed by clicking the respective title: 


FAQs:

Part two: What are the new guidelines? Can you provide a simple example?
Part four: What are the challenges for affected organizations?
Part five: What should I be doing?
Part six: How will Oracle’s experience help?

To learn more about Enterprise Performance Management, click here

Tuesday Mar 08, 2016

Reasons to be Cheerful – a Whole 1000 Cloud Reasons!

In the song “Reasons to be Cheerful (Part 3)” released by Ian Dury and Blockheads in 1979, the lyrics list – believe it or not – many reasons to be cheerful! You will be pleased to know I will not be listing 1000 reasons here, as my 1000 reasons relates to the milestone reached last month of 1000 customers of Oracle EPM Cloud Services. A milestone reached in just two years from the release of the first Oracle EPM Cloud Service – Oracle Planning and Budgeting Cloud Service (PBCS) - on 14 February 2014. Certainly for Oracle and our customers, a 1000 reasons to be cheerful – you can listen to some of our customers by clicking on these names Racepoint Global, Western Alliance Bancorp, Moda Holding, Bukhatir Group, and Baxters.

To put the numbers in perspective, it took 5 years to reach the 1000 customer milestone when we released Oracle Hyperion Planning back in 2000. If you do the math for Oracle Planning and Budgeting Cloud, you will see customers have been signing up at the rate of 1.37 per day every day since the launch!

So, to what do we attribute this success? Here is my list:


  1. Oracle PBCS is built from the ground up for pure cloud deployment and can support simple requirements as well as enterprise planning complexities that the on-premises Hyperion Planning product handles.

  2. Oracle PBCS is based on the experience of over 5000 planning and forecasting customers globally, 1000s of years of staff experience, but is also highly innovative benefiting from Oracle’s large investment in R&D.

  3. Oracle PBCS integration is built to support the smallest or largest customer needs. You can start with simple ASCII imports and then add more sophisticated integration capabilities such as GL/Hierarchy mapping, data quality management and drill through to source.

  4. Oracle PBCS is priced and designed to provide competitive TCO whether you are a small or large enterprise (just a single subscription fee per user and no additional hidden charges).

  5. Oracle PBCS is proven for any size/complexity of EPM requirements and for scalability. Over 50% of the 1000 customers are small or midsize, but we also have user counts of more than 1000 in some customers who are using it for complex zero-based budgeting and other planning activities.

  6. Oracle PBCS provides simplified ‘business user’ driven cloud deployment, configuration, and administration, designed to be implemented and managed by the finance and the lines of business with minimal reliance on IT or additional consultants. Virtually zero training is needed, due to built-in starter kits and online help/tutorials.

  7. If you should need help globally, there are 1000s of trained experts available through Oracle’s vast network of partners, many of whom offer low cost, fixed price packages for their PBCS services.

  8. Oracle PBCS deployments span the entire enterprise across finance, marketing, sales, operations, HR, etc. using a wide span of planning techniques including predictive planning, driver-based planning, rolling forecasts and zero-based budgeting.

  9. Deployed in the Oracle-owned and operated data centers, PBCS leverages in-memory processing and is designed to scale without impact to performance or complexity of administration.

  10. The Oracle Cloud single tenancy approach, along with two environments (test and production), provides world class security and the flexibility for customers to chose when they upgrade to suit their specific business needs.

I think this is a good top 10 list for now. There are many more reasons to be cheerful, and more to come as additional enterprise Oracle EPM capabilities are coming to Oracle SaaS very soon.

By the way, in case you were wondering, there never was a part 1 or 2 from Ian Dury and the Blockheads, but do go out on the internet and listen to part 3; it is a classic. While you are there, you can find out much more about Oracle EPM Cloud solutions here.

Thursday Dec 17, 2015

Maintaining Enterprise Hierarchies? Surely, that’s not my Responsibility!

By Guest Blogger, Gilles Demarquet 

Does this complaint sound familiar? “We attend meetings where people arrive with “different figures” and end up spending too much time trying to resolve the causes of the discrepancies.”

Often these discrepancies are caused by different hierarchy definitions or different ways to roll up information. And, frequently, it’s a challenge to identify who should be in charge of the definition. In many case, it requires management involvement to define the rules and to get consensus.

In a previous post discussing hybrid environments consisting of both on-premises and cloud deployments, I emphasized that a dedicated approach for managing hierarchy changes is preferable to trying to maintain reference definitions in each application. I concluded that discussion by pointing out that successful deployments require committed people, strong processes, and technology to maintain consistent definitions for the reference data used in on-premises and cloud applications.

In this post, let’s consider who is and who should be involved in the maintenance of reference data in a hybrid implementation. There are two major areas of an organization that lay claim to “ownership” of reference data definitions – the IT department and business users. 




Historically, the IT department took care of maintaining the reference data definitions since only they had access to the tools to maintain them. This approach led to dissatisfaction in the business community as IT often became a bottleneck to timely (and correct) maintenance of hierarchy definitions.

In reality, requests to update hierarchies can be proposed by any number of business users and from a variety of functional areas. For example, finance end users might submit change requests for creating a new account, while operations might request an update in the product references. Each end user might be considered an owner of his or her respective information.

A well-designed solution to hierarchy maintenance in a hybrid environment requires dedication from both of these organizational groups. So the answer to who should be involved is “everybody with a stake in having consistent hierarchy definitions.” That includes IT and business users – if you are a member of either group, then you have a stake in ensuring correct and consistent enterprise hierarchies.

Is it possible to get these groups to work together? How do you resolve potential conflicting requests? This is where the inclusion of strong processes contributes to the successful deployment. I will elaborate on this topic in the next post. Stay tuned and forward any comments that you have.

To learn more about software solutions for maintaining enterprise hierarchies, click here.

Wednesday Dec 02, 2015

Coexistence of Cloud and On-premises Applications: Reference Data – Is there really a Choice?

By Guest Blogger, Gilles Demarquet 

In a previous post, I suggested three important aspects to consider when looking at the coexistence of on-premises and cloud applications. And I promised to expand on the need for consistency when managing and sharing common reference data, like cost center hierarchies or chart of accounts, when using this hybrid approach.

What does that mean?
Many applications use the “same” master/reference data but often with subtle variations or differences. For example, one application may need to roll up cost centers by function, while another may need to summarize cost centers by geographic location.

How do you define the hierarchies used in these applications? How do you ensure that the applications use definitions that consistently describe the common components of the hierarchy, while being flexible enough to include hierarchy components for their unique purposes? How do you coordinate hierarchy changes among these applications to reflect business changes?

Historically, I have seen a couple of approaches:

1. Define the hierarchies directly in each of the applications. 
Of course, this approach means that any hierarchy definition must be replicated (often manually) in every single application. Along with duplication of effort, this introduces the risk associated in ensuring that changes are done completely and consistently. And, if you have both on-premises and cloud environments, this effort may be more challenging because you may have to perform such changes in different kind of environments.

All-in-all, this is NOT the recommended approach.

2. Maintain hierarchy definitions in isolation from the applications. 
The idea is to make the changes once, in a single place, and then propagate them to the various applications that require the use of this reference information.

Experience has shown me that this is the preferred way to proceed. It creates a common vocabulary throughout the organization and contributes to the organization’s ability to maintain a single version of the facts.

What do you need to be able to effectively manage your organization’s hierarchy definitions?
It boils down to three considerations – committed people, strong processes, and technology to maintain consistent definitions for the reference data used in your on-premises and cloud applications. I will expand on each of these considerations in subsequent posts.




To learn more about software solutions for defining and maintaining enterprise hierarchies, click here.


Friday Jan 30, 2015

Oracle Enterprise Performance Management Cloud and Oracle Enterprise Resource Planning Cloud Are Platforms of Choice for CFOs Worldwide

In an Oracle press release, it was revealed that more than 600 customers have selected Oracle’s rich, integrated suite of EPM and ERP cloud services to drive growth and innovation.

On January 30, 2015, Oracle announced that in the second quarter of its fiscal year 2015,  sales for Oracle Enterprise Performance Management Cloud (Oracle EPM Cloud)  increased by 80 percent, and 250 new Oracle ERP Cloud and Oracle EPM Cloud customers were added during the quarter. This growth reiterates customers’ confidence that Oracle is best positioned to offer CFOs a complete, integrated suite of financial management and enterprise performance management cloud services, all designed to work seamlessly and securely together.

“Our financial information has become transparent subsequent to our 2013 initial public offering,” notes Karri Callahan, acting chief financial officer and corporate controller, RE/MAX. “To support our ambitious growth strategy, we needed a more efficient finance system with embedded controls and extensive reporting capabilities. Oracle offered us pre-integrated, state-of-the-art cloud services. This was a compelling value, since we prefer to invest in technology innovations for our brokers and agents rather than maintaining separate systems.”

 “Oracle Planning and Budgeting Cloud Service will enable us to significantly reduce the time and effort needed to perform our daily P&L forecasting process, which is our most critical business management practice,” said Paul Cardell, vice president, Corporate Operations, CTDI. “In addition, the real-time analytical data and comprehensive reporting that we can generate from Oracle Planning and Budgeting Cloud Service will enable us to make timely and well-informed decisions in order to run our business better”

To view the entire press release, click here.
To read more about Enterprise Performance Management in the Cloud, 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.



Thursday Apr 12, 2012

What's New in Oracle's EPM System?

Oracle’s EPM System R11.1.2.2  is now generally available to customers and partners on the download center.  Although the release number doesn’t sound significant, this is a major release of Oracle’s Hyperion EPM Suite with new modules as well as significant enhancements across the suite. 


This release was announced back on April 4th as part of Oracle’s Business Analytics Strategy launch, so analytics is a key aspect of the release.  But the three biggest pieces of news in this release are Oracle Hyperion Planning support for the Exalytics In-Memory Machine, the new Project Financial Planning Application and the new Account Reconciliations Manager module.


The Oracle Exalytics In-Memory Machine was announced back in October 2011, at Oracle OpenWorld.  It’s the latest installment from Oracle in a line of engineered systems that combine Oracle Sun hardware, with Oracle database and application technologies – in solutions that are designed to provide high scalability and performance for specific tasks.  Exalytics is the first engineered system specifically designed for high performance analytics.  Running in-memory versions of Oracle Essbase, as well as the Oracle TimesTen database and Oracle BI tools, Exalytics provides speed of thought response times for complex analytic processes with advanced visualizations.  Early adopter customers have achieved 5X to 100X faster interactivity and 6X to 10X faster planning cycles.  Hyperion Planning running with Oracle Exalytics will support enterprise-wide planning, budgeting and forecasting with more detailed data, with hundreds to thousands of users across an organization getting speed of thought performance.


The new Hyperion Project Financial Planning application delivered with EPM 11.1.2.2 is also great news for Oracle customers.  This application follows on the heels of other special-purpose planning applications that Oracle has delivered for Workforce and Capital Asset planning.  It allows Project Managers to identify project-related expenses and revenues, plan and propose new projects, and track results over time. Finance Managers can evaluate and compare different projects, manage the funding process, monitor and report the actual financial results and impacts of projects and project portfolios. This new application is applicable to capital projects, contract projects and indirect projects like IT and HR projects across all industries.  This application is a great complement to existing Project Management applications, and helps bridge the gap between these applications, and the financial planning and budgeting process.


Account reconciliations has to be one of the biggest bottlenecks and risks in the financial close and reporting process, and many organizations rely on spreadsheets and manual processes to perform this critical process.  To help address this problem, Oracle developed an Account Reconciliation Manager module that is being delivered as part of Oracle Hyperion Financial Close Management.   This module helps automate and streamline account reconciliations and eliminates the chances for errors, omissions and fraud.  But unlike standalone account reconciliation packages, it’s integrated with the rest of the Oracle Hyperion Financial Close suite, and can integrate balances from any source system.  This can help alleviate a major bottleneck in the financial close process, increase accuracy and reduce risk, and can complement existing investments in Hyperion Financial Management, as well as Oracle and non-Oracle transaction processing systems.


Other enhancements in this release include an enhanced Web 2.0 interface for Hyperion Planning and Hyperion Financial Management (HFM), configurable dimensionality in HFM, new Predictive Planning feature in Hyperion Planning, new Detailed Profitability feature in Hyperion Profitability and Cost Management, new Smart View interface for Hyperion Strategic Finance, and integration of the Hyperion applications with JD Edwards Financials.


For more information about Oracle EPM System R11.1.2.2 check out the links below:


Press Release:  http://www.oracle.com/us/corporate/press/1575775


Product Information on O.com:  http://www.oracle.com/us/solutions/business-analytics/overview/index.html


Product Information on OTN:  http://www.oracle.com/technetwork/middleware/epm/downloads/index.html


Webcast Replay:  http://www.oracle.com/us/go/index.html?Src=7317510&Act=65&pcode=WWMK11054701MPP046


Please contact me if you have any questions or need additional information – john.orourke@oracle.com

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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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