Friday Dec 20, 2013

Déjà Vu? Oracle EPM in 2013


As the year winds down, I wanted to share some of the highlights from EPM in 2013 and give a sneak peak about where we’re going next year. 2013 was a busy year with new product developments, new research studies, as well as customer events like Oracle OpenWorld. Let’s look back at some of these happenings and their associated blog posts.


New Product Developments 

Early in 2013, we announced a new release of Oracle Enterprise Performance Management with new integrations and product capabilities and updates to user experience that help companies to Unlock Business Potential – by unlocking business potential, companies are able to drive to the desired business outcomes of Aligned Objectives, Accurate Forecasts, Confident Close and a more Accountable Enterprise.

We also released new product modules, including Oracle Hyperion Tax Provision to help with aligning tax information and financial reporting, and Oracle Data Relationship Governance for improving financial master data governance and managing change.  In addition, we certified Oracle Hyperion Planning and Oracle Hyperion Profitability and Cost Management on Oracle Exalytics In-Memory Machine to help organizations Plan at the Speed of Business.  

For the sixth consecutive year, Gartner recognized Oracle as a Market Leader in its 2013 Magic Quadrant for Corporate Performance Management Suites report.  In this year’s report, among the market leaders, Oracle is positioned with the highest ability to execute and the strongest in completeness of vision.

New  Research

We conducted several interesting research studies in 2013.  Over the past several years, as we have gone through and emerged from the Great Recession, the role of the CFO has transitioned to one of catalyst for change.  New technologies and shifts in skill sets are also contributing to this changing role.  To understand these issues more deeply, we partnered with Accenture and released new research about the CFO’s changing role from financial overseer to corporate strategist and change agent.

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.  The EPM Blog featured some compelling results from the CVI around Enterprise Planning, Budgeting and Forecasting Processes.

Customer Events and Videos 

One of the highlights of the year was Oracle OpenWorld, and winning the America’s Cup during that week certainly added to the excitement!  The Business Analytics program this year was our strongest ever, with over 200 EPM, BI, Analytics, Big Data and Exalytics sessions delivered by Oracle, our customers and partners.   We had the opportunity to catch up with a number of these customers and partners after their sessions, and you can view the interviews here

In one of our blogs about Scorecards, we featured forward-looking DC Courts and their process for managing strategy and KPIs.  DC Courts are making some great strides in setting strategy and executing on it, and are really setting the bar for other US Courts. 
On the topic of Profitability and Cost Management, we interviewed Ida Quamina of Oracle about the great strides being made in mastering the cost of Higher Education, and how these institutions can now address the issues of low or no visibility into individual programs, degrees and course costs, or the cost per student.
Next up – Cloud and Mobile!

As we head into 2014, there are many exciting developments in store, and you can expect to see us talk a lot about Cloud and Mobile technologies next year. Our blog called, “Taking your Business Scorecard Golfing” is just a preview.  

Wishing you a very Happy Holiday and New Year!




Wednesday Aug 28, 2013

What’s Happening in Business Analytics at Oracle OpenWorld 2013

Oracle OpenWorld 2013 is rapidly approaching on September 22nd when we take over the city of San Francisco for five days.  The Business Analytics program this year is our strongest ever, with over 200 EPM, BI, Analytics, Big Data and Exalytics sessions delivered by Oracle, our customers and partners.  We'll also have Hands-on Labs, Theater sessions, 23 demo pods dedicated to Business Analytics products, and more than 30 partners exhibiting their solutions.

So what's hot in Business Analytics at OpenWorld 2013?  Here are some of the "can't miss" sessions at this year's conference:

+ Monday Keynote:  Transforming Business with Big Data and Analytics,
led by Oracle President Mark Hurd, will discuss how to harness the value of big data.  You will hear about crafting an IT strategy and leveraging big data to make decisions about business operations and products and services for transforming your business.


+ The EPM and BI General Sessions
, led by SVP of Product Development, Balaji Yelamanchili, will highlight the latest innovations and product directions for Oracle EPM, BI and Analytics.  Both sessions are scheduled on Monday, September 23.

+ Customer Success:  EPM on Oracle Exalytics.  In this session, customers present case studies of how they have deployed Oracle Hyperion EPM applications on Oracle Exalytics and the benefits they have achieved, including extreme performance and scalability, all at a lower total cost of ownership than traditional systems.

+ New:  Oracle Planning and Budgeting Cloud Service.  Oracle Planning and Budgeting Cloud Service is the first of Oracle's EPM applications to be offered as a public cloud service and makes it much easier for businesses of any size to deploy a world-class planning and budgeting solution in a matter of weeks.  Learn about this new offering and hear about early customer experiences.

+ What's New with Oracle Exalytics In-Memory Machine?  Attend this session to learn about the latest and greatest in the hardware and software evolution of Oracle Exalytics In-Memory Machine.  Also learn how customers have obtained value from Oracle Exalytics and listen to a customer case study.

+ Oracle Endeca Information Discovery:  Customer Panel.  This session features a panel of customers that have adopted Oracle Endeca Information Discovery and achieved exciting results.  The customers' stories span various industries and demonstrate the broad applicability of data discovery tools and the competitive advantages customers can realize with Oracle Endeca Information Discovery.

Customer Panel:  Real-World Value with Oracle Business Intelligence Applications.  This session features a panel discussion that presents customer perspectives and best practices for implementing Oracle Business Intelligence Applications with Oracle E-Business Suite; Oracle Fusion; Oracle's PeopleSoft, Siebel and JD Edwards EnterpriseOne product families; SAP; and other application environments.

+ Oracle Fusion Middleware:  Meet This Year's Most Impressive Innovators.  In its seventh year, the Oracle Excellence Awards for Oracle Fusion Middleware Innovation honors organizations from around the globe that are using Oracle Fusion Middleware to achieve significant business value.  Attend this session to learn how leading-edge Oracle customers are successfully transforming their organizations with Oracle Fusion Middleware technology, including Business Analytics.


For more details on these and other Business Analytics sessions at OpenWorld, download the Focus On Business Analytics program guide at: 
https://oracleus.activeevents.com/2013/connect/focusOnDoc.do?focusID=22725

We look forward to seeing you in San Francisco!




Friday Aug 02, 2013

Report from OpenWorld Shanghai

Oracle OpenWorld Shanghai 2013 was held July 22nd – 25th at the International Expo Center in Shanghai, China. The conference drew over 19,000 attendees from 44 countries. In addition, 580 CxOs attended the Executive Edge program, and 430+ partners attended the Oracle Partner Network Exchange. The conference included a number of sessions on Big Data, Business Analytics, Business Intelligence and Enterprise Performance Management delivered by Oracle, our partners and customers. 


Shanghai Skyline
I had the pleasure to attend the conference and delivered three sessions focused on Oracle’s Hyperion Enterprise Performance Management (EPM) applications. Each of my sessions was well-attended, and in a few cases was standing room only, so there is clearly a lot of interest in the China market in EPM. The EPM and BI demo pods in the DemoGrounds at the conference also received a lot of traffic. In addition to the conference sessions I delivered, I had several meetings with customers and partners in Shanghai.

These sessions and meetings I attended made clear the interest that customers in China have in improving their planning, management reporting, financial reporting, and profitability management processes. In fact, with the China Ministry of Finance now standardizing on XBRL for annual reporting across multiple agencies in China, there is a great opportunity here for our disclosure management application. One interesting finding is that the China market may not be ready for cloud-based applications as many companies are state-owned and have security concerns, so on-premise applications are likely to see continued demand.  

For more information about the Oracle OpenWorld China 2013 conference, please check the web  site: 

http://www.oracle.com/events/apac/cn/en/openworld/index.html

And don’t forget, Oracle OpenWorld San Francisco 2013 is just around the corner in September of 2013. Please check the web site for registration and content information: 

http://www.oracle.com/openworld/index.html


Shanghai Demo Grounds

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):

+
63% perform monthly forecasting
+
40% perform rolling forecasts
+
63% perform quarterly forecasts
+
33% perform event-based forecasting (or re-forecasting)
+
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.



Tuesday May 28, 2013

Unlocking Business Potential with Enterprise Performance Management

As we look at the enterprise performance management (EPM) market, it’s clear that the fundamentals of EPM haven’t changed in the last 5 – 10 years.  EPM is still about linking strategies to plans and execution, monitoring financial and operational results against goals, and applying analytics to understand key trends, make better decisions and drive enterprise-wide performance.

What has changed is the world that we operate in. Although economic growth is slow, business cycles are faster so planning and forecasting needs to be more frequent.  There’s more data available to analyze and leverage for planning and reporting – both internally and externally generated.  Stakeholders have higher expectations.  That includes external stakeholders who want more quantitative and qualitative disclosures about the organizations they are investing in, as well as internal management stakeholders who are demanding more frequent insights into financial and operating results.  Even the workforce has changed, for instance Millennials (those born between 1980 and 2000) were raised on technology and have less patience for systems that are outdated or don’t respond quickly.  In addition, technology is changing with the shift to Cloud, Mobile and Social computing.  These new technology enablers that are available today create many opportunities to drive innovation and improve efficiency if leveraged correctly.  

So while today’s market presents a number of challenges to achieving the goals of CEOs and CFOs, there are also opportunities to unlock the potential of their organizations to drive profitable growth. These include:

-
Eliminating or investing more in under-performing products
- Putting more focus on under-served customer segments
- Better utilizing existing staff and capacity
- Putting the excess cash on the balance sheet to work – investing in new markets, products, and services
- Creating more efficient business processes and reducing IT complexity to reduce costs

Many organizations are finding that an integrated EPM platform can help them break down the barriers to success, linking business goals to results and unlocking business potential.  With a world class EPM platform organizations can deliver the desired outcomes needed to succeed in today’s market; Aligned Objectives, Accurate Forecasts, Confident Close and a more Accountable Enterprise.  Plus they can address the needs of Finance, IT, as well as line of business managers to ensure more consistent decision-making.

To learn more about how an integrated EPM platform can help your organization unlock its business potential,
download our new white paper:  Enterprise Performance Management – Unlocking Business Potential. 

Also, learn how the latest release of Oracle Hyperion EPM helps organizations unlock their business potential, here’s a link to the
press release.

And for more general information about Oracle Hyperion EPM please go to www.oracle.com/epm.



Thursday May 23, 2013

The CFO as Catalyst for Change - Part 2


In Part 1 of this series, I talked about some of the factors that are changing the role of the CFO.  But exactly how much has the CFO role changed and what’s in store for the future? To shed more light on the subject, Oracle partnered with Accenture to conduct a global research study. The study "The CFO as Catalyst for Change", includes insights from 930 CFOs from organizations of varying sizes and from different continents. In other words, it's quite comprehensive.

The study highlights the evolution of the CFO’s role from financial overseer to corporate strategist and change agent. Specifically, there are a few key takeaways I wanted to highlight:

The CFO role is becoming more strategic and influential:

- More than 70% of respondents said their overall level of strategic influence has increased over the past three years
- Respondents said their role is increasing in setting and determining strategy (65%) and business transformation (47%).

Internal and external challenges are hindering CFOs from reaching their full strategic potential:

- Only 33% of CFOs surveyed play a leading role in strategy formulation; an even smaller proportion (24%) play a leading role in strategy execution
- The challenging economic environment was identified as the largest barrier (37%), followed by a shortage of time (35%) and lack of integration between the finance function and other parts of the business (31%).

CFOs recognize technology is critical to helping:

- 84% of respondents said co-operation between the finance leader and CIO has increased during the past three years.
- 79% listed access to information as a key factor to making their organization more agile
- 57% of respondents viewed investments in disruptive technology, such as big data and analytics, as key source of competitive advantage.

Maintenance and integration issues are still the biggest technology concerns for CFOs:

- Cost of maintenance, cost of integration and lack of integration between systems were listed as the top three concerns of CFO respondents.

For more information, you can find the press release and links to the full report here.  If you’d like to hear the findings discussed in more detail make sure to tune into the CFO.com webcast on May 30th at 12PM EDT.  More information on the webcast and registration is available here.








Wednesday May 08, 2013

The CFO as Catalyst for Change - Part 1

In today’s hyper-competitive global economy, senior executives often have to wear more than one hat to help their organizations reach their full potential.   A good example is the CFO. With the constant need to drive innovation and growth, coupled with their more traditional financial responsibilities like managing costs, CFOs are under increasing pressure to take on an even broader role within their organizations. This evolving role has seen CFOs become more valued strategic and commercial partners, but has not reduced the challenges they face. From working with customers in nearly every industry and geography, a few of the challenges CFOs currently face have become clear, including:


  • The operating environment – While the economy is recovering, CFOs are still facing a low-growth external environment. The need to focus on cost management and efficiency has, in many cases, meant the difference between survival and extinction. Yet, the CFO’s role has broadened to include playing a greater role in technology and operations. Therefore, lack of time and role overstretch are key problems.

  • Skills and capabilities – As the role of the CFO expands, so must the CFO skill set. This has presented a problem for organizations with finding the right talent and capabilities that move beyond the traditional finance skills. Current CFOs also need to expand their own capabilities – particularly with technology. 

  • Technology – The CFO's role in IT investment is more apparent than ever. According to Gartner, 45 percent of IT leaders report to the CFO…that’s more than report to any other executive. While technological innovation such as big data, business analytics, cloud, mobile and social are a priority for the majority of organizations, most financial executives are unable to evaluate IT investments, making it harder for them to show the fruits of their labors. 

Despite these challenges, I know many CFOs that are taking a more strategic role, but they are also the first to admit that there is more work to be done. Over the next few months we will explore this topic in more depth and discuss how technology and other factors can help CFOs become catalysts for change and unlock the true potential within organizations around the world.

For more information about the role of the CFO and best practices in dealing with today's Finance challenges, check out Oracle CFO Central at www.oracle.com/cfo.







Friday Apr 26, 2013

EPM and ERP - Better Together

I recently had the pleasure to attend and present at the Collaborate 2013 user conference in Denver, Colorado.  This event is run by three of the Oracle user groups – OAUG, IOUG and Quest and attracted over 5000 attendees this year.  The conference included hundreds of sessions covering Oracle Applications, Database, and Middleware which were delivered by Oracle customers, partners and staff members.  The EPM/BI/Data Warehousing track itself had over 130 sessions, most of which were delivered by customers and partners, and which were very-well attended.  Conference attendees and members of the Oracle user groups can see the session list and gain access to the presentation content at this link:  http://collaborate.oaug.org/education/search.

One of the highlights of the conference was the RadiOAUG live radio show that was broadcast from the exhibit hall during the conference.  This was pretty interesting – as two professional radio broadcasters interviewed Oracle executives, customers and partners on a variety of topics that were in focus for the conference.    I was interviewed on the topic of “ERP and EPM – Better Together”. 




During this short interview I talked about the progress Oracle has made in integrating the Hyperion EPM Applications with Oracle E-Business Suite, PeopleSoft, JD Edwards, Fusion and SAP Financials.  I highlighted 3 specific areas of integration that Oracle has built out -- data, metadata, and process integration.  We also discussed how EPM can help with ERP upgrades, through managing metadata like the Chart of Accounts, and providing a consistent planning and reporting environment while the systems are being upgraded on the back end.  I finished by talking about the role our EPM applications can play in helping ERP customers extend their investments and improve their management processes such as Strategy Management, Planning and Forecasting, Financial Close and Reporting as well as Profitability and Cost Management.  Here’s a link to a replay of my RadiOAUG interview:  JohnO'Rourke.mp3.

Here’s a link to all of the RadiOAUG programs that were recorded at Collaborate 2013: http://remote1.businessradiox.com/

For more information about Oracle’s Hyperion EPM Applications please go to www.oracle.com/epm


 

Tuesday Apr 16, 2013

Enrich Your Scorecard with Metadata That Actually Matters

Oracle has released another interesting Podcast – this one is about how Oracle Scorecard and Strategy Management can help you drive behavioural change and improvement at the same time by using metadata that actually matters.

I had the pleasure of interviewing Jacques Vigeant, Product Strategy Director for Oracle Business Intelligence and Enterprise Performance Management and Oracle Scorecard and Strategy Management (or OSSM) about this subject.

After covering the basics about what a scorecard is and how it differs from a BI system or dashboards, we went on to discuss how scorecards should traverse dimensional structures, not just go up and down the hierarchies (like a typical BI system does) but also jump from one hierarchy to another to tie important data together.

Then we got to the heart of the Podcast – metadata that really matters. Jacques told us why accountability is so important – understanding WHO is under or over performing and HOW that performance relates back to the organizational strategy is key to pushing strategy forward. It is difficult to modify behavior if accountability is not included.

Jacques further explained that traditional BI metrics are typically focused around aggregating metadata along a single hierarchy. For example, we all know intuitively that a very high attrition rate in a company can impact the profitability of the company.  Traditional BI metadata focuses on aggregating metadata for HR attrition rates by HR dimensions, like attrition by department or region, but in this example, there is still a chasm between the HR data and financial data. Oracle Scorecard and Strategy Management (OSSM) enables you to draw relationships between your measures that are not necessarily based on aggregate tables or dimensional hierarchies – rather by business insight. You can literally drag and drop scorecard metrics on top of each other to get a better snapshot of what is going on. Jacques provided the following example, “Let’s say my attrition metric has an impact on my employee effectiveness metric, which has an impact on employee productivity, productivity has an impact on cost, and cost has an impact on profitability. You can drag all of these metrics on top of each other to get a whole company understanding of the impact of attrition rate on profitability”. This is new insight about the relationship. Once we understand this relationship, there is now a financial basis for management to ensure that the attrition rate stays within acceptable parameters – which can lead to a change in management behavior.

How does this type of insight help? Jacques explained that OSSM provides a set of metadata that is actually captured by the user using the system, providing new business insight. As more users use the system you are gaining more and more business insight. You get a network effect of new and better business insight as more people use the scorecard tool. This is not the same kind of metadata as traditional metadata that simply describes the existing dimensions.

Near the end of the Podcast Jacques also told us more about how the use of metadata that matters (including accountability) with financial objectives and data and operational metrics and data, can all roll up into the strategy tying everything together. The ability to keep the data current enables users to get a really good picture of the state of the strategy at any time, and which elements are most important to monitor to move the strategy forward. There are really great visual diagrams within OSSM that help you to literally see what is happening.

Jacques provided other interesting examples and useful information about metadata that actually matters in scorecards and how it can help encourage organizational change during the Podcast. I encourage you to listen to the entire interview.

To hear the entire Podcast click here.

For more information about Oracle Scorecard and Strategy Management (OSSM) click here.

Tuesday Mar 26, 2013

Best Practices in Profitability and Cost Management

I recently had the opportunity to run some roundtable discussions on best practices in profitability and cost management with financial executives attending the CFO CPM Conference in Philadelphia and CFO Rising East Conference in Orlando. The attendees represented companies in different industries ranging from manufacturing, to transportation, real estate, insurance, telecommunications and healthcare.

The premise for the roundtable discussion was this; For most organizations, aggressive cost-cutting and management were critical to remaining profitable while top line revenue was flat or shrinking during the recession. However, now many organizations taking a more “surgical” approach to profitability and cost management, by understanding which products, services, customers and channels are truly profitable and which ones are draining value from the business. In these roundtable sessions we discussed best practices in profitability and cost management, including how to accurately allocate revenue and costs to individual product lines, services, customer segments, locations, channels and other lines of business in order to improve decision-making. Here’s a summary of the feedback I received from attendees at these sessions:

At what level does your organization analyze and manage profitability? The answers to this question varied by industry and company: Insurance - region, state and products.  For example:


+ Real Estate Brokerage - offices, products
+ Healthcare Providers – hospitals, business units, departments, services, patients
+ Healthcare Insurance – products, markets, customers
+ Transportation/Freight – ship level, market (car rentals), customers
+ Manufacturing – location/site, products, major customers, projects
+ Retail – store level, regions
+ Telecommunications – business units, products


Are there any regulatory requirements driving detailed allocations of revenue and costs in your industry or organization? Based on the roundtables, the primary industries where there is a regulatory driver behind cost allocations and profitability analysis are Telecommunications, and Healthcare. (The latter as a result of the Healthcare Reform legislation and need to report on Medical Loss Ratios)

How are allocations performed to distribute revenue and costs down to the appropriate level in the business? What allocation techniques is your organization using? Here the participants indicated they are using a variety of techniques ranging from standard costing based on headcount, square footage, and revenue contribution to activity-based cost drivers and allocations for certain areas, such as customer service.

How frequently are detailed cost allocations performed? The frequency of allocations varied across individual companies. Some are performing this task on a quarterly basis, some semi-annually, one bi-weekly, and most of the participants are doing detailed allocations monthly. One company, in Transportation, mentioned they were doing this on a daily basis, running detailed P&Ls for each of their ships (pretty impressive).

What tools are used to perform the allocations and report on profitability at the line of business level? The tools used to perform detailed allocations, cost and profitability analysis included spreadsheets, ABC tools, multidimensional OLAP tools (i.e. Oracle Essbase), and in some cases, the general ledger system.

Who consumes the profitability reporting in your organization? The consumers of this information varied by industry and company, for example:


+ Insurance – product line managers, actuaries, regulators
+ Real Estate Brokerage – branch managers (with compensation linked)
+ Healthcare Providers – doctors, marketing campaign managers
+ Manufacturing – senior management, controllers, sales managers, business unit leaders, operations managers
+ Telecommunications – finance, business unit leaders


Is profitability reporting and management linked to the annual budgeting process? The answers to this question were more varied across the participants. Some leverage this information in their long-term strategic planning process, some link to their annual financial budget, and some are just starting to create a link to their planning processes.

Overall I was impressed with the feedback I received from participants in these sessions. Every company who participated was performing cost allocations and analyzing profitability at some level other than the corporate summary. Some were doing this at a very detailed level (i.e. daily ship P&L), and others at a more summarized level but looking to get more granular over time. I was also impressed with the frequency of profitability reporting, with most of the participants doing this on a monthly basis, some less frequently. And it was clear that the information being generated was actively shared and utilized beyond the finance organization to business unit leads, product managers, sales managers and other line of business decision-makers.

Areas for improvement that most participants identified included moving this process from spreadsheets to analytic tools and applications designed to automate and support detailed allocations and costing on a more frequent and repeatable basis. The good news here is that there are a number of packaged applications available in the market designed to support detailed allocations of revenue and costs. These applications include powerful reporting and analysis tools to provide insights and support improved decision-making regarding resource allocations, product/service mix, pricing, customer service and campaign strategies. Some of these are available as standalone solutions, while others are delivered within Enterprise Performance Management (EPM) application suites and provide seamless integration with EPM planning and reporting applications.

For more information about the profitability and cost management applications offered as part of Oracle’s EPM solutions please go to www.oracle.com/epm.


 

Monday Mar 25, 2013

Optimizing the Business as a Whole: The Case for Enterprise-Wide Planning

I recently interviewed David Jones, Director in PWC’s Consulting Services EPM Practice, and Simon Kenney a Senior EPM Consultant also from PWC, in a podcast about their successes in enterprise planning implementation and their research on finance effectiveness.


Initially, we discussed the research they have been conducting around planning and forecasting effectiveness; they call it the Finance Effectiveness Benchmark. For 2012, some issues were consistent with previous years. Planning, budgeting and forecasting is taking too long to pull together, it’s still too manual and requires too many resources or effort to get it done. But the interesting headline this year is that 80% of the respondents declared that the accuracy of their forecasts is critical to the running of their business, but only 45% said that their forecasts were actually reliable. This result is very concerning as this deficiency will prevent companies from making the right critical business decisions.


So what are the causes of this large deficiency?


According to Simon, a lack of integration across the entire planning process – front office to back office is a key issue. The business functions are just not engaged enough as the forecasting is mostly finance led. Sales and marketing are essential to any forecast, but they are often not engaged properly. Ultimately, those that generate the opportunities and the revenue need to be involved with the forecast.


No wonder the forecasts are not accurate!


How do companies to fix this deficiency and move to an integrated more inclusive world of forecasting? Simon suggested the following three steps are a good start.


Step 1: Identify why the forecasting process is failing (Is each function independently running their own processes? Is there a lack of clearly defined accountabilities?)


Step 2: Determine if/when the company is ready to integrate their processes. (Does it have the required level of sponsorship in place to move to an integrated planning process? Are the functions prepared for change?)


Step 3: Define a blue print or target “n” state (Design the integrated process. Determine which technology can help support the new integrated process)


These steps sound fairly simple, so I asked David what some of the more difficult or challenging things are that he sees when undertaking these steps with his customers. David indicated that there are challenges specific to each industry, but some common ones to watch for are:



  • Lack of executive sponsorship across functions (Very Key!) The drive to implement change must come from the top and be a collaborative process.

  • Miss-aligned performance measures that drive the wrong behaviour.

  • Too much granularity or unnecessary detail in the financial plan. Requests for more detail and more clarifications lengthens the process (without sufficient benefit) taking too much time and effort.


Simon shared his experience working with a large UK based motor car manufacturer – the challenges and success they had experienced.


Car manufacturers are a more traditional type of company with lots of legacy systems. Being so entrenched in these systems meant that they were not sure if they were really ready for a big bang approach to integrated planning and forecasting. They, therefore, decided to work on one area of the company at a time – in waves – so they could prove it was the right thing to do by demonstrating success and showing value to drive further change.


I asked David how real the benefits were that could be obtained through integrated planning and forecasting. David said that he sees real results in more accurate forecasts and a much better understanding of what goes on in the business, how it behaves, and the impact each business function has on delivering the optimal level of profit. These are real and tangible benefits. Individual functional areas need to understand their role in the overall plan and not behave independently.


What can organizations do today to evaluate their planning and forecasting processes? Simon suggested the following:



  • Look at your existing processes – are they collaborative and integrated?

  • How accurate are your forecasts? If you are not sure, take a retrospective look and find out.

  • How effective are the different business functions in forecasting accurately?

  • Take a look at benchmarks and case studies outside your organization and see how you measure up and what else you can achieve.

  • If you are in the spreadsheet world, re-evaluate the process and take an honest look at how it is working for you. How accurate are your forecasts?


It became quite apparent from speaking to David and Simon that it’s all about optimizing the business as a whole and not the individual parts; without enterprise planning integration, this is simply not possible.


To listen to the webcast, click here.

Monday Mar 04, 2013

Bridging the Gap Between Project Management and the CFO’s Office

Organizations undertake numerous projects and initiatives to generate revenue,  improve productivity and increase profits in the hope that they will have the desired effect. But in large and multi-national companies, how can they sensibly and efficiently decide which projects to undertake, how to assign resources, and how to fund them?

Aligning organizational plans (long term and short term) with financial plans and forecasts while enabling the various Lines of Business (LOBs) to lead the projects might sound like it would be next to impossible, but with proper project financial planning tools, it can work really well!

Whether you have indirect (or administrative projects) that generate cost but not revenue, capital projects or contract projects (that generate cost and revenue), or a combination of them, having a well defined, easy to navigate process for documenting, evaluating , funding and approving multiple projects from many LOBs is crucial for forecasting cost and revenues, and booking resources and staff.


Consider these steps:


Step 1: Plan for expenses and revenues (where appropriate), by individual project – and by groups of projects

Step 2: Generate and analyze project financials for individual projects and groups of projects

Step 3: Analyze the funding requirements and revenue generation potential for individual projects and groups of projects

Step 4: Analyze and approve workforce requirements and asset requirements for individual projects and groups of projects

Step 5: Enable the analysis, and approval process by Business Unit Leaders and Finance managers for individual projects and groups of projects within the overall financial plan

Step 6: Enable intercompany project planning and reconciliation to get a complete corporate view of projects within the overall financial plan

Step 7: Enable continued monitoring of project financials within the overall financial plan


Oracle Hyperion Project Financial Planning embraces these steps and provides the needed structure and automation to simplify an otherwise complex set of processes.

When proposing and planning new initiatives, understanding the financial implications on corporate financial plans and objectives and gaining consensus among all concerned parties are a major challenge for many organizations. Without good financial and operational information for both proposed and current projects, it is difficult to analyze and make decisions on new projects to undertake. Oracle Hyperion Project Financial Planning provides the ability for all involved parties to help with this decision making.

It bridges the gap between the detailed task oriented project plans that a project manager within each LOB maintains, and the overall impact of projects on corporate finances and resources. Management can get a holistic view of how their assets and resources are allocated, and then monitor performance and receive information about return on investment (ROI).

Oracle Hyperion Project Financial Planning bridges the gap between LOB project management and the financial plans and forecasts within the CFO’s office.

For more information, click here to read Oracle’s new whitepaper on Oracle Hyperion Project Financial Planning: Aligning Financial and Project Plans.

Monday Feb 25, 2013

Gartner Positions Oracle as a Leader in CPM Suites

On February 14th Gartner released their 2013 Magic Quadrant for Corporate Performance Management Suites report. In the report, Oracle was recognized as a Market Leader for the sixth consecutive year.


Gartner’s Magic Quadrant reports position vendors within a particular quadrant based on their completeness of vision and ability to execute. In this year’s report, among the market leaders, Oracle is positioned with the highest ability to execute and the strongest in completeness of vision.


Here’s an excerpt from the report with some comments about Oracle from Gartner:


“Oracle is a Leader in CPM suites, and the Hyperion brand is respected by finance executives worldwide. Oracle has a very broad and deep CPM product suite, which employs a multiproduct approach with different applications for each of the major CPM processes; however, these products employ a common foundation and administrative components. The vendor has a well-established partner channel and Hyperion skills are plentiful among the consultant community, given the well-established products.”


Oracle Hyperion Performance Management Applications are part of Oracle Business Analytics, which combine market-leading enterprise performance management applications with business intelligence tools and technology and analytic applications to help organizations strategize, plan and optimize business operations and achieve better business outcomes.


Click here to learn more:  reportpress release


For more information about Oracle’s Hyperion Performance Management Applications please go to www.oracle.com/epm.

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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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