Thursday Jul 19, 2012

Progress Towards Integrated Financial and Sustainability Reporting

A few weeks ago in June 2012, thousands of diplomats, world leaders, executives of corporations, institutional investors as well as social and environmental activists gathered in Rio de Janeiro for the U.N. Conference on Sustainable Development, a.k.a. Rio +20 Earth Summit.  Among the agenda items discussed was corporate sustainability disclosures - and although a global agreement was not reached on this topic, there was some progress made here. 


While over 2000 organizations already have registered sustainability reports with the Global Reporting Initiative (GRI), and more than 3000 organizations have submitted their environmental information to the Carbon Disclosure Project (CDP), investors are pushing for more consistency and global standards in environmental and sustainability reporting and standards are being defined for integrating sustainability reporting with financial reporting. 


Towards this goal, the Nasdaq OMX Group Inc. joined stock exchanges in Sao Paulo, Johannesburg, Istanbul and Cairo in an effort to require listed companies to report material information about environmental, social and governance risks.  


Also at the conference, UK deputy prime minister Nick Clegg revealed a government mandate that will force companies listed on the London Stock Exchange’s main market to publish the full details of their greenhouse gas emissions.  What this means is that all LSE-listed businesses will have to report total greenhouse gas emissions for the year beginning April 2013. The regulations will be reviewed in 2015, before ministers decide whether to extend the approach to all large companies starting in 2016.


By encouraging companies to take social and environment dimensions into consideration, and by helping investors to make socially responsible decisions, the exchanges are hoping to enhance transparency of information in capital markets and help create more aware investors.


These exchanges agreed to urge their more than 4,600 listed companies to measure and report on environmental and governance issues such as greenhouse gas emissions, water usage and gender equality, or explain why they won’t. They are also asking more exchanges to join the effort.


So again, while a global standard was not agreed upon at the conference, some progress was made in getting additional stock exchanges to require or encourage listed companies to provide more disclosures to investors and other stakeholders about the environmental and social impacts of their organizations, in addition to their financial results.  These initiatives are positive steps towards the adoption of “integrated reporting”, or the alignment of sustainability reporting with financial reporting which I covered in a prior article on this blog.  See link here:


https://blogs.oracle.com/epm/entry/integrating_sustainability_reporting_with_financial


For more information about the Rio 20+ Earth Summit and announcements made there, see the links below:


http://www.environmentalleader.com/2012/06/20/firms-on-london-stock-exchange-will-be-forced-to-report-co2-data/


http://www.businessweek.com/news/2012-06-19/nasdaq-joins-four-exchanges-in-sustainability-effort


http://www.forbes.com/sites/mindylubber/2012/06/19/a-tipping-point-on-sustainability-disclosure-in-rio/


For more information about Oracle’s solutions for environmental and sustainability reporting, check out the following resources:


Press Release - http://www.oracle.com/us/corporate/press/513393


Sustainability Reporting page on O.com – http://www.oracle.com/us/products/applications/green/risk-performance-management-304575.html#sustainabilityreporting


Feel free to contact me if you have any questions or need additional information:  john.orourke@oracle.com

Friday Jul 13, 2012

Account Reconcilations - Making this Less of a Headache

The finance department in most organizations is coming under increasing pressure to transform and streamline the financial close and reporting function while continuing to maintain the integrity of the financial statements and close process. A key part of this close process includes the completion of detailed account reconciliations, which can be a major bottleneck and headache in the close process. The necessity for understanding and certifying an account balance and its transactions is prompted by regulatory and audit control requirements. In addition to the statutory pressure for account reconciliations, the current economic situation makes it imperative for Finance executives to understand the details and transactions behind every account. They need to be able to easily identify fraudulent, improper and excessively aged transactions. In most organizations, the account reconciliation process is a very time consuming and manual process. A robust and integrated account reconciliation software application   will allow Finance to more effectively manage their business.


Account Reconciliations Can Extend the Financial Close and Introduce Risk


Medium to large organizations often have the need to perform thousands of account reconciliations during the quarter-end or month-end close.  Examples of the typical reconciliations include tying general ledger balances to sub-ledger balances, general ledger balances to bank account balances, general ledger balances to data warehouse balances, and consolidation application account balances to general ledger account balances.  Most organizations also maintain reconciliations of general ledger balance sheet accounts such as prepaid expenses or accrued liabilities.


This tedious process is typically performed in Microsoft Excel, where Finance staff manually tie out the list of items in a spreadsheet to those in the general ledger and other systems.  Managers usually send emails or make phone calls to track progress and follow up on delinquencies.  Due to the challenges in tracking account reconciliations, companies typically prepare and review most reconciliations on the same schedule and are often not factoring in risk when determining frequency and due dates.  Common failure points include:


- Missing or lost reconciliations


- Unreconciled accounts


- Improper use of roll-forwards


- Reconciliation of the wrong balance (balance changed after certification)


- Insufficient justification or documentation


When these failures occur, audit findings can result in a significant deficiency or a material weakness in internal control, and costs can reach the hundreds of thousands, or even millions of dollars.


Integrated Account Reconciliation Management Applications Meet the Challenge


Leading edge Finance organizations are now looking to eliminate spreadsheets and manual processes used to support account reconciliations, and adopt packaged software applications designed to automate and streamline the process.  But it’s not enough to have a packaged software application to support account reconciliations, this application should also be integrated with financial close workflow, and the various systems in which account balances and transaction detail reside, such as financial consolidation applications and specific general ledgers.  Key features in account reconciliation software packages include:


- Currency translation


- Audit controls for all activities


- Reporting and Monitoring


- Pushback of reconciliation adjustments to source systems


- Rule based thresholds for automatic certification and risk assessments


- Workflow support for reconciliation process


- Tasks and task assignments


The key benefits of integrated and packaged account reconciliation software packages include efficiency gains as well as reduction in risk to Finance organizations.  Efficiency gains can be measured by the value in labor savings achieved by making the administration, preparation, and review of account reconciliations more efficient.  Reduction in risk can be measured by the avoidance of costs associated with a failure in internal controls around account reconciliations.  If material weaknesses are found and announced in external audits, the consequences can be costly.  Companies incur expenses for additional legal and audit fees and there can be an impact on the stock price for publicly-held entities.


In summary, with increasing pressure to reduce close times and improve the integrity of financial reporting, Finance departments need to eliminate spreadsheets and manual processes and adopt technologies that can help automate and streamline the financial close process and eliminate the chances for errors, omissions and fraud.  Integrated and packaged account reconciliation software applications can help alleviate a major bottleneck in the financial close process, increase accuracy and reduce risk, and can complement existing investments in financial consolidation, financial reporting, financial close workflow and transaction processing systems.


Here’s a link where you can find information about how the new Account Reconciliation Manager feature in Oracle Hyperion Financial Close Management can help make account reconciliations less of a headache:


http://www.oracle.com/us/solutions/ent-performance-bi/financial-close-065894.html


Also, here’s a link to a recent webcast replay on this topic:


https://oraclemeetings.webex.com/ec0605lc/eventcenter/recording/recordAction.do;jsessionid=gLMyQNcpqmQSGGf8h2YNZYT2gcwpdQNyTjvlxMj2hP0rXFJSSDTz!-866538466?theAction=poprecord&actname=%2Feventcenter%2Fframe%2Fg.do&actappname=ec0605lc&renewticket=0&renewticket=0&apiname=lsr.php&entappname=url0107lc&needFilter=false&&isurlact=true&rID=69582487&entactname=%2FnbrRecordingURL.do&rKey=168b45687e963894&recordID=69582487&siteurl=oraclemeetings&rnd=0489765029&SP=EC&AT=pb&format=short


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

Tuesday Jul 10, 2012

Challenges in Corporate Reporting - New Independent Research

Earlier this year, Oracle and Accenture sponsored a global study on trends in financial close and reporting. We surveyed 1,123 finance professionals in large organizations in 12 countries around the world during February and March.


Financial Consolidation and Reporting is the most mature aspect of Enterprise Performance Management with mainstream solutions having been around for over 30 years. But of course over this time there have been many changes and very significant increases in regulation. So just what is the current state is Financial Consolidation and Reporting in our major corporations across the world? We commissioned this independent research to find out. Highlights of the result are:


          Seeking change: Businesses recognize they need to invest in financial reporting to address the challenges they currently face. 47 percent of companies have made substantial investments over the last year to the financial close, filing, and reporting processes.


          Ineffective investments: Despite these investments, spreadsheets (72 percent) and e-mails (68 percent) are still being used daily to track and manage reporting, suggesting that new investments are falling short of expectations.


          Increased costs and uncertainty: The situation is so opaque that managers across the finance function are unable to fully understand the financial impact or cost implications of reporting, with 60 percent of respondents admitting they did not know the total cost of managing and publicizing their financial results.


          Persistent challenges: 68 percent of respondents admitted that they have inadequate visibility into reporting processes, while 84 percent of finance managers surveyed said they find it difficult to control the quality of financial data across the entire reporting process.


          Decreased effectiveness: 71 percent of finance managers feel their effectiveness is limited in some way by data-analysis–related issues, while 39 percent of C-level or VP-level respondents say their effectiveness is impaired by limited visibility.


          Missed deadlines: Due to late changes to the chart of accounts, 15 percent of global businesses have missed statutory filings, putting their companies at risk of financial penalties and potentially impacting share value.


The report makes it clear that investments made to date by these large organizations around the world have been uneven across the close, reporting, and filing processes, which has led to the challenges these organizations currently face in the overall process. Regardless of whether companies are using a variety of solutions or a single solution, the report shows they continue to witness increased costs, ineffectual data management, and missed reporting, which—in extreme circumstances—can impact a company’s corporate image and share value.


The good news is that businesses realize that these problems persist and 86 percent of companies are likely to make a significant investment during the next five years to address these issues. While they should invest, it is critical that they direct investments correctly to address the key issues this research identified:


          Improving data integrity


          Optimizing processes


          Integrating the extended financial close process


By addressing these issues and with clear guidance on how to implement the correct business processes, infrastructure, and software solutions, finance teams will find that their reporting processes are much more effective, cost-efficient, and aligned with their performance expectations.


To get a copy of the full report:


http://www.oracle.com/webapps/dialogue/ns/dlgwelcome.jsp?p_ext=Y&p_dlg_id=11747758&src=7300117&Act=92


To replay a webcast discussing the findings:


http://www.cfo.com/webcast.cfm?webcast=14639438&pcode=ORA061912_ORA

Tuesday May 29, 2012

What's Going on With IFRS?

There hasn’t been much news lately about the adoption of IFRS in the United States, and I have received some questions from customers and partners on this topic.  So here’s a quick update.


Most of the world has moved to International Financial Reporting Standards (IFRS) with the last holdouts being Japan, India and the United States.  Japan has started the transition process and should be complete by 2015 and India will be in transition through 2018.  The Financial Accounting Standards Board (FASB) has been discussing and working with the International Accounting Standards Board (IASB) on the convergence of US GAAP and IFRS for many years.   The reality is that the United States Securities and Exchange Commission (SEC) is not going to force a switch entirely over to IFRS, but is proposing a slow convergence of US GAAP with IFRS principles over time.  In fact the latest word being used to describe this process is “condorsement”, as per a proposal issued by the SEC in May 2011. 


There are a number of convergence projects now being worked on between the two standards committees, but the four that are in focus currently relate to Financial Instruments, Revenue Recognition, Financial Statements and Leases.  Exposure drafts on these topics were released for public comment back in 2010 and SEC board reviews occurred in 2011.  The expected timeline for adoption of the revised US GAAP rules in these areas is highlighted below.


Revenue:  Exposure draft closed, comment period over, the boards are mulling the exact wording.   This is expected to be finalized in late 2012.  Effective date unknown – but not likely until 2015, with retroactive reporting back to 2013.


Leasing:  Principles established, exposure draft still being finalized.  Anything that meets the definition of a lease will be on the balance sheet as a right to use asset and a lease liability.  P&L expense will distinguish the interest element from the usage element.  Some issues still to be resolved.  This is expected to be finalized in 2013.


Financial Statement Reporting: Postponed indefinitely.


Financial Instruments:  Progress, dialogue this year between FASB & IASB.  Basel III, Dodd-Frank, JPMorgan Chase, Greek exposure all factors in getting this one done.  No final dates at this point.


The SEC has not made their announcement, but everyone is pretty certain that what they will do is ask the FASB to expose the IFRS statements, other than the 4 convergence ones listed above, as ASUs (Accounting Standards Updates) to US GAAP: that is, FASB will adopt IFRS, not companies.    Companies will then adopt the IFRS statements as US GAAP Updates as FASB rolls them out, but absolutely no details are available on that program currently.


Oracle has staff carefully tracking these developments and provides features and capabilities in our financial management applications designed to help customers migrate smoothly from their local GAAPs to IFRS.  For news and updates on US GAAP/IFRS convergence projects, please consult the following resources:


US SEC:  http://www.sec.gov/


FASB:  http://www.fasb.org/home


IASB:  http://www.ifrs.org/Home.htm


For information about how Oracle’s financial management solutions can help with the transition to IFRS:


http://www.oracle.com/us/solutions/corporate-governance/ifrs/061806.html


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

Wednesday Mar 28, 2012

XBRL - Moving from Production to Consumption


Here's an update on what’s new with XBRL and how it can actually benefit your organization versus adding extra time and costs to financial reporting.  On February 29th (leap day) of 2012 I attended the XBRL and Financial Analysis Technology Conference at Baruch College in NYC.  The event, which attracted over 300 XBRL gurus and fans was presented by XBRL US, The New York Society of Security Analysts’ Improved Corporate Reporting Committee, and Baruch College’s Robert Zicklin Center for Corporate Integrity.  The event featured keynotes from the U.S. Securities and Exchange Commission (SEC), and the CFA Institute as well as panels covering alternative research tools and data, corporate reporting to stakeholders and a demonstration of XBRL analysis tools.  The program culminated in a presentation of the finalists and the winner of the $20,000 XBRL Challenge.   


Some of the key points made in the sessions included:


The focus of XBRL tools is moving from production to consumption.


As of February 2012, over 9000 companies are reporting in XBRL, with over 10 million facts filed to date


XBRL taxonomy extensions have dropped from 27% to 11% making comparisons easier


The SEC reports that XBRL makes it easier to analyze disclosures, focus on accounting issues


XBRL is helping standards-setters like the FASB speed their analysis of impacts of proposed accounting rule changes


Companies like Thomson Reuters report that XBRL is helping speed the delivery of data to clients


The most interesting part of the program though, was the session highlighting the 5 finalists in the XBRL Challenge competition and the winning solution.  The XBRL Challenge was launched in 2011 as a means of spurring the development of more end-user tools to help with the consumption of XBRL-based financial information.       Over an 8-month process handled by 5 judges, there were 84 registrants, 15 completed submissions, 5 finalists and one winner of the challenge.  All of the solutions are open-sourced tools and most of them focus on consuming XBRL-based data.  The 5 finalists included:


Advanced XBRL Processing from Oxide solutions – XBRL viewer for taxonomies, filings and company data with peer comparison capabilities.


Arrelle – API for XBRL processes, supports SEC Validations, RSS Feeds to access filings etc.


Calcbench – XBRL data analysis tool that can be embedded in other web applications.  This tool can combine XBRL filings with real-time market data.


XBRL to XL – allows the importing of XBRL data into Microsoft Excel for analysis, comparisons.  Users start on the web and populate Excel with XBRL data.


XBurble – allows users to search and view XBRL filings, export to Excel, merge for comparison, and includes a workflow interface.


The winner of the $20,000 XBRL Challenge prize was CalcBench.  More information about the XBRL Challenge and the finalists can be found at www.XBRLUS.org/challenge


XBRL for Sustainability Reporting – other recent news on the XBRL front was the announcement by the Global Reporting Initiative (GRI) of an XBRL taxonomy for Sustainability Reporting.  This taxonomy was co-developed by the GRI and Deloitte and is designed to make the consumption of data found in Sustainability Reports much easier.  Although there is no government mandate to file Sustainability Reports in XBRL format, organizations that do use the GRI guidelines for Sustainability Reporting are encouraged to tag and submit their data voluntarily to the GRI – who will populate a database with Sustainability Reporting data and make this available to the public.  For more information about this initiative, you can go to the GRI web site:  www.globalreporting.org.


So how does all of this benefit corporate filers and investors?  Since its introduction, the consensus in the market is that XBRL has mainly benefited the regulators and investment analysts who need to consume and analyze large volumes of financial data.  But with the emergence of more end-user tools for consuming and analyzing XBRL-based data, and the ability to perform quick comparisons of one company versus its peers and competitors in an industry group, will soon accelerate the benefits to corporate finance staff, as well as individual investors.  This could apply to financial results tagged in XBRL, as well as non-financial information such as Sustainability Reporting – which over the long-term will likely be integrated with financial reporting.   And as multiple regulators and agencies in a country adopt the XBRL standard for corporate filings, more benefits will accrue as companies will be able to leverage one set of XBRL-based financial data for multiple regulatory filings.    


For more information about the latest developments in XBRL, check out the XBRL US or XBRL International web sites:  www.xbrl.org, www.xbrlus.org.


For more information about what Oracle is doing to support XBRL, here are some links:


http://www.oracle.com/us/solutions/ent-performance-bi/disclosure-management-065892.html


http://www.oracle.com/technetwork/database/features/xmldb/index-087631.html


Feel free to contact me if you have any questions or need more information:  john.orourke@oracle.com

Tuesday Feb 21, 2012

Hyperion Enterprise Customers - Moving Forward

There has been a lot of buzz in the Oracle/Hyperion customer and partner community in the past few weeks about the impending end of life of Hyperion Enterprise.   Yes, Hyperion Enterprise (or good old Sparky as we affectionately call it) which was first released in 1995, is finally approaching the end of its lifecycle after almost 20 years.  Hyperion Enterprise was the leading financial consolidation application in the world with over 3,000 organizations using the application at its peak.  But market requirements and technology have changed, new licenses of Hyperion Enterprise have declined, and the majority of customers have switched to Hyperion Financial Management, Oracle Essbase, or other solutions.  So in January 2012, Oracle published a Statement of Direction for Oracle Hyperion Enterprise and Hyperion Enterprise Reporting which communicates that these products will be on Controlled Availability as of December 2012.  What does this mean?


This means that additional sales of these products will be limited to existing customers only, no sales of Hyperion Enterprise to net new customers.  Premier Support for these products will be offered until April 2013, after which Sustaining Support will continue to be provided, so customers who wish to continue using these products will be supported for a number of years into the future.  More information on the Oracle Lifetime Support policy and the services offered under Premier and Sustaining Support can be found here:  http://www.oracle.com/us/support/library/lifetime-support-applications-069216.pdf


The good news is that there are a number of options for existing Hyperion Enterprise customers:


For customers who are satisfied with Hyperion Enterprise and wish to continue using the application, you can continue using it and will receive support for many years into the future.  However there will be no product enhancements and limited service patches.


For customers who have outgrown Hyperion Enterprise and are ready to move to a more modern, web-based financial consolidation application, with more dimensionality and other advanced features, Hyperion Financial Management (HFM) has been the solution of choice.  There are software tools and services available from Oracle, and some partners, that can help with the conversion process.  In addition to offering a more robust platform for financial consolidation and reporting, HFM is complemented by a number of other modules that can help address the extended financial close and reporting process.  This includes Hyperion Financial Data Quality Management for data integration, Hyperion Disclosure Management for regulatory filings and XBRL support, Hyperion Financial Close Management for orchestrating the financial close process and Oracle Financial Management Analytics, a packaged executive dashboard solution providing real-time access to financial results and close process metrics.     Of course, Hyperion Financial Management also integrates with Hyperion Planning and Oracle Essbase, so customers already using these products will see additional advantages from converting to HFM.


For customers with simpler financial consolidation requirements but a need to collect and aggregate financial data from multiple sources to perform financial and management reporting, Oracle Essbase has been a popular choice as well.  Customers can leverage a number of familiar tools with Essbase such as Hyperion Financial Data Quality Management, Hyperion Financial Reporting, and Smart view for Office.  One advantage here is that Oracle Essbase data can be leveraged by Hyperion Disclosure Management for regulatory reporting and XBRL filings, as well as OBIEE for management reporting.


Of course, since the news has broken about the upcoming controlled availability of Hyperion Enterprise, some of Oracle’s competitors have been targeting Hyperion Enterprise customers with their own offers.  Customers should certainly evaluate all of their options here, but Oracle’s goal is to make it as attractive as possible for Hyperion Enterprise customers to “stay in the family” and take advantage of our solutions to address their financial and management reporting requirements.  Here are a couple of key points to consider:


·         Oracle/Hyperion has been a trusted partner and a low-risk choice for thousands of customers, and we continue to invest in providing market-leading financial close and reporting solutions.


·         Oracle’s Hyperion Performance Management applications address the complexities of the extended financial close and reporting process as well as enterprise planning, strategy management, profitability and cost management.  All of these applications are designed for high scalability and performance, with integration across the suite.


·         Oracle’s Hyperion applications provide direct integration with Oracle E-Business Suite, PeopleSoft Financials, Fusion Financials and soon JDE Financials.  This enables customers to leverage existing ERP investments, data and meta data, and provides drill-through capabilities from summary reports and dashboards to transactional details.


·         Oracle’s Hyperion applications also provide direct integration with SAP Financials, and thousands of SAP customers continue to select our solutions over alternatives from SAP and other vendors.


·         Oracle’s Hyperion Financial Close Suite integrates with Oracle Essbase, the Oracle Hyperion Planning Suite, as well as Oracle Business Intelligence tools – so customers can leverage their investments in these technologies as they convert from Hyperion Enterprise.


Some of the “all in one” performance management solutions offered by other competitors may appear attractive to Hyperion Enterprise customers looking to move.  But “buyers beware”, while these applications claim to support a broad range of requirements (i.e. budgeting, planning, financial consolidation, financial and management reporting) they can be risky and typically don’t provide the depth of functionality offered by best of breed applications.  And the all-in-one applications typically don’t scale and perform well for large deployments.  A number of customers who tried the all-in-one approach eventually switched to Hyperion Financial Management due to performance issues.  One example is Brady Corporation who tried to use SAP’s BPC solution for financial consolidation and eventually switched to Hyperion Financial Management.  Here’s a link to a podcast interview with an executive from Brady Corporation:  http://streaming.oracle.com/ebn/podcasts/media/9590934_Brady_Int_012711.mp3


Here’s a link to more information about Oracle’s Hyperion Financial Close Suite:  http://www.oracle.com/us/solutions/ent-performance-bi/051190.html


Here’s a link to a white paper on the options for Hyperion Enterprise customers: http://www.oracle.com/us/solutions/business-intelligence/064290.pdf


Here’s a link to the Astellas Pharma Hyperion Financial Management success story:  http://www.oracle.com/us/corporate/customers/astellas-pharma-europe-hyperion-081582.pdf


I hope this information is helpful as you consider your path forward from Hyperion Enterprise.  The product has had a long life, providing value to many organizations, but it’s time to move forward.  Feel free to contact me if you need additional information:  john.orourke@oracle.com.

Monday Dec 19, 2011

EPM Resolutions for 2012


With 2011 coming to a close and 2012 quickly approaching, many organizations are wrapping up their plans for the New Year.  While 2012 planning may be mostly financial in nature, organizations should also think about setting some goals and objectives for how they can improve their performance management processes.  With that in mind, here are my top 10 recommendations for EPM/BI process and system resolutions for 2012:


Streamline the period-end close.  With increasing regulatory and stakeholder reporting requirements like IFRS and Solvency II, many organizations spend too much time and resources on the financial close and reporting process.  Review your process and look for areas that continuously present hurdles or bottlenecks – such as data integration, account reconciliations, regulatory reporting, and XBRL-based filings.  These low-hanging fruit could be ripe for review and updating and targeting with software solutions that can help shorten the entire close and reporting process, like at Menzies Aviation.


Bring XBRL tagging in-house.   When first adopting XBRL, most organizations have chosen to outsource XBRL tagging to third party publishers.  But as detailed tagging of footnotes and disclosures drives up the cost of outsourcing, and organizations realize they can’t make last-minute adjustments to their filings – many are bringing XBRL tagging and filing in-house.  Integrating XBRL tagging with the financial close and reporting process, like StealthGas, can reduce the costs of outsourcing, improve accuracy and increase your ability to accommodate last minute changes.


Align planning processes.  Many organizations suffer from planning processes that aren’t aligned across functions and are supported by disconnected spreadsheets.  Look for ways to better integrate long-term, strategic planning with financial budgeting as well as operational planning.  Reel in processes that still rely on spreadsheets and use web-based software applications to eliminate time and resources spent on data collection and aggregation.  Connecting strategic, financial and operational planning like Societe General will also help improve resource alignment across the organization. 


Focus on forecasting.  Most organizations still have an annual budget process, but many are placing less focus and effort on this and are relying more on monthly or quarterly forecasts to update planning assumptions and implement changes to operating plans.  The rolling forecast technique is being utilized by many organizations like Sunshine 100 Real Estate to maintain a steady view of the business 4 – 6 quarters into the future.  This approach increases business agility and ensures better utilization of resources.


Leverage predictive modeling techniques to improve forecast accuracy.    Predictive modeling is being used in business forecasting by leading edge companies like Ingersoll Rand to bring statistical analysis and techniques such as Monte Carlo simulations into the mix.  These techniques can augment the forecasting be performed by line managers and can be used to validate those forecasts based on historical information, and to produce a broader range of outcomes to consider in decision-making. 


Get more granular on profitability and cost analysis.  Many organizations rely on corporate-level or divisional views of profitability and don’t regularly allocate revenues and costs down to the individual product, service or customer levels to understand which lines of business are adding or detracting value from the business.  Having a repeatable, accurate process and system for allocating revenues and costs, like Shenhua Gouhua Power, can reveal hidden insights about which parts of your business are truly profitable and which aren’t.  It can also help in allocating resources, adjusting pricing or customer service programs, or driving marketing campaigns.


Integrate sustainability reporting with financial reporting.  To address increasing stakeholder demand for more detailed disclosures regarding energy usage and carbon footprint, many organizations are producing a sustainability report or voluntarily submitting data to organizations such as the Carbon Disclosure Project (CDP).  However the processes used to collect, aggregate and report this type of information is often manual – relying on spreadsheets, email and other processes which are unreliable.  Leverage existing business processes and systems like Dong Energy to collect, consolidate and report sustainability metrics and ensure that the non-financial information you are providing to stakeholders has the same level of accuracy as the financial results.


Centralize enterprise dimension management.  If your organization is maintaining dimensions and hierarchies such as charts of accounts and organizational structures in multiple systems, this would be a great time to centralize the management of this information. Centralizing and automating enterprise dimension management like Anglo American can lead to better IT governance, reduced costs, more consistency in reporting and high return on investment by eliminating manual, redundant administration across EPM, BI and ERP applications.


Standardize business intelligence (BI) tools.  Most large organizations have a variety of BI tools and data delivery systems and processes being utilized across different departments, business units and functions.  This often leads to different versions of the truth, duplication of effort, and higher support costs for IT.  Organizations like Presider and Home Credit Group that are standardizing BI tools and information delivery are able to improve user productivity, ensure more consistency in decision-making, and reduce costs of ownership and maintenance for IT.


Last but not least – go mobile!   Don’t be left behind – Gartner predicts that 33% of BI will be consumed on mobile devices by 2013.   Most of today’s BI tools provide support for deployment on today’s popular mobile devices.  Think about the mobile road warriors are in your business who can most benefit from having management dashboards and key metrics delivered to them anytime, anywhere to improve decision-making and customer service.


I hope these resolution suggestions give you some ideas to think about for your organization.  Best wishes for the holidays and continued success in 2012!

Wednesday Nov 09, 2011

What's New with XBRL?

The answer is – quite a bit!  Over the past 2 months I had the chance to attend and speak at the XBRL US Conference in Nashville, as well as the XBRL International Conference in Montreal.  The adoption of XBRL as an electronic standard for business communications is accelerating around the world, with many companies adopting it for financial reporting and many new projects underway.  Here are the highlights and key points I took away from the two conferences.


XBRL US Conference – The XBRL US National Conference for 2011 was held in Nashville September 26 – 27th at the Gaylord Opryland Resort.  The conference had about 300 attendees, roughly half of which were accounting/finance staff from corporate filers, and the rest representing vendors, consultants and service providers.  Before the conference started, XBRL US held its Committee and General Members meetings.  The conference agenda included general sessions with keynotes and panel discussions on various topics, as well as XBRL Essentials Training sessions for corporate filers.


Some of the highlights from general sessions included:



  • Public Company Viewpoint – Frank Brod – Chief Accounting Officer, Microsoft

  • Regulatory Viewpoint - Mike Starr - Deputy Chief Accountant, US SEC

  • XBRL Panel:  Beyond the SEC - Corporate Use of XBRL to Communicate with Other Regulators, Industry Groups and Other Stakeholders

  • XBRL Panel:  Investor Communications

  • Corporate Competitive Analysis Panel

  • Corporate Actions Panel


Key takeaways from the sessions included:


By integrating XBRL with the financial close process, Microsoft reduced the reporting cycle – released earnings sooner, 10Q on day 20, late changes to filings are supported through in-house projects.  Microsoft filings posted in HTML on Investor Relations site, with XBRL data source  


The US SEC says there will be 6500 active filers by the end of 2011, 8300 when all are phased in.  Foreign filers are waiting on the IFRS taxonomy to be approved – SEC anticipates approval of IFRS taxonomy in first half 2012.  Concerns:  detailed tagging, concurrent filings, capacity.  Benefits:  easier analysis, identify outliers, easier to consume disclosures, more software licenses.  Trends:  costs will drop, in-house tagging will increase, more authoring and consumption tools, industry group standards, clearer disclosures.  Expectation that industry extensions and disclosure formats will standardize over time.


XBRL has made it easier for regulators like the FDIC to consume and analyze bank filings.  Easier for the banks to file since XBRL handles many calculations


Corporate filers expect to see more benefits when XBRL can be used to file with multiple agencies/regulators.  In other countries, Standardized Business Reporting (SBR) efforts are yielding results with multiple agencies either mandating XBRL or accepting on a voluntary basis – i.e. Australia, Belgium etc.


Aggregators are using XBRL data – massaging to provide consistency across companies, analysts and investors starting to leverage XBRL data directly and from aggregators.  Some concerns about data consistency with extensions.  Tagging of earnings press releases would be helpful to investors and analysts.  Industry taxonomies will help improve comparability.


XBRL Essentials Training classes included:



  • Essentials Basics:  Seleting the Right Tag

  • Essentials Basics:  Checking Your Work

  • Essentials Basics:  Managing the Process

  • Essentials Basics:  XBRL Controls Process

  • Essentials Advanced:  Getting into the Details – With Detailed Footnote Tagging

  • Essentials Advanced:  Outsource vs. In-House XBRL Creation

  • Essentials Advanced:  Crossing the Finish Line – Process, Timing and Quality Control

  • Essentials Advanced:  What Comes Next:  Transitioning to a New Taxonomy Release


This conference has grown substantially over the past few years and now has a critical mass of corporate filers who are attending to get information on XBRL and attend the XBRL Essentials training.  Here’s a link to videos of the keynotes, and copies of all of the presentation and training materials:


http://xbrl.us/events/Pages/natconf2011/schedule.aspx


XBRL International Conference - The XBRL23 International Conference was held in Montreal, Canada October 25 – 27th at the Le Sheraton Centre.  The theme for the conference was “Enhancing Business Performance”.  The conference had about 300 attendees, including regulators, banks, agencies, and XBRL practitioners from the US, Canada, Europe and Asia. 


The conference started with the XBRL International Committee meetings on Monday, then conference sessions and exhibits Tuesday through Thursday.      Here are some of the session highlights:



  • The State of XBRL International

  • Roadmap to XBRL Adoption in Canada

  • UAE:  Securities and Commodities Authority Implementation Project

  • IFRS Convergence in Canada and the IFRS Taxonomy

  • The Implications of XBRL for Financial Statement Audit

  • Update on XBRL Activities at the IASB and IFRS Foundation

  • Risk, OCEG, GRC-XML, Solvency II

  • Launch of the XBRL Abstract Model as Public Working Draft

  • Standard Business Reporting:  SBR and IFRS

  • Deeper XBRL – XBRL’s Global Ledger Framework

  • Climate Change Reporting Taxonomy – Towards Integrated Reporting

  • Improving the Usefulness and Relevance of XBRL-Tagged Data

  • The Evolution to Integrated Reporting

  • First Canadian end-to-end XBRL Implementation – Deposit Insurance Corp.

  • Corporate Actions Project Panel

  • Insurance Project:  Bermuda Monetary Authority Case Study – including Solvency II

  • Global Reporting Initiative Taxonomy

  • Tax Project:  Creation and filing of Inline XBRL in the UK

  • Integrated Reporting in South Africa

  • US GAAP Taxonomy Project:  FASB Best Practices


As you can see from the session list above, there are many different XBRL projects underway around the world, and some of them overlap – i.e. Climate Change Taxonomy vs. GRI Taxonomy for Sustainability Reporting.  There were a number of sessions on Integrated Reporting and how to combine financial statement information with non-financial data tagged in XBRL with different taxonomies.  A number of countries are moving forward with Standard Business Reporting (SBR) where multiple regulators are adopting the XBRL Standard (e.g. Belgium, Netherlands, Australia).   There is also growing interest in Solvency II with the EIOPA mandate (European Insurance Occupational Pensions Authority).


Here’s a link to the XBRL International web site where you can find additional information these global projects:  http://www.xbrl.org/


What’s Oracle up to regarding XBRL? 


Oracle is providing solutions to support both the production and consumption sides of XBRL.  On the production side, we provide Oracle Hyperion Disclosure Management and on the consumption side we have the XBRL Extension for Oracle Database 11g.  Information about these solutions can be found on the Oracle web site:


Oracle Hyperion Disclosure Management: http://www.oracle.com/us/solutions/ent-performance-bi/disclosure-management-065892.html


Oracle Database XBRL Extension:  http://www.oracle.com/technetwork/database/features/xmldb/index-087631.html


I hope this information is helpful – let me know if you have any comments or questions.

Thursday Oct 06, 2011

Integrating Sustainability Reporting With Financial Reporting

With drivers such as climate change, increasing energy costs, limited natural resources, and increasing stakeholder demand for more detailed disclosures regarding environmental and social initiatives - an increasing number of organizations are engaged in sustainability reporting.  In fact more than 2000 organizations have registered sustainability reports with the Global Reporting Initiative (GRI) through 2010, and more than 3000 organizations have submitted their information to the Carbon Disclosure Project (CDP).   


Related to this, on September 12, 2011 the International Integrated Reporting Committee issued a discussion paper titled “Towards Integrated Reporting – Communicating Value in the 21st Century”.  This discussion paper presents the rationale for Integrated Reporting, offering initial proposals for the development of an International Integrated Reporting Framework and outlining the next steps towards its creation and adoption.  The idea is that Integrated Reporting will provide more comprehensive and meaningful information about all aspects of an organization’s performance and position, and will demonstrate the links between an organization’s financial performance and the social, environmental and economic context within which it operates. This initiative is backed by the FASB, IASC, GRI, and major accounting firms.


Also related to this, on August 24, 2011 Ernst & Young issued a report citing the expanding role CFOs should play in sustainability reporting.  CFOs must now help communicate a robust sustainability story through the company’s investor relations, Ernst & Young says. “Work with your sustainability team to develop a sustainability story for your organization. If current trends continue, the CFO could be the one telling it,” the consultancy reports.  The report argues that institutional investors are starting to view financial and non-financial performance as two sides of the same coin, while credit-rating agencies such as Moody’s and Standard & Poor’s now want to know about companies’ sustainability practices. There are the more than 100 ratings, rankings and indices focused specifically on sustainability.  What’s more, shareholders are speaking out strongly on these issues.


So what is Oracle doing about this?  The good news is that Oracle has been working with customers and partners to deliver solutions designed to help our customers collect, consolidate and report environmental and sustainability information to internal and external stakeholders.    This week at OpenWorld 2011, Oracle announced a Sustainability Reporting Starter Kit for Oracle Hyperion Financial Management that provides customers and partners a jump-start towards delivering a corporate sustainability reporting application, using the same application that they use for financial reporting.    This application, which is being made available to customers free of charge via My Oracle Support, will enable existing customers to leverage their investments in Hyperion Financial Management to create a more repeatable and auditable process for consolidating and reporting environmental, social and economic metrics for their annual or quarterly sustainability reporting. 


Back in July of 2011, Oracle announced Oracle Environmental Accounting and Reporting (EA&R) for Oracle E-Business Suite and JD Edwards EnterpriseOne Financials.  Oracle EA&R enables organizations to track their greenhouse gas (GHG) emissions and other environmental data for both voluntary and legislated emissions reporting schemes. The solution manages this function from within the existing ERP system and utilizes Oracle Business Intelligence to provide immediate insight into an organization’s environmental data to identify and manage CO2 and cost reduction opportunities—providing a rapid return on investment-.  This is a great solution for existing Oracle E-Business Suite and JD Edwards EnterpriseOne customers who would like to extend the capabilities of their existing system to collect and report this information internally or externally.


And last year at OpenWorld 2010, Oracle announced Oracle Sustainability Sensor Data Management, which allows organizations to collect very granular energy usage information from sensors, meters and shop floor controllers that can be used to track, benchmark and manage energy usage across locations, buildings, and departments.


These announcements have been met with positive feedback from the market, and a number of customers are already leveraging them to better manage sustainability initiatives, reduce costs, meet regulatory requirements and improve stakeholder communications.  One of these customers, Telenor ASA, was recognized with an Eco-Innovation Award at OpenWorld 2011 based on their usage of Oracle Hyperion Financial Management for integrated financial and sustainability reporting.


To download the Sustainability Reporting Starter Kit for Hyperion Financial Management:  Logon to My Oracle Support , Select the Patches & Updates tab, Enter patch 13036326 and Search, Select and Download the patch.  The downloaded file name will be p13036326_111130_WINNT.zip


For more information, check out the following resources:


Press Release - http://www.oracle.com/us/corporate/press/513393


Sustainability Reporting page on O.com – http://www.oracle.com/us/products/applications/green/risk-performance-management-304575.html#sustainabilityreporting

Thursday Jul 21, 2011

BI For Environmental Reporting

I’ve written before about the increasing use of EPM and BI tools for environmental and sustainability reporting.  As organizations outgrow spreadsheet approaches to collecting and reporting environmental metrics they are looking to software vendors for special purpose tools, or extensions of existing applications to bring rigor and control to this process. 


In response to this trend, Oracle recently released Oracle Environmental Accounting and Reporting (EA&R) for Oracle E-Business Suite and JD Edwards EnterpriseOne Financials.  Oracle EA&R enables organizations to track their greenhouse gas (GHG) emissions and other environmental data for both voluntary and legislated emissions reporting schemes. The solution manages this function from within the existing ERP system and utilizes Oracle Business Intelligence to provide immediate insight into an organization’s environmental data to identify and manage CO2 and cost reduction opportunities—providing rapid ROI.


This will be a great solution for existing Oracle E-Business Suite and JD Edwards EnterpriseOne customers who would like to extend the capabilities of their existing system to collect and report this information internally or externally.  EA&R enables organizations to:


Automate Environmental Data Collection – by leveraging existing systems and business processes, with user access control and full audit trails, and multiple data entry options.



  • Calculate Greenhouse Gas Emissions - in accordance with the Greenhouse Gas Protocol, defining  emissions factors by source, and managing emissions factor changes over time

  • Analyze KPIs and Comply with Regulations – with pre-built analytics and dashboards, including for the Carbon Disclosure Project (CDP), custom KPI definition and ad hoc reporting, comparative analysis and benchmarking to drive energy savings


This new application is complementary to other solutions Oracle offers to help with environmental and sustainability reporting including Oracle Sustainability Sensor Data Management, for detailed data collection from utility meters and sensors as well as Oracle Hyperion Financial Management for corporate-level GRI reporting.


If you would like more information about Oracle Environmental Accounting and Reporting here’s a link to the press release as well as OEA&R page on Oracle’s web site:


http://www.oracle.com/us/corporate/press/432571


http://www.oracle.com/us/products/applications/green/accounting-reporting-410442.html


Here’s a link to the Sustainability solutions pages on O.com:  www.oracle.com/green

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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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