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

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!

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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