a user-driven performance management application thatopnpublic/documents/webcon… · • a...

© 2008 Oracle Corporation

Hyperion Profitability and Cost Management

• A user-driven Performance Management application that

• Measures, allocates and assigns Cost and Revenues

• Computes Profitability for business segments, customers and products

• Provides scenario modeling for decision making

• Is tightly integrated with EPM System• Metadata and Master Data

• Data

• Technology Stack


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Profitability and Cost Management

Business PainsEPM

Overview

High Yield Questions

Business Pains

Customer Story

Benefits by Role

The Solution


Key Challenges Addressed by HPCM

Profitability disconnect from management systems

Profitability applications are generally in their own silo, reporting oriented, generally disconnected from performance management systems today, predominantly operationally oriented

Methodology Dependence

Profitability implementations must follow one of the allocation methodologies inherently supported by the product

High TCO for Modeling Profitability

Model development is IT responsibility, a major ETL project, requires knowledge of underlying infrastructure, difficult to maintain and enhance




High Yield QuestionsEPM

Overview


Business Pains

Customer Story

Benefits by Role

The Solution



• What challenges do you have in the process of determining profitability today?

• What traceability mechanism do you have in place?

• Can you see the impact of cost/profitability metrics on your financial performance?

• What software tools are used for the process of determining profitability?

• What requirements do you have from users?

• Do you feed profitability metrics back into your budgeting and forecasting systems? If yes, how do you do this? If no, would you like to?

• How do you measure and track costs?

• How do you create, maintain, share and secure cost allocations? What is your level of confidence in the accuracy of your cost allocations for driving the cost/profitability model?

• What are your current modeling and scenario-playing capabilities?

• What is the proportion of time spent on process versus reporting?

• To what level of detail do you currently calculate costs and/or profitability? Are you satisfied with this level of detail?

CFO

CIO

FP&A




The Solution – Proof – Benefit EPM

Overview


Business Pains

Customer Story

Benefits by Role

The Solution


Empower Users with Visibility and Flexibility

• Accurately allocate costs with a flexible allocation engine that supports any methodology

• Gain confidence in cost allocations and revenue flows with graphical traceability maps

• Quickly validate models with user-defined business rules


Allocation Methodology Independent

• Support for any allocation methodology • Cascading service department allocations

• Activity-Based Costing, including time estimation

• Revenue sharing & promotions allocations

• Broad industry appeal

• Open design environment supports commercial industries as well as public sector implementations

70


Designed for the Business User

• User defined allocation stages• Accounts, cost centers, products,

activities, customers, platform, channel, sales group….unlimited choices

• User defined dimensionality• Time, account descriptors,

scenarios, attributes…et al

• User defined allocation formula

• Seven standard methods

• Custom built methods, custom formula, conditional…


Reducing High TCO for Modeling Profitability

• Designed for the business user

• End-user driven Profitability model development and maintenance

• User defined allocation stages

• User defined dimensionality

• User defined allocation formula

• Unified Environment To Create and Manage EPM Business Rules

• Visualization for data lineage, allocations, calculations

• Extensible leveraging the industry’s leading OLAP engine, Essbase


• Business Problem

• Determining the optimal mix of interest-sensitive financial products to maximize bank profitability

• Solution

• Accurate cost allocations for all activities related to development, marketing, sales and servicing of financial products

• Projected Benefits

• Ability to offer a basket of products by mixing and matching products according to customer demographics

• Benchmarking costs for developing and marketing new products

73

• Regional bank serving 19 Western and Midwestern states

• Serving 4 million households

• $61B in assets

• 700 retail and commercial locations

• 10,700 employees

• #1 RV lender in US

• #3 Agricultural bank lender


Gain Actionable Insights into Costs and Profitability

Benefits

Discover Drivers of Costs and Profitability

• Identify sources and attributes of profitability with multidimensional analysis

• Improve decisions with scenario modeling capabilities• Enable management best practices by leveraging profitability as

a performance metric

Empower Users with Visibility and Flexibility

• Accurately allocate costs with our flexible allocation engine that supports any methodology

• Gain confidence into cost allocations and revenue flows with graphical traceability maps

• Quickly validate models with user-defined business rules

Improve Resource Alignment

• Impact budgets and plans through integration with other performance management applications

• Strategically allocate resources with accurate profitability andcost information

• Improve marketing programs through customer segmentation


Questions & Discussion


Financial Consolidations & Reporting



Consolidations

OverviewEPM

Overview


Business Pains

Customer Story

Benefits by Role

The Solution


Oracle’s Hyperion Financial Management

• Confidence in the numbers – One integrated solution (FDM+ HFM) for all data improving processing time and accuracy with complete audit trails and validation processes

• Decrease cost of Compliance – Financial Management with a flexible workflow, process control, ICT, commentaries and electronic questionnaires help organizations to focus on value added tasks

• Speed and agility – Improve the close cycle by days with Finance owned workspace, a centralized DB and the benefits of EPM Architect to implement and maintain the application with confidence and rapidity



Consolidations

Business PainsEPM

Overview


Business Pains

Customer Story

Benefits by Role

The Solution


Collect data Close AdjustmentsCurrency

I/CSubsidiaries

ReportManagement

LegalExternal

Analyze

6 Days 12 DaysAverage

Source: Hackett Group Benchmarking -Solutions Book of Numbers

Collect Close Adjustment Report Analyze and Forecast

<2 Days 6 DaysWorld Class

More time!

The Financial Consolidation Challenge

Reporting Goal: High Value While Reducing Cycle Times



Consolidations

High Yield QuestionsEPM

Overview


Business Pains

Customer Story

Benefits by Role

The Solution



• How long is your consolidation process? Do you have the confidence you should in your financial close?

• How are updates controlled?

• How do you track the close?

• Do you have a clear audit trail from data sources to reports?

• How do you handle supplementary information?

• How do you handle the following for financial consolidation and reporting?

• How do you manage your financial data quality?

• How do you comply with IAS, and local statutory?

• How do you control the close?

• Are duties segregated for financial reporting?

• How do you monitor compliance over the financial reporting process?

CFO

CIO

Dir. Accounting

Dir. Finance


Roles concerned

Accounting Dept-VP Accounting

- Controller

- Director or Manager of Accounting

- Accounting Analyst

Finance Dept- VP Finance

- Director of Finance

- Manager of Financial Planning & Analysis (FP&A)

- Budget Manager

- Financial Analyst

Treasury Dept- Treasurer

- VP or Director of Mergers & Acquisitions (M&A)

- VP or Director of Strategic Planning

- Director of Investor Relations

CFO



Consolidations

The Solution EPM

Overview


Business Pains

Customer Story

Benefits by Role

The Solution


Hyperion

Financial

Management

HyperionFinancial

Data QualityManagement

XBRL/SECFinancial and Mgmt.

Reporting

ERP: Oracle, SAP,

Legacy, Other

Infrastructure Services

TaxFiling

Oracle GRC Manager

Reconciliations

CFO Dashboard

TaxCalculations

Transactions

Oracle/Hyperion Partner

CFO

CIO

Reporting

Application Configuration Controls Application Access Controls

Hyperion Financial Management – the Heart of

Financial Reporting Compliance


• Data cleansing and transformation

• Task scheduling

• Text and document archive

• Audit review

• Data staging

EPM Adapters

• Prepackaged integration

• Data loading including supplemental data, line item detail

• Dimensional mapping verification

• Process management

• Excel• G/L• ERP

• Flat files

• ETL Repositories

• Oracle Hyperion EPM

• Financial Management

• Planning

• Essbase Analytics

• Oracle Hyperion Enterprise

• Data Marts

Source Systems

Data Preparation

Server

EPM Systems

Guided Workflow User Interface

Financial Data Quality Management



Consolidations

Proof – Benefit EPM

Overview


Business Pains

Customer Story

Benefits by Role

The Solution


First to Report on the Dow Jones Hyperion Financial Management

• 12+ days to close

• Many analytical technologies

• Complex reporting and forecasting

processes

• Hours to create reports

Before

• 5 days to close

• Global consolidation across 58

lines of business

• Global forecasting and reporting

solution for 1,000+ users

• Minutes to access information

After

The world’s leading producer of primary aluminum with $23.5 billion in revenues with operations in 43 countries and 350 locations. Alcoa has over 131,000 employees.


Financial Reporting Challenges Solved…

Changing Disclosures

Complex Financial Closing

Inconsistent Account Structure

Financial Data Collection Errors

Inefficient Filing Process

ROI

CUSTOMER CHALLENGES

Sustainable Reporting; 150 KPI’s

5 Days; 585 Legal Entities; 45 BU’s

10 Systems; Reduced by 50%

26 Countries

17% Productivity Gain in 10-Q’s

67% with 1.5 Year Payback

RESULTS WITH ORACLE


Public Sector & Healthcare

Com. Media& Utilities

ManufactureRetail

Life Sciences

Services, Transport &

Constructions

FinancialServices

SMB

Financial Consolidation + 4,000 Customers :

EDF


Demo 3 - HFM


Essbase


Essbase:

“The multi-dimensional database technology that put online analytical processing (OLAP) on the business intelligence map. Developed by Arbor Software, it spurred the creation of scores of rival OLAP products - and billions of OLAP cubes”

Information Age MagazineAugust 2005

Top Ten Most Influential Technology Innovations


Oracle’s Hyperion Essbase: What-if and Scenario Modeling Server

The OLAP (Online Analytical Processing) serverthat provides an environment for rapidly developing custom analytic and enterprise performance management applications


Oracle Hyperion EssbaseEmbedded Analytics Improve Accuracy and Predictability

• Multi-user read/write

• Support for large user communities and large analytic data sets

• Built-in financial intelligence

• Built-in time series intelligence

• 250+ built-in functions for computational functions

• Integrated predictive analytics

• Optimized storage


Performance Management Needs Both a BI Server and Modeling Server

COMMON ENTERPRISE INFORMATION MODEL

WORKSPACE

Intelligent Request Generation and Optimized Data Access Services

Advanced calculation & integration engine

Analytical Modelling & Exploration, Designed by Business Analysts

Responsive to Changing Business Needs

Integrated Security, User Management, Personalization.Mission critical scalability and performance

KPIs DIMENSIONS HIERARCHIES

BI SERVER OLAP SERVER


9/11 Crisis in the Airline IndustrySouthwest Airlines Adapts

Before

� Determine how long cash balances of $1 billion would last –immediately

� Develop capital spending plans and 15 month rolling forecasts in 1 day

� Create business cockpits for executives and other functional areas to track key metrics

83 million passengers a year

63 destinations

3300 flights a day

After

� Ability to forecast within 2% of outcome, providing top-bottom and bottom-top analysis

� Analysis provided comfort level (no employees laid off; no need for government funding)

� Finance moved to spending 10% accumulating data and 90% analyzing (75% / 25% before)


Proven Scalability @

• The “Cube”

• 35 minutes

• 12 dimensions

• Business Case

• Relational Model

• Allocations to 14M accounts

• 5m to 5h Response

• Server

• AIX (32bit)

• 8 CPUs

• 8GB RAM (4Gb addressable)

• Disk

• From… 1.0TB (Oracle DB)

• To… 1.4GB (Essbase)

0.2 Second Response

Customer Level Profitability

1,000 Concurrent Queries


Copyright © 2008, Oracle and/or its affiliates. All rights reserved.

9

Hyperion Essbase CustomersS

trate

gic

Ope

rational

Tactical

Sales &Marketing

Development& Delivery

HumanResource

Information Technology

Finance& Audit

Executive &General Mgt


Why Essbase?

Richest Business User

Experience

• Superior Tools for the Business User

• Broadest Analytic Functionality

• “Speed of Thought” Response

Most Highly Advanced Calculation Engine

Best Custom Analytic

Environment

• Superior Calculation Power

• Comprehensive Library of Functions

• Extensive Financial and Time Intelligence

• Optimized Storage

• Enterprise Scale Forward Looking Applications

• Premium Performance


Demo 4 - Essbase


Competitive Differentiators



EPM SYSTEM ArchitectureCompetitive Differentiators

� Workspace

� MS Office integration

� EPM Architect & Calculation Manager

� Master Data Management

� Essbase

� Oracle BI Applications

� SmartSpace


• Single sign on

• Planning and HFM process integration

• User interface filtered by security

• Tabbed view of content

• One place for applications, reporting and administrative content

EPM WorkspaceIntegrates Management Processes into a Common Environment


Microsoft Office IntegrationThe Management Process Brought to Office

EXCEL-BASED DASHBOARDS

NATIVE POWERPOINT CHARTS


EPM Architect Allow You to CentrallyManage and Synchronize EPM Applications


Calculation Manager

• Three main sections of Rule Designer

• Top right: Flow Chart representation of calculation process flow

• Left pane: Object Palette - Drag and drop new or shared objects from palette to flow chart

• Bottom right: Property or formula tab for the selected object on the flow chart

Drag & drop new calculation components

Drag & drop existing components

Graphical rule flow chart


The Business Value of Master Data Management

• Faster Application Deployments

• Consistency – A Single Version of the Truth

• Enterprise MDM – Financial and Analytical

• Cost Savings – 50% to 70% maintenance & productivity improvements

• Agility – ability to respond to change

• Accountability and better decision making


BudgetingBudgeting

Oracle Enterprise Master Data ManagementThe most complete MDM solution in the market today

Data Governance & Compliance

Oracle Fusion Middleware

Analytical MDM AppsAnalytical MDM Apps

Operational MDM AppsOperational MDM AppsOperationalSystems

AnalyticalSystems

Custo

mer

Custo

mer

Supplie

rS

upplie

r

OracleProduct Hub

OracleProduct Hub

Fin

ancia

lF

inancia

l

Oracle / Hyperion Data Relationship Management

Oracle / Hyperion Data Relationship Management

OracleCustomer Hub

OracleCustomer Hub

EBSEBS

SiebelSiebel

SAPSAP

Custom AppsCustom Apps

ExternalApps

ExternalApps

DWDW

BI &DatamartsBI &Datamarts

PlanningPlanning

Financial ConsolidationFinancial

ConsolidationP

roduct

Pro

duct

Analy

tical

Analy

tical

Application Integration Architecture

Hyperion Data Relationship Management (DRM)•Financial MDM (Ledger Hub)

– CoA– Cost Centers– Legal Entities

•Analytical MDM – Dimensions– Hierarchies– Reporting Structures – KPIs,

Metrics & Measures

•Complementary to CDI & PIM


EssbaseEssbaseAnalytic Services

Planning

CorpOracle

APACCustom

LATAMPeoplesoft

EMEASAP

ETLEAI

• Accounts• Entity• Project• Product• Location• Channel

DW

Analytic Applications

Hyperion DRM’s Solution

Hyperion DRM

• Collapse separate structures into a single maintenance structure

BusinessUser

• Streamline change management – one place to make changes, one structure to update

• Immediate feedback to business users to enforce system constraints, business rules

• Publish changes for each specific consuming system as needed, when needed


Powered by EssbaseEmbedded Analytics Improve Accuracy and Predictability

• Only multi-user read/write

• Support for large user communities and large analytic data sets

• Built-in financial intelligence

• Built-in time series intelligence

• 250+ built-in functions for computational functions

• Integrated predictive analytics

• Optimized storage


• Translates strategies into objectives to establish ownership and accountability

• Communicate goals and objectives to align an entire organization

• Tailor scorecards by individual or teams to increase adoption

• Monitor key performance indicators to track execution

Aligns Strategy with Execution for Performance Accountability

Hyperion Performance Scorecard


Drive Corporate Financial PerformanceOracle BI Applications

� Unable to achieve timely visibility into financial data for execs and managers

� Lack of data and information quality: Garbage in, Garbage out

� Time and effort to manually gather data from Excel spreadsheets and other data sources

Before

American Power Conversion (APC) is a $2 billion producer of uninterruptible power supplies. Deployed full “source to dashboard” Financial Analytics in matter of weeks on top of Oracle EBS, including GL, profitability, AR, and AP dashboards.

� Up-to-date, reliable source of financial truth for effective decision making

� Better visibility into business processes

� Ability to go from global view to detail view in 4 mouse clicks

� Proactively track and manage key drivers of revenue, cost, and shareholder value

After


Oracle EPM SmartSpaceBrings Management Processes to the Desktop



EPM SYSTEM ArchitectureCompetitive Differentiators

� Workspace

� MS Office integration

� EPM Architect & Calculation Manager

� Master Data Management

� Essbase

� Oracle BI Applications

� SmartSpace


Competitive Landscape


EPM Competition BEFORE Spring 2007

ERP & BIVendors

ApplicationSpecialists& Suites


EPM Competition AFTER Spring 2007

ERP & BIVendors

ApplicationSpecialists& Suites


The market today

SAPORACLE

IBMMICROSOFT

Hyperion BOBJOutlook

COGN

� The buying center is getting more diverse

� Strategic aspects will dominate over functional aspects

� EPM is the next ERP

Perf.Point


Gartner: Magic Quadrant for CPM Suites, 2008

The Magic Quadrant is copyrighted 19 December 2008 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

This Magic Quadrant graphic was published by Gartner, Inc. as part of a larger research note and should be evaluated in the context of the entire report. The Gartner report is available upon request from Oracle.

Source: Gartner, Inc., “Magic Quadrant for CPM Suites, 2008” by Nigel Rayner, Neil Chandler, John E. Van Decker, 19 December 2008.


Forrester Validation

Forrester uses the term business performance solutions (BPS) to refer to purpose-built applications used to plan, report, and measure business results


Oracle #1 in Financial Performance and Strategy Management Applications - IDC

Other

35%

SAS

6%

SAP/BOBJ

17%

Cognos/Applix

9%

Oracle

27%

Infor

6%

2006 Total Market: $1.76B2005-2006 Growth: 10.1%

2006 Pro Forma FPSM Apps Revenues2006 Pro Forma Market Shares

164

468

301

109

99SAS

Infor

COGN

SAP

ORCL

Source: IDC, 'Worldwide Financial Performance and Strategy Management

Software 2006 Vendor Shares‘, Oct 2007, Doc #209241

IDC counts software license and maintenance in their revenue estimates

IDC derives their numbers independently, without validation from Oracle


Questions & Discussion

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