Utililizing Key Aspects Of Oracle Essbase To Run Finance In Sixth Gear


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Examples of using Essbase to solve large number crunching needs.

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  • Utililizing Key Aspects Of Oracle Essbase To Run Finance In Sixth Gear

    1. 1. Session #2071A —Hyperion Essbase at AT&T Long Distance: Utilizing Key Aspects to Run Finance in Sixth Gear Curtis Neumann, CPA Associate Director, Financial Planning & Analysis AT&T Long Distance
    2. 2. Agenda <ul><li>Introduction </li></ul><ul><li>Company profile </li></ul><ul><li>Business case </li></ul><ul><li>Business Performance Management requirements </li></ul><ul><li>Solution – first to sixth gear </li></ul><ul><li>Results </li></ul><ul><li>Important success factors </li></ul><ul><li>Questions and answers </li></ul>
    3. 3. Introduction <ul><li>Responsible for Business Performance Management processes </li></ul><ul><ul><li>Monthly financial reporting of profit and cost center results </li></ul></ul><ul><ul><li>Annual profit and cost center financial planning process </li></ul></ul><ul><ul><li>Customer and geographic studies for monitoring of divisional strategies </li></ul></ul><ul><ul><li>Quarterly regulatory reporting </li></ul></ul><ul><ul><li>Product and regional profitability studies </li></ul></ul><ul><ul><li>Net Present Value, IRR analysis, M&A, and business valuation </li></ul></ul><ul><ul><li>Ad hoc reporting </li></ul></ul>Curtis Neumann – Associate Director, Financial Planning & Analysis
    4. 4. AT&T Long Distance Division Profile <ul><li>In 2000, this division began as a “Start-Up” of SBC Communications Inc., and was called SBC Long Distance </li></ul><ul><li>SBC Long Distance Mission: </li></ul><ul><ul><li>Its initial strategy was to gain long distance customer market share by adding long distance voice and data products to SBC’s existing portfolio of telephony products </li></ul></ul><ul><ul><li>Result of the 1996 Telecom Act </li></ul></ul><ul><li>Business launched in mid 2000, and grew revenue to several billion and 21 million customers within five years </li></ul><ul><li>At the end of 2005, AT&T and SBC Communications merged and named itself AT&T. SBC Long Distance became a division of AT&T. Division headquartered in Pleasanton, California </li></ul>
    5. 5. Business Case
    6. 6. <ul><li>An Oracle general ledger with access to account balances via a browser tool </li></ul><ul><li>Plan data stored in Excel that linked with financial data exported from Oracle to create variance analyses </li></ul><ul><li>A manual Excel calculation of cost of goods sold (COGS) based on prior month vendor invoicing (Wiltel carries SBC Long Distance traffic and presents an invoice two weeks after the month-end close) </li></ul><ul><li>A weekly reporting of new customer counts prepared manually in Excel </li></ul><ul><li>Billing system data stored in an Teradata Electronic Data Warehouse (EDW) </li></ul>Business Case Business Performance Management History: A Start-Up before Hyperion Essbase, SBC Long Distance had:
    7. 7. <ul><li>Oracle general ledger browser reporting shortcomings </li></ul><ul><ul><li>No flexible income statement trend </li></ul></ul><ul><ul><li>IT Oracle report changes were slow </li></ul></ul><ul><ul><li>Report subtotals could not be “drilled” to lower account levels </li></ul></ul><ul><ul><li>No ability to run ad hoc analysis </li></ul></ul><ul><ul><li>No plan data to calculate actual verses plan variances </li></ul></ul><ul><li>Plan data stored in Excel had limitations </li></ul><ul><ul><li>No central repository for data </li></ul></ul><ul><ul><li>Consistency problems amongst disparate files </li></ul></ul><ul><ul><li>No automatic data rollup </li></ul></ul><ul><ul><li>Lack of automatic refresh ability </li></ul></ul><ul><ul><li>Lack of consistent assumptions across the business </li></ul></ul><ul><ul><li>Scalability and flexibility limitations </li></ul></ul>Business Case Resulting Challenges – Actual Results & Planning Process
    8. 8. <ul><li>Excel process to calculate cost of goods sold did not take into consideration current month traffic flows </li></ul><ul><ul><li>Cost of goods sold booked, based on prior month data, was off because the business was growing 10% to 20% per month </li></ul></ul><ul><ul><li>The accrual reversals and booking of actual invoices caused COGS to fluctuate wildly month over month </li></ul></ul><ul><li>Weekly reporting of new customer counts prepared manually in Excel was prone to spreadsheet errors </li></ul><ul><li>Business Objects (BO) was used to query the EDW system </li></ul><ul><ul><li>BO queries were slow, had to be exported to Excel and then converted to pivot tables </li></ul></ul><ul><ul><li>Process was labor intensive </li></ul></ul><ul><ul><li>No central repository for data </li></ul></ul>Business Case (continued) Resulting Challenges – COGS & Sales Reporting
    9. 9. Business Performance Management Requirements
    10. 10. Business Performance Management Requirements <ul><li>Users needed single repository for monthly financial results that could immediately improve reporting flexibility and provide performance visibility to lower levels of detail </li></ul><ul><li>Financial analysts needed to create and modify their own ad hoc reports, customizing them to their particular responsibility areas </li></ul><ul><li>The business needed a “single version of the truth” </li></ul><ul><li>The finance group needed a process to control planning consistency across cost centers and provide adherence to planning assumptions </li></ul><ul><li>The solution needed to be easily scalable and flexible to improve productivity, while maintaining data accuracy </li></ul>“ One Stop Shop” needed for monthly financial reporting and analysis
    11. 11. Business Performance Management Requirements (continued) <ul><li>To improve accrual accuracy, Accounting required an automated standard costing solution to calculate the approximate COGS within 1% of the monthly vendor bill, with the capability to </li></ul><ul><ul><li>Load thousands of input data points at multiple dimensions </li></ul></ul><ul><ul><li>Perform cost accrual computations, including averaging, multidimensional allocation and other math calculations, in a reliable sequential process to finally calculate costs (= average cost per min. x number of allocated network minutes) </li></ul></ul><ul><ul><li>Be repeatable every month, and be rerun quickly if source data was bad </li></ul></ul><ul><ul><li>Run the process end-to-end over a three-hour duration on the first workday of each month </li></ul></ul>Excel by itself was not suited for large amounts of input
    12. 12. Business Performance Management Requirements (continued) <ul><li>Financial analysts needed to have access to aggregated customer billing records to understand business trends and be able to model from that operational information </li></ul><ul><ul><li>Customer revenue by various dimensional slices </li></ul></ul><ul><li>Corporate development needed data for strategic initiatives </li></ul><ul><ul><li>Geographic data to isolate lower performing cities </li></ul></ul>Operational data access was needed to help explain financial results
    13. 13. Solution – First to Sixth Gear
    14. 14. Solution – First to Sixth Gear <ul><li>Most important was that it had features and functionality the business needed </li></ul><ul><li>Used Hyperion Essbase in other positions and had good experiences with it </li></ul><ul><li>Hyperion Essbase had a long history of customer acceptance and Hyperion was committed to continued Business Performance Management excellence and market leadership </li></ul><ul><li>For the end user, the Hyperion Essbase add-in could be incorporated into existing spreadsheets, and it was easy to learn </li></ul><ul><ul><li>No more massive pivot tables which had inherent risks </li></ul></ul><ul><li>Security was robust, but simple to maintain </li></ul><ul><li>Last but not least, I didn’t need IT’s help to install or maintain the software (Hurrah) </li></ul>Hyperion Essbase selected as best alternative in 2000
    15. 15. Evolution of Hyperion Essbase 7.X – First to Sixth Gear * MDX = MultiDimensional expressions Solution – First to Sixth Gear (continued) Development Year Complexity & Value 2000 2006 Operational Financial 5 th Gear: Essbase Integration Services 4 th Gear: Aggregate storage cubes for customer and geographic analysis 6 th Gear: MDX* Queries 5 th Gear: Hyperion Essbase Integration Services 3rd Gear: Partitioning of data between block storage cubes 2nd Gear: Calculation scripts to write back to block storage cube 1st Gear: Basic Rollup Reporting Cube – General ledger data along with plan data
    16. 16. Solution – First to Sixth Gear (continued) <ul><li>First developed general ledger and plan rollup master cube (orange) </li></ul><ul><ul><li>Plans compiled with standard spreadsheet templates </li></ul></ul><ul><ul><li>Tip: To control cube sparsity, minimize member redundancy from ERP sources </li></ul></ul><ul><ul><li>As Master cube got too large, performance degraded and monthly calculation time increased to 1 hour </li></ul></ul><ul><li>So, created new close cube (dark blue) with parent plan data partitioned from master cube </li></ul><ul><ul><li>Used Replicated Partitioning </li></ul></ul><ul><ul><li>Close cube calculates in 20 minutes for a 66% improvement </li></ul></ul><ul><ul><li>Excel retrievals much faster </li></ul></ul>1st gear: Basic Rollup Cubes & 3rd gear: Partitioning Fast
    17. 17. Solution – First to Sixth Gear (continued) <ul><li>How many of you are aware of Finance organizations that use multiple linked spread-sheets to calculate? </li></ul><ul><li>Costs per widget </li></ul><ul><li>Revenue per widget </li></ul><ul><li>Expense per headcount </li></ul><ul><li>Or any other kind of metric </li></ul><ul><li>What you see to the right is </li></ul><ul><li>just the inter-spreadsheet </li></ul><ul><li>part </li></ul>2nd gear: Calculation scripts & 3rd gear: Partitioning
    18. 18. Solution – First to Sixth Gear (continued) <ul><li>This spreadsheet represented only one region or 20% of the cost per minute calculation </li></ul><ul><li>Several hundred pivots </li></ul><ul><li>200 columns </li></ul><ul><li>1000 rows </li></ul><ul><li>Links = 9.9 x 10 ? </li></ul><ul><li>Incredible amounts of work to add products, etc. </li></ul><ul><li>What would be a better solution? </li></ul>2nd gear: Calculation scripts & 3rd gear: Partitioning
    19. 19. Solution – First to Sixth Gear (continued) <ul><li>In addition to its uses for planning and reporting, Hyperion Essbase is a great number-crunching machine </li></ul><ul><ul><li>Tip: Don’t try to perform all calculations in one cube </li></ul></ul><ul><ul><li>Used replicated partitions to copy relevant calculated numbers to the main cube (dark grey) </li></ul></ul><ul><ul><li>Took advantage Hyperion Essbase robust calculation function library </li></ul></ul><ul><li>Benefits </li></ul><ul><ul><li>Efficient & accurate </li></ul></ul><ul><ul><li>Manageable process </li></ul></ul><ul><ul><li>Can run parts in minutes or the whole application in < 1 hour </li></ul></ul>2nd gear: Calculation scripts & 3rd gear: Partitioning
    20. 20. Solution – First to Sixth Gear (continued) <ul><li>Enterprise customer cube reports yield from largest business customers </li></ul><ul><li>Hyperion Essbase 7.X Aggregate Storage is a powerful alternative to relational reporting practices </li></ul><ul><li>Benefits </li></ul><ul><ul><li>Lots of dimensions </li></ul></ul><ul><ul><li>Quick loading </li></ul></ul><ul><ul><li>Fast materialization </li></ul></ul><ul><ul><li>Lightening fast retrieval </li></ul></ul>4th gear: Essbase Aggregate Storage for customer analysis
    21. 21. Solution – First to Sixth Gear (continued) <ul><li>Wirecenter cube shows product revenue trends by region, state or city </li></ul><ul><li>Tips </li></ul><ul><ul><li>Hyperion Essbase Integration Services allows for automatic outline updates and data loading </li></ul></ul><ul><ul><li>MDX a better alternative to using Excel and drilling to level -0-, because Excel cannot drill down on and display very large outlines </li></ul></ul>4th gear: Hyperion Essbase Aggregate Storage - geographic analysis
    22. 22. Solution – First to Sixth Gear (continued) <ul><li>As operational data gathering and the number of cubes increased, Hyperion Essbase Integration Services was launched </li></ul><ul><ul><li>It facilitates outline maintenance and data loading by connecting directly to SQL server tables </li></ul></ul><ul><li>Benefits </li></ul><ul><ul><li>Allows cubes to be created very quickly from relational tables </li></ul></ul><ul><ul><li>Ideal for Aggregate Storage cubes that have very large outlines and millions of records to load </li></ul></ul>5th gear: Hyperion Essbase Integration Services <ul><li>Tips </li></ul><ul><ul><li>Aggregate detail transaction data onto a staging server, like SQL server first </li></ul></ul><ul><ul><li>The parent/child recursive hierarchy works best </li></ul></ul>
    23. 23. Solution – First to Sixth Gear (continued) <ul><li>MDX is ideal for use to extract data from aggregate storage cubes </li></ul><ul><ul><li>Excel is unable to zoom in on large dimensions (not enough rows) </li></ul></ul><ul><ul><li>Can apply criteria to filter data similar to SQL </li></ul></ul><ul><li>Tips </li></ul><ul><ul><li>Run in MAXL Shell </li></ul></ul><ul><ul><li>Use a text editor to prep output for Excel </li></ul></ul><ul><ul><li>Better to have a quad processor server for better performance </li></ul></ul>6th gear: MDX Queries
    24. 24. Results & Success Factors
    25. 25. Results <ul><li>Hyperion Essbase 7.X has provided AT&T Long Distance with huge productivity gains in financial and operational reporting, planning, and analysis </li></ul><ul><li>Since the software is relatively easy to use, a simple cube can be created the same day the software is installed </li></ul><ul><li>Hyperion Essbase is very functional, flexible, scaleable, and customizable to the point of replacing dozens of spreadsheets </li></ul><ul><li>Can be deployed on a modular basis </li></ul><ul><ul><li>First, financial reporting implementation is “low-hanging fruit” (1 st – 3 rd gears) </li></ul></ul><ul><ul><li>Then, replace spreadsheet intensive financial planning / modeling (2 nd – 3 rd gears) </li></ul></ul><ul><ul><li>Lastly, integrate with relational sources to bring operational reporting into the fold (4 th – 6 th gears) </li></ul></ul>
    26. 26. Success Triangle Results Processes Relationships Success Factors
    27. 27. <ul><li>Most important factors </li></ul><ul><ul><li>Sponsorship from CFO and/or leadership – give him/her access </li></ul></ul><ul><ul><li>Personally feel confident about change </li></ul></ul><ul><ul><li>Communicate effectively to user community, attempting to gain as much support as possible </li></ul></ul><ul><ul><li>Insure IT is on board and understand its role </li></ul></ul><ul><li>Attack “low-hanging fruit” first </li></ul><ul><ul><li>Roll out some cubes that will create immediate value for the Finance organization </li></ul></ul><ul><ul><li>Create leverage from those that understand value of best-in-class financial software tools </li></ul></ul><ul><ul><li>Continue rolling out new applications to help users </li></ul></ul><ul><li>Continue to innovate </li></ul><ul><ul><li>Upgrade as often as possible to gain access to new functionality </li></ul></ul>Success Factors (continued)
    28. 28. Questions and Answers ?
    29. 29. Session #2071A —Hyperion Essbase at AT&T: Utilizing Key Aspects to Run Finance in Sixth Gear Curtis Neumann, CPA Associate Director – FP&A, AT&T Long Distance Contact Info: [email_address] or 925.548.7161 Please Complete Your Session Evaluation