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Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
The Power of Allocations for Profitability Analysis
Usin...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Agenda
•Introduction
•CFO Insights
•Why Profitability?
•...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
CFO Insights
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
What Are CFOs Thinking About Today?
The top three most p...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
What Are Some Of The Keys To Success for CFOs?
95% 89% 8...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
What Do The Most Profitable Finance Organizations Have B...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
What Are Our Clients’ Financial Organizations Doing To M...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Why Profitability?
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Detailed Costing Practices Are Needed To Stay In The Gam...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Yet, Many Companies Are Still Over-burdening Their Gener...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Measuring The True Profitability of Products, Services a...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Measuring The True Profitability of Products, Services a...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Approaches to Profitability
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Profitability as an Allocation
14
Typical Allocation Cal...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
There’s More To It Than That
15
Example: Customer Profit...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Technology Options
16
EBS
Essbase Stand Alone
Hyperion P...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Emtec’s Allocation Framework (EAF) – Purpose Built For F...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Using The Best Tools To Create A Profitability Solution
...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Putting It All Together = Success = Happy CFO
19
Emtec A...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Practical Considerations
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Some Things to Think About
21
Accuracy vs Precision
Do Y...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
73%
YEARS
47serving clients
OUR COMPANY
500dedicated
ass...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
An Exciting Year For Emtec… And Or Clients!
Vertical Foc...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
Emtec Services Align Well
with each stakeholder communit...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
For More Information About How Emtec and Oracle
Can Help...
Emtec, Inc. Proprietary & Confidential. All rights reserved 2015.
THANK YOU FOR YOUR TIME
Please visit us online at www.em...
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The Power of Allocations for Profitability Analysis - Using Financial Data to Improve Decision Making - Emtec, Inc.

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The Power of Allocations for Profitability Analysis - Using Financial Data to Improve Decision Making - Emtec, Inc.

  1. 1. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. The Power of Allocations for Profitability Analysis Using Financial Data to Improve Decision Making Presented by Bill Lowry, Emtec
  2. 2. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Agenda •Introduction •CFO Insights •Why Profitability? •Approaches to Profitability •Practical Considerations •How Emtec can Help •Q&A 2
  3. 3. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. CFO Insights
  4. 4. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. What Are CFOs Thinking About Today? The top three most pressing concerns for CFOs 1 Measuring and monitoring business performance 2 Providing inputs into enterprise strategy 3 Developing talent in the finance organization * Source: Forbes Magazine & IBM CFO Study Only 47% think they’re effective at measuring and managing performance CFOs are dubious about how well their own finance organization fulfills some of these duties 82% of CFOs see the value of integrating enterprise-wide information Only 24% think their team is up to the task 4
  5. 5. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. What Are Some Of The Keys To Success for CFOs? 95% 89% 85% Measure/monitor business performance Optimize planning, budgeting and forecasting Drive enterprise cost reduction “We need to have the right information, have it on time and invest the right amount of effort in interpreting it.” -- CFO, Industrial Products * Source: IBM CFO Study 5
  6. 6. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. What Do The Most Profitable Finance Organizations Have Beyond Efficient Operations? The ability to generate “Business Insight” These finance organizations are called “Value Integrators” They are on average 38% more profitable than other companies Value Integrators have high finance efficiency and high business insight Performance optimization Predictive insights Business decision making Enterprise risk management Value Integrator Finance operations focused Information provision Performance interpretation Disciplined Operator Analytics focused Sub-optimal execution Fragmented data Constrained Advisor Data recording Controllership Multiple versions of the truth Score Keeper How mature is you finance organization? Performance optimization Predictive insights Business decision making Enterprise risk management Value Integrators 6
  7. 7. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. What Are Our Clients’ Financial Organizations Doing To Move The Needle? Performance optimization Predictive insights Business decision making Enterprise risk management Value Integrators Performance Optimization Predictive Insights Business Decision Making Enterprise Risk Management Cost and Profitability Management Optimize Planning, Budgeting & forecasting Analytics Predictive Analytics Analytics Dashboards & KPI’sData Integration of Information across the Enterprise Financial Process Improvements Big Data Move From Just Focusing on Compliance to Focusing on Enterprise Risk Management Implementing Governance Data Transparency Data Mining Focused Analytics Team “Organizations are looking for actionable insights to optimize performance. At Emtec, we believe this can best be achieved by incenting the business owners by providing them with transparent analytics” Rich Reid Managing Director of Strategy & Innovation, Emtec 7
  8. 8. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Why Profitability?
  9. 9. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Detailed Costing Practices Are Needed To Stay In The Game Or Get Ahead 9 The desire to understand detailed costing practices has grown significantly this year. • 71% increase over last year in companies planning to cost individual customers this year • 133% more for invoices • 136% more for transactions The economic downturn gave rise to an intensive focus on cost control. And while growth has returned to its position of prominence on the finance agenda, detailed costing practices are needed to stay in the game or get ahead. Drilling down into more detailed costs is definitely on the minds of most. - Oracle study “EPM, Top Trends for 2015”
  10. 10. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Yet, Many Companies Are Still Over-burdening Their General Ledger With Management Reporting Calculations 10 Nearly 1/3 or more companies indicated they were calculating detailed costs inside of their GL, and as costing practices adopt even more detailed levels, this will not end well. The GL is not the right tool for developing and allocating granular costs – but many still do it. - Oracle study “EPM, Top Trends for 2015” Many of these organizations use profitability and cost management tools to develop multidimensional cost pools, activity rates, and unit costs as they develop P&L statements about individual subscribers, accounts, assets, projects, and orders. - Oracle study “EPM, Top Trends for 2015”
  11. 11. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Measuring The True Profitability of Products, Services and Customers What is the true cost of the products/services we are selling? FACT Most companies have trouble determining what their most profitable products or services are FACT Most reporting structures are not designed for managing profitability. For example, processes are not reflected in the GL FACT Companies are making decisions on partial information or the wrong information FACT Companies are having trouble incenting business units to reduce costs and improve service due to lack of transparency and proper allocations "Work mixed with management becomes not only easier but more profitable. The time is past when anyone can boast about 'hard work' without having a corresponding result to show for it.” Henry Ford 11
  12. 12. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Measuring The True Profitability of Products, Services and Customers What is preventing me from gaining the insight I need? Allocations done today in an array of spreadsheets No transparency of allocations to business owners Allocations not based on the right drivers because there is no clear understanding of what drives costs Analysis process is time consuming Allocations are arbitrary and not directly related Process is complex and difficult to change & maintain Complex allocations are difficult to perform ”The key to successfully managing profitability and costs is putting the right information into the business owners hands by simplifying the process and increasing transparency” -- Dan Franceschina, Director of EPM, Emtec ACTIONABLE Insight 12
  13. 13. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Approaches to Profitability
  14. 14. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Profitability as an Allocation 14 Typical Allocation Calculation Expense x Driver = Result Example: IT Costs x Percentage of Employees in Department = Department IT Spend Typical Profitability Calculation Revenue – Expense x Driver(s) = Profitability Example: Revenue by Customer – (Standard Costs x Units Sold by Customer) = Customer Profitability
  15. 15. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. There’s More To It Than That 15 Example: Customer Profitability • Not all data will be available • Typical data that you might use: - Customer volumes - Price and discount data - P&L line items - Sales, Customer Service, and Marketing organizational information (to allocate people costs) - Marketing programs by Brand or Product • The point is to be pragmatic about this. End product will not be an accounting exercise where amounts have to be accurate down to the cent, but instead, we will attempt to produce a high quality pragmatic approximation. • Costs allocations: This is the most difficult and creative part of the process. Again the idea here is to find a simple, yet highly accurate way to estimate an individual cost component of a customer.
  16. 16. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Technology Options 16 EBS Essbase Stand Alone Hyperion Profitability and Cost Management Excel HPCM Planning / Allocations Framework Oracle eBusiness Suite Really? Might want to cancel your life Oracle’s OLAP database Emtec’s Hyperion Planning Accelerator
  17. 17. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Emtec’s Allocation Framework (EAF) – Purpose Built For Fast Results • Provides a Financial Analytics platform for better decision making • Allows for a consistent, reliable and automated process • Allocations are customized by user input and then calculated automatically • Directly integrated into the Budget, Plan and/or Forecast • The allocations framework allows for flexibility and extensibility – new allocations, new drivers, new source or target inputs can be added with relative ease • Provides a consistent user interface and process throughout all allocations • Multi-Dimensional & Multi-Step Allocations supported • Allocation Transparency – Insight to Sources, Targets and Drivers • A standardized process approach EAF EAF is a packaged driver-based allocations framework that is configured to your needs. Built on Oracle Hyperion Planning, it accommodates any allocation methodology at any level of complexity, adheres to a common and simple data model and brings transparency to your process 17
  18. 18. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Using The Best Tools To Create A Profitability Solution 18 ApplicationStack Essbase Unstructured Other Data&Matadata Source Systems GL HR MFG Cust Ops Emtec Allocation Framework Hyperion Planning Product Line Profitability Application Toolset Multidimensional Database Financial Reports SmartVie w Finance General Users LOBReporting Calcs, Workflow, Security, UI tool, Data Solution, Constructs, Process, UI, Transparency, Analytics HPCM
  19. 19. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Putting It All Together = Success = Happy CFO 19 Emtec Allocation Framework Hyperion Planning Essbase • The most powerful multidimensional OLAP engine on the market today • Being accessed by the most full- featured UI and toolset • Utilizing the best purpose-built, user friendly allocations framework to solve your most complex product line profitability needs
  20. 20. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Practical Considerations
  21. 21. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Some Things to Think About 21 Accuracy vs Precision Do You Have the Data? Don’t Boil the Ocean You may need to make decisions about how and what to include based on data available Best Advice: Start with what you have These are not the same thing Best Advice: Aim for accuracy This is exciting stuff, and CFOs want and need this information Best Advice: Start small Precision Accuracy
  22. 22. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. 73% YEARS 47serving clients OUR COMPANY 500dedicated associates 17 over years BEST PLACES TO WORK 2012 TECHNOLOGY EMPOWERED BUSINESS SOLUTIONS “right size provider” “client for life” India Pune Bangalore USA IL, PA, NJ, GA, VA, MN, FL Canada Toronto Ottawa GLOBAL DELIVERY OUR SERVICES 87% 14 prior tier 1 consultancies avg. years experience fulltime employees OUR PEOPLE 25+ OTHER PARTNERS - onshore - offshore - nearshore - blended managed services Advisory Applications Cloud Analytics Infrastructure strategy governance process ERP, HCM, CRM, app. development, mobile solutions applications infrastructure enterprise reporting, predictive analytics, big data service management enterprise infrastructure end user computing Business and Technology Empowered
  23. 23. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. An Exciting Year For Emtec… And Or Clients! Vertical Focus • Strategy • Enterprise Solutioning • Management Consulting • Line of Business Expertise Advisory Services Expansion Services GEO Vertical SMAC
  24. 24. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. Emtec Services Align Well with each stakeholder community ENTERPRISE SUITE SALES & MARKETING  360 degree view of the customer  Sales force automation  Customer Service  Marketing Automation  Customer and Product Data Management  BI / Analytics HCM  Workforce Planning  HR Analytics  Talent Management  Employee Self-Service  Performance Management  Total Compensation CFO FINANCE  Budget & Planning  Financial Close Mgmt  Procure to Pay  SEC Reporting  Financial Analytics  Cash Management OPERATIONS  Forecasting  Operational Analytics  ERP  Project Costing TECHNOLOGY  Advisory Services  Application Development & Maintenance services  Business Intelligence & Big Data  Cloud Strategy and Implementation  Independent Verification & Validation  Infrastructure Services  Managed Services  IT Service Management  Procurement Services  Business Strategy  Managed Services & Outsourcing  Advisory Services  Analytics  Governance POWER The of Emtec
  25. 25. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. For More Information About How Emtec and Oracle Can Help You With Measuring Profitability Contact Bill Lowry by email at Bill.Lowry@Emtecinc.com Visit us at www.emtecinc.com
  26. 26. Emtec, Inc. Proprietary & Confidential. All rights reserved 2015. THANK YOU FOR YOUR TIME Please visit us online at www.emtecinc.com THANK YOU FOR YOUR TIME Please visit us online at www.emtecinc.com

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