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Overview profitability and cost management cloud services

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The Need for Profitability & Cost Management, Oracle Profitability & Cost Management Cloud Service Overview, Oracle IT Financial Management – prebuilt content on top of PCMCS

Presented at Oracle EPM Day Montreal 1/22/19 by Mike Killeen, SVP, Alithya

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Overview profitability and cost management cloud services

  1. 1. Overview Profitability and Cost Management Cloud Services Profitability & Cost Management Cloud Service (PCMCS) Oracle IT Financial Management (ITFM) Mike Killeen, Sr. VP, Oracle Ace
  2. 2. 20+ Years 1000+ Clients 2000+ Projects AGENDA > Introductions > The Need for Profitability & Cost Management > Oracle Profitability & Cost Management Cloud Service Overview > Oracle IT Financial Management – prebuilt content on top of PCMCS > Closing and Q&A 2
  3. 3. TODAY’S PRESENTER – MIKE KILLEEN > Sr. Vice President, Oracle Ace > 21+ Years EPM & BI Experience ▪ 6 Years – Strategic Initiatives & Advisory ▪ 2 Years – VP, UK Division ▪ 6 Years – Planning & Analytics Practice Director ▪ 8 Years – Implementation Consultant > Expertise across Multiple Domains ▪ Business Intelligence & OLAP ▪ Planning, Budgeting & Forecasting ▪ Financial Consolidation & Reporting ▪ Cost Allocations & Profitability Analysis ▪ Master Data Management 3
  4. 4. ALITHYA OVERVIEW – ORACLE EPM PRACTICE 4 Comprehensive Business Solutions Alithya’s solutions drive improved business performance through better decision making, strong customer engagement and optimized operations Deep Oracle Partnership Drives Customer Value Adaptable Deployment Models Diverse Client Portfolio & Industry Expertise Retail Energy/ Utilities Team Highlights Multiple Oracle ACEs Seasoned delivery team with avg ~8 yrs serving Alithya clients Experienced mgmt team with avg 15 yrs leading Alithya
  5. 5. HISTORY WITH PROFITABILITY & COST MANAGEMENT SOLUTIONS 5
  6. 6. The Need for Profitability & Cost Management
  7. 7. WHY PROFITABILITY & COST MANAGEMENT IS IMPORTANT 7
  8. 8. If you can generate a whale curve by Customer, by Product, by Channel, etc, you’re on your way to making intelligent decisions about your business. PROFIT OPPORTUNITIES 8 Exploiting the Whale! 50% 15% 35% $140 Mil $81 Mil Why $60M Loss? Product/Customer/Channel/Market, etc Profit Detail? Strategic P&Ls
  9. 9. CHALLENGES IN PROFITABILITY MANAGEMENT A PATCHWORK OF TECHNOLOGY APPROACHES > Very manual > Error Prone > Time consuming > Lacks controls & governance > Creates Key Personnel Dependencies > Lacks transparency > Financial close is slower, bloated, and more costly > Unable to extend ERP data (e.g. customer) > “Black-box” that is difficult to maintain > Slow to adapt > Grows unwieldy over time > May become unsupported Spreadsheets ERP Custom Built 9
  10. 10. EXPECTED OUTCOMES OF A PROFITABILITY & COST MANAGEMENT SOLUTION > Reliability > Visibly defensible profitability and cost results through transparency & audit/control > Agility > Timely reflection of results to be actionable > Flexibility in logic & reporting > Relevance > An ability to Allocate resources to the most important opportunities Financial Results Revenue & Cost Models Operational Results FP&A Senior Management 10
  11. 11. Profitability & Cost Management Cloud Service (PCMCS) Overview
  12. 12. ORACLE ENTERPRISE PERFORMANCE MANAGEMENT Solution Architecture 12 Planning & Forecasting Profitability Management Enterprise Performance Management Suite Strategy Management Customer Management Resource Management Owners & Investors RegulatorsManagement Operational Systems Performance Reporting Financial Close & Reporting Shared Integration Platform General Ledger Sub Ledgers Financial Systems Mappings & Drill BackHierarchies & Attributes Workflow HCM CX SCM ERP FCCS EPRCS PCMCS E/PBCS ARCS TRCS HSFHP HPCM DRM/DRG FDMEE Essbase HFM EDMCS CDM
  13. 13. ORACLE PROFITABILITY & COST MANAGEMENT CLOUD Capabilities & Workflow Published Reports & Interactive Analytics Model Development Master Data & Data Integration Management Profitability & Cost Management Cloud Service (PCMCS) Financial Reports, Smart View, Embedded Visualizations Model Execution No Large Initial Investment Accessible Always up to date Limited IT Involvement Embedded Intelligence Mobile Rule Transparency Allocation Engine Integrations Dashboards & Work Areas 13
  14. 14. PCMCS SIMPLIFIED USER INTERFACE 14
  15. 15. DIMENSIONS System Dimensions (2) POV Dimensions (1-4) Business Dimensions 15 Published Reports & Interactive Analytics Model Development Master Data & Data Integration Management Model Execution
  16. 16. PCMCS PCMCS PCMCS DATA MANAGEMENT > Native Load > Formatted Text Document > No Load Rule Required > Loads can be initiated in PCM GUI > Cloud Data Management (e.g. FDMEE “Light”) > Provides data mapping > Provides scheduling > Provides Drill (included in user licenses) > Flat File & Cloud to Cloud Import/Exports > Hybrid (e.g. FDMEE On-Premises v 11.1.2.4+) > Full CDM Functionality, plus…. > Custom Scripting & Automation > Direct Connectivity to Ground Applications > Additional licensing considerations…. 16 Published Reports & Interactive Analytics Model Development Master Data & Data Integration Management Model Execution
  17. 17. POINT-OF-VIEW MANAGEMENT > Point Of View (POV) allow for the ring fencing of data, business logic and output > Allows users to do complex what-if analysis without interfering with previously released results > Users can copy financial and driver data between POVs > Users can copy Rule Sets and Rules between POVs > Users can clear input and calculated data from POVs > Users can change the POV state 17 Published Reports & Interactive Analytics Model Development Master Data & Data Integration Management Model Execution
  18. 18. RULES MANAGEMENT > Point-of-view (POV) Specific > Rules, Drivers, & Financials can vary by POV > Completely GUI based > Intuitive Business focus layout > No coding knowledge necessary > No staging tables to edit > Four Easy Steps: > 1. Define your Rule > 2. Select your Source > 3. Select Destination > 4. Select Driver > Optional – Select Offset 18 Published Reports & Interactive Analytics Model Development Master Data & Data Integration Management Model Execution
  19. 19. MODEL EXECUTION > Pre-Calculation Validation > Meta-data Validation > Model Validation ▪ Rule Sets and Rules ▪ Model Views ▪ Queries ▪ Analytics ▪ Data Grants > Data Validation ▪ SmartView ▪ Queries ▪ Rule Balancing Report ▪ Dashboards ▪ Financial Reports > Post-Calculation Validation > Data Validation ▪ SmartView ▪ Queries ▪ Rule Balancing Report ▪ Traceability Maps ▪ Dashboards ▪ Financial Reports > System Validation ▪ Programme Documentation ▪ Dimension Statistics ▪ Rule Data Validation ▪ Execution Statistics Calculation 19 Published Reports & Interactive Analytics Model Development Master Data & Data Integration Management Model Execution
  20. 20. REPORTING & ANALYSIS > Provides built-in reporting and analytics capabilities > Are developed and maintained by end-users > Minimizes the need for dedicated Reporting teams. The people who use the reports can develop them > Provides: > Population Performance Analysis > Multi-dimensional P&Ls > Cost Contribution Reporting > Cost and Profitability Statistics > KPI’s & Dashboarding 20 Published Reports & Interactive Analytics Model Development Master Data & Data Integration Management Model Execution
  21. 21. Revenue USD ~ $5B Deployment Location North America Industry Financial Services Products PCMCS, DRM Legacy Platform Planning Essbase PSGL Apptio Excel Partner Use Case Summary Vanguard needed to replace an excel based allocation solution that was too high-level with no accountability for resource usage. PCMCS was implemented, they are now seeing increased flexibility and reduced maintenance allowing them to leverage what if capabilities that were previously unattainable. PCMCS now enables each BU to understand their resource usage and overall impact on the P&L. Top Customer Objectives and Challenges • Vanguard needed greater context to facilitate decision making around capital allocations • Improved financial insight in-order to explain, trace and define the value delivered by business unit • Eliminate skewed results on investment spending • Create revenue adjustment analysis capability - to increase transparency of alternative results Results • The PCMCS model enables them to generate allocation results within PCMCS in under 20 minutes for Actuals scenario, and in under 40 minutes for 3 years of Forecast data • Can now run multiple daily cycles of allocations as forecast data is updated throughout the day • Full end-to-end automation with validation mechanisms enables the team to simply verify a set of standardized reports and quickly troubleshoot issues Key Benefits Achieved  Increased allocation totals from 50% of revenue generating expenses to 100% across entire company  Business Unit Accountability for Corporate Spending  Faster Rule Development  Ability to run Multiple Allocation Cycles per day  High Systems Availability * PARTNER USE CASE * Partner Contact: Shereen Moubayed (BDM) Shereen.moubayed@alithya.com
  22. 22. Oracle IT Financial Management (ITFM) Pre Built Content for IT Shared Services Leveraging Oracle EPM Cloud
  23. 23. PROFITABILITY & COST MANAGEMENT APPLICATION TYPES 23
  24. 24. CFO CIO $ $ $ $ $ $$ C-SUITE PERSPECTIVE: Connecting the Value of IT to the Business 24 “With the business units in control of the IT budget… the CIO should expect to hear an increasingly common question from the business to IT: ’For the check I wrote you, what value did we achieve?’” – CIO.com, Modernizing IT: How to thrive as a CIO ‘value broker’ 24
  25. 25. ALIGN IT TO RUN AND GROW THE BUSINESS Oracle IT Financial Management (ITFM) 25
  26. 26. PCM IT COSTING & CHARGEBACK (ITCC) TEMPLATE > Pre-Built Data Model > 14 Base Dimensions > 24 Attribute Dimensions > Pre-Populated Content ▪ IT Chart of Account Definition (150+) ▪ Service Catalogue (50+) ▪ 40+ Drivers > Pre-Built Model & Reporting Content > 15+ Ratios/Metrics > Time Series & Variance Calculations > Starter Set of 40 Allocation Rules > 15+ Smart View & Fin Reports > 30+ Pre-Built Model Views for Analysis > Pre-Built Interface Specifications > 20+ Native File Formats managed by Source > Alithya Accelerators WIP for Data Management Mapping & Automation Pre-Packaged Content for Cloud or On-Premise 26
  27. 27. PCM IT COSTING & CHARGEBACK (ITCC) TEMPLATE Pre-Built Dimension Model 27 • Time: MTD, QTD, YTD, ITD • Scenario: Pre-built variance calculations • Currency: For Local, Reporting & Constant Currency Analysis • System Dimensions: Enables Transparency • Data Source: Recon & adjustments between GL & Project/Vendor/Resource in Sub-Ledgers • Account & Service: Prepopulated with content & calculations • Optional Dimensions: Allow for phased delivery and flexibility to adapt
  28. 28. Shared Costs $ (Cost Centers & Accounts) GL IT Functions $ IT Functional Units $ (Cost Centers & Accounts) Projects $ Project $ (Cost Centers & Accounts) (Projects) GL Resources $ Vendors $ Services $ Consumers $ IT OH Support $ PR Fixed Assets $ (Cost Centers & Accounts) (Projects) (Resources & Vendors) FA Services to Consumers (Cost Centers & Accounts) (Projects) (Resources & Vendors) (Services & Consumers) Pre-Built Rules Statistics Drivers Financial Operational Optional PCMCS IT COSTING & CHARGEBACK TEMPLATE Prescriptive Starter Set of Allocation Rules 28
  29. 29. PCMCS IT COSTING & CHARGEBACK TEMPLATE Prebuilt Reports & Dashboards 29
  30. 30. Application TCO, IT Service Costing, IT Operational Reporting The company uses the Oracle Cloud to measure the effectiveness of and drive performance improvement for their technology business investments of approximately > $1B OPEX. The system provides calculated views for cost analysis by: project, resource class (labor, equipment), application, end-user services, vendor, technology consuming business units, and platform. The solution is fundamental for tracking several aspects of application TCO and transparency to include senior management’s highly visible, cost reducing strategic initiatives. Top Customer Objectives and Challenges • Objectives • Reduce the cost of the existing Apptio solution: software & labor effort • A single, comprehensive, flexible, and efficient financial model for all technology spend as basis for all cost analytics • Challenges • Lack of transparency & self-service reporting capabilities • Multiple projects/financial models make it difficult to accommodate frequent reorganizations • Lack of what-if and forward-looking analytical capabilities • Financial models with low business user adoption rate • Low degree of modeler productivity caused by long system run times and large volume and variety of data sources • Disconnected Results with Core Financials IT OPEX USD: 1B+ Deployment Location North America Products – Oracle ITFM + Analytics Oracle Profitability & Cost Management Cloud Service (PCMCS) FDMEE Oracle Analytics Cloud Service (OAC) Oracle DBaaS Legacy Platform Apptio Oracle EBS * PARTNER USE CASE * Oracle ITFM Case Study Technology Company Partner Contact: Coby Nichols(BDM) Coby.Nichols@alithya.com
  31. 31. Closing and Q&A
  32. 32. SELF-EVALUATION QUESTIONS > Does your company understand the true costs of its products or services? > Are costing models transparent enough? Can you easily trace back the assigned costs to the activities and line item expenses that drive them? > Do your costing methods operate at the right level of detail? > Are you satisfied that you are allocating shared services (e.g. IT/HR) accurately? > Are people spending too much time maintaining our costing models and other elements of our costing system? > Can people in your company quickly test how changes to commodity, input costs, lower or higher volumes will affect our profitability? > Are you getting answers from our costing systems fast enough to be actionable? Would reducing this process time improve our competitiveness or profitability? > Is all of the data that you need to understand true costs available in a single ERP system? If not, what are the initial and ongoing costs of integrating that data into your ERP system? 32
  33. 33. CLOSING AND Q&A 33 Mike Killeen SVP, Technology & Strategy Mike.Killeen@alithya.com
  34. 34. Appendix
  35. 35. ORACLE PROFITABILITY & COST MANAGEMENT Key Application Benefits….F-A-S-T! 35 Flexibility  Analyze different allocation approaches to yield optimal mix of services versus costs incurred by the entity.  Rapidly evolve methodologies as the business changes.  Provide What-If capabilities to assess impact of key business decisions on bottom line. Audit & Control  Provide key stakeholders confidence in the numbers produced and methodologies employed to ensure compliance.  Achieve this through meaningful allocations, automation, and system controls. Shared Methodology  Define consistent allocation and charge back methodology across all management cycles.  Create consistent comparisons when reviewing and updating methodology result and planning for future management cycles. Transparency  Give units the detail costs they incur for the service consumed.  Compare effectiveness of internal unit services with those of external providers to ensure efficiency.  Allow LOB managers to understand cost to serve and profitability results.
  36. 36. ORACLE PROFITABILITY & COST MANAGEMENT Evolution of the Application 2008 HPCM Standard Profitability v 11.1.1.1 2012 HPCM Detailed Profitability v 11.1.2.2 2015 HPCM Management Ledger v 11.1.2.4 2016 (Oct) PCMCS Management Ledger v 17.xx 36
  37. 37. ORACLE PROFITABILITY & COST MANAGEMENT A Comparison of Different Modules 37 Role/Product Capability HPCM Standard Profitability HPCM Detailed Profitability HPCM Management Ledger PCMCS End User End User Reporting Hyperion Financial Reports, Smart View 3rd Party SQL Query or BI Tools Hyperion Financial Reports, Smart View Web Financial Reports, Smart View, Dashboarding Transparency Multi-Stage Trace Screen, Geneaology Limited Single Stage Trace Screen, Rules Dimension/Data Model System Reports Stage Balancing None Program Documentation, Rule Balancing Model Manager Maintain Rules BSO Calc Scripts or GUI Interface with RDBMS Staging Tables SQL Based Rules Designer Limited ASO MDX or GUI Rules Designer Full ASO MDX or GUI Rules Designer; Bulk Edit Functional Admin Load Data Essbase Load Rules, Native File or Smart View 3rd party SQL Tool into Tables Essbase Load Rules, Native File or Smart View Cloud Data Management, Native File, or Smart View Load Master Data EPMA or Essbase Staging Outline SQL Staging Tables EPMA or Essbase Staging Outline Parent Child Text File or GUI Dimension Editor Automation Essbase MaxL, EPMA Batch Client, LCM Client, HPCM Batch Client, SQL Loader Utilities EPM Automate Application Owner Underlying Database BSO & ASO Essbase Cubes, RDBMS Stage RDBMS Essbase ASO Software Licensing Higher Client Revenue Licensing Metric, plus annual maintenance Lower Per User Monthly Subscription Oracle Innovation No Further R&D Periodic Patching & Updates Monthly Updates & New Features • HPCM Management Ledger + • Rule Maintenance & Functionality Enhancements • Embedded Analytics (“BI Light”) • Oracle EPM Cloud Integration & Automation Platform • Oracle EPM Cloud Pricing & Operating Model Oracle PCMCS is:

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