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Business Analytics Solutions Provider Using Oracle EPM, BI, and Big Data Technologies
Retail Profitability Dinner
Improve ...
Registration & Networking
Welcome & Introductions
Presentation
Profit Focused Enterprise Framework for Retail
Fully Alloca...
3
One of the largest full service Oracle Platinum EPM/BI Partner whose
sole focus is Oracle Business Analytics.
240+ W2 Hy...
4
Financial Close &
Consolidations
Business
Intelligence/Big Data
Enterprise
Planning &
Analytics
Data Integration
Service...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
About the Speaker – Mark Wright
BIO
Mark Wright, Pri...
6
About the SpeakerAbout the SpeakerAbout the SpeakerAbout the Speaker –––– Rufus WilliamRufus WilliamRufus WilliamRufus W...
7
Senior Vice President of Technology & Strategy
Planning & Analytics Practice Lead for 5 Years
Helped Establish Ranzal’s ...
Profit-Focused Enterprise ™
Framework for Retail
Mark Wright
– Oracle Principal Solutions Consultant
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Oracle Hyperion EPM Applications
Identify Opportunit...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
HPCM and The Profit-Focused Enterprise™
Oracle Confi...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Res...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Product A
Product B
Product C
Revenue Gross Margin N...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Profit Clusters – Exploiting the Whale
Oracle Confid...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Revenue $1,000
Retail Strategic P&Ls (Layering)
Shar...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Profit by SKU
Profit by DC
Oracle Confidential – Int...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Res...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Profit-Focused Enterprise ™ Topics
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Score the PFE Topics
Assess each strategy in relatio...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Oracle Client PFE™ Detail Results
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |
Oracle Client PFE™ Results
1.36% of Revenue Potentia...
Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Res...
Oracle HPCM Customer StoryOracle HPCM Customer StoryOracle HPCM Customer StoryOracle HPCM Customer Story
Fully Allocated P...
23
MasterCard Customer Story AgendaMasterCard Customer Story AgendaMasterCard Customer Story AgendaMasterCard Customer Sto...
24
MasterCard BackgroundMasterCard BackgroundMasterCard BackgroundMasterCard Background
• We are payments technology leade...
25
MasterCard ChallengeMasterCard ChallengeMasterCard ChallengeMasterCard Challenge
1. Fully Loaded Country P&L
2. Transpa...
26
MasterCard StrategyMasterCard StrategyMasterCard StrategyMasterCard Strategy
1. Prototype in MS Access & Excel
2. Obtai...
27
MasterCard Solution OverviewMasterCard Solution OverviewMasterCard Solution OverviewMasterCard Solution Overview
• Guid...
28
Fully Allocated P&LFully Allocated P&LFully Allocated P&LFully Allocated P&L
Margin 1
Margin 2
Margin 3
Margin 4
Varian...
29
HPCM Model ArchitectureHPCM Model ArchitectureHPCM Model ArchitectureHPCM Model Architecture –––– Stage DesignStage Des...
30
MasterCard Solution HighlightsMasterCard Solution HighlightsMasterCard Solution HighlightsMasterCard Solution Highlight...
31
MasterCard Lessons LearnedMasterCard Lessons LearnedMasterCard Lessons LearnedMasterCard Lessons Learned
1. Trace Scree...
32
MasterCard HPCM Future PlansMasterCard HPCM Future PlansMasterCard HPCM Future PlansMasterCard HPCM Future Plans
1. Exp...
33
Jonah Rufus William, Financial Systems Business Leader
Business Analytics Solutions Provider Using Oracle EPM, BI, and Big Data Technologies
Retail Profitability Dinner
An Overv...
Challenges in Profitability Management Delivery
Profitability and Cost Management Solution
Overview
Retail Demo: Oracle Hy...
Recap: Profitability Management Goal –
Delivery of Strategic P&Ls
2
Financial
transactions
Financial
Data
Consolidation
(GL or HFM)
Accumulator
Bottom-line
Results
Organizational P&L
37
What...
No Standard Process
Standard,
accepted
process
Indirect Costs are tracked
against supply side
structures, not demand
side ...
Meaningful Cost Assignments Requires a
Varying Approach By P&L Line
•Revenues, Returns
•Discounts, Allowances, Accruals
•S...
Sales/
Product
Managers
Cost Center
Managers
LOB Execs
Finance10’s
100’s
1000’s
1000’s
LOB/Functions
Segments/Entities
Dep...
Reliability
Visibly defensible profitability
and cost results through
transparency & audit/control
Agility
Timely reflecti...
Overview of Oracle Business Analytics
Profitability Management Solution
42
BI Foundation: Info Delivery
EPM Apps: Information Generation
Master Data, Data Quality & Data Integration Tools: Informat...
Solution Architecture with HPCM
Ad HocPublished Reports
HPCM Data Mart
Hierarchies,
Attributes &
Maps
Web
Office
Manual
Da...
Packaged Profitability
functionality
Business User-Driven
application
Tightly integrated with
the full Hyperion EPM
Suite
...
Why HPCM? To Meet these Key
Requirements…
Flexibility
• Analyze different
contractual
approaches to yield
optimal mix of
s...
47
Group Services (e.g. Property, Controllership, IT)
Product Profitability
Customer Profitability
Group Overhead (e.g. CE...
48
HPCM Has Multiple Model Types to
Solve Different Allocation Problems
Version 11.1.1.1 Version 11.1.2.0 Version 11.1.2.4...
HPCM Workflow & Demo
Published Reports &
Interactive Analytics
Model Development
System Administration:
• Create & Manage
Dimensions & Hierarch...
Demo - Define POV, Business & Driver Metric
Dimension Master Data
Business DimsPOV Dimensions Driver Metrics
AccountDivision
Product (Future)Pool
ProductPool
Division
Stage 1 – General Ledger
Stage 2 – Cost Pool
Stage 3 - Store
Sta...
Demo - Create a New Point of View (POV) to
House Your Model
Create New POVs with different
combinations of Financial Data,...
HPCM Allocation Model Definition
Components
Source Stage
2 - Cost Pool
Target Stage
3 - Store
Pool
Product
Division
Driver...
Demo - End Users Define Drivers in HPCM
Select from list of user
defined driver metrics and
allocation methodologies.
1
Demo - End Users Assign Drivers to
Source Cost Pools in HPCM
Select Default Drivers for Cost Pools, with
an ability to pro...
Demo - End Users Create Target Range
Assignment Rules in HPCM
3
Demo - End Users Map Source Stage to
Targets Via Assignments
Or Allocation Assignments can be bulk
loaded via a staging ta...
Demo – Pre-Run Model Validation – Multiple
Reports
Demo – Post Model Validation – Stage
Balancing Report
Jump to Smart View to see
unbalanced results
All Costs should be
All...
Demo – Traceability Analysis – What makes up an
allocation charge?
Closing and Q&A
62
Flexibility
Business Users can Run Multiple Versions to assess impact of business changes
Business Power User facing appli...
Does your company understand the true costs of its products or services?
Are costing models transparent enough? Can you ea...
Closing and Q&A
Edgewater Ranzal Contact Info:
108 Corporate Park Drive, Suite 105, White Plains, NY, USA 10604
US: +1-914...
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Improve Performance with Enhanced Insight into Profitability and Costs Utilizing HPCM

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Improve Performance with Enhanced Insight into Profitability and Costs Utilizing HPCM

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Improve Performance with Enhanced Insight into Profitability and Costs Utilizing HPCM

  1. 1. Business Analytics Solutions Provider Using Oracle EPM, BI, and Big Data Technologies Retail Profitability Dinner Improve Performance with Enhanced Insight into Profitability and Costs Utilizing HPCM Mark Wright, Principal Solutions Consultant, Oracle Jonah Rufus William, Business Leader Financial Systems, MasterCard Mike Killeen, Oracle Ace, Sr. Vice President, Edgewater Ranzal BLT Prime, New York, NY Feb 24, 2016
  2. 2. Registration & Networking Welcome & Introductions Presentation Profit Focused Enterprise Framework for Retail Fully Allocated P&Ls at MasterCard Worldwide Oracle HPCM Overview Dinner & Networking Event Closure 2 Event Agenda
  3. 3. 3 One of the largest full service Oracle Platinum EPM/BI Partner whose sole focus is Oracle Business Analytics. 240+ W2 Hyperion experts across product suite. Dedicated team stands behind our implementations from start to finish. Proven track record in global, multi-product, large scale Oracle EPM/BI implementations. Best in class consultants both technically and with EPM business processes. Oracle ACE Consultants across the Oracle EPM and BI Stack Over 95% of consulting team certified in Planning, HFM, Essbase, DRM, BI, and Infrastructure and many hold certifications in multiple products. Ranzal has specializations and in-depth experience implementing all of the products envisioned within the solution architecture. 20+ Years 1000+ Clients 2000+ Projects Edgewater Ranzal Overview
  4. 4. 4 Financial Close & Consolidations Business Intelligence/Big Data Enterprise Planning & Analytics Data Integration Services Training & Support Services Advisory ServicesInfrastructure Costing & Profitability Mgmt Business Intelligence/Big Data • Scorecards & Dashboards; Mobile Delivery • Prepackaged Analytic Applications (OBIA) • BI Foundation (OBIEE / Essbase) • Financial & Operational Analytics • Reporting & Publishing • Big Data • Information Discovery (Endeca) • Business Intelligence Cloud Service (BICS) Financial Close & Consolidations • Legal, Segment, & Mgmt Reporting • Financial Performance & Close • Optimization & Performance Lab • Tax Provisioning • Regulatory Requirements Data Integration Services • ERP Integration • Financial Data Management • Data Warehousing • MDM & DRM • ETL Services and Automation Infrastructure • Hardware Sizing, Installation, & Configuration • Exalytics Benchmarking • System Monitoring, Backup, & Disaster Recovery • Upgrade & Migrations Advisory Services • Project/Program Management & Process Change • EPM & BI Road Maps Training & Support Services • Standard & Custom Training • Virtual Classroom • Multimedia and UPK • Service Level Agreements • Managed Services & Hosting • Performance Engineering Enterprise Planning & Analytics • Strategic Planning (HSF) & Modeling • Planning, Budgeting & Forecasting • Workforce, Capital, & Project Financial Planning • Public Sector Planning • Cloud Services Costing & Profitability Management • HPCM Standard & Detail Models • Waterfall Allocations • Shared Service Charges • Activity Based Costing • Customer, Product, Segment & LOB Profitability Edgewater Ranzal Services Overview
  5. 5. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | About the Speaker – Mark Wright BIO Mark Wright, Principal Sales Consultant Oracle Accounting 10 yrs Management Consulting 7 yrs EPM software 8 yrs Roles - Accounting Mgr, Director of Profitability & Center of Excellence Emphasis Strategy, Planning and Profitability
  6. 6. 6 About the SpeakerAbout the SpeakerAbout the SpeakerAbout the Speaker –––– Rufus WilliamRufus WilliamRufus WilliamRufus William Strategize, Implement and Sustain Hyperion and BI Platforms at MasterCard. Prior Experience IBM Cognos – EPM Architects Oracle Partner – EPM Sr. Principle Consultant Education Engineer – Electrical & Electronics MBA – Systems and Marketing
  7. 7. 7 Senior Vice President of Technology & Strategy Planning & Analytics Practice Lead for 5 Years Helped Establish Ranzal’s UK Division Responsible for driving growth through strategic initiatives – currently focused on HPCM, DRM & BI Works from Ranzal’s Corporate HQ in White Plains, NY Oracle Certified Professional Essbase, Planning & HFM Oracle ACE – Business Intelligence 19+ Years of Functional & Technical Experience In: Budgeting, Forecasting & Planning Cost Allocation & Profitability Management Solutions Business Intelligence Master Data Management & Data Integration Solution Architecture & Design Process Rationalization & Transformation Client Engagement Portfolio Includes Various Industries: Financial Services & Insurance Consumer Products and Retail Professional Services Telecommunications Higher Education Health Care Works Closely with Oracle Product Management on Enhancements & Direction About the Speaker – Mike Killeen
  8. 8. Profit-Focused Enterprise ™ Framework for Retail Mark Wright – Oracle Principal Solutions Consultant
  9. 9. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Hyperion EPM Applications Identify Opportunities & Create Shareholders Wealth with HPCM Financial Analytical Platform (Essbase) Strategy Management Profitability Management Planning and Forecasting Financial Close and Reporting User Workspace, Reporting FDM DRM 1 –Report GAAP Statutory 2- Generate Decision Information 4- Create Financial, Sales & Op Plans Gartner CPM 3- Develop Strategy
  10. 10. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | HPCM and The Profit-Focused Enterprise™ Oracle Confidential – Internal/Restricted/Highly Restricted 10 Visual White Paper (link) Infographic (link)Blog (link) How to Dive Deeper into Profit … PFE Brief (link)
  11. 11. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Restricted 11 The “Right” Customers • Targeted Marketing • Market Basket Analysis • Sales Strategy • Customer Profitability • Top, Middle, Bottom The “Optimal” Product Mix • Pricing Considerations • Vendor Negotiations • Product Rationalization • Product Profitability • Top, Middle, Bottom Process Improvement • Supply Chain Monetization • Outsourcing / Procurement • Support • Delivery / Channel Resource Alignment • Tops Down Strategy • Align expenses to most profitable Customer/ Product Dimensions • Capacity / Utilization Analysis Policy Execution • Product Substitutions • Sales Incentives • Shared Services Behaviors • Minimal Orders Align Capital • Redirect Interest Expense • Invest in Profitable Clusters • Maximize ROI CustomersCustomers ProductsProducts PoliciesPolicies ProcessesProcesses CapitalCapital Profit ClustersProfit Clusters Strategic P&Ls Oracle’s Approach - Profit-Focused Enterprise™ Maturity PFE™ Scorecard ResourcesResources RevenueAttainmentRevenueAttainmentOperationsOptimizationOperationsOptimization ResourceAlignmentResourceAlignment Margins .1 to 2.5% of Revenue SegmentationSegmentation
  12. 12. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Product A Product B Product C Revenue Gross Margin Net Margin Stacked Clusters 1.0 2.0 3.0 4.0 $1,000M $750M $500M $250M $400M $450M $350M $125M $(150)M $200M $250M $75M Strategic Emphasis $200M $75M $275M $2,500M $1,325M $375M $275M What is Your Profit Decision Maturity Level? Totals Company Score 1.75 DIMENSION Product D Profit Clusters (*) (*) By any Profit Cluster including Product, Customer, Channel, Vendor, etc. SKU Maturity Levels
  13. 13. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Profit Clusters – Exploiting the Whale Oracle Confidential – Internal/Restricted/Highly Restricted 13 If you can generate a whale curve by Customer, by Product, by Channel, etc, you’re well on your way to being able to make intelligent decisions about your business. 50% 15% 35% $140 Mil $81 Mil Why $60M Loss? SKUs Profit Detail? Strategic P&Ls
  14. 14. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Revenue $1,000 Retail Strategic P&Ls (Layering) Shared Services (HR, IT, ACCT) Capital $ Headquarters Op Ex $ Merchandisers & Warehouse Operations Supply Chain, Assembly, Mfg Operations Sales / Marketing & Store Operations SKU Vendor CustomerWarehouse Distribution Center Freight Transport Transport Pick, Pack, Ship Stock Channel DELIVERY PROFIT Direct (350) Semi-Direct (450) Indirect (300) ($100) Strategic P&LsStrategic P&Ls
  15. 15. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Profit by SKU Profit by DC Oracle Confidential – Internal/Restricted/Highly Restricted 15 PFE™– Systematic Improvement 1 Analyze Profit Clustering1 2 2 Understand Details in Strategic P&Ls 3 Fix Root Causes – Drivers KPIs o 3
  16. 16. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Restricted 16 Align Capital • Redirect Interest Expense • Invest in Profitable Segments • Maximize ROI CustomersCustomersProductsProducts PoliciesPolicies ProcessesProcesses CapitalCapital Summary - Use HPCM to become a PFE™ Customer P&LChannel P&L Vendor P&L Warehouse P&L SKU P&L Etc. HPCM Strategic P&Ls Sales Person P&L One Version of Truth Initiatives The “Right” Customers • Targeted Marketing • Market Basket Analysis • Sales Strategy • Customer Profitability • Top, Middle, Bottom The “Optimal” Product Mix • Pricing Considerations • Vendor Negotiations • Product Rationalization • Product Profitability • Top, Middle, Bottom Process Improvement • Supply Chain Monetization • Outsourcing / Procurement • Support • Delivery / Channel Policy Execution • Product Substitutions • Sales Incentives • Shared Services Behaviors • Minimal Orders
  17. 17. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Profit-Focused Enterprise ™ Topics
  18. 18. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Score the PFE Topics Assess each strategy in relation to maturity to determine potential profit improvement. ™ 1.7% .75% .05% 2.5% ™ 2 3 4 1
  19. 19. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Client PFE™ Detail Results
  20. 20. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Client PFE™ Results 1.36% of Revenue Potential The PFE™ maturity of an enterprise determines the potential profit improvement Conservative - PFE™ - Aggressive
  21. 21. Copyright © 2014 Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Restricted 21 Profit-Focused Enterprise™ Assessment Offering ½ - 1 Day PFE™ Workshop Partnership with Access to Key Stakeholders Finance Merchandising Marketing / Sales Supply Chain Store Operations Ecommerce
  22. 22. Oracle HPCM Customer StoryOracle HPCM Customer StoryOracle HPCM Customer StoryOracle HPCM Customer Story Fully Allocated P&Ls at MasterCard WorldwideFully Allocated P&Ls at MasterCard WorldwideFully Allocated P&Ls at MasterCard WorldwideFully Allocated P&Ls at MasterCard Worldwide February 24, 2016 Jonah Rufus William Business Leader – Financial Systems
  23. 23. 23 MasterCard Customer Story AgendaMasterCard Customer Story AgendaMasterCard Customer Story AgendaMasterCard Customer Story Agenda • Business Background & Challenges • Solution Overview • Business Benefits & Lessons Learned • Future Plans • Q&A 1 2 3 4 5
  24. 24. 24 MasterCard BackgroundMasterCard BackgroundMasterCard BackgroundMasterCard Background • We are payments technology leader providing customers with faster, simple and safe payments solutions. Hyperion @ MasterCard Mgmt. Reporting Entity Mapping Work Force Product P&L 2011 2012 2013 2014 Local Currency Driver Local Currency Exposure FX FTE SPA - II Implementation Stabilization Expansion Budget Breakout Performance Tuning 2015 Commitment Lights Out Automation StratPlan Customer P&L 2010 Payroll Renovation 2016 D&A Revenue Attribute Local Actual M&A Cash Flow Hyperion Upgrade Managerial P&L Expense Mgmt. BI Rev. Rec. Application Automation / Enhancement / Project BI Stabilization Expansion Road Map A&M BI – Europe Rept. CDF / MDF Hyperion B&F 3.0 (Entity, Local Forecast, Budget Tracker, SPA…) BI – Mgmt. / PA Rept. Mgrl. P&L Phase 2 1 Monthly Close 2 Strategic Planning Annual Budget3 Quarterly Forecast4 8 Workforce Planning 9 Monthly Customer P&L (COS) Quarterly Product P&L (PPL)10 Local Currency Exposure11 Monthly Payroll Process5 Commitment Collection Process12 M&A Reporting6 Managerial P & L13 Cash Flow7 BI Updates14 Revenue Expense
  25. 25. 25 MasterCard ChallengeMasterCard ChallengeMasterCard ChallengeMasterCard Challenge 1. Fully Loaded Country P&L 2. Transparent Rules 3. Sound and Simple Methodology 4. Faster System 5. Fit within Hyperion Framework
  26. 26. 26 MasterCard StrategyMasterCard StrategyMasterCard StrategyMasterCard Strategy 1. Prototype in MS Access & Excel 2. Obtain buy in from impacted business owners 3. Assess solution fit with in Oracle Platform 4. Develop Functional Pilot in Requirements & Design 5. Implement & Rollout 6. Build Future Roadmap
  27. 27. 27 MasterCard Solution OverviewMasterCard Solution OverviewMasterCard Solution OverviewMasterCard Solution Overview • Guiding Principle: Tiered approach to attribute Revenue & Margin between Direct/Dedicated and Indirect/Overhead. 1. Drivers – Revenue Based or Metrics Based 2. Actual from Oracle General Ledger 3. M1: Revenues & Directly associated expenses no allocation 4. M2: Dedicated expense mapped to country 5. M3: Support expense allocated to country 6. M4: Overhead expenses allocated to country 7. Actual from Oracle GL gets allocated using the guiding principle 8. Simple rule to produce Tiered P&Ls applied after allocation 9. Validation reports are run to ensure data accuracy 10. Results published via Prebuilt FR or SmartView
  28. 28. 28 Fully Allocated P&LFully Allocated P&LFully Allocated P&LFully Allocated P&L Margin 1 Margin 2 Margin 3 Margin 4 Variance Explanation
  29. 29. 29 HPCM Model ArchitectureHPCM Model ArchitectureHPCM Model ArchitectureHPCM Model Architecture –––– Stage DesignStage DesignStage DesignStage Design Cost CtrAccount* Data Type GeoDivision* GeoDivision* Geo*Division Stage 1 – Financial Detail Stage 2 – Fin. Pool Stage 4 – Tier 2 Stage 3 – Tier 1 ► HPCM allocates Costs & Revenue Pools through one or more stages in a top down capacity ► Stage – Step in the allocation process that has similar pool characteristics ► Separate stages enable traceability. Cost Pool Tier 1 (Div) Allocs or Pass Thru (Direct) Tier 2 (Geo) Allocs or Pass Thru (Direct) Sum Account/CC to Cost Pool (Direct) AccountCost Ctr Data Type GeoDivision GeoDivisionCost Pool 1-3-4 Genealogy Allocation Results 1-3-4 Genealogy
  30. 30. 30 MasterCard Solution HighlightsMasterCard Solution HighlightsMasterCard Solution HighlightsMasterCard Solution Highlights 1. Planning App to stage, validate inputs and consume 2. Relational model to contract and expand data grain 3. Front end to assign rules 4. Prebuilt Tiered report 5. Trace Screens
  31. 31. 31 MasterCard Lessons LearnedMasterCard Lessons LearnedMasterCard Lessons LearnedMasterCard Lessons Learned 1. Trace Screens work at allocation grain 2. Need a reporting solution to make end user consumption easy 3. HPCM is a maturing product 4. Success or Failure depends on the partner’s experience – project completed on time and on budget
  32. 32. 32 MasterCard HPCM Future PlansMasterCard HPCM Future PlansMasterCard HPCM Future PlansMasterCard HPCM Future Plans 1. Explore use of Management Ledger i. Movement of historical management restatements from the general ledger ii. Would require upgrade to 11.1.2.4 2. Product & Customer Profitability migration to HPCM 3. Delivery of Dashboards to Business Users using OBIEE
  33. 33. 33 Jonah Rufus William, Financial Systems Business Leader
  34. 34. Business Analytics Solutions Provider Using Oracle EPM, BI, and Big Data Technologies Retail Profitability Dinner An Overview of Oracle Hyperion Profitability & Cost Management (HPCM) Mike Killeen, Oracle Ace, Sr. Vice President, Technology BLT Prime, New York, NY Feb 24, 2016
  35. 35. Challenges in Profitability Management Delivery Profitability and Cost Management Solution Overview Retail Demo: Oracle Hyperion Profitability & Cost Management (HPCM) Q&A Appendix Profitability & Cost Management Cloud Service HPCM New Features 35 HPCM Overview Agenda
  36. 36. Recap: Profitability Management Goal – Delivery of Strategic P&Ls 2
  37. 37. Financial transactions Financial Data Consolidation (GL or HFM) Accumulator Bottom-line Results Organizational P&L 37 What defines a profitable customer? What is the profit contribution of a product or a service? What does it cost to sell to or to service customers? What proportion of resources does a specific customer consume? Why hasn’t increased revenue resulted in increased profitability? Challenge #1 - Statutory Reports are not Timely or Detailed Enough
  38. 38. No Standard Process Standard, accepted process Indirect Costs are tracked against supply side structures, not demand side needs. This makes measurement difficult 38 Challenge #2 - Indirect Cost Assignment to Products, Services & Customers
  39. 39. Meaningful Cost Assignments Requires a Varying Approach By P&L Line •Revenues, Returns •Discounts, Allowances, Accruals •Store By Product •Store Specific •Invoice Details •% Net Sales to Product •COGS •Inventory Charges •Store By Product •Product Specific •Invoice Details •% Net Sales to Customer •Operating Expense - Labor •Operating Expense – Non Labor •Org Channel or Product Line •% Time Spent (Activities, Employee) •% Net Sales to Customer •Selling Expense •Marketing Expense •Org, Channel •Org, Product Line •Rep Commission, % Net Sales •Initiatives, Trade Spend $ •Shared Services (IT, Fin, HR) •Corporate Overhead •Organization •Overall Corporate •Service Catalog, Projects, Mgmt Fee •FTEs, Net Revenue, Square Footage P&L Line Items Typical Dimensionality Allocation Method & Drivers Used 8
  40. 40. Sales/ Product Managers Cost Center Managers LOB Execs Finance10’s 100’s 1000’s 1000’s LOB/Functions Segments/Entities Departments Products & Customers User Counts Data Volumes Frequency Of Use 100’s 1000’s 10K’s 1 MM’s Qtrs Monthly Weekly Daily 40 Challenge #3 - Consistent Performance as Volume & Use Increase
  41. 41. Reliability Visibly defensible profitability and cost results through transparency & audit/control Agility Timely reflection of results to be actionable Relevance An ability to Allocate resources to the most important opportunities Financial Results Revenue & Cost Models Operational Results FP&A Senior Management 41 Expectations of a Profitability Management Solution
  42. 42. Overview of Oracle Business Analytics Profitability Management Solution 42
  43. 43. BI Foundation: Info Delivery EPM Apps: Information Generation Master Data, Data Quality & Data Integration Tools: Information Management 43 Oracle Business Analytics Architecture
  44. 44. Solution Architecture with HPCM Ad HocPublished Reports HPCM Data Mart Hierarchies, Attributes & Maps Web Office Manual Data Input Pre & Post-Allocations Data Processing Attributions & Adj ETL/FDMEE GL or HFM Operational System .txt file .csv file Calculations Validations Centralized Reporting Supply Plan Demand Plan OBIEE Reports DRM 44 Information Management: Pools & Drivers Information Generation Information Delivery Information Management: Master Data
  45. 45. Packaged Profitability functionality Business User-Driven application Tightly integrated with the full Hyperion EPM Suite 45 Solution Element: Hyperion Profitability & Cost Management (HPCM)
  46. 46. Why HPCM? To Meet these Key Requirements… Flexibility • Analyze different contractual approaches to yield optimal mix of services versus costs incurred by the client. • Provide What-If Capabilities to assess impact of key business decisions on bottom line Audit & Accuracy • Provide key stakeholders confidence in the numbers produced and methodologies employed to ensure compliance. Speed • Ensure data is timely enough to be actionable • Ensure system provides “speed of thought” response in reporting and analysis to support Ad-Hoc questions Transparency • Allow managers to understand cost to serve and client profitability • Understand why some clients are profitable and others are not, and what can be done to change business behavior Organizations need information management solutions to address the challenges. These needs can be abbreviated as F-A-S-T! 46
  47. 47. 47 Group Services (e.g. Property, Controllership, IT) Product Profitability Customer Profitability Group Overhead (e.g. CEO) Division 3 Division Overhead Fully Allocated P&L (e.g. Product Line, Channel, Region) Group HQ Operational Profitability "BI" Shd Svcs Expense Allocations Inter Unit Charges (e.g. Xfer Pricing, Contractual Charges) Division Services Fully Alloc P&L "Thin Ledger" Inter Unit “Regulatory” Division 2 Division Overhead Fully Allocated P&L (e.g. Product Line, Channel, Region) Division Services Division 1 Division Overhead Fully Allocated P&L (e.g. Product Line, Channel, Region) Division Services Multiple HPCM Use Cases
  48. 48. 48 HPCM Has Multiple Model Types to Solve Different Allocation Problems Version 11.1.1.1 Version 11.1.2.0 Version 11.1.2.4 Management Ledger Fully Allocated P&L Standard Cost Rate Development via ABC Customer Profitability HFM/GL Actuals Planning Bgt/Fcst BI Reporting
  49. 49. HPCM Workflow & Demo
  50. 50. Published Reports & Interactive Analytics Model Development System Administration: • Create & Manage Dimensions & Hierarchies • Deploy the Application • Define Data Integrations from Source Systems • Manage User Security Master Data & Data Integration Management DRM, EPMA, Essbase Or File Dimensions Hierarchies Attributes HPCM Financial Reports, Smart View, Business Intelligence Foundation Produce Management and Performance Reports: • Financial Results Books • Margin Analysis • Cost & Revenue Contribution Analysis • What-If Scenario Comparisons • Genealogy Reports Execute a Model POV: 1. Load Cost/Revenue Data 2. Load Driver Metric Data 3. Validate Model Inputs 4. Execute Calculations 5. Trace Allocations & Validate Model Results 6. Publish the Model POV Create & Manage the Business Model: 1. Define the Stages (Std Only) 2. Create a Model Point-Of-View (POV) 3. Create Rules (Std & Detailed) 1. Define the Drivers 2. Define Assignment Rules 3. Assign Drivers 4. Create Assignments 4. Create Management Ledger Rules Model Execution Stages Drivers Driver Sels Rules Assignments Standard Model Detailed Model Management Ledger Model Calc Cube BSO Rept Cube ASO Calcs RDBMS Contr. ASO Destination ASO Calc/Rept ASO Source ASO HPCM Workflow
  51. 51. Demo - Define POV, Business & Driver Metric Dimension Master Data Business DimsPOV Dimensions Driver Metrics
  52. 52. AccountDivision Product (Future)Pool ProductPool Division Stage 1 – General Ledger Stage 2 – Cost Pool Stage 3 - Store Stage 2 - Cost Pool Intra Stage 4 - Product Retail Model Stage Design ProductDivision Product Margin Direct 4-Wall Store Opex Home Office, Dist Store Alloc, By Prod (Future) Store Alloc, No Prod Product Alloc By Store Home Office, Dist Allocs 1. Pool/Map 2. Intra-Stage Allocation 3. Inter-Stage Allocation HPCM allocates Costs & Revenue Pools through one or more stages in a top down capacity Stage – Step in the allocation process that has similar pool characteristics Separate stages enable traceability.
  53. 53. Demo - Create a New Point of View (POV) to House Your Model Create New POVs with different combinations of Financial Data, Driver Metric Data, and Model Definitions
  54. 54. HPCM Allocation Model Definition Components Source Stage 2 - Cost Pool Target Stage 3 - Store Pool Product Division Driver Driver Selections – Defines what Driver Definitions to use against the Source stage, typically the dimension identified as the driver definition. Assignment Rules Definitions– Defines the member combination in the target dimension for the assignment. Assignments– Defines the source dimension combination and the target Assignment Rule Driver Definitions – Create an allocation formula/methodology that references a loaded metric within the model. 1 2 3 4 2 3 1 4 4 19
  55. 55. Demo - End Users Define Drivers in HPCM Select from list of user defined driver metrics and allocation methodologies. 1
  56. 56. Demo - End Users Assign Drivers to Source Cost Pools in HPCM Select Default Drivers for Cost Pools, with an ability to provide exceptions 2
  57. 57. Demo - End Users Create Target Range Assignment Rules in HPCM 3
  58. 58. Demo - End Users Map Source Stage to Targets Via Assignments Or Allocation Assignments can be bulk loaded via a staging table. 4
  59. 59. Demo – Pre-Run Model Validation – Multiple Reports
  60. 60. Demo – Post Model Validation – Stage Balancing Report Jump to Smart View to see unbalanced results All Costs should be Allocated to Final Stage
  61. 61. Demo – Traceability Analysis – What makes up an allocation charge?
  62. 62. Closing and Q&A 62
  63. 63. Flexibility Business Users can Run Multiple Versions to assess impact of business changes Business Power User facing application – limited IT involvement in running the model Accuracy Profitability Workflows are now an automated, repeatable processes Meaningful cost drivers and methods for cost pools ensures greater acceptance of published results Speed Business Users Can answers questions that impact operational and pricing decisions quickly. Reporting Analytical Platform supports speed of thought ad-hoc reporting as well as user guided analysis Transparency Excellent visibility throughout the allocation process. Operational Managers now understand operational profitability and cost to serve via the analytical platform. Summary –Typical Project Outcomes 63
  64. 64. 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? Self-Evaluation Questions 64
  65. 65. Closing and Q&A Edgewater Ranzal Contact Info: 108 Corporate Park Drive, Suite 105, White Plains, NY, USA 10604 US: +1-914-253-6600 E-mail: info@ranzal.com 65 Mike Killeen Sr. Vice President of Technology mkilleen@ranzal.com

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