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Optimizing Data for EPM

The document discusses a lecture on optimizing data for enterprise performance management (EPM). It covers understanding EPM data challenges, managing master data, and EPM products and solutions like performance applications, scorecards, dashboards, and key performance indicators. The lecture agenda includes an overview of the EPM workspace and applications, as well as challenges around financial consolidation, performance management, and business intelligence.

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Day 2: - Optimizing Data for EPM Lecture at SP Jain Institute of Management Executive MBA, Singapore – Oct 2009 Ravi Tirumalai Oracle Corporation,, Asia Pacific
Agenda • Understanding the EPM Data challenges • Master key data management process • Products and solutions: – EPM – Scorecards – Dashboards & KPI’s
Enterprise Performance Management System EPM Workspace Performance Management BI Applications Applications Business Intelligence Foundation Middleware OLTP & ODS Oracle Data OLAP SAP, Oracle, Siebel, Excel Business Systems Warehouse PeopleSoft, Custom XML Process Data Mart
Performance Management Applications Strategic Planning Planning and Budgeting Set Strategic Cascade Targets Objectives Treasury Long-Term Forecasting Detailed Budgeting Strategies Planning Corporate Allocate Resources Development Master Data Business Rules Metrics/KPIs Targets, Plans & Actuals Financial Close Process Cost and Profitability Management Define Costing Methods Internal External Data Report & Analyze Consolidate Reporting & Reporting & Define Cost Drivers Cleansing Analysis Compliance Perform Allocations 4
Transparency Challenges
Financial Consolidation At-a-Glance Collect Data Calculate & Adjust Report • Gather from multiple & • Apply FASB and IFRS • Generate financial disparate applications consolidation rules statements, • Store data in a centralized • Perform currency translation managerial reports, repository & aggregation and perform ad hoc analysis “Consolidations applications are seeing a resurgence after what was considered a maturing of this market, driven primarily by compliance issues in the United States (driven by Sarbanes-Oxley) and worldwide (driven by the pending International Financial Reporting Standards).” -- Kathleen Wilhide and Henry D. Morris
The Financial Consolidation Challenge Deliver High Value and Reduced Cycle Times Average 6 Days 12 Days Collect data Close Adjustments Report Analyze Currency Management I/C Legal Subsidiaries External World Class <2 Days 6 Days More time! Collect Close Adjustment Report Analyze and Forecast Source: Hackett Group Benchmarking-Solutions Book of Numbers 7
Operational Challenges Subsidiary 1 Accounting Differences ¥ • Charts of accounts• Currencies • • Accounting methodsCalendars Parent Company Subsidiary 2 Manual, Error-Prone Processes • Data extraction, transformation, and load £ • Adjustments and eliminations Consolidation $ Joint Venture Complex Ownership Structures • Minority interest • Intercompany Rs • Cross holding transactions Multiple, Fragmented Systems Affiliate  Lengthy close process with weak internal controls €  Rigid systems that cannot exploit new opportunities  Disconnect between strategy and execution
Financial Close and Reporting Today …a controlled process is not easy to achieve! • Lengthy and cumbersome closes • Inefficient and disconnected processes • Difficulty with reporting and analysis • Data quality issues • Inability to keep pace with change Kenneth Lay • No control over the process • Too many spreadsheets Accounting scandals have brought financial reporting …AUDIT ISSUES into focus as never before
Performance Management Applications Strategic Planning Planning and Budgeting Set Strategic Cascade Targets Objectives Treasury Long-Term Forecasting Detailed Budgeting Strategies Planning Corporate Allocate Resources Development Master Data Business Rules Metrics/KPIs Targets, Plans & Actuals Financial Close Process Cost and Profitability Management Define Costing Methods Internal External Data Report & Analyze Consolidate Reporting & Reporting & Define Cost Drivers Cleansing Analysis Compliance Perform Allocations 10
Fundamental Capabilities Capability Detail Planning and Fully embedded into BI and Microsoft Office Analysis for real-time reporting and analysis The ability to model at the operational level, Modeling assessing impact to the overall strategic plan See the business impact of changing business drivers What-if to make intelligent decisions Technology that allows the entire user community Collaboration to communicate and plan in real time as well as offline Bi-directional planning capabilities Top-down / Bottom-up to promote accuracy and accountability
Challenges - Excel/Manual Based Processes – Lack of process – Lack of integration – Lack of confidence – Rigid, costly to maintain – Inability to act 12
Today’s Integrated Planning Process Sweat and Excel Financial Planning Long-Term Financial Working Treasury Profitability Performance Financial Planning & Capital Management Management Scorecards Planning Budgeting Planning Human Product Demand Customer Supply Logistics Resources Performance Management Management Planning Planning Planning Management Functional Operational Planning ERP System 15
Integrated Business Planning Bridging the Finance-Operations Disconnect Financial Planning Long-Term Financial Working Treasury Profitability Performance Financial Planning & Capital Management Management Scorecards Planning Budgeting Planning Strategic Integrated Financial Operational Impact Performance Modeling Analysis Modeling Human Product Demand Customer Supply Logistics Resources Performance Management Management Planning Planning Planning Management Functional Operational Planning ERP System 17
Integrated Business Planning Profit targets, prices, costs, investment limits, working capital Financial Modeling and Strategic Operational Modeling Planning and Planning Constrained Op Plans Baseline Op Plans Operating Policies Functional Operational GL Accounts Accounting Periods Budget Data Planning Entities Actual Master Data Execution Plan Transactional Data ERP
Differences between Strategic Operational Planning and Financial Planning 1. “Network” models 2. Planning Frequency 3. Concept of “Lead Time” 4. Data Driven Model Relationships 5. Constraint Based
Integrated Planning Drives Key Requirements Need for Core Technology Innovation 1. Modeling of operational constructs – Rich expressiveness in modeling & calculation logic – Complex dependencies, relationships, transformations – Declarative calculations, not scripted 2. Rapid analysis of cross-functional impact • “Change anywhere, analyze everywhere” • Evaluate financial desirability & operational feasibility • Interactive response times 3. Robust analytic transaction framework 1 1 • Scenario management & change isolation 2 2 • Reconciliation of concurrent plan changes 3 3 • System of record for plan changes: audit trails 20
Budgeting Process is Highly Inefficient • Time – takes too long, results obsolete • Quality – political/negotiation, not Senior Management reflective of business • Cost – many wasted resources, dubious benefits • Flexibility – lack of responsiveness to changes FP&A Group Dept A Dept B Dept C
Streamline Planning, Budgeting and Forecasting • Centralized, not distributed • Short budget cycles • Collaboration across organization • Consistent assumptions and calculations • Accurate data and plans • Accountability • Align top-down with bottom-up • Driver-based planning • Rolling forecasting
Reduce Fragmentation in Financial Modeling • Complex spreadsheet models Acquisitions • No consolidated view Banks Investors Divestitures • Spreadsheets are error prone • Limited accounting integrity • Lack of integrated models Board of Directors make scenario analysis Senior Management cumbersome • Long simulation times Treasury Corporate Long-Term Planning Development
Enabling an Iterative Planning Process Finance Review Plan Exceptions Evaluate Alternatives • Analyze critical gaps • Create what-if scenario’s between financial and on plan revisions operational plans • Rough-cut modeling • Resolve constraints Update Plan of Record Assess Business Impact • Approve plan revisions • Compare impact of • Submit plan changes back to alternatives on key planning and execution systems financial and operational metrics Marketing Sales Supply Chain  Manage collaboration  Enable fast decision-making  Assess cross-functional impact  Perform interactive scenario analysis 24
Performance Management Applications Strategic Planning Planning and Budgeting Set Strategic Cascade Targets Objectives Treasury Long-Term Forecasting Detailed Budgeting Strategies Planning Corporate Allocate Resources Development Master Data Business Rules Metrics/KPIs Targets, Plans & Actuals Financial Close Process Cost and Profitability Management Define Costing Methods Internal External Data Report & Analyze Consolidate Reporting & Reporting & Define Cost Drivers Cleansing Analysis Compliance Perform Allocations 25
Integrated Corporate Finance Modeling Allows You to Create a Complete Plan Strategic Planning Value Management Treasury Long-Term Strategies Planning Corporate Development Top-Down Target Setting Covenant/Ratio Analysis Mergers & Acquisitions Contingency Planning Funding Alternatives Valuation Analysis Strategy Screening Rating Agencies Divestitures 26
Financial Modeling Challenge Missed market opportunities Limited cost-benefit analysis All scenarios not considered Not enough focus on cash flow 27
Scenario Modeling Explore Options for Organizational Restructuring Scenario 3 Scenario 2 • Copy and modify Original State Scenario 1 existing hierarchies to easily model options – Move – Add – Remove • Run consolidation on modified hierarchy to see potential outcome – Balance Sheet – Income Statement – Statement of Cash Flows – Managerial Reports
Risk Analysis Possibilities Probabilities Thinking in Single Point Scenarios Thinking in Ranges • Only 3 possible outcomes • Monte Carlo simulation shows full range of • Limited view of risk outcomes • What are most important risk factors? • Illustrates probability of outcomes • What are the odds I’ll miss the target? • Immediate visibility into inherent risk • Which outcome is most likely? • True risk analysis for financial models 3 possibilities… No probabilities… All possibilities… Clear probability… 29
Predictive Modeling – Drivers Impact 30
Integrate Strategic Planning Budgeting & Forecasting Strategic Plan Long-term planning Optimize capital structure Corporate development Shareholder value Seed targets and assumptions Budget Cascade BU Targets Consolidate budgets Prepare detailed financial plan Budget Reviews Update strategic plan with latest forecast Seed budget Forecast YTD Capture forecast assumptions Actuals Performance reviews Rolling Forecast Driver-based planning Key performance indicators Months / Quarters 1 Year 3 – 5 Years
Profitability Management Questions • What defines a profitable customer? • What is the profit contribution margin of a product or a service? • What does it cost to sell or service customers? • What proportion of resources does a customer consume? Why hasn’t reducing costs increased profitability? 32
Enterprise Performance Management System EPM Workspace Performance Management BI Applications Applications Business Intelligence Foundation Middleware OLTP & ODS Oracle Data OLAP SAP, Oracle, Siebel, Excel Business Systems Warehouse PeopleSoft, Custom XML Process Data Mart
Across the Enterprise and Beyond Corp Supplier Customer Division Division Partner
Business Intelligence Scorecard Dashboards EUQR Data Foundation
Operational Challenges Analyses, Reports Executives Sales Marketing Operations Finance Sales Marketing Operations Operations Finance Finance Data Data Data 1 Data N Data 1 Data N Data IT Warehouse • Delayed, inaccurate reporting Cross-functional analysis only by IT • Conflicting, departmentally-biased results Sub-optimal enterprise performance 36
Valuable Insights Often Require Data from Multiple Departments and Sources Customers Suppliers HR/Workforce Procurement Distribution Operations Marketing Finance Service Sales Customers Suppliers Customers Suppliers How does call center agent tenure, training, & compensation affect efficiency and cross-selling performance? How does supplier performance impact customer satisfaction and revenue? How do I proactively manage risks of my receivables portfolio? 37
The Analytic Application Problem is Below the Surface DASHBOARDS Information Delivery “Visible” “PLUMBING” Everything Else “Under the Surface” Mappings to multiple applications and data transformation all take expertise and time Upgrades
What’s “Above the Surface”? Metrics and Attributes Reports & Dashboards
So what’s Below the Surface? Extracts Staging Work Flows Transform Unified Metadata & Area & Execution & Dimensions Change Plans Loads Fact Tables & Data Aggregates Capture Presentation Account ID Physical Logical ∑
What Percentage of Each Layer is Configured? 20% + 10% + 10% + 10% + 20% + 20% 40% 50% Extracts Staging Work Flows Transform Unified Metadata & Area & Execution & Dimensions Change Plans Loads Fact Tables & Data Aggregates Capture Presentation Account ID Physical Logical ∑
Data Quality Control Points
BI Approach :From Warehouse to Workspace Data Sources Data Warehouse BI Foundation Workspace (BI Server) PRESENTATION LAYER •Single Database •Interactive Dashboards • User Roles, Preferences •Multiple schemas, • Simplified View •Ad Hoc Analysis logical separation • Logical SQL Interface •Reporting & Publishing •Staging Data Layer SEMANTIC OBJECT LAYER (SDL) •Disconnected & Mobile • Dimensions Analytics •Foundation Data • Hierarchies Layer (FDL) • Measures •Proactive Detection & • Calculations Alerts • Aggregation Rules •Access and • Time Series •MS Office Integration Performance Layer PHYSICAL LAYER Consume (APL) Manage Acquire • Map Physical Data • Connections • Schema Security
BI Applications Architecture  Role Based Dashboards BI  Analytic Workflow Dashboards by Role Presentation  Guided Navigation Services Reports, Analysis / Analytic  Security / Visibility Workflows  Alerts & Proactive Delivery Administration Metrics / KPIs  Logical to Physical Abstraction Layer Metadata  Calculations and Metrics Definition Logical Model / Subject Areas BI Server  Visibility & Personalization Physical Map  Dynamic SQL Generation Data Warehouse / Data Model  Abstracted Data Model Direct  Conformed Dimensions Load Process Access to  Heterogeneous Database support DAC Source Data Staging Area ETL  Database specific indexing Extraction Process  Highly Parallel  Multistage and Customizable  Deployment Modularity Oracle SAP R/3 Siebel PSFT EDW Copyright © 2008, Oracle and / Federated Data Sources Other or its affiliates. All rights reserved. - Internal Use Only
Dashboards and Scorecards Differing Perspectives Past Future • Business results Alerting • Strategy deployment • Operational and strategic Benchmarking • People & team scoring • Root cause analysis Metrics • Accountability maps • Guided navigation Graphics • Management processes Reporting • Initiative tracking Metadata • Cause & effect • Collaboration Dashboards Scorecards Dashboards: Why did I miss Scorecards: How does my goal my goal? support the corporate strategy? 48
Snapshot of Dashboard
Snapshot of Dashboard 50
Snapshot of Scorecard
Snapshot of Scorecard
Process & Steps to build a BI Application 1. Research business requirements for processes & users 2. Design the underlying logical model – KPIs, Dimensions etc These steps 3. Architect physical data model – Fact tables, Aggregates etc require different types of BI, ETL 4. Buy and configure a database management system to store and DB information technology 5. Buy an ETL tool to extract, transform and load data from the transactional tables These steps require 6. Develop ETL programs based on an intimate understanding significant of transactional data structures resources with specialized skills 7. Buy a BI tool for interactive end user access – Ad-Hoc, / expertise Dashboards, Alerts, Offline, MS Office etc. 8. Develop Dashboards & KPI, Hierarchies and prompts These steps typically take a 9. Integrate Security: authorization, authentication and auditing long time to 10. Integrate user experience with transactional applications perfect as knowledge of 11. Perform rigorous performance testing and QA best practices is 12. Manage changes to BI Apps – because of upgrades and learned updates to the transactional systems
Built-in Best Practices - Metrics Example Financial Analytics Metrics Receivables Payables General Ledger Profitability AR Balance AP Balance Balance Sheet Profitability Returns • DSO • DPO • Cash • Return on Equity • Closing Group Amt • Closing Group Amt • Accounts Receivable • Return on Assets • Credit Limit Used % • Total AP Overdue Amt • Debt to Equity Ratio • Return on Capital • Total AR Overdue Amt • Overdue Amt to Total % • Current Ratio Margins AR Aging AP Aging Asset Turnover • Gross Margin % • AR Aging 1-30 Amt • AP Aging 1-30 Amt • AR Turnover • Operating Margin % • AR Due 1-30 Amt • AP Due 1-30 Amt • AP Turnover • EBT Margin % • AR Overdue 1-30 Amt • AP Overdue 1-30 Amt • Inventory Turnover • Net Income Margin % Payment Performance Payment Performance • Cash Cycle Product Profitability • AR Payment Days • AP Payment Days • Fixed Assets Turnover • Revenue • AR Weighted Days • AP Weighted Days Cash Flow • Product Gross Profit • Times Paid Before Due • Times Paid Before Due • Operating Cash Flow • Product Operating Profit AR Transactions AP Transactions • Investing Cash Flow Customer Profitability • AR Avg Invoice Amt • AP Avg Invoice Amt • Financing Cash Flow • Revenue • AR Credit Memo Amt • AP Avg Payment Amt • Net Cash Flow • Customer Gross Margin Sample Pre-Built Dashboards Financial Controller Receivables Manager Payables Manager Department Manager • Balance Sheet • AR Balance • AP Balance • Budget Vs Actual • Cash Flow • Payments Due • Payments Due • P&L • Budget Vs Actual • Effectiveness • Effectiveness • Product Profitability • P&L • Invoice Details • Invoice Details • Customer Profitability
Ensuring Alignment to Corporate Objectives Headquarter Objectives Subsidiary 1 Subsidiary 2 Subsidiary 3 Critical Critical Critical Success Success Success Factors Factors Factors Actions Actions Actions
Aligning to Corporate Strategy • Accountability Maps • Strategy Maps • Cause and Effect Maps 56
Building a Scorecard Consolidated Budget Strategic Actuals Goals Long Term Goals Financial Actuals Target YEAR 1 Target YEAR 5 Customer Internal Learning & Growth ERP, CRM, HR, Other (Oracle, SAP…)
How the Scorecard System Works Send e-mail alert Fix when a problem is detected SCORECARD Analyze E-MAIL ALERT STRATEGY ANALYSIS 58
The Business Intelligence Continuum Strategic Dynamic Will our cash balances take us through this crisis? What if we rolled out this product nationwide? What if demand falls short of forecast? Past Oriented Future Oriented Which customers spend the most? What is the Q4 revenue forecast? What did this customer buy? Which customers are most profitable? Operational Static
Solve a Continuum of BI Needs Strategic Dynamic Modeling Past Oriented Future Oriented Advanced Analytics Ad-Hoc Query & Reporting Standardized Reporting Operational Static
A Fusion of BI & Business Processes • Visibility & Business Insight – Understand Business Impact Business Process BI & BAM • Action From Insight – Empower Business Users Business Process BI • Insight Driven Business Processes – Business Intelligence Services for integrated insight and reporting BI Business Process
Driving action from insight – Empowering Decisions Drive sales & marketing promotions Enhance Customer Satisfaction Escalate and rectify approvals issues Business Process Initiate employee Business Intelligence Dashboards, Alerts, Reports education initiatives Remove production bottlenecks
Technology Value Chain Where Value is Created Syn Struct Collect Store the Use ure sis Filter Digets External By Decision Optimized Aggregate Assess Internal By Responsibility for Speed Relate Decide Extract Act
In Summary : Alignment and Accountability are Key to Driving Enterprise Performance… • Develop strategies and goals • Define key initiatives and KPIs • Revisit Goals Set • Model scenarios • Update Models Goals • Update Plans • Reallocate Resources Align Plan Insight • Allocate strategic Performance targets • Financial & Statutory Action • Financial budgeting • Management Reporting • Operational planning • Compliance Report Monitor • Rolling forecasts • SDR – GRI Metrics Analyze • Financial and operational • Revenue, profits, KPIs • Efficiency and Utilization • Variances to budget • Benchmarking and metrics • Key trends across LOBs • Profitability • Effectiveness
Applying Technology to Performance Management- Fourth time lucky CONVERGENCE NETWORK INFORMATION DATA 1960 1970 1980 1990 2000 2010
CONVERGENCE People Communication PAYOFF Computing Information
Back Up Slides
Performance Management - Best Practices • Strategic Planning – Definition of goal • Tactical Planning – Tactics, initiatives, resource allocation • Financial Planning – Preparation/consolidation of plan • Management Reporting • Forecasting • Business Risk Management
Why Planning Fails • Planning and reporting the wrong stuff • Poor ownership and accountability • Tying plan achievement to compensation • Incomplete strategy definition • Inadequate risk recognition • Poor communication • Weak Integration (connecting the dots) • Information overload • Mistaking detail for accuracy
Best Practice for leveraging Technology • Integrate business and technology planning • Break down the functional walls • Set the right priorities • Avoid automating inefficiencies • Implementation is a team effort • Focus on use, not deployment • Manage complexity • Link ROI to business value
Common Enterprise Information Model Single Consistent View and User Self-Sufficiency PRESENTATION LAYER User Roles, Preferences Simplified View Role-Based Views of the Information Logical SQL Interface Relevant to the User SEMANTIC OBJECT LAYER Dimensions Hierarchies Measures Consistent Definition of Business Measures, Calculations Metrics, Calculations Aggregation Rules Time Series PHYSICAL LAYER Map Physical Data Connections Model Once, Deploy Everywhere Schema Across Any Data Sources 75
Simple Source On Mapping Rule Identify the Identify the Identify the Identify The varying Dimensions Initial Data Dimensions Operation to be To be Source To be Debited performed Credited Create or Select a Create or Select Condition Components
Ensuring Financial Data Quality Financial Data Audit Trail Trial Balance to Report Data Reconciliation Business Data Accuracy Processes Data Completeness Internal Audit Controls COSO Repository Stewardship Business Analysts Driver Regulatory Compliance We mean 77
An Integrated approach to BI & DW Elements of a BI Initiative Success Factors Consume Insight as a Service Multi-channel Open API’s User self-service Federated query Aligning People, Manage Processes & Technology Embedded OLAP, Data Mining RAC, Clustering Data Integration, Business Security, Scalability, Acquire Processes (BPEL, BAM), MDM, & Performance Content Management
Pre-Built, Pre-Mapped, Pre-Packaged Insights 1 Pre-built warehouse with more than 16 3 Pre-mapped metadata, including embedded best star-schemas designed for analysis and reporting practice calculations and metrics for Financial, on Financial Analytics Executives & other Business Users. Presentation Layer Logical Business Model Physical Sources 2 Pre-built ETL to extract data from hundreds of 4 A “best practice” library of over 360 operational tables and load it into the DW, sourced pre-built metrics, Intelligent Dashboards, 200+ from Oracle EBS, PeopleSoft Enterprise, SAP R/3, Reports and alerts for CFO, Finance Controller, and other sources. Financial Analyst, AR/AP Managers and Executives
The New BI approach visualization Dashboards Consume Analytics Scorecards Workspace Performance BI Apps Management Apps. BI Foundation Infrastructure Acquire Manage

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Optimizing Data for EPM

  • 1.
    Day 2: -Optimizing Data for EPM Lecture at SP Jain Institute of Management Executive MBA, Singapore – Oct 2009 Ravi Tirumalai Oracle Corporation,, Asia Pacific
  • 2.
    Agenda • Understanding theEPM Data challenges • Master key data management process • Products and solutions: – EPM – Scorecards – Dashboards & KPI’s
  • 3.
    Enterprise Performance ManagementSystem EPM Workspace Performance Management BI Applications Applications Business Intelligence Foundation Middleware OLTP & ODS Oracle Data OLAP SAP, Oracle, Siebel, Excel Business Systems Warehouse PeopleSoft, Custom XML Process Data Mart
  • 4.
    Performance Management Applications Strategic Planning Planning and Budgeting Set Strategic Cascade Targets Objectives Treasury Long-Term Forecasting Detailed Budgeting Strategies Planning Corporate Allocate Resources Development Master Data Business Rules Metrics/KPIs Targets, Plans & Actuals Financial Close Process Cost and Profitability Management Define Costing Methods Internal External Data Report & Analyze Consolidate Reporting & Reporting & Define Cost Drivers Cleansing Analysis Compliance Perform Allocations 4
  • 5.
  • 6.
    Financial Consolidation At-a-Glance Collect Data Calculate & Adjust Report • Gather from multiple & • Apply FASB and IFRS • Generate financial disparate applications consolidation rules statements, • Store data in a centralized • Perform currency translation managerial reports, repository & aggregation and perform ad hoc analysis “Consolidations applications are seeing a resurgence after what was considered a maturing of this market, driven primarily by compliance issues in the United States (driven by Sarbanes-Oxley) and worldwide (driven by the pending International Financial Reporting Standards).” -- Kathleen Wilhide and Henry D. Morris
  • 7.
    The Financial ConsolidationChallenge Deliver High Value and Reduced Cycle Times Average 6 Days 12 Days Collect data Close Adjustments Report Analyze Currency Management I/C Legal Subsidiaries External World Class <2 Days 6 Days More time! Collect Close Adjustment Report Analyze and Forecast Source: Hackett Group Benchmarking-Solutions Book of Numbers 7
  • 8.
    Operational Challenges Subsidiary 1 Accounting Differences ¥ • Charts of accounts• Currencies • • Accounting methodsCalendars Parent Company Subsidiary 2 Manual, Error-Prone Processes • Data extraction, transformation, and load £ • Adjustments and eliminations Consolidation $ Joint Venture Complex Ownership Structures • Minority interest • Intercompany Rs • Cross holding transactions Multiple, Fragmented Systems Affiliate  Lengthy close process with weak internal controls €  Rigid systems that cannot exploit new opportunities  Disconnect between strategy and execution
  • 9.
    Financial Close andReporting Today …a controlled process is not easy to achieve! • Lengthy and cumbersome closes • Inefficient and disconnected processes • Difficulty with reporting and analysis • Data quality issues • Inability to keep pace with change Kenneth Lay • No control over the process • Too many spreadsheets Accounting scandals have brought financial reporting …AUDIT ISSUES into focus as never before
  • 10.
    Performance Management Applications Strategic Planning Planning and Budgeting Set Strategic Cascade Targets Objectives Treasury Long-Term Forecasting Detailed Budgeting Strategies Planning Corporate Allocate Resources Development Master Data Business Rules Metrics/KPIs Targets, Plans & Actuals Financial Close Process Cost and Profitability Management Define Costing Methods Internal External Data Report & Analyze Consolidate Reporting & Reporting & Define Cost Drivers Cleansing Analysis Compliance Perform Allocations 10
  • 11.
    Fundamental Capabilities Capability Detail Planning and Fully embedded into BI and Microsoft Office Analysis for real-time reporting and analysis The ability to model at the operational level, Modeling assessing impact to the overall strategic plan See the business impact of changing business drivers What-if to make intelligent decisions Technology that allows the entire user community Collaboration to communicate and plan in real time as well as offline Bi-directional planning capabilities Top-down / Bottom-up to promote accuracy and accountability
  • 12.
    Challenges - Excel/ManualBased Processes – Lack of process – Lack of integration – Lack of confidence – Rigid, costly to maintain – Inability to act 12
  • 14.
    Today’s Integrated PlanningProcess Sweat and Excel Financial Planning Long-Term Financial Working Treasury Profitability Performance Financial Planning & Capital Management Management Scorecards Planning Budgeting Planning Human Product Demand Customer Supply Logistics Resources Performance Management Management Planning Planning Planning Management Functional Operational Planning ERP System 15
  • 15.
    Integrated Business Planning Bridging the Finance-Operations Disconnect Financial Planning Long-Term Financial Working Treasury Profitability Performance Financial Planning & Capital Management Management Scorecards Planning Budgeting Planning Strategic Integrated Financial Operational Impact Performance Modeling Analysis Modeling Human Product Demand Customer Supply Logistics Resources Performance Management Management Planning Planning Planning Management Functional Operational Planning ERP System 17
  • 16.
    Integrated Business Planning Profit targets, prices, costs, investment limits, working capital Financial Modeling and Strategic Operational Modeling Planning and Planning Constrained Op Plans Baseline Op Plans Operating Policies Functional Operational GL Accounts Accounting Periods Budget Data Planning Entities Actual Master Data Execution Plan Transactional Data ERP
  • 17.
    Differences between StrategicOperational Planning and Financial Planning 1. “Network” models 2. Planning Frequency 3. Concept of “Lead Time” 4. Data Driven Model Relationships 5. Constraint Based
  • 18.
    Integrated Planning DrivesKey Requirements Need for Core Technology Innovation 1. Modeling of operational constructs – Rich expressiveness in modeling & calculation logic – Complex dependencies, relationships, transformations – Declarative calculations, not scripted 2. Rapid analysis of cross-functional impact • “Change anywhere, analyze everywhere” • Evaluate financial desirability & operational feasibility • Interactive response times 3. Robust analytic transaction framework 1 1 • Scenario management & change isolation 2 2 • Reconciliation of concurrent plan changes 3 3 • System of record for plan changes: audit trails 20
  • 19.
    Budgeting Process isHighly Inefficient • Time – takes too long, results obsolete • Quality – political/negotiation, not Senior Management reflective of business • Cost – many wasted resources, dubious benefits • Flexibility – lack of responsiveness to changes FP&A Group Dept A Dept B Dept C
  • 20.
    Streamline Planning, Budgetingand Forecasting • Centralized, not distributed • Short budget cycles • Collaboration across organization • Consistent assumptions and calculations • Accurate data and plans • Accountability • Align top-down with bottom-up • Driver-based planning • Rolling forecasting
  • 21.
    Reduce Fragmentation inFinancial Modeling • Complex spreadsheet models Acquisitions • No consolidated view Banks Investors Divestitures • Spreadsheets are error prone • Limited accounting integrity • Lack of integrated models Board of Directors make scenario analysis Senior Management cumbersome • Long simulation times Treasury Corporate Long-Term Planning Development
  • 22.
    Enabling an IterativePlanning Process Finance Review Plan Exceptions Evaluate Alternatives • Analyze critical gaps • Create what-if scenario’s between financial and on plan revisions operational plans • Rough-cut modeling • Resolve constraints Update Plan of Record Assess Business Impact • Approve plan revisions • Compare impact of • Submit plan changes back to alternatives on key planning and execution systems financial and operational metrics Marketing Sales Supply Chain  Manage collaboration  Enable fast decision-making  Assess cross-functional impact  Perform interactive scenario analysis 24
  • 23.
    Performance Management Applications Strategic Planning Planning and Budgeting Set Strategic Cascade Targets Objectives Treasury Long-Term Forecasting Detailed Budgeting Strategies Planning Corporate Allocate Resources Development Master Data Business Rules Metrics/KPIs Targets, Plans & Actuals Financial Close Process Cost and Profitability Management Define Costing Methods Internal External Data Report & Analyze Consolidate Reporting & Reporting & Define Cost Drivers Cleansing Analysis Compliance Perform Allocations 25
  • 24.
    Integrated Corporate FinanceModeling Allows You to Create a Complete Plan Strategic Planning Value Management Treasury Long-Term Strategies Planning Corporate Development Top-Down Target Setting Covenant/Ratio Analysis Mergers & Acquisitions Contingency Planning Funding Alternatives Valuation Analysis Strategy Screening Rating Agencies Divestitures 26
  • 25.
    Financial Modeling Challenge Missed market opportunities Limited cost-benefit analysis All scenarios not considered Not enough focus on cash flow 27
  • 26.
    Scenario Modeling Explore Options for Organizational Restructuring Scenario 3 Scenario 2 • Copy and modify Original State Scenario 1 existing hierarchies to easily model options – Move – Add – Remove • Run consolidation on modified hierarchy to see potential outcome – Balance Sheet – Income Statement – Statement of Cash Flows – Managerial Reports
  • 27.
    Risk Analysis Possibilities Probabilities Thinking in Single Point Scenarios Thinking in Ranges • Only 3 possible outcomes • Monte Carlo simulation shows full range of • Limited view of risk outcomes • What are most important risk factors? • Illustrates probability of outcomes • What are the odds I’ll miss the target? • Immediate visibility into inherent risk • Which outcome is most likely? • True risk analysis for financial models 3 possibilities… No probabilities… All possibilities… Clear probability… 29
  • 28.
    Predictive Modeling –Drivers Impact 30
  • 29.
    Integrate Strategic PlanningBudgeting & Forecasting Strategic Plan Long-term planning Optimize capital structure Corporate development Shareholder value Seed targets and assumptions Budget Cascade BU Targets Consolidate budgets Prepare detailed financial plan Budget Reviews Update strategic plan with latest forecast Seed budget Forecast YTD Capture forecast assumptions Actuals Performance reviews Rolling Forecast Driver-based planning Key performance indicators Months / Quarters 1 Year 3 – 5 Years
  • 30.
    Profitability Management Questions •What defines a profitable customer? • What is the profit contribution margin of a product or a service? • What does it cost to sell or service customers? • What proportion of resources does a customer consume? Why hasn’t reducing costs increased profitability? 32
  • 31.
    Enterprise Performance ManagementSystem EPM Workspace Performance Management BI Applications Applications Business Intelligence Foundation Middleware OLTP & ODS Oracle Data OLAP SAP, Oracle, Siebel, Excel Business Systems Warehouse PeopleSoft, Custom XML Process Data Mart
  • 32.
    Across the Enterpriseand Beyond Corp Supplier Customer Division Division Partner
  • 33.
    Business Intelligence Scorecard Dashboards EUQR Data Foundation
  • 34.
    Operational Challenges Analyses, Reports Executives Sales Marketing Operations Finance Sales Marketing Operations Operations Finance Finance Data Data Data 1 Data N Data 1 Data N Data IT Warehouse • Delayed, inaccurate reporting Cross-functional analysis only by IT • Conflicting, departmentally-biased results Sub-optimal enterprise performance 36
  • 35.
    Valuable Insights OftenRequire Data from Multiple Departments and Sources Customers Suppliers HR/Workforce Procurement Distribution Operations Marketing Finance Service Sales Customers Suppliers Customers Suppliers How does call center agent tenure, training, & compensation affect efficiency and cross-selling performance? How does supplier performance impact customer satisfaction and revenue? How do I proactively manage risks of my receivables portfolio? 37
  • 36.
    The Analytic ApplicationProblem is Below the Surface DASHBOARDS Information Delivery “Visible” “PLUMBING” Everything Else “Under the Surface” Mappings to multiple applications and data transformation all take expertise and time Upgrades
  • 37.
    What’s “Above theSurface”? Metrics and Attributes Reports & Dashboards
  • 38.
    So what’s Belowthe Surface? Extracts Staging Work Flows Transform Unified Metadata & Area & Execution & Dimensions Change Plans Loads Fact Tables & Data Aggregates Capture Presentation Account ID Physical Logical ∑
  • 39.
    What Percentage ofEach Layer is Configured? 20% + 10% + 10% + 10% + 20% + 20% 40% 50% Extracts Staging Work Flows Transform Unified Metadata & Area & Execution & Dimensions Change Plans Loads Fact Tables & Data Aggregates Capture Presentation Account ID Physical Logical ∑
  • 43.
  • 44.
    BI Approach :FromWarehouse to Workspace Data Sources Data Warehouse BI Foundation Workspace (BI Server) PRESENTATION LAYER •Single Database •Interactive Dashboards • User Roles, Preferences •Multiple schemas, • Simplified View •Ad Hoc Analysis logical separation • Logical SQL Interface •Reporting & Publishing •Staging Data Layer SEMANTIC OBJECT LAYER (SDL) •Disconnected & Mobile • Dimensions Analytics •Foundation Data • Hierarchies Layer (FDL) • Measures •Proactive Detection & • Calculations Alerts • Aggregation Rules •Access and • Time Series •MS Office Integration Performance Layer PHYSICAL LAYER Consume (APL) Manage Acquire • Map Physical Data • Connections • Schema Security
  • 45.
    BI Applications Architecture  Role Based Dashboards BI  Analytic Workflow Dashboards by Role Presentation  Guided Navigation Services Reports, Analysis / Analytic  Security / Visibility Workflows  Alerts & Proactive Delivery Administration Metrics / KPIs  Logical to Physical Abstraction Layer Metadata  Calculations and Metrics Definition Logical Model / Subject Areas BI Server  Visibility & Personalization Physical Map  Dynamic SQL Generation Data Warehouse / Data Model  Abstracted Data Model Direct  Conformed Dimensions Load Process Access to  Heterogeneous Database support DAC Source Data Staging Area ETL  Database specific indexing Extraction Process  Highly Parallel  Multistage and Customizable  Deployment Modularity Oracle SAP R/3 Siebel PSFT EDW Copyright © 2008, Oracle and / Federated Data Sources Other or its affiliates. All rights reserved. - Internal Use Only
  • 46.
    Dashboards and ScorecardsDiffering Perspectives Past Future • Business results Alerting • Strategy deployment • Operational and strategic Benchmarking • People & team scoring • Root cause analysis Metrics • Accountability maps • Guided navigation Graphics • Management processes Reporting • Initiative tracking Metadata • Cause & effect • Collaboration Dashboards Scorecards Dashboards: Why did I miss Scorecards: How does my goal my goal? support the corporate strategy? 48
  • 47.
  • 48.
  • 49.
  • 50.
  • 51.
    Process & Stepsto build a BI Application 1. Research business requirements for processes & users 2. Design the underlying logical model – KPIs, Dimensions etc These steps 3. Architect physical data model – Fact tables, Aggregates etc require different types of BI, ETL 4. Buy and configure a database management system to store and DB information technology 5. Buy an ETL tool to extract, transform and load data from the transactional tables These steps require 6. Develop ETL programs based on an intimate understanding significant of transactional data structures resources with specialized skills 7. Buy a BI tool for interactive end user access – Ad-Hoc, / expertise Dashboards, Alerts, Offline, MS Office etc. 8. Develop Dashboards & KPI, Hierarchies and prompts These steps typically take a 9. Integrate Security: authorization, authentication and auditing long time to 10. Integrate user experience with transactional applications perfect as knowledge of 11. Perform rigorous performance testing and QA best practices is 12. Manage changes to BI Apps – because of upgrades and learned updates to the transactional systems
  • 52.
    Built-in Best Practices- Metrics Example Financial Analytics Metrics Receivables Payables General Ledger Profitability AR Balance AP Balance Balance Sheet Profitability Returns • DSO • DPO • Cash • Return on Equity • Closing Group Amt • Closing Group Amt • Accounts Receivable • Return on Assets • Credit Limit Used % • Total AP Overdue Amt • Debt to Equity Ratio • Return on Capital • Total AR Overdue Amt • Overdue Amt to Total % • Current Ratio Margins AR Aging AP Aging Asset Turnover • Gross Margin % • AR Aging 1-30 Amt • AP Aging 1-30 Amt • AR Turnover • Operating Margin % • AR Due 1-30 Amt • AP Due 1-30 Amt • AP Turnover • EBT Margin % • AR Overdue 1-30 Amt • AP Overdue 1-30 Amt • Inventory Turnover • Net Income Margin % Payment Performance Payment Performance • Cash Cycle Product Profitability • AR Payment Days • AP Payment Days • Fixed Assets Turnover • Revenue • AR Weighted Days • AP Weighted Days Cash Flow • Product Gross Profit • Times Paid Before Due • Times Paid Before Due • Operating Cash Flow • Product Operating Profit AR Transactions AP Transactions • Investing Cash Flow Customer Profitability • AR Avg Invoice Amt • AP Avg Invoice Amt • Financing Cash Flow • Revenue • AR Credit Memo Amt • AP Avg Payment Amt • Net Cash Flow • Customer Gross Margin Sample Pre-Built Dashboards Financial Controller Receivables Manager Payables Manager Department Manager • Balance Sheet • AR Balance • AP Balance • Budget Vs Actual • Cash Flow • Payments Due • Payments Due • P&L • Budget Vs Actual • Effectiveness • Effectiveness • Product Profitability • P&L • Invoice Details • Invoice Details • Customer Profitability
  • 53.
    Ensuring Alignment toCorporate Objectives Headquarter Objectives Subsidiary 1 Subsidiary 2 Subsidiary 3 Critical Critical Critical Success Success Success Factors Factors Factors Actions Actions Actions
  • 54.
    Aligning to CorporateStrategy • Accountability Maps • Strategy Maps • Cause and Effect Maps 56
  • 55.
    Building a Scorecard Consolidated Budget Strategic Actuals Goals Long Term Goals Financial Actuals Target YEAR 1 Target YEAR 5 Customer Internal Learning & Growth ERP, CRM, HR, Other (Oracle, SAP…)
  • 56.
    How the ScorecardSystem Works Send e-mail alert Fix when a problem is detected SCORECARD Analyze E-MAIL ALERT STRATEGY ANALYSIS 58
  • 57.
    The Business IntelligenceContinuum Strategic Dynamic Will our cash balances take us through this crisis? What if we rolled out this product nationwide? What if demand falls short of forecast? Past Oriented Future Oriented Which customers spend the most? What is the Q4 revenue forecast? What did this customer buy? Which customers are most profitable? Operational Static
  • 58.
    Solve a Continuumof BI Needs Strategic Dynamic Modeling Past Oriented Future Oriented Advanced Analytics Ad-Hoc Query & Reporting Standardized Reporting Operational Static
  • 59.
    A Fusion ofBI & Business Processes • Visibility & Business Insight – Understand Business Impact Business Process BI & BAM • Action From Insight – Empower Business Users Business Process BI • Insight Driven Business Processes – Business Intelligence Services for integrated insight and reporting BI Business Process
  • 60.
    Driving action frominsight – Empowering Decisions Drive sales & marketing promotions Enhance Customer Satisfaction Escalate and rectify approvals issues Business Process Initiate employee Business Intelligence Dashboards, Alerts, Reports education initiatives Remove production bottlenecks
  • 61.
    Technology Value Chain Where Value is Created Syn Struct Collect Store the Use ure sis Filter Digets External By Decision Optimized Aggregate Assess Internal By Responsibility for Speed Relate Decide Extract Act
  • 62.
    In Summary :Alignment and Accountability are Key to Driving Enterprise Performance… • Develop strategies and goals • Define key initiatives and KPIs • Revisit Goals Set • Model scenarios • Update Models Goals • Update Plans • Reallocate Resources Align Plan Insight • Allocate strategic Performance targets • Financial & Statutory Action • Financial budgeting • Management Reporting • Operational planning • Compliance Report Monitor • Rolling forecasts • SDR – GRI Metrics Analyze • Financial and operational • Revenue, profits, KPIs • Efficiency and Utilization • Variances to budget • Benchmarking and metrics • Key trends across LOBs • Profitability • Effectiveness
  • 63.
    Applying Technology toPerformance Management- Fourth time lucky CONVERGENCE NETWORK INFORMATION DATA 1960 1970 1980 1990 2000 2010
  • 64.
    CONVERGENCE People Communication PAYOFF Computing Information
  • 65.
  • 66.
    Performance Management -Best Practices • Strategic Planning – Definition of goal • Tactical Planning – Tactics, initiatives, resource allocation • Financial Planning – Preparation/consolidation of plan • Management Reporting • Forecasting • Business Risk Management
  • 67.
    Why Planning Fails • Planning and reporting the wrong stuff • Poor ownership and accountability • Tying plan achievement to compensation • Incomplete strategy definition • Inadequate risk recognition • Poor communication • Weak Integration (connecting the dots) • Information overload • Mistaking detail for accuracy
  • 68.
    Best Practice forleveraging Technology • Integrate business and technology planning • Break down the functional walls • Set the right priorities • Avoid automating inefficiencies • Implementation is a team effort • Focus on use, not deployment • Manage complexity • Link ROI to business value
  • 70.
    Common Enterprise InformationModel Single Consistent View and User Self-Sufficiency PRESENTATION LAYER User Roles, Preferences Simplified View Role-Based Views of the Information Logical SQL Interface Relevant to the User SEMANTIC OBJECT LAYER Dimensions Hierarchies Measures Consistent Definition of Business Measures, Calculations Metrics, Calculations Aggregation Rules Time Series PHYSICAL LAYER Map Physical Data Connections Model Once, Deploy Everywhere Schema Across Any Data Sources 75
  • 71.
    Simple Source OnMapping Rule Identify the Identify the Identify the Identify The varying Dimensions Initial Data Dimensions Operation to be To be Source To be Debited performed Credited Create or Select a Create or Select Condition Components
  • 72.
    Ensuring Financial DataQuality Financial Data Audit Trail Trial Balance to Report Data Reconciliation Business Data Accuracy Processes Data Completeness Internal Audit Controls COSO Repository Stewardship Business Analysts Driver Regulatory Compliance We mean 77
  • 73.
    An Integrated approachto BI & DW Elements of a BI Initiative Success Factors Consume Insight as a Service Multi-channel Open API’s User self-service Federated query Aligning People, Manage Processes & Technology Embedded OLAP, Data Mining RAC, Clustering Data Integration, Business Security, Scalability, Acquire Processes (BPEL, BAM), MDM, & Performance Content Management
  • 76.
    Pre-Built, Pre-Mapped, Pre-PackagedInsights 1 Pre-built warehouse with more than 16 3 Pre-mapped metadata, including embedded best star-schemas designed for analysis and reporting practice calculations and metrics for Financial, on Financial Analytics Executives & other Business Users. Presentation Layer Logical Business Model Physical Sources 2 Pre-built ETL to extract data from hundreds of 4 A “best practice” library of over 360 operational tables and load it into the DW, sourced pre-built metrics, Intelligent Dashboards, 200+ from Oracle EBS, PeopleSoft Enterprise, SAP R/3, Reports and alerts for CFO, Finance Controller, and other sources. Financial Analyst, AR/AP Managers and Executives
  • 77.
    The New BIapproach visualization Dashboards Consume Analytics Scorecards Workspace Performance BI Apps Management Apps. BI Foundation Infrastructure Acquire Manage