Product Spotlight: Oracle Profitability and Cost Management - OAUGNYC 2012

1. Product Spotlight:
Oracle Hyperion Profitability and Cost Management
Roy Googin, Oracle
RJ Linehan, Innovus Partners

2. Today’s Management Challenges
Only 5% of the work force
understands the strategy
60% of organizations don’t link
budgets to strategy
Only 25% of managers have
incentives linked to strategy
85% of executive teams spend
less than one hour per month
discussing strategy
9 of 10 companies
fail to execute
strategy
The People Barrier
The Vision Barrier
The Management Barrier
The Resource Barrier
Inability to Translate Vision into an Executable Strategy
©1998-2012 Balanced Scorecard Institute

3. The Four Perspectives of Translating Vision and Strategy
Vision and
Strategy
Objectives Measures Targets Initiatives
FINANCIAL
“To succeed
financially, how
should we
appear to our
shareholders?”
Objectives Measures Targets Initiatives
LEARNING AND GROWTH
“To achieve our
vision, how will
we sustain our
ability to
change and
improve?”
Objectives Measures Targets Initiatives
CUSTOMER
“To achieve our
vision, how
should we
appear to our
customers?”
Objectives Measures Targets Initiatives
INTERNAL BUSINESS PROCESS
“To satisfy our
shareholders
and customers,
what business
processes must
we excel at?”
Today’s Management Challenges
©1998-2012 Balanced Scorecard Institute

4. Linking Tactics to Strategy
Customer Perspective
• Strategy - Improve customer value to increase revenue
and profitability
• Tactic – Define profitable customers, Identify those
customers, Acquire and/or retain those customers
Financial Perspective
• Strategy - Manage financial resources more efficiently to
reduce costs and increase profitability
• Tactic – Identify cost drivers, Decide what costs are
wasteful or unnecessary, Eliminate those costs
Today’s Management Challenges

5. Strategy and Tactics Lead to More Questions
• How do we define a profitable customer?
• How much does it cost to service our
customers?
• What is the profit margin for products sold
to our customers?
• What organizational resources does a
customer consume?
• Why has an increase in revenue not
translated into an increase in profitability?
Today’s Management Challenges

6. Measuring Profitability and Costs
Challenges of Measuring Profitability and Cost Drivers
• Homegrown disparate models are inflexible,
inaccurate, and inconsistent
• Time lags to create and update profitability model
• Insufficient customer, product, or driver data at
the correct grain
• Lack of integration with financial data
• Excessive cost associated with maintaining
profitability solution

7. Measuring Profitability and Costs
Qualities of an Effective Profitability Solution
***Connecting the Dots***
• Integrated solution that is flexible, accurate, and
consistent
• Owned and maintained by business users
• Offers transparent results that are reliable
• Provides traceability to source data for easier
visibility
• Lowers total-cost-of-ownership

8. • Packaged Profitability functionality
• Computes Profitability for Business Segments, Customers and
Products
• Pre-Built Framework for profitability modeling:
• Pre-built Measures dimension
• Support for Multiple Cost Allocation methodologies
• Pre-Built Validation reporting
• Graphical Interactive Traceability Maps
• Genealogy Reporting shows flow from any stage to any stage
• A User-Driven application
• Measures, Allocates and Assigns Cost and Revenues via User
Defined Rules
• Finance User-facing Administration
• Provides Scenario Modeling for Decision Making
• Tightly integrated with the full Hyperion EPM Suite
• Shared Data and Metadata via EPMA
• Shared Reporting Tools like Financial Reports & Web Analysis
• Proven Technology Stack
Hyperion Profitability and Cost Management (HPCM)
An Oracle EPM System Module

9. Oracle’s Enterprise Performance Management Platform
Common Integration & Analysis
Data Quality and Consistent Dimensions
Common Reporting & Interaction
Strategic Planning
Financial Close
Planning & Forecasting
Profitability Management
10
EPM Architect / Financial Data Quality Management
Web Browser / Excel / Word / PowerPoint
Hyperion Profitability &
Cost Management
DW / Excel / Text Files / Etc…

10. IT
Salaries
Facilities
Rent
Audit
Salaries
IT
Desktop Support
Checking Accts
East 57th St
Checking Acct
East 57th St
Process Deposit
Stages: Dimensions:
1: General
Ledger
= Dept + Account
2: Activity = Dept + Activity
3: Product = Product
4: Branch = Branch
5: Cost
Object
= Product + Branch + Activity
An Example: Using HPCM to Assign Costs
to Products, Branches, and Activities
Stages & Dimensions Drivers & Assignment Paths
GL $$$
$$$$ $$$$ $$$$
$$$ $$$
$$$
$$ $$ $$$
$ $ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $
$ $ $ $ $ $ $
% of
Time
Spent
# PCs
in Use
Even
Split
# of
Trans
Square
Feet
# of
Trans

11. HCPM Demonstration

12. Product Spotlight:
Oracle Hyperion Profitability and Cost Management
Roy Googin, Oracle
RJ Linehan, Innovus Partners