Recorded at Kscope21 Hosted by: Alecs Mlynarzek (Alithya) and Geordan Drummond (Alithya)

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3. How to Allocate Your Close
Time More Effectively
Alecs Mlynarzek
Geordan Drummond

4. Agenda
• Typical Close timeline
• Tracking your Close
• Process improvement opportunities
• Impact of allocations on Close cycle
• Use cases
• Where to start?
• Food for thought
• Q&A

5. • Alithya Product Manager – Profitability and Cost
Management
• 14 years of Enterprise Performance Management (EPM)
implementations
• Architecture, Design, Integration, Optimization
• Planning, Essbase, SQL Scripting and PCM certified
• Oracle ACE Associate
• Hobbies: foreign languages, skiing, skating, climbing
Email: alecs.mlynarzek@alithya.com
Twitter: @AlecsEPM
Alecs Mlynarzek
• Alithya Product Manager – Financial Close and
Consolidation
• 17 years of Enterprise Performance Management (EPM)
implementations
• Architecture, Design, Integration, Optimization
• FCC and NR certified
• Oracle ACE
• Hobbies: 3 grade school boys, soccer, music
Email: geordan.drummond@alithya.com
Twitter: @always_closing
Geordan
Drummond
Meet the speakers

6. Close subledgers
• Finalize
outstanding sub-
ledger transactions
and exceptions
Reconcile accounts
• Reconcile sub-
ledgers
to general ledger
• Automatically
match transactions
and balances
Close ledgers
• Make any
additional accruals
or adjustments
• Perform allocations
• Close the
accounting period
Consolidate
subsidiaries
• Aggregate values
from subsidiaries
• Translate functional
to reporting
currency
• Eliminate
intercompany
activities and book
consolidating
entries
Review results
• Issue preliminary
reports
• Review results
• Enter final
adjustments
Publish reports
• Distribute report
packages to both
internal and
external
stakeholders
Update forecasts
• Modify forecasts
and financial plans
based on period
closed
Typical close timeline

7. Common close cycle pain points
Pre-Ledger
• Poor data quality from sources
• Grey area of ownership / responsibility for data validation prior to close cycle kick off
• Lack of monitoring capabilities to keep track of issues over time and learn from past mistakes
• Lack of enforced deadlines
Ledger
• Lengthy process and numerous dependencies
• Constant business changes
• Manual processing of recurring items
• Complex calculations /allocations deferred until source data is received
• Lack of enforced deadlines, multiple review and approval cycles
• Tracking is manual and frequently disjointed between Excel, Email, and other means
Post-Ledger
• Manual adjustments and validations
• Disjointed systems leading to numerous reconciliations on both sides of the fence
• High volume and redundancy in Managerial Reporting at different stages of the close cycle

8. Speed
Accuracy
Reactivity
Control
Analysis
Reporting
Bottlenecks can occur when gaps exist between manual steps An automated process will keep lost time to a minimum
Errors can result when process is not clearly defined or
documented
Remedied by a well defined and structured process
Waiting until the end of the reporting period means having to
catch up on variances and errors at the last minute
Review results throughout the month to avoid surprises and
data rectification at the end of the month or quarter
Less structured processes have the potential for additional
changes to impact results
Keep manual intervention to a minimum when moving data
and generating reporting outputs
More manual steps leads to a staff focus more on the process,
rather than understanding the underlying drivers of the
numbers
Less manual processing allows for analysis, such as variance
analysis or identifying outliers
Without well designed structures, reporting can be
inconsistent and burdensome
Having well defined master data to support reporting outputs
simplifies the process
SOLUTIONS
CHALLENGES
Typical attributes of a close cycle

9. Close cycle tracking – how it started:

10. Close cycle tracking – how it’s going:

11. Lack of transparency
Cannot easily support auditing
Error prone
Satisfactory for auditing purposes
Lack of flexibility
Lack of access (troubleshooting via IT only)
Data is accessible, can support thorough auditing processes
Specialized knowledge (custom rules), simple, static
Data is accessible, can support thorough auditing processes
Business Driven
Flexible
Process improvement opportunities
GL
PCM
FCCS
FCCS
GL
FCCS
GL

12. Impact of Allocations on Close Processes
•Multiple methods to get to the same
standard reports, which may result in
misleading information
•Cannot easily tell whether there are
data issues that stem from the
allocation process or if they are related
to other areas within the Close
System/Cycle
•Lack of transparency
•Dependency on IT to provide data or
answers to support the data
•Missing critical analysis details just
because source system cannot easily
accommodate
•Slows down the close cycle by either
inserting bottlenecks in data
responsibilities or delays due to data
availability
•Level of detail may be adjusted to
reflect business needs at the cost of
optimal run times
Burden the GL
Unsatisfactory
Managerial
Reporting
Standard
Reporting is
rarely
standardized
Complicate the
validation and
troubleshooting
process

13. Extend your Close Cycle capabilities!
Situation:
Allocations in the GL via
multiple steps w no
transparency
Desired outcome:
Reduce Close cycle delays,
align Close and Budgeting
allocation logic and enable
faster and more accurate
reporting
Insurance
Financial Services
Manufacturing
Financial
Close
Situation:
Allocations partially done in GL,
partially in offline solutions,
error prone and lacking
complete picture
Desired outcome:
Improved financial insight in-
order to explain, trace and
define the value delivered by
business unit
Situation:
Lack of capability to calculate
standard rates
Desired outcome:
Achieve greater transparency for
costs (direct and indirect) by
Product Line

14. Use case #1
Insurance
Financial Services
Manufacturing
Financial
Close

15. Insurance allocations & Close cycle (1)
Insurance
Expense
Allocations
Internal/External
Stat (Insurance
Regulatory Body)
Legal Entity
Reporting
Segment Level
Reporting
External/Internal
US GAAP
GL data set @Account, Department and BU Level
Allocations moved from
PSGL to PCM
Data loaded at Account and
Department level required
LE to LE allocations based on
SLAs custom drivers and LOB
Direct
Defining Allocation Points and Account groups
Finding allocation patterns
by looking at data , business
org and reporting
requirements. This enabled
simplification of both
process as well as
maintenance and driver data
submission. Reporting and
troubleshooting was also
greatly enhanced.
Legal Entity allocations
LE to LE allocations now had
the detail of the originating
account, originating Legal
Entity , Target Legal Entity
and any number of
interactions in between. The
LE to LE allocation was not a
single step process – there
were several instances
where data bounced around
various LE before reaching
the final target.
Product allocations
~ 200 products , being able
to report now at Source and
Target BU, detailed Account
and Department level..
Limited transparency into original expenses and methodology of allocated amounts
Multiple steps/dependencies in Peoplesoft (PS) allocations process which had to run in sequence over several days
Results were aggregated and details lost along the way
International regions would see Corporate Expense allocation entries when they were loaded into the consolidation model
Needed a centralized tool that could share allocation rules, drivers, and structures

16. Insurance allocations & Close cycle (2)
Allocated Expenses are completely transparent allowing the lines of business to trace received expenses back to originating source
Created greater visibility and control around management of expenses
Standardization of allocation rules leading to simplified reporting, troubleshooting and maintenance
Eliminated all manual / offline systems that were built in support of equivalent Budget/Forecasting cycle (alignment of methodology as well
as solution for both Financial Close and Planning and Budgeting Cycles)
Reduced Financial Close processing cycle by hours and eliminated downtime
Empowered business to focus on what matters – how to improve processes, business and create a positive impact

17. Use case #2
Financial Services
Financial
Close
Insurance
Manufacturing

18. Historically half of corporate expenses not reflected in business line profit and loss (P&L) reports
Greater business leader visibility to corporate spending
System that could be audited
Flexibility
Capability to process What If scenarios
Alignment between Close and Planning re: allocation methodologies
Financial Services & Close cycle (1)
Fin Services
Shared
Services
Allocations
Securities and
Exchange
Commission
(SEC)
Financial
Industry
Regulatory
Authority
(FINRA)
Reflecting
Corporate
Spend in
Business Line
P&L
Multiple
rounds
/iterations of
Shared Costs`
GL data set @Account, Cost Center, Project
Allocations moved from GL
and Offline solutions to PCM
Data loaded at Account ,
Cost Center and Project
needed to be allocated to
target Account, target cost
centers, target segments.
Facilities, HR, Fund Allocations
Defining relationships
between hierarchy
structures and allocation
patterns enabled users to
drive allocations by
leveraging master data
attributes.
Inter –department and intra-
account allocations.
Fees Allocations
State registration Fees and
SEC allocations down to
segments and subsegments.
Segment allocations
Regional and institutional
subsegment allocations

19. Financial Services & Close cycle (2)
Each BU can now understand their resource usage and overall impact on the P&L
Greater context to facilitate decision making around capital allocations
Improved financial insight 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
Generate allocation results within PCMCS in under 20 minutes for Actuals scenario

20. Use case #3
Manufacturing
Financial
Close
Insurance
Financial Services

21. Manufacturing & Close cycle (1)
GL data set @Account, Cost Center, Entity
Allocations moved from
GL and Offline solutions
to PCM
Data loaded at Account ,
Cost Center and Entity
needed to perform
allocations across
various departments
(shared services
distribution), all the way
down to products (SKU
family)
Facilities, IT, HR allocations
Allocating expenses
between departments,
having instances of
reciprocal allocations
that needed to be
tracked back and forth
for transparency
purposes.
Drivers such as Sq Ft,
Headcount, PC Count,
etc. were identified as
meaningful.
Finance and General Manufacturing Allocations
Finance allocations to
targeted departments
that can then push the
expense further to
General Manufacturing
Management as well as
specific direct
departments.
Other Indirect Department allocations
Allocations based on a
workforce detailed
driver (ref. time surveys)
Allocation to Finished
Goods (SKU Family)
Allocation of final
indirect departments
data to Finished Goods
based on Labor hours
metrics from GL
Calculation of final
rates(Direct Labor,
Indirect Overhead,
Direct Overhead)
Manufacturing
Allocation to
Product (SKU
family)
“Letting the
numbers tell the
story”
Base company
product strategy
on real data vs
anecdotal
evidence
Discover manuf.
Inefficiencies
buried into
product costs
Gain Labor hours
Efficiencies

22. Manufacturing & Close cycle (2)
Impactful discoveries of true profit winners or losers
Identified human errors in reporting MH and LH
Clarity of indirect costs across all departments down to Product level
Flexibility in allocation approach when determining new /more accurate allocation drivers
Transparent rates to form the basis of Standard Costing

23. Where to start?
Need to consider level of
complexity
Are there specific
reporting requirements?
Is process transparency
important?
Is the process static or
does it need to change
frequently?
Do historic results need to
remain as is or do they
need to be revised for
management purposes?
EPMORACLEALITHYA

24. Food for thought
• Consider investing in automation
• Use Intelligent Process Automation and other tools to minimize manual processing and increase reliability
• Evaluate where and how allocations and calculations are occurring
• There may be better tools and steps in the process to perform these tasks
• Identify recurring issues
• Structural issues and poor data quality can cause additional effort every reporting period if not addressed
• Perform reconciliations early in process
• Identify issues early so that they can be resolved on timely basis
• Leverage your master data relationships
• Identify relationships in master data that could drive calculation logic and reduce/remove maintenance
• Evaluate tracking mechanisms in place
• Leveraging tools can provide additional transparency and simplify process
• Use workflow
• Will allow for multiple review and approval cycles throughout the close

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Don't Miss Our 12 Sessions at Kscope21! Alithya is a platinum sponsor of Kscope21
> Mike Killeen & Zubin Shah, Alithya
6/22/21 | 1:40 - 2:20 PM
> Geordan Drummond, Alithya
6/22/21 | 12:40 - 1:40 PM
> Seema Shah; Nick Boronski, Oracle, & Lee Divers, State Street
6/23/21 | 12:40 - 1:40 PM
> Ryan Ward & Sara Beth Good, Alithya
6/23/21 | 2:20 - 3:20 PM
> Andrew Laferla, Alithya & William Harned, MUFG Union Bank
6/24/21 | 11 AM - 12 PM
> Alecs Mlynarzek & Vatsal Gaonkar, Alithya
6/24/21 | 2:20 - 3:20 PM
> Kevin Black, Alithya & Robert Kursten, Viasat
6/25/21 | 12:40 - 1:40 PM
> Geordan Drummond; Nick Boronski & Tim Gaumont, Oracle
6/28/21 | 4 - 5 PM
> Kevin Black; Matthew Jacobsen, WillScot Mobile Mini
6/29/21 | 4 - 5 PM
> Alecs Mlynarzek, Alithya & Caroline Dill, General Dynamics IT
6/30/21 | 11 AM – 12 PM
> Alecs Mlynarzek & Geordan Drummond, Alithya
6/30/21 | 12:40 - 1:40 PM
> Andrew Laferla, Alithya
6/30/21 | 2:20 - 3:20 PM

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