Improve Performance with Enhanced Insight into Profitability and Costs Utilizing HPCM
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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. 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
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. 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. 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
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. Overview of Oracle Business Analytics
Profitability Management Solution
42
43. BI Foundation: Info Delivery
EPM Apps: Information Generation
Master Data, Data Quality & Data Integration Tools: Information Management
43
Oracle Business Analytics
Architecture
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
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
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
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. Demo - Define POV, Business & Driver Metric
Dimension Master Data
Business DimsPOV Dimensions Driver Metrics
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. 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. 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. Demo - End Users Define Drivers in HPCM
Select from list of user
defined driver metrics and
allocation methodologies.
1
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. Demo - End Users Create Target Range
Assignment Rules in HPCM
3
58. Demo - End Users Map Source Stage to
Targets Via Assignments
Or Allocation Assignments can be bulk
loaded via a staging table.
4
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. 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. 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