hyperion - total planning and budgeting - oracle · hyperion - total planning and budgeting michał...

Hyperion - total planning and budgeting

Michał Kozłowski, EPM Solution Sales

Poland, Lithuania, Latvia, Estonia

Agenda

• Overview Enterprise Planning

• Solution Overview

• Delivering World Class Enterprise Planning

• Customer Success

Copyright © 2010, Oracle and/or its affiliates. All rights reserved. 3

AVG. HOURS FOR FINANCIAL MODELING

Reduce Budget Cycle by Months,

Scenario Analysis by More Than 50%


MONTHS TO ASSEMBLE BUDGET

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Marginal Stable Best in Class Transformational

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Marginal Stable Best in Class Transformational

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Reduce Modeling Time From Days to Hours

Fortune 500 energy company and nation’s leading supplier of competitive electricity to large commercial and industrial customers.

Before

In Excel took days to run new

scenarios 5 year long-range plan

Lack of fully integrated financial

scenarios between debt pay downs,

share buy-backs and investments in

long-term capital projects

No integration between FP&A and

Treasury models

After

Cash-flow models in hours, not days

Sensitivity analysis on cash-flow and

treasury scenarios

Strategic use of funds across debt,

equity and capital projects


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Overview Enterprise

Planning


Forecast/model strategic possibilities

Select strategies

Set targets

Seed targets to annual operating plan

Start annual process

Evaluate Financial Performance

Update strategic plan with latest forecast

Evaluate resource and capital requirements

Strategic plan Annual

budget / plan

Include operational

details

Evaluate workforce and capital

Monthly / rolling

forecast

Evaluate ‘true’

profitability

Achieve a World Class Enterprise Planning

Process

Assess and Manage Risk

Include operational detail and model variability of financial plan

Update forecast with latest budget and actuals


Disconnected Processes Lead to

Inefficiency and Missed Targets

• Time – cycles take too long,

missed opportunities and

obsolete plans

• Quality – data integrity, lack of

standardization and

communication

• Flexibility – lack of

responsiveness to changes

• Cost – many wasted resources,

questionable benefits


FP&A

Senior Management

Annual Plan & Forecast

Revenue & Cost Models

M&A

Departmental Plans

Headcount Plans

Treasury Plans

Long-Term Planning


Solution Overview


Oracle EPM Connects Management

Processes


Common Integration & Analysis Data Quality and Consistent Dimensions

Common Reporting & Interaction

Strategic Planning

Financial Close

Planning & Forecasting

Profitability Management

Critical Components to Implement Planning Best Practices


Capital Assets Planning

Workforce Planning

Long-Term Financial Planning

Financial Detail

Operational Detail

Predictive Modeling & Simulation

Operational Revenue & Cost

Modeling

Planning, Budgeting & Forecasting

Functional Plans

Project Planning

Marketing Planning

Key Capabilities Accelerate the Enterprise Planning Process

• Centralized system

• Align top-down and bottom-up

• Consistent assumptions

• Common allocations &

calculations

• Integrated Operational Planning

to address in-depth revenue and

margin planning

• Purpose-built Capital Assets and

Workforce planning modules for

fast deployment

• Powerful workflow and process

management for budgeting and

forecasting

• Leverages Essbase – powerful

reporting and analysis


Forward-looking Analytic Engine Fast and Simple with Essbase

Powerful Calculator • Hundreds of built in functions and algorithms

• Trending

• Goal seeking

• Procedural calculations

Financial Intelligence • Critical for Variance Analysis, understands better /

(worse)

• Essbase understands Financial Data and Calculations

• Time Balances

Time Intelligence • Time Series calculations are hard to do

• Yet, an extremely common BI requirement

• Essbase makes it very easy at any level, any dimension, for any type of calendar



Delivering a World Class

Enterprise Planning

Process


Best Practices For a World Class Enterprise

Planning Process

1 Measure financial impact of business strategies

3 Evaluate impact on workforce and capital assets

5 Manage risk and uncertainty

2 Include operational detail and model variability of financial plan

4 Adjust the forecast continuously


• Evaluate strategic projects and initiatives

• Simulate effects of M&A

• Optimize capital structure

• Review impact on financing strategies

• Set annual targets

1 Measure the financial impact of key business strategies


Long-term Planning, Corporate Development

and Treasury in a Single Model

• Integrated financial

statements

• Project shareholder value

• Run unlimited scenarios

• Consolidate multiple

business combinations

• Evaluate strategic projects

• Simulate effects of M&A

• Debt Scheduling

• Optimize capital structure



• Validate key financial drivers based on operational

details

• Accountability from operations and finance

• Continuous validation throughout the planning and

forecasting cycles


Include operational detail and model variability of financial plan

• Align plans and planning

assumptions across

finance and operations

• Review financial impact

with plan revisions

• Empower finance team to

assess overall business

impact and drive fact-

based decisions


Revenues

Cost of Sales ---------------------------------------------

Gross Margin

Operating Expenses R&D

SG&A

Other ---------------------------------------------

Operating Margin

– Bottom-up product

hierarchy models

– Product mix details

– Regional, channel &

customer mix details

– Key materials &

input costs

– Granular pricing

• Driver-based revenue and margin impact analysis

• Alignment of dollar targets with unit plans

• Validation of operational constraints

Revenue & Margin Planning Aligned with

Operations


3 Evaluate the resource impact on workforce and capital assets

• Incorporate the appropriate level of detail in the

enterprise planning process

• Ensure you have the right amount of workforce

staffed

• Ensure you allocate the right amount of capital

required


Assess Resource and Capital Assets

Requirements

Workforce Plan

Financial Plan

Capital Plan

Detailed Headcount, Staff Expenses, Salary &

Compensation

Detailed Depreciation, Asset Purchase/Sell,

Asset Expenses



• Adjust the forecast continuously by incorporating a

monthly or rolling forecasting process

• Incorporate ‘event based’ planning in order to react to

change in economic and environmental changes

• Apply best practices and a world class process in

order to respond timely


Updated Forecasts Based on Current

Conditions

• Continuous forecasts (rolling,

event based)

• Manage budget process and

workflow with validations

• Top-down and bottom-up

• P&L, B/S and C/F

• Business Unit, Department

and Cost Center level

• Revenue and cost allocations

• Driver-based planning

• Workforce planning

• Capital asset planning


5 Manage risk and uncertainty in your plans

• Move from ‘conventional’ to ‘advanced’ scenario

modeling

• Review full range of outcomes

• Quantify the risk of not achieving your goals

• Know the probability of outcomes

• Understand key factors impacting your business


Quantify Risk and Uncertainty

• Only 3 possible outcomes

• Limited view of risk

• What are most important risk factors?

• What are the odds I’ll miss the target?

• Which outcome is most likely?

• Full range of outcomes

• Illustrate probability of outcomes

• Immediate visibility into inherent risk

• True risk analysis for financial models

Conventional Single Point Scenarios

Advanced Thinking in Ranges


Best Practices For a World Class Enterprise

Planning Process

1 Measure financial impact of business strategies

3 Evaluate impact on workforce and capital assets

5 Manage risk and uncertainty




Critical Components to Implement Planning Best Practices


Capital Assets Planning

Workforce Planning

Long-Term Financial Planning

Financial Detail

Operational Detail

Predictive Modeling & Simulation

Operational Revenue & Cost

Modeling

Planning, Budgeting & Forecasting

Functional Plans

Project Planning

Marketing Planning

Improved Accuracy, Flexibility and Costs

• Increase planning and

forecasting accuracy

• Flexibility to respond to

market changes timely

• Reduce costs by

allocating resources to

the most important

opportunities


Annual Plan & Forecast

Revenue & Cost Models

Long-Term Planning

FP&A

Senior Management


Customer Success


Budget Tens of Thousands Employees in a

Fast Changing Market

One of the 20 largest financial institutions worldwide and ranked in top 10 in Europe. Implemented initial budget system for 10,000 employees within 4 months.

Before

Days to get HR data in

8 weeks for first budget iteration

10 days to transfer employees

4 weeks to create and distribute

Excel templates

Data was not dependable

Corporate budget group had 9 FTE’s

to maintain the process

After

Few minutes to enter HR data

4 ½ weeks for first budget iteration

Reorganizations down to 24 hours

Next phase scale to 50,000 employees

Detailed budget to 700 accounts

Rapid user adoption due to user

friendliness


Shortens Budget Cycle by Implementing

18 Month Rolling Forecast

World's 5th largest Airline, celebrating its 75th anniversary in 2009

Operates 2,750 daily departures;133 domestic, 132 international destinations

Named Fortune magazine No1 World's Most Admired Airline

Before

30% of FP&A time spent on data

management

Thousands of spreadsheets exist with

embedded calculations, macros &

links

Excessive review time and multiple

iterations due to extended budget

cycle

Security issues with having data

residing in offline Excel spreadsheets

After

Move to a 18 month rolling forecast to

allow for shorter budgeting process

Replaced 1000’s of excel

spreadsheets

Web-based data entry for Workforce

Planning (Mgmt, Reservations agents)

Enabled for local currency input and

automated currency translation

Driver-based calculations using

Operational Statistics


Align Product Allocation Decisions with

Business Priorities

Seagate is the worldwide leader in the design, manufacture and marketing of hard disk drives

Before

Hundreds of Excel templates with little

consistency across planners

Lack of visibility and coordination in

demand-supply alignment

Lack of business and financial impact

analysis

Limited scalability to handle growing

business volume & complexity

After

Consistent data and planning models

shared across all planners

Proactive management of supply hot-

spots in response to demand variability

Responsive decisions based on

operational and financial impact

analysis

40% gain in planner productivity

leading to staffing efficiencies


Overcome A Financial Crisis

$22 Billion global provider of power and automation technologies

Before

Lost investment-grade credit rating

Needed to recapitalize balance sheet

No cash flow modeling capability

No simulations at the divisional or

business unit level

After

Credit rating back to investment grade

$4 Billion debt restructuring

Simulate capital structure and cash

flow

97% accuracy in net income projection


Common Customer Challenges Solved

CHALLENGE

Long budget cycles

Reduce budget variances

Increasing budget details

Reduce number of Excel sheets

Too few resources focused on analysis

High process costs

Expanding budget process

RESULTS

50-82% time reduction

65-80% improvement in accuracy

700 accounts and over 60,000 employees

2,000+ Excel spreadsheets replaced

8 FTE transferred from budget to analysis

$1.5M return on investment

Rolling forecasts, operational planning,

investment planning, bulk updates,

pre-built depreciation calculations,

version control


hyperion - total planning and budgeting - oracle · hyperion - total planning and budgeting michał...

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