Hyperion - total planning and budgeting. Michał Kozłowski, EPM Solution Sales Poland, Lithuania, Latvia, Estonia

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2 Hyperion - total planning and budgeting Michał Kozłowski, EPM Solution Sales Poland, Lithuania, Latvia, Estonia

3 Agenda Overview Enterprise Planning Solution Overview Delivering World Class Enterprise Planning Customer Success Copyright 2010, Oracle and/or its affiliates. All rights reserved. 3

4 Reduce Budget Cycle by Months, Scenario Analysis by More Than 50% AVG. HOURS FOR FINANCIAL MODELING MONTHS TO ASSEMBLE BUDGET Marginal Stable Best in Class Transformational 0 Marginal Stable Best in Class Transformational Pre Post Pre Post Copyright 2010, Oracle and/or its affiliates. All rights reserved. 4

5 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 5

6 <Insert Picture Here> Overview Enterprise Planning Copyright 2010, Oracle and/or its affiliates. All rights reserved. 6

7 Achieve a World Class Enterprise Planning Process Forecast/model strategic possibilities Select strategies Set targets Include operational detail and model variability of financial plan Update forecast with latest budget and actuals Strategic plan Annual budget / plan Include operational details Evaluate workforce and capital Monthly / rolling forecast Evaluate true profitability Seed targets to annual operating plan Start annual process Evaluate resource and capital requirements Evaluate Financial Performance Update strategic plan with latest forecast Assess and Manage Risk Copyright 2010, Oracle and/or its affiliates. All rights reserved. 7

8 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 Treasury Plans Senior Management Long-Term Planning M&A Flexibility lack of responsiveness to changes Annual Plan & Forecast Cost many wasted resources, questionable benefits Headcount Plans FP&A Departmental Plans Revenue & Cost Models Copyright 2010, Oracle and/or its affiliates. All rights reserved. 8

9 <Insert Picture Here> Solution Overview Copyright 2010, Oracle and/or its affiliates. All rights reserved. 9

10 Oracle EPM Connects Management Processes Common Reporting & Interaction Strategic Planning Planning & Forecasting Financial Close Profitability Management Common Integration & Analysis Data Quality and Consistent Dimensions Copyright 2010, Oracle and/or its affiliates. All rights reserved. 10

11 Critical Components to Implement Planning Best Practices Predictive Modeling & Simulation Functional Plans Long-Term Financial Planning Workforce Planning Capital Assets Planning Project Planning Marketing Planning Operational Revenue & Cost Modeling Planning, Budgeting & Forecasting Financial Detail Operational Detail Copyright 2010, Oracle and/or its affiliates. All rights reserved. 11

12 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 12

13 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 13

14 <Insert Picture Here> Delivering a World Class Enterprise Planning Process Copyright 2010, Oracle and/or its affiliates. All rights reserved. 14

15 Best Practices For a World Class Enterprise Planning Process Measure financial impact of business strategies Include operational detail and model variability of financial plan Evaluate impact on workforce and capital assets Adjust the forecast continuously Manage risk and uncertainty Copyright 2010, Oracle and/or its affiliates. All rights reserved. 15

16 1 Measure the financial impact of key business strategies Evaluate strategic projects and initiatives Simulate effects of M&A Optimize capital structure Review impact on financing strategies Set annual targets Copyright 2010, Oracle and/or its affiliates. All rights reserved. 16

17 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 17

18 2 Include operational detail and model variability of financial plan Validate key financial drivers based on operational details Accountability from operations and finance Continuous validation throughout the planning and forecasting cycles Copyright 2010, Oracle and/or its affiliates. All rights reserved. 18

19 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 factbased decisions Copyright 2010, Oracle and/or its affiliates. All rights reserved. 19

20 Revenue & Margin Planning Aligned with Operations 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 20

21 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 21

22 Assess Resource and Capital Assets Requirements Financial Plan Workforce Plan Capital Plan Detailed Headcount, Staff Expenses, Salary & Compensation Detailed Depreciation, Asset Purchase/Sell, Asset Expenses Copyright 2010, Oracle and/or its affiliates. All rights reserved. 22

23 4 Adjust the forecast continuously 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 23

24 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 24

25 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 25

26 Quantify Risk and Uncertainty Conventional Single Point Scenarios Advanced Thinking in Ranges 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 26

27 Best Practices For a World Class Enterprise Planning Process Measure financial impact of business strategies Include operational detail and model variability of financial plan Evaluate impact on workforce and capital assets Adjust the forecast continuously Manage risk and uncertainty Copyright 2010, Oracle and/or its affiliates. All rights reserved. 27

28 Critical Components to Implement Planning Best Practices Predictive Modeling & Simulation Functional Plans Long-Term Financial Planning Workforce Planning Capital Assets Planning Project Planning Marketing Planning Operational Revenue & Cost Modeling Planning, Budgeting & Forecasting Financial Detail Operational Detail Copyright 2010, Oracle and/or its affiliates. All rights reserved. 28

29 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 Long-Term Planning Senior Management FP&A Annual Plan & Forecast Revenue & Cost Models Copyright 2010, Oracle and/or its affiliates. All rights reserved. 29

30 <Insert Picture Here> Customer Success Copyright 2010, Oracle and/or its affiliates. All rights reserved. 30

31 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 31

32 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 32

33 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 hotspots in response to demand variability Responsive decisions based on operational and financial impact analysis 40% gain in planner productivity leading to staffing efficiencies Copyright 2010, Oracle and/or its affiliates. All rights reserved. 33

34 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 34

35 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 Copyright 2010, Oracle and/or its affiliates. All rights reserved. 35

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