1
Copyright © 2011, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Hyperion Profitability and Cost Management
HPCM – Hyperion Profitability & Cost Management
Complimentary Positioning: Oracle Cost Mgmt + HPCM
Bart Stoehr, John Fitzmaurice – EPM Product Management/Strategy
19-Mar-2013
2
Copyright © 2011, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
The following is intended to outline our general product
direction. It is intended for information purposes only,
and may not be incorporated into any contract. It is not
a commitment to deliver any material, code, or
functionality, and should not be relied upon in making
purchasing decisions. The development, release, and
timing of any features or functionality described for
Oracle’s products remains at the sole discretion of
Oracle.
3
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Program Agenda
• Challenges around O/H’s, allocations and profitability
• Solution approach
• Introduce Hyperion Profitability & Cost Management (HPCM)
• Simple model example and report insight
• Q&A
4
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Challenges facing Oracle Cost
Management customers today
• Item Cost Overhead analysis
• Product line and customer profitability
• Strategic and tactical decision making
5
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Item Cost Overhead analysis
• Challenge
– Overhead is a big proportion of total COGS
– Overhead pools/rates in numerous spreadsheets & one-off efforts
– Lack coordination with system-wide cost reduction/efficiency
initiatives; Often poor or no justification of O/H assignment logic
– Non-inventoriable overheads and controllable costs – the GAAP view
vs. total overhead costs that you are responsible for controlling
6
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Product line and customer profitability
• Challenge
– Revenue adjustments and numerous cost allocations needed
beyond direct revenue and COGS
– Like COGS, need a consistent approach to SGA allocations
– Cost to serve can erode some to all Gross Margin
– Some higher volume products and some larger customers may be
subsidizing low volume products and unprofitable customers
7
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Strategic and tactical decision making
• Challenge
– Do the profitability numbers we’re using tie back to the G/L view
that Executive Management are basing their decisions on?
– Are we capturing the variability of costs/expenses across Products
and LOBs so that we can model new product costs?
– Are we integrating our planning and costing, using the latest Annual
Budget or Forecast numbers as the basis for overhead rate
development (– driver-based planning)?
8
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Program Agenda
• Challenges around O/H’s, allocations and profitability
• Solution approach
• Introduce Hyperion Profitability & Cost Management (HPCM)
• Simple model example and report insight
• Q&A
9
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Profitability Management Lifecycle
Who are the most and least profitable
customers?
What products contribute the most to
the bottom line?
Does customer or product profit vary by
region?
What is the profit contribution margin of
a product or a service?
Why are customers profitable or
unprofitable?
Why is the cost to sell or service
different across the customer base?
How do business processes impact
customer profitability?
How is resource consumption
affected by product maturity?
Profitability
Management
What is the impact on Profitability when:
- change in price
- reassignment of resources
- introducing a new product
-change in product mix
10
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
One System for Profitability Reporting, Profitability
Analytics, and Profitability Management
Drive Profitable Growth –
Measure the value added by a
product, customer, or a segment, to
your business profitability
What?
Why?
Discover drivers of Cost
and Profitability – Discover
how much each activity costs to
sell or service a product
Now What?
Use Insight to Guide Actions – Lead people to take
action based on verifiable facts for effective decisions
An integrated system for Profitability Reporting, Profitability Analysis
and Profitability Management will drive the next level of value creation
and competitive advantage for organizations
11
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Program Agenda
• Challenges around O/H’s, allocations and profitability
• Solution approach
• Introduce Hyperion Profitability & Cost Management (HPCM)
• Simple model example and report insight
• Q&A
12
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Hyperion Performance Management Applications
Market-Leading, Integrated Suite
Strategy
Management
Financial Close
and Reporting
Planning and
Forecasting
Profitability and Cost
Management
Common Administration Services
Oracle BI Foundation
• Integrates data from multiple
transaction systems
• Automates and links strategic and
financial management processes
• Modular, integrated suite
• Fast time to value; Low TCO
• Over 6,000 customers
13
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Hyperion Profitability and Cost Management
Providing Value in All Industries
Consumer
Packaged Goods
Financial Services
Healthcare
Providers & Payer
Retail
Communications
Manufacturing
HPCM
Utilities
14
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
Distribution and
Logistics
Transportation
INTERNAL USE ONLY
Public Sector Government
Hyperion Profitability and Cost Management
Delivers Detailed Cost and Profitability Insight
• Flexible measurement, allocation and
management of costs and revenues
• Computes Profitability for any
dimension such as Products,
Customers, Channels & LOB
• Provides Scenario Modeling for
Decision Making
• Computes Profitability across any
view such as Actual, Budget &
Forecast
15
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Hyperion Profitability and Cost Management
Empower Users with Visibility and Flexibility
– Accurately allocate costs with
a flexible allocation engine that
supports any methodology
– Gain confidence in cost
allocations and revenue flows
with graphical traceability
maps
– Quickly validate models with
user-defined business rules
16
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Hyperion Profitability and Cost Management
Empowers the Business User to Own & Operate the system in
partnership with IT
• User defined allocation stages
– Accounts, cost centers, products,
activities, customers, LOB,
channel….your choices
• User defined dimensionality
– Time, account descriptors, scenarios,
attributes…et al
• User defined allocation formula
– Supports several delivered methods
– Ability to build configurable allocation
methods
17
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Hyperion Profitability and Cost Management
Integrated Reporting & Analysis
Multiple End User Options
– SmartView for MS Office
• Excel / Word / PowerPoint
– Report Distribution Capabilities
– Interactive Dashboard Analysis
18
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Program Agenda
• Challenges around O/H’s, allocations and profitability
• Solution approach
• Introduce Hyperion Profitability & Cost Management (HPCM)
• Simple model example and report insight
• Q&A
19
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
GL $$$
An Example: Using HPCM to Assign Costs
to Products, Branch, and Activity
Stages & Dimensions
Stages:
$$$$
Dimensions:
1: General
Ledger
=
2: Activity
=
Dept
Dept
Drivers & Assignment Paths
+
+
Account
=
$$$$
Facilities
Rent
Audit
Salaries
% of
Time
Spent
IT
Desktop Support
Activity
$$$
3: Product
$$$$
IT
Salaries
Even
Split
$$$
Checking Accts
Product
$$$
# PCs
in Use
4: Branch
=
Branch
East
57th
Square
Feet
St
# of
Trans
5: Cost Object
20
=
Product
+
Branch
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
+
Activity
INTERNAL USE ONLY
Checking Acct
East 57th St
Open Account
# of
Trans
$$ $$ $$$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$$
$ $
$ $
$ $
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Traceability map – insight into model logic
21
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
HPCM – a great foundation to begin
the journey
• Actionable information
• Consistent
• Repeatable
• Reliable
• Better internal controls
• Insight
• Traceability and validation reporting built in
• Easy reporting development & analysis
22
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Program Agenda
• Challenges around O/H’s, allocations and profitability
• Solution approach
• Introduce Hyperion Profitability & Cost Management (HPCM)
• Simple model example and report insight
• NEW – HPCM Shared Services Flash Demo
• Q&A
23
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
NEW HPCM Flash Demo
– Shared Services
• Just completed
and posted to
Oracle.com
24
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
HPCM Flash Demo – Shared Services
- broad applicability
• IT Shared Services is often the
primary focus
• Other Shared Services include:
–
–
–
–
–
25
Support Desks/Call Centers
Human Resources (HR)
Facilities/Real Estate/Occupancy Costs
Legal, & Compliance (GRC)
Developing manufacturing overheads
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
26
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
Do we need to have EPM installed
before HPCM?
• Please refer to slide # 13
• The Oracle EPM Suite:
– Budgeting/Planning/Forecasting
– Profitability & Cost Management
– Financial Close & Reporting
– Strategy Management
• shares a common foundation and setup infrastructure
• You install the foundation and then the application modules
27
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
How does this product relate to
Hyperion Planning?
• The Oracle EPM Suite includes both Planning and HPCM
• Both of these solutions are on the common foundation we see in Slide # 13
• Yes, some HPCM customers are also using Planning
• Integrated usage we’ve seen includes flowing the G/L data into Planning for
Actuals vs. Budget or Forecast analysis
• and flowing the data from within Planning into HPCM
• Via EPMA, dimensions and hierarchies can be shared by both solutions
28
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
We are not using an Activity-Based
approach/model – can it be skipped?
• Please refer to slide # 20
• Great question
• We showed an example that included activities in one of the Stages
• No, this is not required
• With HPCM, you, the Functional Business User, define the model you need:
– dimensions; hierarchies; attributes
– stages; dimensions for each stage; the process/data flow
• So, if you do not want/need to define or include activities, that is OK
29
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
From a solution perspective, is it imperative that the
user know both HPCM, and EBS Cost Mgmt and G/L
(the latter being two being the underlying data
source). Thoughts?
• For the types of situations we discussed today, yes, it would be beneficial to
have some of your Team know Cost Management solutions, and be familiar
with G/L systems, in addition to being your HPCM cost/profit guys.
• No, you don’t need to be experts on all of these data sources --- but you’ll
want to have a good high level understanding so that you can interact
effectively with all the solution owners
• We expect most FP&A groups have these skills/talents
• As we commented on Slide # 17, projects are successful where the
Finance/Business Teams partner up with the IT Team, and HPCM helps
facilitate that versus a black-box spreadsheet or custom solution approach
30
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
How are HPCM and In Memory Cost
Management integrated? Do we need both
or HPCM can address all business needs?
• HPCM complements the new (and in development) offerings from Oracle Cost
Management. With HPCM you can allocate your overheads and pass these
calculated overheads to Oracle Cost Management (TBD). HPCM can do
overall customer and profit line profitability. But to get item level or SKU
profitability, you will need the new in-memory solutions from Oracle Cost
Management.
31
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
32
Copyright © 2013, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY
33
Copyright © 2011, Oracle and/or its affiliates. All rights
reserved.
INTERNAL USE ONLY