Profitability and Cost Management v19.08: Updates, Insight, & Impact

Oracle Cloud Service subscribers are used to monthly updates being applied to their Test and Production instances on the first and, respectively, third Friday of each month 

However, not all monthly updates are created equal. 

If you own a subscription to Profitability and Cost Management Cloud, you may have noticed a brand new menu with the latest update that occurred this past Friday, August 2ndMore importantly, the updates in the latest version of PCM are not only on the surface.  

Here is a list of all the announced updates as well as some other insightful findings and their potential impact: 

  1. Custom Calculations Bug fixed
  2. New Model Menu
  3. Designer menu – 2 in 1!
  4. Increased transparency during rule build
  5. Integrated POV Manager
  6. Increased flexibility with Model and Data POV
  7. Launch multiple POV allocations with one click
  8. Embedded search capability in the Execution Control menu
  9. Easy access to Job Library
  10. Recreate instance with all file clear

1.  Custom Calculations Bug Fixed

If you were holding off on applying PCM patches because of reasons pertaining to Custom Calculations issues in prior updates, then this is the update you have been waiting for!  Early testing of the updates in PCM v19.08 indicates that bugs found in past versions in relation to complex custom scripting have been solved.

*Caution:  Each Custom Calculation is unique, and thorough testing is crucial before the scheduled v19.08 update is pushed to the Production instance. 

All software updates should be tested using a data set that can be easily compared with results from a prior version of the software.

Due to several changes to the Essbase database, users may notice differences in the reported values in Execution statistics reports, but the resulting data values should be the same as they were before the latest update was applied. When Test instance calculations results indicate that the cells updated differ compared to Production results for the same rule, users should take it one step further and validate the data values.

2.  New Model Menu

Rule build and maintenance tasks can now be performed in the new “Models” menu.

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The new Models menu is aimed at simplifying the way we manage Profitability and Cost Management applications Model data – Rulesets and Rules. All administrative tasks are grouped for a more streamlined interaction with PCM – from building rules to executing them and, finally, monitoring jobs – a simplified menu that reflects a real-life workflow. This GUI update will enhance the user experience as there is no more need to jump between different sections of the menu in order to perform end to end activities.

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3.  Designer Menu:  2 in 1!

Within the Designer tile there are two tabs covering functionality that were previously accessed via two separate menus:

  • the pre 19.08 Rules menu –called Waterfall Setup in the Designer menu
  • the pre 19.08 Calculation Express Editor menu – called Mass Edit in the Designer menu

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Combining the previous two menus is a beneficial move as it groups logical actions within one location.

Users can set up new rules in the Waterfall Setup tab and can perform mass changes such as replace or add selections in multiple rules in the Mass Edit tab.

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4.1  Increased Transparency During Rule Build

Prior to the 19.08 update, in order to check who was the author of a rule, date and time the rule was created as well as last updates, users would have to exit the Rules menu and use the information in the Calculation Rules menu instead. That is no longer the case in the new 19.08 Designer menu. Every rule now displays all this information immediately as it is selected.

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There are also updates to the GUI for the two types of rules in PCM.

4.2.  Standard Allocation Rules

The pre-19.08 Management Ledger Rule editor menu for standard allocations is straightforward and easy to use.

There is a tab for each section, indicating from left to right the proper steps for setting up your model allocations.

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Who would have thought it could get better?

Well, in v19.08 it did.

The new display combines the Source and Destination tabs into one. This adds to the ease of use as well as transparency of rule setup.  In one look users can now check the core setup of each rule.

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The […] button on the right side of each row/ dimension selection has 3 menu options:

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  • Users can type in multiple member source selections. Member name validation is not dynamic; it is performed only when saving contents. The menu does not lend itself to bulk copy and paste from a text editor – each record will have to be copied on its unique row.
  • Calculation segmentation – this was a feature that was present in prior versions of PCM. The advice here is to utilize this feature only when requested to do so by Oracle Support, when dealing with large applications. As per the Oracle Admin Guide for PCM, “it activates a way of calculating specific dimensions and levels to enhance scalability with very large models”.
  • Clear [Dimension] Selections – the previous menu’s “X” button (see below) would enable users to remove member selections, one at a time.

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The clear selections menu option with the latest PCM release enables users to remove all selections with one click.

4.3.  Custom Calculations

Custom calculations have a similar enhancement as the one in standard allocation rules. The Rule menu, available with pre 19.08 versions of PCM, had two separate tabs, one for the Target set of members and a second one for the custom formula:

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In the 19.08 version, the Target and Formula are now collapsed into one  menu.

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The new displays for both standard allocation rules as well as custom calculations add clarity and ease of use at the same time, potentially decreasing development and troubleshooting time.

4.4.  Wishlist for Future Designer Menu

If I could choose one feature from the pre 19.08 Rules menu that we could layer in on top of the 19.08 Designer menu, it would be the Text Editor.

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A simple feature that is used heavily not just during development, but also during troubleshooting and maintenance.  This feature is, unfortunately, not available in the On-Premises version and it is not part of the Designer menu screen either.

The benefit of this feature is that users can copy information from a text editor or .xls and apply mass updates to a rule for all the dimensions in the Source/Destination/Target screens in one action.

The format of the Text entry is restricted, as each dimension member selection must be typed on a separate line and must include a reference of the dimension that it belongs to.

“Dimension Name”, ”Member Name”

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The format restrictions have not impacted the amount of times users prefer Text Entry to any other type of rule editing menu, especially when they are familiar with the model and the metadata naming conventions.

One other feature that I found useful especially during development or even during initiatives involving structure reorgs, is the selection panel that displays the entire hierarchy for each dimension.

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This panel does not appear to exist in the new Designer menu, which means that the user must be familiar with member names or must know all the layers of a dimension. That type of familiarity with metadata comes with time and, as things often change, the user may be constrained to stay constantly up to date with every new modification, as it pertains to updates to the allocation model.

The member selection search box that appears in 19.08 is an improvement, as it is fast and dynamic. However, when multiple selections are required and there is not much familiarity with the hierarchy naming convention, having the entire picture available in one panel is beneficial.

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5.  Integrated POV Manager

The POV Manager has been collapsed under the Execution Control menu which ensures a more streamlined management and maintenance.

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Users can now create a new POV via the plus sign button.

All other options remain as they were prior to the 19.08 update with one exception.

Alex Mlynarzek - PCM v19.08 - 8-5-19 - Image 18Users were able to manage and update a global context in relation to a POV in the pre 19.08 Rules menu, but this information was displayed alongside the Rulesets and Rules for that POV.

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Changing the Global context Dimensions may impact the entire POV set of Rules. Therefore, the configuration of Global context alongside with the POV manager is a logical menu association, part of the 19.08 update.

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6.  Increased Flexibility with Model and Data POV

Profitability and Cost Management applications have always had features that enabled fast spin-off of new “What-If” analysis as well as testing different allocation logic rules on the same POV. Oracle has now taken this existing capability to the next level, by enabling users to leverage any Model POV against any Data POV.

Model POV vs Data POVs:

  • The Model POV represents the reference POV that contains the allocation rulesets and rules.
  • The Data POV represents the POV that contains the data values which must be allocated.

In prior versions of PCM, users had to keep Model and Data POVs aligned. If there was a need to test a new set of rules on a data slice, users had to copy the desired rules in the Data POV intersection to be able to launch allocations.

With the 19.08 update that is no longer the case.

The control over which POV is the Model POV is available in the Run Express Calculation menu.

Users can now point to any Reference POV model and run the respective rules onto any other Data POV.

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This “run-time association” is not forcing a rule copy, as it would have in prior 19.08 versions.

Because of this new capability, we could potentially have as single set of rules that could be referenced for all our POV’s, without having to copy them across each Data POV every time we would want the allocations to run.

There is one optional parameter that can be called via EPM Automate in order to leverage this Model POV/Data POV reference capability in automated jobs:

epmautomate runcalc APPLICATION_NAME POV_NAME [DATA_POV_NAME] PARAMETER=VALUE [comment=”comment”] stringDelimiter=”DELIMITER

The [Data POV Name] parameter, when specified, enables this pivoting capability between Model and Data POV. If not specified, the automation will assume that the Data POV is the same as the Model POV.

7.  Launch Multiple POV Allocations with One Click

The new 19.08 menu enables users to launch multiple allocations for different POVs at the same time, while also leveraging the functionality of a reference POV described in the previous section of this blog. Through simple check boxes users can select one or many POVs to run allocations.

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The 19.08 update Execution Control panel will indicate whether a POV already contains its own rulesets and rules (Model data), so the users can decide if they want to leverage the existing Model associated with Data POV or a distinct Model altogether.

If a reference Model POV is used instead of the Data POV corresponding rules, the Execution statistics report will record that point-in-time reference.

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If users select multiple Data POVs to run at the same time, it is important to mention that if a Model POV is selected as reference, it will be applied to all the Data POVs selected to be calculated, whether these Data POVs have Model information (Rulesets and Rules) of their own or not.

8.  Embedded Search Capability in the Execution Control Menu

When launching a single allocation rule, either during development or troubleshooting, the Calculation menu in versions prior 19.08 would have constrained users to scroll through the mass of rules until they found the rule they needed to launch. In larger models, this situation would soon become frustrating.

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With the new 19.08 update, users have the possibility of performing a fast search by simply typing portions of the rule name. A dynamic filter is applied and only the rules with that specific string will become available in the drop-down selection.

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9.  Easy Access to Job Library

The Job Library is the location of most PCM related logs (except for the Cloud Data Management and Migration logs). With the 19.08 Model menu, it is easier to access it because it shares the same area as the Run Express Calculation menu. The details on the job library will include the reference POV that was used when executing allocations.

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10.  Recreate Instance with All File Clear

The Recreate command within EPM Automate enables users to start from a fresh new environment by deleting the existing application and performing a reset on the instance. This month we have an additional parameter that can be leveraged in order to wipe out any existing artifacts, such as backups and other files, that may accumulate and take up significant space over time.

The data storage allowance from Profitability and Cost Management Cloud subscription was communicated back in 2017 to be of 150 G/instance. This is not a hard limit; going over it won’t grind a service subscription to a halt, but over time Oracle may request clients to update their subscription to reflect an increased storage requirement.

*Caution: if you cannot launch some of the EPM Automate commands in your version of this software, you may be running on a prior month release. Upgrade your EPMAutomate utility through the epmautomate upgrade command to align your version of the automation software with the latest PCM version and access all the latest features and parameters added to the library.

Release Calendar for PCM Updates

On the 1st Friday of the month all Test instance will be updated to the current months’ release level, and on the 3rd Friday of the month the same update activity will occur in the Production instance of either PCM or Enterprise Cloud subscriptions.

If for any reason the testing of the 19.08 patch should indicate there are issues, there is a timeframe of reaction when administrators may request to postpone the rollout of the patch to their Production Instance, until the issues uncovered are fixed.

The deadline for such a request is the Weds of the week when the upgrade is scheduled to be applied to the Production environment. In the case of the August Production instance update, that deadline would be on Weds, August 14th. Such Service Request must contain the details of the POD as well as the business reason why the patch update is requested to be delayed.

Conclusion

There are many exciting new updates in 19.08 – from new interfaces aimed at user experience enhancement to backend optimization and new functionality. The Profitability and Cost Management Cloud is being constantly refined based on client and partner feedback, which is why it is so important to become involved in the Oracle community via the Customer Cloud Connect website.

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Customer Cloud Connect has become the new space for engaging with Oracle Product Management as well as other members of the community, whether partners or clients.

Create an account today and rate existing Enhancement Ideas if you believe they are beneficial to your user base. The more positive votes, the faster that feature will make its way to your Cloud subscription, based on Oracle’s prioritization list criteria.

For comments, questions or suggestions for future topics, please reach out to us at infosolutions@alithya.comSubscribe to receive notifications about new posts about Cloud updates and other Oracle Cloud Services such as Planning and Budgeting, Financial Consolidation, Account Reconciliation, and Enterprise Data Management.  Follow Alithya on social media for the latest information about EPM, ERP, and Analytics solutions to meet your business needs.

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We’ve Got You Covered: Producing Flat-File Extracts out of Cloud Data Management

As an EPM Administrator or Implementation Specialist, we have all had that moment when someone comes to us and asks for the dreaded extract out of an Enterprise Performance Management (EPM) application.  Depending on the system combination (Hyperion Financial Management (HFM), Planning, etc.) and the file layout specifications, this can be tricky.  Layer in the concept of a Cloud application, and things have now gotten real!

In an on-premise installation of Financial Data Quality Management Enterprise Edition (FDMEE), we could use scripting within a “custom application” to build an end-to-end approach for delivering a flat-file extract for third party consumption.  With the release of version 19.06, Oracle has further enhanced this concept and brought it to Cloud Data Management (CDM). The Cloud application now provides the ability to design and produce a text file for downstream consumption in Oracle Cloud products (PCMCS, EPBCS, FCCS).  WHOA!

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The Setup

I recently busted out the functionality and this is what I have discovered:  It’s crazy simple!

  1. Create a text file with your defined headers

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  1. Create a target application and set your settings

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3.  Create an import format

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  1. Create a Location & DLR

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  1. Create the desired Maps
  2. Run the Data Load Rule

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It is that simple!  CDM produces a file that looks similar to this:

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It can PIVOT!?

As crazy as it sounds, it can even pivot the data!  I find this extremely helpful as it is a common request to have twelve months of data in column format.  CDM leverages the PIVOT command of the database for this process and creates the pivot file with ease and efficiency.

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What does it do behind the scenes?

Behind the scenes, CDM appears to run a standard import and validation of the data, but it leverages a different set of workflow instructions.  The process does not consider unmapped items which are left as blank fields in the output.

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It also does not permanently store any data in the CDM repository unless you want it to.  The documentation can be easily misinterpreted because you will see “fish,” but no data is stored (more on this later).  A quick review of the process details log shows that all the work is done in the “tDataSeg_T” table.  This is the “temporary working” table of Data Management, and it is cleared after/before each new run for optimal performance.  Since the data is never moved out of this table, it is never retained.  Even the export process that produces the output file pulls from the temporary table.

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A review of the Documentation shows that there are 3 main supported types for processing:

  • Simple (the option selected here) – Does all the work in tDataSeg_T and does not retain any data or archive maps. Although, be warned, it does retain the process details and “fish” status which can look a bit strange.

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  • Full No Archive – Data is retained in tDataSeg only after the import step. Data is deleted after the export.
  • Full – All data is retained. Full process flows are supported (check rules, drill down, etc.).

That’s great, but my file is stuck in the Cloud!

Not really…let’s think this through in a workflow process.  When using Cloud applications, we might have an automation wrapper or a larger workflow process.  If not, we are using the general user interface (GUI), and we can access the file in two ways:

  1. Data File Explorer
  2. Process Details -> Download File option

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If we are using a more automated approach, we just need to include additional steps to:

  1. Monitor the data load rule for completion
  2. Verify the status of that completion (do not proceed forward if it failed; do something different)
  3. Confirm that the file was created
  4. Download the file that was created
  5. Continue the automated routine

In Summary…

It is simple to produce a file using Data Management in the EPM Cloud products.  This is a welcomed change that further enhances the product lines by delivering on client needs.  This allows us to build a simplified Cloud solution that was previously only on-premise.

If you need more information or have questions about this topic, email us at infosolutions@alithya.comSubscribe to receive notifications about new posts.  Follow Alithya on social media for the latest information about EPM, ERP, and Analytics solutions to meet your business needs.

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Out-of-the-Box Features: Profitability and Cost Management Cloud Service (PCMCS) – Intelligence and Dashboarding: Traceability

Traceability is the buzz word in any regulated industry. Being able to prove the numbers is crucial to all businesses, but it can be very time consuming and complex for companies that operate across multiple and diverse lines of business with a large pool of Channels, Services, Customers or Products. Shared Services implementations require a clear understanding of the flow of costs.

Where is this cost coming from?

Why have I been charged so much more this month for the same service compared to last month ?

These questions should be easy to answer. Unfortunately, not all profitability analysis technologies are able to support a quick turnaround for providing the required level of detail.

PCMCS has more than one option to easily provide much-needed answers.

The Rule Balancing report is one of numerous out-of-the-box (OOTB) features included with an Oracle Cloud Service subscription able to support data traceability and transparency. For more details about the type of information the report provides and to learn the ease with which it can be set up for your application, review this comprehensive blog post.

Besides Rule Balancing reports, PCMCS OOTB features support transparency within allocations and/or profitability models with Traceability maps.

The focus of the current post is how to access, build, and use Traceability maps.

The order in which I am covering the PCMCS OOTB features is directly related to the Intelligence menu options available in PCMCS.  As a recap, the 6 menu options are listed below:

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 1  1.  Analysis Views (How to create them, customize them and use them here)

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 2  2.  Scatter Analysis (Setup and configuration covered here)

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 3  3.  Profit Curves (Usage and features covered here)

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 4  4.  Traceability

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 5  5.  Queries

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 6  6.  Key Performance Indicators

The contents of this blog are based on the standard Bikes (BkML30) demo application, so you can follow the step-by-step details without having to go through an app setup from scratch. You can load and deploy this application directly from your PCMCS Instance through a couple of clicks via the Application menu using the + / Create button.

Traceability – Intro

The traceability maps, whether in PCMCS or in on-premise HPCM, allow users to graphically visualize the allocation flow. A chosen business segment can be traced through the allocation steps, either backwards or forwards, starting from a predefined point. Images  make up the map of a data point either flowing into the selection of members chosen by an end user to troubleshoot or flowing out of that selection into subsequent allocation steps.

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Traceability is a great tool for troubleshooting specific intersections of detailed data such as base level accounts against a specific department. However, when there is a need to identify patterns or troubleshoot allocation results at a higher level, the Standard Profitability (the first on-premise version of the Profitability module) Traceability maps are not geared to handle such requests. In order to perform a high-level analysis in Standard Profitability models, users would have to revert to Smart View or Financial Reports.

Being able to trace data at a summarized level of detail is the key difference between traceability in Management Ledger applications and traceability in Standard Profitability. Management Ledger allows end users to select the level within the hierarchy where they desire to launch or generate traceability, whether base level or otherwise.

Traceability – Setup

The starting point of any traceability map in Management Ledger is Model Views.  If you are interested in learning how to build and use Model Views, spend a few minutes reviewing this prior post.

List of steps necessary to launch a traceability report in Management Ledger applications:

  1. Select a valid Point Of View (POV). The POV must contain data in order to display any traceability results.
  2. Choose a prebuilt Model View – example: IT Support Activities.
  3. Select a tracing dimension which will represent the detail that is the focus of your analysis (Accounts, Departments, Entities, Business Units, Segments, etc). The selected tracing dimension determines the focus or scope of your analysis and will be the one dimension that is displayed at base level detail or any other generation within the hierarchy.
  4. Trace Forward and Use Generation Selection boxes are selected by default.  Not selecting “Trace Forward” allows users to perform a “Trace Backward” action; in other words, figure out how the model arrived at a data value for a selected intersection, rather than how a data value was allocated out from that intersection to other recipienAlex Mlynarzek - Traceability - 5-21-19 - Image 3

A report with the “Use Generation Selection” filter disabled will display the data at the base level for the Trace Dimension (in this example, Entity).

Note: If a message is received indicating the Flash Player version is not up-to-date, check that pop-ups are enabled on the page to allow the download of the required update.

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If the traceability report does not generate any results, check that the allocation rules were successfully completed for the referenced POV. Alternatively, if the POV calculated is successful, but data is not displaying on the Trace Screen, check that the application variables are correctly setup for Current Year, Period, and Scenario. Also ensure the Account dimension maps are specified in the Dimension Settings screen.

Traceability – Display Options and Filters

Traceability screens have 5 display options:

  1. Vertical (Top Down)
  2. Horizontal (Left to Right)
  3. Tree
  4. Radial
  5. Circle

Within the traceability analysis, users can focus on a single rule. The tracing dimension in the previous example is Entity. The tracing dimension is the focus of the traceability reports – following how data was allocated into or out of a base level Entity.

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To isolate a specific rule and separate it in a standalone diagram, click Shift+Enter or select the graphical option on the top of the Rule ID box.

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End users have the choice of displaying the aliases/descriptions of the Entities rather than the code member names. If aliases have not been uploaded in the metadata of the application, then the report will still reference the member name codes, regardless of this choice.

The following traceability report will display how operating expenses are reallocated /redistributed from each support entity (like IT, Facilities, IT, etc.) to the production entities using predefined driver configurations referenced in the Rule box.

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Select the “Trace Forward” filter and keep constant all other prior selections in the initial traceability screen to display IT Support Activity charge out.

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The “forward tracing” of IT allocations represents how data is allocated out to consuming departments such as Finance, Marketing, Outside Sales, Assembly, etc.  Remember the focus of the trace screen depends on the “Tracing dimension” selected. In this example, Entity was the tracing dimension.

The top box, R0009, shows us the Rule Name relevant for IT allocations, the ruleset reference, the Driver used to allocate data to Targets – in this case : Desktop Laptop Users, regardless of Activity performed (NoActivity reference) as well as the amount / dollar value of the allocation : Allocation Out 1.338.000.

Users have the flexibility to allocate data partially (to allocate only a % of the total value instead of 100%). That is what the Contribution % reference in the R0009 box represents. In this rule, the administrator/rule designer decided to fully allocate the IT cost to the consuming department instead of allocating it partially. Therefore, the 100% reference is displayed.

In the case of the Bikes ML (Management Ledger) application, the Entity dimension has 4 generations. When talking about generations, the larger number, in this case number 4, represents the lowest level of detail. Generation 0 represents the Dimension name; Generation 1 represents the first set of children; Generation 2 represents the Children of Children, etc.

Below is a radial display of the contribution charge out at base Entity level when no generation selection was made prior to launching the traceability report:

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We can see in this diagram how much each Target Department was charged for their IT bill.  The contribution from the IT department to each target is displayed as a %.

Change the generation reference from 4 to 3. The higher the number of the generation, the more summarized the detail. The change of Generation reference will result in a summarization of the members of the Entity dimension to one level higher than seen previously.

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Notice how there is no longer an Entity breakdown at base level as we had in the previous screen when Generation 4 was selected, and the contribution percentages have been summarized to display the contribution % at a node level.

In situations where a dimension has many levels within the hierarchies or an increased volume of base level members, the generation selection proves useful as it allows users to group data sets and display them in the same diagram without compromising the level of detail.

Traceability – Customization

As mentioned at the beginning of this post, PCMCS comes with several features to support traceability and troubleshooting, one of these features being the Rule Balancing report. In situations where the traceability maps are insufficient to support a meaningful conversation regarding bill out values, and a deeper dive into an individual rule is necessary, the Rule Balancing report covers such a request.

While the traceability report has evolved in comparison to the Standard Profitability model, its usage is limited to situations where there is a need to troubleshoot specific data points while also having a visual representation as support.

The most common alternative to graphical traceability reports are ad hoc reports in Smart View, either built from scratch or launched via the Rule Balancing report (described in detail in a previous post).

Conclusion on OOTB features: Traceability

Business segment profitability analysis represents the analysis of operations and profitability of individual segments (e.g. Lines of Business, Products, Channels, Customers, Services) within a company. Business segment reporting requires all costs to be divided into one of the two categories:  direct /traceable costs or indirect/nontraceable costs.

In PCMCS, all costs are transparent and fully traceable. An indirect cost value can easily be traced throughout the flow of the allocation model all the way down to the business segment being analyzed. The indirect allocated volume can be explained through step-by-step analysis, high level traceability maps, and OOTB reports listing out the rules impacting the distribution of such cost.

Using a combination of Model Views, Rule Balancing reports combined with Traceability analysis and Smart View ad hoc retrievals, there should be no doubt regarding the source of a data value within PCMCS. Metric data validation – situations where the intersections for each metric are customized to such extent that building a Rule Balancing report or an individual Model View is not efficient nor effective – is mostly performed via Smart View.

In a nutshell, traceability provides significant benefits:

  • users can trace both revenue and cost based on predefined model views.
  • traceability can flow forward or backward from a starting point.
  • users can review the final contribution % (driver details are not displayed on this screen).
  • users can toggle between different display options and focus on specific rules for focused analysis.

Subscribe to our mailing list to receive updates for new blog posts related to PCMCS Queries, KPIs, Model Validation, System Reports, Data Integration using Cloud Data Management, as well as the OOTB Application Backup and Restore functionality.

Is there a PCMCS-related topic that you would like to see covered in more depth?  Email us at infoSolutions@alithya.com.

Out-of-the-Box Features: Profitability and Cost Management Cloud Service (PCMCS) – Intelligence and Dashboarding: Profit Curves

Welcome back to this series of blog posts to cover out-of-the-box (OOTB) features of Profitability and Cost management Cloud Service (PCMCS). There is a need within the Oracle Cloud client community to discover what can be achieved with the tools provided when subscribing to one or more Oracle Cloud Services. A lack of awareness of the features included with your subscription is an unmeasured cost and a missed opportunity to gain much needed insight without further spend.

PCMCS applications – whether built for Fully Allocated P&L Solutions, Transfer Pricing, Shared Services Allocations or Customer/Product Profitability – have OOTB reporting capabilities available via the Intelligence menu that offer insight into allocation models with reduced effort. Here, we’ll explore how to set up, configure, and use such features and fully leverage the functionality that is included in the Oracle Cloud subscription cost.

The order in which I am covering the OOTB features is directly related to the Intelligence menu options available in PCMCS.  The 6 menu options are:

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 1  1.  Analysis Views (learn how to create, customize, and use them here)

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 2  2.  Scatter Analysis (discover how to set up and configure them here)

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 3  3.  Profit Curves (this blog post focuses on Profit Curves)

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 4  4.  Traceability

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 5  5.  Queries

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 6  6.  Key Performance Indicators

The content of this blog is based on the standard Bikes (BkML30) demo application, so you can follow the step-by-step information without having to go through an app setup from scratch. You can load and deploy this application directly from your PCMCS instance through a couple of clicks via the Application menu using the + / Create button.

 

Profit Curves – What Are They?

If you are looking for a graphical representation for the concentration of your profit by either Customer, Products, Channels, or Funds, look no further than the Profit Curves section in PCMCS. Profit Curves, also referred to as Whale Curves, are used to identify which cluster of Customers, Channels, or Products generate the most profit. Profit Curves display a graphical representation of the relationship between economic profit and the quantity of output sold.

The details of the profit or net income split by unit/service/customer displayed in a Profit Curve identify issues with:

  • expansion of a production line
  • breadth of services that may have a negative impact on profit
  • onerous clients consuming numerous resources without justifying the cost for the profit gained from their engagement
  • potential costing issues of “over” or “under” costing products (for example, overburdening a product or product line inappropriately);  a cost study should be performed to determine the appropriate allocation
  • pricing

Information illustrated with a Profit Curve can be enlightening and help to put the focus on specific customers, products, or channels where the greatest profit attention is needed, indicating situations where a few products, services, or clients create enough profit to maintain the rest of the company’s offering. Profit Curves are key to strategic decision making, especially when dealing with competing projects and limited resources.

During one of my recent PCMCS implementations, a Profit Curve proved valuable when the client’s staple product, advocated as being its best and most profitable, was discovered to be the least profitable after the implementation of an accurate cost allocation methodology in PCM!

The easy-to-follow Profit Curve provides the foundational insight needed to rapidly shift gears across product lines, ensuring alignment of management decisions backed up by real information.

 

Building a Profit Curve

There are several Profit Curves available in the Demo application BksML30. In order to build a Profit Curve, there must be a corresponding Analysis View that can be leveraged as the basis for data selection. See a step-by-step guide on how to build an Analysis View here.

Analysis Views can contain multiple references to Measures and/or Accounts; however, the Profit Curve using the Views analyzes and displays only one measure at a time.  Users can choose to define names for the X and Y axis to add clarity to the Profit Curve information consumers.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 1.png

Here is an example of a Profit Curve:

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 2

The curve displays a listing of Net Income generated by Customer.

From a Quarter-to-Date perspective (the Period selected at the top of the View), this Profit Curve indicates that all customers are profitable.  That may raise questions about whether or not the overhead is allocated appropriately or an even spread is used, thus skewing the results.

Note: Data in the BksML30 model at the time this Profit Curve was generated was calculated only for January, confirming the Profit Curve display, as the profit by customer distribution was evened out at Quarter-to-Date level.

The details of each customer/product/channel/segment and how much net income each is generating can be reviewed in the Category Analysis section. From a cost management and process improvement point of view, the right side is the most important.  This side generally represents customers/products/channels with a negative profit or that cost the company money.  While these customers/products/channels can’t always be eliminated, they can be watched and reviewed for pricing changes.

Using a PCMCS Profit Curve

There are options to filter data by the POV dimension, Period, or by metrics tied to Customers. For example, we can exclude from the analysis any Customers with Operating Expenses that are considered marginal. After defining the required filters, we can refresh the Profit Curve and review the newly generated pie charts.  Filters can be added to all available metrics and can be stacked up to generate any custom report.

Below is an example of the same “All Customers” Profit curve, limited to January and with a selection of all Customers who had a Net Income smaller than 1 positive unit (USD or the currency defined in the PCM model) thereby highlighting Customers creating losses.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 3

In the Details section of the Profit Curve, there is a count of 886 customers with a Net Income smaller than 1.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 4100% of the customers analyzed based on the specified criteria are unprofitable. The “Actual Profit” in this Details section can be translated into “Actual Loss” as the total accumulated value across the 886 customers is US$ -1,148,670.

If there are doubts regarding the data intersection for the remaining dimensions in the PCM model such as Product or Entity, we can analyze related information through the configuration icon located next to the “Add Filter” menu. These selections are predefined in the Analysis View that was used during the creation of the Profit Curve, and you will not be able to modify them unless you modify the underlying View.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 5

If questions are raised during the analysis on the Profit Curve screen and a list of details by Customer is requested, we have the option to launch a report from the “Analysis Links” menu under the Category section.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 6

A report in the following format will be generated to display the Customer detail records along with all the other settings defined in the Analysis View.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 7

This report can be exported in .xls format (“Export to Excel” option), and it represents a base level data dump report, in column format, containing multiple generations and references to attribute dimensions.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 8

Note: When launching this report, users must check that the parameters have transitioned correctly from the previous screen. The Period parameter, which is saved to be Quarter-to-Date on the original Analysis View used in the Profit Curve diagram, will override any other selection made during run time analysis. If there is a need to revert to a specific month before launching the Export to Excel, users will have to make this update on the Filter /POV area and perform a data Refresh.

We can make changes to the Analysis View to add further details (for example, Cost of Goods).

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 9

For the 886 customers that are not profitable, we can dive deeper into their Cost of Goods data, Operating Expenses, or analyze whether or not the products sold are so heavily discounted that they no longer generate a margin.

 

Pie Charts Related to PCM Profit Curves

 

We can further analyze the resulting Profit Curve data by using the available predefined categories tied to the Attribute dimensions available in the PCMCS application, in the underlying Analysis View displayed in the adjacent Pie Chart.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 10

The available categories to display the Pie Chart data for the Profit Curve chosen are the following:

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 11

When selecting the Region category/attribute, we learn that the Southeast area contains 26,07% of all the unprofitable customers.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 12

If we change the Focus of the Category to be on Top 10% most unprofitable customers by Amount vs. All Customers/Number of Customers, the following information is displayed:

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 13
Alex Mlynarzek - Profit Curves - 4-18-19 - Image 14

The Pie Chart reveals that the Southeast region has the highest number of unprofitable customers both by Number of Customers as well as by Total Amount/Loss.

When adding a filter based on Customer Generation 3 which distinguishes between Department Stores and Specialty Retailers, it looks like 87.64% of the Top 10% most unprofitable customers are from Department Stores.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 15

A look at the 4th generation in the Customer dimension where we can analyze the split of the losses at Customer level indicates that one store is responsible with 65.17% of all losses within the top 10% most unprofitable Customers.

Alex Mlynarzek - Profit Curves - 4-18-19 - Image 16The Pie Chart is the only artifact that is refreshed based on the selections of the Category Analysis menu while the Profit Curve remains constant based on the selections in the POV and filter criteria.

While all users of PCMCS can generate/launch Profit Curve reports and export their associated Analysis Views, in order to create and set up a Profit Curve report, the PCMCS administrator must update the requesting user’s permissions. As with all Intelligence screens within PCMCS, the Viewer role allows the use of these artifacts, not its creation or setup.

Concluding Thoughts About OOTB Features: Profit Curves

If you have been following the posts in this blog series, you’ve become aware of the dashboarding opportunities at your disposal with a PCM subscription. The listing of PCMCS OOTB features is a good starting point for comparing any other profitability and cost management tools on the market, regardless of vendor and technology employed.

Creating insightful dashboards is now at the tips of end users’ fingers, no longer involving complex requirements gathering processes and iterating between different display options. PCMCS users have the ability to build and customize their own dashboards. As a result, IT staff is no longer burdened with reporting requests or artifact migration between environments.

Subscribe to our mailing list for updates on the next blog post covering Traceability, Queries, and KPIs. Don’t think the PCMCS OOTB features blog series will stop at the Intelligence menu options! There is more to come on Model Validation, System Reports used for maintenance and troubleshooting, Integration with Cloud Data Management, and the Application Backup and Restore functionality. All this and more will be covered in future blog posts, so watch this space for updates.  If there is a PCMCS-related topic that you would like to see covered in more depth, email us at infosolutions@alithya.com.

Out-of-the-Box Features: Profitability and Cost Management Cloud Service (PCMCS) – Intelligence and Dashboarding: Analysis Views and Scatter Analysis

PCMCS Out-of-the-Box (OOTB) Features:  2. Intelligence and Dashboarding – Analysis Views and Scatter Analysis

Two teams of consultants with similar amounts of experience and prestige guarantee that they can perform an application implementation to the highest quality: one at a higher cost, but shorter timeframe; and the other at a lower cost, but in a longer timeframe?  All other considerations being equal, should I save money, or should I save time?

A few days ago, I released my first blog post on PCMCS, covering Rule Balancing reports usage and customization. This post builds on that first post to cover intelligence capabilities, some of which are only available in the Cloud version of the PCM software.

There are 6 menu options when accessing the Intelligence menu within PCMCS.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 1  1.  Analysis Views

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 2  2.  Scatter Analysis

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 3  3.  Profit Curves

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 4  4.  Traceability

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 5  5.  Queries

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 6  6.  Key Performance Indicators

This post covers the first two menu options to explain how to set up Analysis Views and how to use Scatter Analysis.

Analysis Views

Analysis Views are the first set of reports available to end users within the PCMCS user interface.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 7

These views represent a way to predefine and save intersections of members for future review.  The selections within Analysis Views are open to all dimensions within the PCMCS application at various levels within the hierarchies. This is the first step you need to take towards building or defining a dashboard for your PCMCS application.

If you cannot create or edit an analysis view, then you need to reach out to your PCMCS administrator in order to review and adjust your security settings.

The example Analysis Views for this post are based on the “Demo Bikes” application that can be deployed with a few clicks in your PCMCS instance BksML30.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 8

A data slice is a combination of rows and columns along with the page selection, which, in this case, is the Period dimension.

Any dimension that is not specified in any of the 3 areas (row, column, page) will be read at top level and will be displayed in the settings menu.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 9

The Add Filter section allows you to filter the columns based on specific numerical values. In this case, the columns are represented by the Product dimension selections.

To create an analysis view, click on the plus (+) sign on the main menu. The three tabs displayed will allow you to define a name and description as well as the setup for row and column dimensions. You cannot select more than a dimension for either rows or columns.

Within the Row dimension selection, you can leverage different formulas applicable to the hierarchies within PCM such as Children of member, Member and children, Level 0 descendants, etc.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 10

Columns do not have options for member formulas beyond the usage of User preferences.

The row dimension will allow you to display further information such as generation or level details. For example, for the Product dimension, we can display the generation 3 and 4 information alongside the level 0 members, allowing us to expand our analysis to different product categories, or types.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 11

Selecting new members within the Analysis Views will not impact the original data definition. If you choose to display data for any month other than the one that was setup and saved in the Analysis view, you can do so because the Page parameter is open to end user modifications. If; however, you want to update and store a selection change within the analysis view, you must perform such update via the Edit menu instead of simply selecting a new parameter on the screen in view mode.

You may need to utilize the concept of period ranges when using Analysis Views in order to dynamically reference specific members of your Period dimension.

Defining a current period for the application is mandatory in order to be able to create formulas dependent on time. This action is available via the Application menu by selecting the Edit application option and navigating to the tab called Dimension settings. Here is where you can define the current Period and the Current Year for your PCMCS application.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 13

These settings will be applied when using the “Single…” or “Current” selection options within Analysis Views. Single (-1) Level 0 selection represents, in this case, the month of May, since the current Period selection for the PCMCS application is June. The Single (-1) Level 1 selections return Q1, since June is in Q2.

Scatter Analysis

Scatter Analysis graphs will compare one member’s values against another member’s values. The two members selected must be within the same dimension. Your PCMCS Demo application may not have any sample Scatter Analysis graphs. However, you can create one by leveraging the Analysis Views at your disposal.

You can launch Analysis Views from within Scatter graphs.

Note that saved Scatter Analysis cannot be reused or referenced in dashboards. You should use this section to create graphs for ad-hoc use outside of the dashboarding capability.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 14

If you need to include Scatter Analysis within your dashboards, you will have a corresponding menu item that allows you to create dashboards within the list of available items.

You can select an existing Analysis view, but you must reselect your X-axis and Y-axis dimension references.

Alex Mlynarzek - Analysis Views and Scatter Analysis - 2-28-19 - Image 15

Conclusion:  PCMCS Intelligence – Analysis Views and Scatter Analysis

While there are many alternative reporting solutions to use in conjunction with PCMCS applications, assuming that both time and money are of essence in any project implementation, it is safe to conclude that using the PCMCS OOTB reporting features would be cost effective as well as efficient. The Intelligence screens shared in this post are included in the PCMCS subscription cost, and any end user of a PCMCS application with the right level of access can take charge and build the desired reports, saving end users in a location accessible to their peers while spending no time in iterations of reporting requirements and data validations.

The PCMCS OOTB reporting features support not only troubleshooting, but also detailed analysis and reporting within one screen.  Such capabilities should not be ignored as they will surely add meaningful insight into finance teams’ day-to-day use of PCMCS.

If you need advice and guidance on how to leverage the PCMCS reporting capabilities for existing or future applications, reach out to our team of PCMCS experts at infosolutions@alithya.com.

The remaining intelligence menus will be covered in subsequent posts over the next few weeks. If you are interested in receiving notifications of such posts, subscribe to notifications.

Out-of-the-Box Features: Profitability and Cost Management Cloud Service (PCMCS) – Rule Balancing Reports

PCMCS Out-of-the-Box (OOTB) Features:  1. Rule Balancing Reports

The other day, I was thinking about the times I used to study Finance, and specifically about a course regarding Interest and how it represents the value of Time. What is the cost, or value, of one’s time? – is it high, resulting in a higher interest rate per period, or is it low, resulting in a low interest rate per period? How much time am I willing to spend working in order to get that new car? How much time do I have before that competitor will outrun me and snatch that market share from me?

This was how I started thinking about various out-of-the-box features (OOTB). Such features are often key in deciding whether to acquire a software/service/product because the one resource that we constantly complain about not having enough of is “time.”

You are now reading the first blog post on OOTB features in PCMCS covering one of the most used Reports for data analysis as well as troubleshooting profitability calculation results. At the end of this blog post, you should know what Balancing reports are, where to find them, how to use them, and also how to further expand them with minimal time and effort invested.

What are Rule Balancing Reports?

Rule Balancing reports provide quick insight into the validity of the application results. These reports are powerful OOTB artifacts that can be further configured to cater to any custom application requirements in order to support validation of calculation results as well as contribution analysis and traceability.

The PCMCS OOTB Rule balancing report is initially based on a Default Model View with a standard selection of upper level members for each dimension. Starting from this Default Model View, the administrators or users of the PCMCS applications can perform a deep dive analysis on more granular intersections and configure detailed reports for a ruleset or a group of rulesets they choose to investigate.

The Default Rule Balancing report is available as soon as the application has been deployed, and it can be accessed via the Main Navigator menu found under the Manage section.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 1I will be using the default BikesML30 application to demonstrate the capabilities of the Rule Balancing reports. If you have loaded your sample application and cannot see any results in the Rule Balancing reports, check that you ran your end-to-end calculations for any given POV from the Manage Calculation Menu. The POV I have chosen for this demonstration is FY16, January, Actual Scenario.

As you open the Rule Balancing menu, the Default Model View is the only view available when you initially set up your application and your allocation rules. Any other Rule Validation reports that you see within the Demo application besides the Default Model View have been built and configured outside of the out-of-the-box list of features.

What are PCMCS Model Views?

A Model View represents a predefined data slice within the PCMCS application; consider the model views as a set of selections of members for each dimension that displays only the relevant data points for a required intersection.

Rule Balancing Report Example

After running the entire set of allocation rules within the Demo BksML30 application, the Rule Balancing report should look like this:

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 2

The description of each rule selected will be displayed along with the rule number. The rules will be displayed in the order that they were launched following the user-defined sequencing, regardless of the actual Rule Number/Rule ID that has been assigned.

  • The “Input” column enables users to confirm that what was loaded into the application matches the expected values received from the source system.
  • The Allocation In and Allocation Out columns validate the allocations performed by the application from both a balance perspective (Allocation In should be equal and opposite to Allocation Out) and a numeric one.  The balance aspect is particularly of interest when allocations are executed with custom calculation rules.  In these cases, two separate rules are typically required, one for the “credit out” and one for the “debit in.”  As such, there is a greater risk that the formulas for the outbound and inbound values will not produce amounts equal and opposite in total, thereby causing an undesired imbalance.  In these situations, the Allocation In and Allocation Out values are shown on two separate rows, and they quickly illustrate to the user the success of their calculations.

Rule Balancing and Smart View Ad Hoc Reports

Any highlighted data point/data value in the Balancing screen will allow you to further investigate the allocation step through a Smart View ad hoc report. These hyperlinks represent pre-built/pre-defined queries that point directly to the Essbase database, allowing you to further expand the analysis of a selected data point.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 3

When you click on the highlighted number, a Smart View link will be downloaded to your workstation.

As an example, you can see how the detail for Net Change looks like for the Custom calculation rule R0001 – Utilities Expense Adjustment in a Linked report in Smart View.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 4

The column headers for the Rule Balancing report will list the relevant Balance dimension members. If there are members that are not populated, these will be automatically filtered out of the view. You can choose to display them by selecting View -> Columns and tagging the members you would like to display on your report – whether they have data or not.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 5

For further information on what each of these Balance dimension members represent, check out my blog post on Demystifying the Balance dimension in PCMCS.

You can view and edit the model view definition in the collapsed area between the POV and the Balancing report.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 6

The Input data on this customized Model View is pertinent only to Operating Expenses rather than the entire pool of data. This is the reason that the total USD value may be different from data displayed on the Default Model View report.

You can perform ad hoc edits to the Model View as you are using it, but none of the newly made selections will be stored. If you want to apply permanent changes to a specific Model View selection, you will have to edit the Model View in the corresponding menu.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 7

Your Model Views can be defined in the same order of operations as your allocations, or you can choose to create Model Views that are more detailed and dive deeper into a custom grouping of rules, regardless of the ruleset to which they might belong. The only dimensions displayed in your Model View selection are the Business dimensions. POV, Balance, Rule, and Attribute dimensions are not represented and therefore are not open for selection. The data points you define in the Model view will apply to all relevant rules IDs that generated the new cells.

Enhancing and Customizing Your Rule Balancing Reports

In the Demo BikesML30 application, there are several standard Rule Balancing reports that are split by Ruleset while others are named “Trace.” The Trace Model views are built in order to support point troubleshooting of allocation areas that are either complex or open to high variation during each run.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 8

If you want to use the Rule Balancing report values outside of the ad hoc capacity, you can export the report into XLS, but remember that such an export will not represent a Smart View report – it will simply be a listing of the information presented on the Rule Balancing screen, as some members displayed here do not have a direct equivalent in the application (Running Remainder, Running Balance). This export option can be found in the Actions menu, export to Excel, or by selecting the button in the below screen capture.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 10

A new workbook is downloaded called RuleBalance, and the entire set of data displayed on your screen will be available in XLS.

Alex Mlynarzek - PCM Rule Balancing - 2-7-19 - Image 9

PCMCS Rule Balancing Drawbacks

Rule Balancing does not allow filtering based on Attributes, UDAs, or Names.

Rule Balancing hyperlinks open SmartView tabs called Linked View, and any new selections of links within the Rule Balancing report will overwrite the contents of the existing tab. If you start developing a report by using Rule Balancing, remember to always rename the tab in case you want to kick off another report for a secondary data point within the same workbook.

Common Issues When Using Rule Balancing Reports

“Rule Balancing Report Links Don’t Work”

Your workstation must have Smart View installed before using the hyperlink feature within PCMCS. The latest Smart View version is available for download through the Navigator main menu under the Installations section.  For more guidance on generic EPM product patching, read the blog post Patch Today! Don’t Delay!

When selecting a hyperlink in the Rule Balancing report, you should be able to see that a download has started. As you click on the downloaded content, a new Excel tab will open, and you will be prompted to enter your Cloud credentials in order to have access to the requested data point intersections. If you do not have Excel open at the time you are accessing the downloaded content, the prompt to enter your Cloud credentials may not appear on the screen.

“I Can’t See Any Data in the PCMCS Rule Balancing Report.”

If data is not displayed on the screen, you are looking at one of the following situations:

  1. There is no data loaded and/or calculated for the POV at the intersections you have defined in the Rule Balancing report. Check your job console to see if such tasks have been triggered and completed successfully.
  2. Your security setup is restricting you from seeing any data values. Reach out to your administrator to adjust data grants or application access.
  3. (This used to happen occasionally during on-premise implementations) If your Business dimensions are tagged as Label Only, check that the first child contains values. You may be able to see data at base level intersections within your application, yet the Rule Balancing report shows no vales due to the Dimension Type, Member Storage, or Aggregation operators you have defined in the metadata.

“I Can’t Create a PCMCS Model View.”

This restriction is based on provisioning. Reach out to your PCMCS Administrator for assistance with your profile or settings.

Rule Balancing Wrap Up

Rule Balancing reports are easy to set up and use.  They retrieve data quickly, are accessible to all application users through the same menu, and they should be the first stop during a model run to quickly identify if there were any issues with data allocations.

Because Rule Balancing is a fast reporting tool with a predefined template OOTB, it is one of the commonly used troubleshooting reports for PCMCS, which can be leveraged for quick balance checks. It is also a mechanism for quick report building at detailed Rule level, a faster alternative to reading the Rule definition and manually replicating the intersections in a Smart View report.   Because these reports are system generated and their hyperlinks are based on application and rules set-up, there is no room for manual errors when building validations.

Save precious time by leveraging the PCMCS OOTB functionality. The next post in this series covers Intelligence screens – Analysis Views and Scatter Analysis.  If you have further questions on the usage of Balancing Reports within PCMCS, please reach out to our team of PCMCS experts at infosolutions@alithya.com.

Implementing Zero Based Budgeting: Setting Up Your Environment

The previous post – Implementing Zero-Based Budgeting: The Requirements – outlined two key components of a successful zero-based budgeting program:  a culture change and a centralized system. We recommended creating a centralized system with Oracle Planning and Budgeting Cloud Service (PBCS)/Enterprise Plainning and Budgeting Cloud Service (EPBCS) because of the many advantages it provides such as an environment with data depth.

Even with a zero-based budgeting blueprint, many companies are still hesitant to go “all in” thinking that a zero-based budgeting program implementation requires too much time and resources. The introduction of Cloud services such as Oracle PBCS/EPBCS makes the implementation of a centralized financial system easier than ever, greatly reducing the barrier to entry.

This final post in this series shares the power of a PBCS/EPBCS environment to achieve the greatest success with a newly implemented zero-based budgeting program.

How Can PBCS/EPBCS Environments Enhance the ZBB Experience?

There are four key ways to gain the most from a PBCS or EPBCS environment, including the setup of targets and accountability metrics that offer more meaningful data and greater transparency when making budgeting decisions.

Clients are often given target settings goals in management meetings or over the phone, but we demonstrate for them how to integrate this into their budgeting systems. On numerous occasions, Alithya has been contracted to implement target settings where leadership sets growth targets and the systems flows down the revenue by service, product line, etc. In turn, analysts match the underlying details.

Not surprisingly, this is a common request because target setting has been a long-time tradition during the budget process. By setting up this target setting process in PBCS\EPBCS, an off-line process is instead online and is molded with the overall budgeting system process.  Combining that with the zero-based budgeting mantra allows targets to be set and provides analysts with their needed baseline.  Moreover, analysis can be done on departments that take the typical “reduce expenses by 10% approach” to archive the target number instead of the more insightful zero-based budget journey.  Yes, target setting in a centralized system is easier, but the benefit of a centralized system is the ability to see how teams react to the new target.  Did they take the traditional “reduce budget percentages to fit the numbers,” or did they look at their budget as a whole and analyze each line item and question the numbers organically?

After targets are set and the budget is approved, we look at the said cost saving come to fruition.  A centralized system allows capital projects or initiatives to be tracked to help systematically measure the expenditures of cost savings activities found during the zero-based budget discovery. This provides a clear picture of what each department is doing and holds them more accountable for project decisions. It is an achievement to complete a zero-based budget “diet,” but holding teams accountable brings them to the next level of the zero-based budget “lifestyle.”

In essence, this new budgeting environment provides better insight into data – insight that ultimately allows savings to be found more effectively. For example, if you want to see the cost of direct materials, this centralized system can be set up to capture the costs in order to analyze and keep track of the different KPIs that reduce or increase overall costs.

Another example of how this works is by segmenting down employee costs such as travel. Instead of having a run rate of 10% of direct labor or travel costs, determine what job or tasks required that travel and use this KPI to negotiate travel expenses to further drive down costs.  Essentially, use PBCS/EPBCS as a tool to capture KPIs (e.g. travel costs by job) and determine the best use of travel dollars and – more importantly – negotiate with vendors on key travel.

Lastly, a budgeting environment provides clarity to help teams make better informed decisions about future initiatives. With the ability to see all of the underlying data points in a single location, it is possible to identify past sales and marketing campaigns and expenditures that led to profitable customers. Therefore, zero-based budgeting teams that took the initiative to determine the best sales and marketing costs to benefit analysis from the ground up are able to dedicate more resources (e.g. dollars, people, etc.) to winning strategies.  This is in contrast to the traditional budgeting approach of “10% rate of marketing spend year-of-year” that often masks the winning and more importantly losing marketing initiatives. Moreover, such planning and availability of different data points helps draw key inferences that allow sales and marketing teams to be more successful.

Summary 

Utilizing a Cloud service such as Oracle PBCS/EPBCS makes it easier for companies to implement a centralized system and achieve success with a zero-based budgeting program. PBCS/EPBCS environments can and should be set up in a way that enhances the zero-based budgeting experience. This is achieved by integrating target setting goals and establishing accountability metrics that allow a deeper dive into budget data while providing greater transparency to make better informed decisions.

To learn more about zero-based budgeting best practices and to get professional help with your Oracle PBCS/EPBCS environments, feel free to contact our team of experts.

Implementing Zero-Based Budgeting: The Requirements

A Culture Change and a Centralized System

The first post in this 3-post series – Implementing Zero-Based Budgeting: Benefits, Myths, and Goals – covers the benefits of zero-based budgeting. To summarize, it enables you to achieve long-term savings that result in sustainable growth and holds your financial analysts accountable for the cost figures they approve and how they are managing the overall budget. This allows more effective recognition of any unwanted costs and how you that money can be shifted into other growth areas within the company.

However, to reap the benefits of a zero-based budgeting program, a culture change is needed first at certain levels within the company. The goal is to eventually have the entire company complete this culture shift, but it is best to start small. Along with a change in culture, a centralized reporting system needs to be created as well to provide teams the ability to share real-time numbers with each other to achieve the goals of this new budgeting program.

Better Than a Quick Fix

What exactly is meant by a culture change? This means starting small and fostering this culture change in other departments starting with Finance. To be successful with this new program, other departments will eventually have to jump on board with this new budgeting approach. These departments will need to step up in analyzing their own costs and how they can save more without diminishing their capabilities.

For example, while financial analysts talk to the shop floor to see where costs can be reduced, the HR department should work with Finance to determine how it can become leaner. Moreover, the IT department should take the lead on negotiating with its vendors to find any areas that can be saved. These are just a few examples of how different departments can step up to the plate; implementing a successful zero-based budgeting program will requires team effort.

Changing the culture doesn’t happen overnight. Senior leaders should take the lead in fostering this change. To ensure that everyone is on the same page, managers need advocate the new approach within their respective departments.

Incentives also help teams to buy into this new budgeting approach.  Although incentives for growth metrics may already exist, additional incentives can effectively encourage staff to find ways to reduce costs for the metrics they manage.

Some examples of incentive metrics are the realized ROI based on the requested capital expenditure and the total cost saving dollars resulting from a zero-based budgeting program. For the former, this can mean moving to the Cloud to save money or reducing redundant tasks by introducing centralized software. For the latter, it can be exemplified by achieving a 10% cost reduction per phone.

Best Practice to Achieve Success

A crucial component of the success of a zero-based budgeting program is an officer who governs the entire process from start to finish. This individual (or team) should contain deep knowledge of the budgeting process. Naturally, s/he will not know the ins and outs of each department, so that is why s/he needs to be an ambassador to department leaders. The officer will also provide oversight to ensure that past bad habits of budgeting do not return to plague this new program. And lastly, s/he must be dedicated to the craft of continuous improvement which means seeking outside counsel when needed.

As mentioned earlier in the post, a culture change needs to be accompanied by a centralized reporting system. Alithya has helped clients implement Oracle Planning and Budgeting Cloud Service (PBCS) and Enterprise Planning and Budgeting Cloud Service (EPBCS) and overcome the deficiencies of Excel-based models. These models lose sight of what the true cost numbers are because past budgets are simple anchors of history rather than detailed breakdowns of cost. Moreover, these numbers become siloed within the vast library of Excel models. With Oracle PBCS or EPBCS, budgets can be highly surgical and help leaders in the company pinpoint reductions.

A centralized system allows the capture of all changes in a single location in real-time, and it provides insight into how effectively managers seek cost savings. This can be used as a key indicator to determine if their actions are in line with this new methodology.

Furthermore, centralization not only holds managers more accountable, but it also empowers them to create innovative cost-saving solutions. Driven by incentives, staff will burn with a clear purpose to find new ways to achieve sustainable growth for the company and be rewarded for hard work.

Recapping What It Takes to Achieve ZBB Success

The goal is to create a cost savings culture that allows more capital to be invested into growing parts of the company. To be successful, follow the best practices outlined, starting with a culture change within the company and giving your teams a centralized PBCS and EPBCS system to more clearly see all data points. The hard work does not stop here, though! The next post delves into setting up a zero-based budgeting system.

Implementing Zero-Based Budgeting: Benefits, Myths, and Goals

If you are in the finance world, then you probably have heard of zero-based budgeting. Investopedia defines zero-based budgeting as “a method of budgeting in which all expenses must be justified for each new period. The process…starts from a “zero base,” and every function within an organization is analyzed for its needs and costs.”

There are many reasons that financial professionals decide to use zero-based budgeting. For one thing, it goes hand-in-hand with a centralized system where information can be shared – something at which Excel spreadsheets are terrible. Furthermore, developing a centralized system enables you to scale to your needs as your company grows. Lastly, it enables financial analysts to spend more of their work week analyzing data instead of curating a financial system and worrying if the numbers match.

At Alithya, we have found with our past clients that a successful zero-based budgeting implementation resolves numerous problems. The two main things clients hope to achieve is growth across multiple business units and developing sustained cost reduction. With zero-based budgeting, you can earn long-term savings that can directly translate into sustainable growth.

Earning Long-Term Cost Savings

Zero-based budgeting becomes a daily exercise in cost savings for your financial teams. One method in achieving cost savings is renegotiating costs. For example, instead of taking the run-rate of 3% from last year’s numbers, perhaps you can contact your vendors to bargain for a better deal or switch to a different vendor with a more competitive price. Or how about having your analysts ask the IT department why it costs $38.03 per phone? What makes up that entire $38.08? Don’t assume that there aren’t any negotiable components of a cost.

The reason zero-based budgeting is so effective at long-term savings is that it is not a one-off fix. Many teams tend to implement one-off fixes, and then find that those fixes do not provide sustainable cost savings. A common example is offshoring your call center which might get you an immediate win in the cost column. However, this strategy typically reduces customer service quality while also limiting your ability to evolve with your business as it grows.

When enacting this type of program, you will analyze the costs of your business at every level. This may seem tedious, but what you will find is a clearer understanding of where your money is going. This can mean acquiring a greater understanding of contract labor costs as well as improving purchasing and procurement procedures, just to name a few. Moreover, when properly implemented, zero-based budgeting can reduce SG&A costs by 10 to 25 percent, often within as little as six months,” according to McKinsey & Company.

Debunking Myths Surrounding Zero-Based Budgeting

There are many myths surrounding zero-based budgeting that have sadly created an artificial barrier that CFOs and their teams do not want to cross. Many financial professionals think that it means cutting the budget down to the bare bones, but rather, a zero-based budgeting program analyzes costs from the top-down. Moreover, it is the CFOs’ duty to outline cost-cut targets so that their team’s efforts are focused.

Another misconception is that zero-based budgeting only helps with cutting the costs of SG&A. Actually, it can do much more, such as breaking down the Cost of Goods Sold (COGS) and help teams make investment choices on the capital expenditure with the greatest ROI.

Just because your business is not in decline or stagnating doesn’t mean that you can’t adopt a zero-based budgeting program. If you are already achieving growth, you can use this type of budgeting method to keep the overall business leaner so that you can provide more runway for growing business units.

Do you really start from zero? This is a common question that we are asked, and many people think because of its name that you do always start from zero. Technically, this is true, but this is the core component that drives the cost management culture change that will be introduced in the next post in this series.

However, not all things have to start from zero. At Alithya, we have been through many implementations where parts of the P&L are driver-based or zero-based. This can be achieved with a detailed, structured, and interactive system (like Oracle PBCS/EPBCS) that gives you real-time feedback.

How Does Oracle PBCS and EPBCS Help Achieve ZBB goals?

The main feature you acquire when you implement an Oracle PBCS or EPBCS system with your zero-based budgeting program is deeper analytics. This data enables you to dig into the “why and how” of your P&L.

For example, you could pose the question what driver did they use? Did they just simply take last year’s actuals and add 3%? Did they take a cost-per-head and budget it manually, or did they take the easy way out? All are important questions that force finance teams to be more accountable when it comes to everyday decisions.

Recapping the Benefits of ZBB

By implementing a zero-based budgeting program with a centralized system, you can hold your analysts more accountable to cost figures while making them own up to how the costs are managed. It allows you to recognize any unwanted costs that can be diverted into certain growth areas as well as breed a culture of cost reduction and visibility. The latter requires that you to start a culture change within your team. It is an essential part of having success with a zero-based budgeting program which is why we will cover it in greater detail in the next post.

PCM Micro-Costing, a Framework for Detailed Profitability and Costing

Oracle’s Profitability and Cost Management Cloud Service (PCMCS) provides a powerful service for allocating General Ledger profits and costs.  Recently, we worked with a banking industry client to provide a model that calculates profitability at a Product/Channel level while maintaining Account level detail.  We accomplished this through a framework we refer to as Micro-Costing where detailed profits and costs are calculated in a database using rates developed at the summary level in PCMCS.  Alithya began development of this framework in 2016 to meet a functional gap in PCMCS and provide a common framework that can be used either on-premise or in the Cloud.

To highlight the capabilities of Micro-Costing, I will use the solution deployed at our banking client as a specific example.  The following table describes the two layers where profits and costs are provided:

PCM Micro-Costing, a Framework for Detailed Profitability and Costing - Image 1

 Definitions:

  • Product – a loan or deposit offering. Examples of a loan are an auto loan or credit card; examples of a deposit are a savings account or a checking account.
  • Origination Channel – where the account was originated.
  • Service Channel – where the financial or transactional cost or profit is occurring or assigned to.
  • Customer – a legal entity responsible for accounts; for example, a person with both a home loan and a savings account.
  • Customer Account – a product that is assigned to a customer.
  • Financial Costs and Profits – the cost or profit of servicing a loan or deposit for a customer; for example, interest paid on a savings account.
  • Transactional Costs and Profits – the cost or profit of interacting with a customer; for example, the cost of an ATM transaction.

A simple way of thinking about the client’s business model:

  • Origination channels offer Products
  • Products are assigned to Customers as Customer Accounts
  • Customer Accounts are used by Customers through Service Channels

The generation of an Account level profit or cost is a C = A*B calculation where

  • A is the driver
  • B is the rate of a driven value
  • C is the driven value (profit or cost)

An example is:

ATM Expense = ATM Transaction Count * ATM Expense Rate

Micro-Costing Diagrams

Data Model

This summarizes the data model deployed.

PCM Micro-Costing, a Framework for Detailed Profitability and Costing - Image 2

STAGING – Contains transient data.

OPERATIONAL DATA STORE (ODS) – Persists the operational data with minimal transformation.  Dimensional integrity is not enforced, but validation jobs are available for validating stored data regarding rules and dimensional integrity.

WAREHOUSE-STAR – Persists the drivers, the rates, and the calculated profits and costs at the Customer Account level.  The Driver Lookup and Driven Value Lookup functions are used to define the drivers and driven values so that the addition of a driver or driven value is a configuration activity for an administrator rather than a coding activity.

Data Integration

A high-level summary of the data flows as deployed:

PCM Micro-Costing, a Framework for Detailed Profitability and Costing - Image 3

The source data is broken down into 3 types:

  1. General Ledger
  2. Operational Data
  3. Metadata

Data Integration uses interim flat files to maintain flexibility regarding the source data by establishing an API via the flat files without requiring knowledge of the source systems.  This allows for the introduction of source data that comes from 3rd parties not available for automated extraction from the source.

The operational data includes both Customer Account financial information and transactional activities or fees.  Product and Channel references are provided along with this information:

  • 1 million+ Customer Accounts
  • Approximately 6 million transactions per month

Some transactional drivers represent an activity that cannot be associated with a specific Customer Account; for example, a new loan application.  Proxy Customer Accounts for each product are generated to provide a place for these activities.

Additionally, although not graphically displayed in the above diagram, Branch level drivers are directly fed into the PCM Model, examples of which are Branch square footage and number of branch employees.  These drivers were used for non-Customer Account PCM costs and profits.

All Batch processing is built using SQL Server Integration Services.  This is based upon an agreement with the client regarding the preferred tool sets with the database selected being SQL Server.  Framework is transferable to other integration tools and databases including Hadoop framework, and in-house solutioning by Alithya was performed in preparation for use of the Micro-Costing framework with larger clients.

The data integration is as follows:

  1. Set POV
  2. Update metadata and stage
  3. Stage financial and transactional information
  4. Validate staged data and reprocess as necessary
  5. Load staged data to ODS and then to Star
  6. Upload PCMCS with GL and drivers
  7. Process allocations in PCMCS
  8. Download rates
  9. Run A*B calculations for each Customer Account and populate profit and cost table

Key Design Principles

The following design principles were focused on during development of the Micro-Costing framework.  These principles facilitate an easy-to-use and easy-to-maintain solution as deployed for our client.

  • Dimensional synchronization between the Micro-Costing warehouse and PCM
  • Validation checks as close to the original data as possible
  • Configurable drivers and driven values

Dimensional Synchronization

All dimensional mapping must occur prior to the warehouse star schema.  It is not possible to perform the Micro-Costing A*B calculations to derive profits and costs detail otherwise.  This has an impact on any deployment that uses FDMEE or Cloud Data Manager as they cannot perform additional mappings during upload to the cube.

Dimensional Synchronization includes a Point of View: Year, Period, Scenario, and Version to allow for loading multiple sets of drivers during a month, and for transfer of ‘what-if’ rates back to the Customer Account level, if desired.

Validation Checks

Validation kick-outs and checks occur as early in the data integration process as possible, with a “simple” validation during staging and a “complex” validation during generation of the fact information in the warehouse.  This allows the administrator to catch quality issues with a minimum amount of overall process duration occurring.  The data integration process is broken into a series of steps that allows for validation review and then re-running a step prior to moving on to the next step.  This principle held up in deployment, ensuring that time wasn’t wasted running later processes with invalid data, the result being an improved overall process and a significant reduction in the number of days required to produce profit and cost analysis for a given month.   A lesson learned during the initial roll-out was that our client had not previously required a rigorous validation of the drivers at the Customer Account level and had to develop new techniques for validating the source information to ensure accuracy.

Configurable Driver and Driven Values

A key feature of Oracle’s PCM applications is configurability, and the Micro-Costing framework is built to provide an easy-to-maintain solution that allows for rapid addition of drivers and driven values without the administrator having to manually update the tables and views required to manage the transformation and persistence of data.  This was accomplished by defining the drivers and driven values in tables and providing stored procedures for maintaining the tables and views.

The process for adding a new driver and driven value is very straightforward:

  1. Backup the database and the PCM cube.
  2. Update the source feeds to include the new activity or fee.
  3. Update the activity to Driver Lookup and Driven Value Lookup tables with the new values.  *Note: The driven value record references the driver for the A*B calculation.
  4. Execute the “Update Costing Tables and Views” stored procedure. *Note: removing a driver or driven value does not modify the tables.
  5. Update HPCM Account dimension for the new driver and driven value.
  6. Update HPCM rules to use the new driver and allocate expenses to the new driven value, and calculate the rate for the new driven value.
  7. Run the entire data integration process for the POV, and review results.

Key Benefits

The successful deployment of the solution provides the following key business benefits:

  • An improved ability to provide Product/Channel level costs and profits.
  • Reduced monthly cycle time and effort. The prior data integration process was disjointed and required a large amount of effort to produce results.
  • Drill-through capability to Customer Account level drivers, profits, and costs allows for root cause analysis of Channel and Product Costs.
  • Aggregation along other dimensional paths. Starting at the Customer Account level allows for aggregation along Customer attributes such as zip-code or credit score, providing new insights and enhanced executive decision making.  A follow-on project to use the Customer Account level data in OAC is currently being assessed.

Additionally, the following benefits to the administrative team are realized:

  • Model flexibility. The configuration of an additional driver and driven value in Micro-Costing takes fewer than 15 minutes.
  • Operational Data Store (ODS) and Warehouse. This allows for future projects to use a common curated source of information.  This was a pot sweetener for our client who was dissatisfied with its prior warehouse, but needed a business reason to refresh.  The prior warehouse lacked the following items that were addressed in the new ODS and warehouse:
    • Explicit mappings such as Activity Code to Driver Code that are controlled by the business
    • 3rd party data from partners and industry sources
    • Consolidation of financial and transactional information into Customer Account level facts
    • Hashing of Personally Identifiable Information (PII) for account security
  • Easy troubleshooting, validation, and auditing capabilities with PCM. Errors or mismatches in profit or cost at the Product/Channel level can be reduced to either rule definition mistakes or driver data entry mistakes. Finding out where the issue is and correcting it with a few clicks has a positive impact on the overall analysis and maintenance effort.

Final Thoughts

Alithya has developed a Micro-Costing framework that allows an integrated view of profits and costs at both a summary and detailed level.  This framework is successfully deployed at a banking industry client to provide a superior solution.

Framework is deployable either on-premise or in the Cloud and is available for other industries such as:

  • Patient encounters in Healthcare
  • Claims in Insurance
  • SKUs in Retail
  • Subcomponents in Manufacturing

…or anywhere the allocations occur at a summary level with drivers aggregated from a detail level.