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.

Alex Mlynarzek - Traceability - 5-21-19 - Image 1

Alex Mlynarzek - Traceability - 5-21-19 - Image 2

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.

Alex Mlynarzek - Traceability - 5-21-19 - Image 4

Alex Mlynarzek - Traceability - 5-21-19 - Image 5

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.

Alex Mlynarzek - Traceability - 5-21-19 - Image 6

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.

Alex Mlynarzek - Traceability - 5-21-19 - Image 7

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.

Alex Mlynarzek - Traceability - 5-21-19 - Image 8

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

Alex Mlynarzek - Traceability - 5-21-19 - Image 9

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:

Alex Mlynarzek - Traceability - 5-21-19 - Image 10

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.

Alex Mlynarzek - Traceability - 5-21-19 - Image 11

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.

Patch Today! Don’t Delay! Best Reasons to Upgrade Your EPM System

Putting off that upgrade to 11.1.2.4? Cloud not whetting your appetite for patches? Patch today. Don’t delay!

“But we’re going to the Oracle EPM Cloud soon!” you say. You should maintain your patches anyway. With the recurring maintenance, updates, and patches available to the EPM Cloud products, expect the on-premise patches to contain similar updates. An upcoming conversion to Oracle EPM Cloud products may benefit from running the latest on-premise codelines.

If you have an existing on-premise installation of Oracle EPM System, be sure to maintain the latest EPM System Patch Set Updates every 3 to 6 months. Here are a few great reasons why:

New Features

Patches often contain reactive bug resolutions to known issues; however, we have also been seeing new functionality released in patches for 11.1.2.4.

You Own It

You already pay for it! As long as your Oracle Maintenance contract is current (very likely if you are reading this article), you’re already paying for access to patches. Why leave them unapplied? You are running legacy code when the latest version costs you nothing additional. Windows XP was a great OS, but we’ve got to keep up with the times.

Supportability

Maximize your success by reducing time to resolution on your issues. Should you submit a support request to the vendor, the first line of response to a ticket is often about current patch levels. Once provided, the subsequent reply frequently contains a recommendation to apply the latest Patch Set Updates (PSUs) to see if that fixes the issue. Annoying? Perhaps you’re a pessimist. Or have just been remiss with your patching. I’ve certainly changed my mind on the matter and can better side with them. The reason? Supporting the latest codeline is more efficient and effective for the vendor. Your problem may have already been addressed in a code fix. They can better and more quickly support you if they are troubleshooting the current release instead of legacy code.

Stability

In older versions, patches seem to come out on a haphazard schedule. Over the last few years, Oracle has regularly streamlined EPM System patch releases – typically releasing Patch Set Updates quarterly, which are different from Patch Set Exceptions. PSUs are a grouping of PSEs or fewer, more significant PSEs that get regression tested collectively by the vendor and are released under a singular patch. We’ve gained a much higher degree of confidence with this bulk model of PSUs. The organization of release schedule and bug fixes is more dependable and greatly appreciated. The PSU model provides less ambiguity on which patches to apply and brings greater stability to all customers.

Upgrade

Maybe it’s bigger than patching. Are you not on version 11.1.2.4 of your EPM System? Compliance with Enterprise IT requirements around browser version and operating systems is often impetus for an upgrade. But there are also plenty of compelling new software features, functions, conventions, and improvements in 11.1.2.4.

Operating System (OS) support for current platforms maximizes your investment and supportability. When 2.4 came out, many customers were forced to upgrade their older systems for compliance with the latest enterprise standards for server operating systems and/or client browser versions. Instead of being faced with an IT mandated technology upgrade, an upgrade on the business’ schedule is preferred.

What Kind of Effort is Involved?

The comprehensive effort to bring a simple deployment (3-4 servers, no High Availability) up to the latest PSUs is typically less than a day per environment. That includes an analysis of existing patches, the patching itself as well as any prerequisites, and a post-check verification to confirm all patches applied are properly indicated in the corresponding inventories.

An initial patch application may take a little bit longer because there are often common prerequisites to address that don’t have to be handled with subsequent patching. There are also considerations like bringing WebLogic up to the latest patch level, as well as one-offs like the fixes for the Equifax-discovered vulnerabilities, that don’t happen frequently. Once you’ve got a solid base of primary critical patching, additional patching events are typically shorter.

Patching can be tricky. Documentation can often be ambiguous, whether it be an unintended omission or even assumed knowledge based on an implied experience or understanding of the product. Sometimes post-install instructions get skipped or SQL statements do not get executed properly as part of the patch. Less experienced resources typically only patch the EPMSystem11R1 Oracle Home; however, did you know that Oracle’s ADF framework also has an Opatch directory under oracle_common? Possibly because those are often prereqs. But what about Oracle Data Integrator (ODI) and Oracle HTTP Server (OHS)? They also may have applicable OPatches. Who knows what you’re missing? We do! Let’s button it up.

Contact us for more details.

An IT Financial Management (ITFM) Solution Will Boost Your Bottom Line Impact

An IT Financial Management (ITFM) Solution Will Boost Your Bottom Line Impact

Wherever they sit in the organization, CIOs are responsible for making sure that IT is agile, cost effective, and delivers services that are responsive to business changes.  To deliver this, IT needs to provide a unified view of its value to the business determined through a rigorous, disciplined, and transparent process – ITFM – governed through the offices of the CFO and CIO.  IT executives frequently have difficulty explaining IT budget variances, exacerbated by heavy reliance on Excel for financial accountability and an inability to perform quality TCO analysis more than once a year.

For the good of your organization, it’s imperative that the CIO and the CFO speak the same shared language of value and move forward, aligned and focused on maximizing returns on technology investment strategies.  Speaking a shared language — one based on a unified financial model view and founded on a shared definition of value — is key to finding a solution. The discipline of ITFM is about equipping both of these executive-level offices and their teams with this better language.

A unified financial model is only as useful as the conversations it enables and the problems it allows decision makers to solve.   Applying over 21 years of experience with leading costing and planning implementations, Edgewater Ranzal designed a custom ITFM framework, constructed through Oracle application templates now owned by Oracle. This Oracle ITFM solution leverages the lessons learned from the wisdom of numerous customers and serves as a guide for future clients to build their ITFM solutions.  As templates deployed on widely embraced enterprise financial applications – Oracle Profitability and Cost Management (PCMCS) and Enterprise Planning and Budgeting (EPBCS) – Oracle ITFM is prescriptive, pre-configured, and fine-tuned to handle both financial performance management and IT-specific logic. Inherently, your organization gets a jumpstart to a modern defined service catalogue, data management approaches, and a cost and planning model framework that follows leading practices for IT finance and corporate finance.

Recognizing that every business is unique in some ways, the base solution is easily adapted to meet any organization’s IT financial management needs. With a set of 15 pre-built reporting and analytics capabilities, the Oracle ITFM solution empowers companies to bring innovation to the business without disrupting business flow.  The templates are free, providing an estimated savings of 650 consulting hours for design, build, and testing, and a cost savings of $125k to $150k. We have fixed scope offerings to implement our ITFM solution in about 7 weeks.

An ITFM solution can:boost

  • Provide transparency to IT service charges
  • Align IT projects with strategic priorities
  • Allow IT spend analysis: run vs. grow vs. transform
  • Help IT build credibility with the business proactively

Leveraging the included set of allocation rules and data source dimensions not only diminishes the effort needed to implement, but also creates alignment with the industry for internal and external benchmarking activities. This alignment promotes a culture of accountability and collaboration with the business, resulting in better IT investment decisions.

So why continue struggling in the dark or spending hours in Excel? Let us shed some light on your opportunities.

Contact us today for a Complimentary “30 Minute ITFM Health Check”

Edgewater Ranzal’s ITFM Solution

This blog post was written in collaboration with our trusted CIO advisor, Thavron Solutions.

Automating Enterprise Planning with EPBCS: A Case Study Featuring Sims Metal Management

Enterprise Planning and Budgeting Cloud ServiceIn using Enterprise Planning & Budgeting Cloud Service (EPBCS) to support annual budgeting and forecasting processes, organizations are choosing solutions that allow them to leverage the financials, projects, capital and workforce business processes necessary to provide a driver-based solution that links expected intake to revenues and costs. In turn, they are able to more efficiently produce integrated income statements, balance sheets and cash flow statements.

Featuring Jim Clark of Sims Metal Management, Our Special Guest

 Our August 16, 2017 webinar, featuring Jim Clark, Group Manager of FP&A at Sims Metal Management, takes a detailed look at how one organization automated enterprise planning to streamline processes and produce better results.

Within a real-world scenario, this means that whether using EPBCS out of the box or as a “hybrid” of OOTB with customized extensions, companies like Sims are able to adjust sales forecasts—throughout the year and through sales cycles—to better match the actual costs and needs in areas such as raw materials and labor.

A Better Approach To Performance Management

Using this integrated approach to Performance Management, companies are, in effect, bringing actual performance numbers, on a monthly basis, into their models.

As a result, changes and adjustments can be fine-tuned and incorporated into the mix.  Forecasts can be based more on actual numbers and less on assumptions, thus leading to a balance sheet that matches projections. From a planning perspective, companies can be more nimble and, ultimately, create their models with greater accuracy.

Whether you are participating live or via a recording, this webinar will illustrate how organizations like Sims are leveraging EPBCS in ways that allow them to: 

  • Gain insight to increase efficiency and improve outcomes
  • Better understand how organizations like yours can make standardization and centralization a top priority
  • See how an integrated solution works not just in theory, but actually in practice
  • Follow the processes to results that include improved accuracy and increased efficiency across the enterprise

For More Information

No matter where your team or your organization is along your EPBCS journey, this webinar is certain to provide you with valuable insight and context that can help you to implement changes that lead to greater efficiency and a more streamlined forecasting process overall.

Register for our “Automating Enterprise Planning with EPBCS: A Case Study Featuring Sims Metal Management ” webinar:

Missed the webinar? View Recording Here.

 

Data Governance in the Cloud: An Integrated Strategy; A Unified Solution

Are you tasked with making organizational decisions that have placed you in a major dilemma? As a decision-maker in today’s fast-paced economy, you must wonder how you can cut costs, improve the bottom line, and still maintain the data quality necessary to make strategic decisions.

Take heart because it IS possible to achieve a balance of on-premise and off-premise Enterprise Performance Management (EPM) software while maintaining integrity and control of your data to provide the quality and data assurance needed for success – AND benefit financially from new Cloud technologies.

Success is a combination of understanding what each data tract requires and creating an integration strategy consisting of the necessary business processes and software tools that deliver consistency and integrity of your EPM strategic data.

Past trends called for a tight on-premise coupling of all EPM software to achieve the best results. This strategy required maintenance of a large hardware and software infrastructure and related personnel to keep everything running smoothly.  The new Cloud “POD” subscriptions are geared toward reducing the high costs of infrastructure which is a financial benefit. As in all things in life, there is a consequence of moving to Cloud technology.   An unexpected consequence of Pod technology is the creation of isolated silos of information, but there is an easy resolution!  The key to overcoming this limitation is to gain an understanding of what each component offers and demands, and creating an integration strategy to bridge that gap.

If you are interested in learning how to create this strategy to bring the various pieces together as a unified solution or if your organization plans to migrate to the EPM Cloud platform in the future, this whitepaper helps to define a process to pre-build the integration strategy and make moving to the Cloud easier with reduced time to migrate.

Download our whitepaper: Data Relationship Management (DRM) for Cloud-Based Technologies:  Using DRM for Data Governance in the Cloud

Connecting the Value of IT: A Disciplined Solution for Service Costing and Chargeback

This post corresponds to the webinar “Connecting the Value of IT: A Disciplined Solution for Service Costing and Chargeback,” the last in our “Let Your Profitability Soar” webinar series. You can access the recording here.

 

Within an organization, technology is mission-critical to most business strategies, and IT costs represent a significant portion of back office spend.

Among their many responsibilities, the CFO and the CIO must make sure that:

  • Technology spending is aligned with business strategy
  • Business applications and end-user services are delivered efficiently and cost-effectively
  • Coherent project portfolios that grow and transform the business are created and nurtured

Within this new economy, a key ongoing goal of the CIO is to make sure that IT is aligned with business strategy.

Generally, this IT-to-Business Strategy alignment is achieved in two ways:

  1. Running the business: Providing a cost-effective level of internal services necessary for sustaining business activity.
  2. Building the business: Managing and delivering portfolio development projects that are prioritized and aligned with all key business initiatives aiming to improve efficiency and aid in gaining competitive advantages.

The Nature of the Problem

One challenging pattern we see time and again is the ongoing disconnect between the CIO and the CFO.

Some might say this disconnect is an inevitable result of the fact that technology is moving so fast and we don’t always have the time to stop and assess its value. Understandably, it can be difficult for a CFO to get away from all the checks and balances just to get the financial books closed, let alone turn attention to the books that measure performance at greater depths, like line of business.

In general, as a function of the role, the CFO does not talk servers, desktop deployments, applications or other semantics of the technology business. Conversely, with many companies establishing Technology Shared Service Centers, pressure is placed on the CIO to operate the business of IT with the same financial disciplines the CFO requires of all lines of business. The CIO must connect the value of IT services and capabilities to internal business partners. To achieve this, IT Finance teams require performance management solutions that are IT-specific, yet are connected to Finance, to ensure efficient allocation of resources and effective delivery of internal services.

Part of the CFO’s role is to look at the technology projects and initiatives and think about how all of this technology is adding value. CIOs have to fill information voids, while also having to build their own financial models and performance management book of record using their own resources.

Two seemingly differing views of value can be hard to navigate and leverage. If two divergent approaches are not connected in a common view among the key stakeholders, then—more often than not—there is ongoing value-related confusion. Ultimately, the dissonance between the line of business owners can stall or even paralyze decision-making.

A Better Language Is Needed

For the good of your organization, it’s imperative that the CIO and the CFO speak the same shared language of value and that they connect in an effort to move forward in the most aligned and productive manner possible.

Speaking a shared language—one that offers a unified financial model view and is based on shared definition of value—is a key to finding a solution. The disciplines of ITFM (IT Financial Management) is about equipping both of these executive-level offices and their teams with a better language.

With an ITFM solution, you are able to:

  • Reduce the time that IT Finance spends on managing the business processes, providing more time for value-added analytical activities
  • Give IT Managers more detailed, timely, accurate data to better understand the cost & effectiveness of the services and projects they are delivering
  • Provide Line-of-Business managers with cost transparency into IT allocations and chargebacks, allowing them to better align their consumption of services with their business goals

ITFM focuses on these finance business processes:

  • IT Planning: Budgeting & forecasting of IT Operating and Capital Spend
  • IT Costing: Linking supply side financial cost structures with demand side consumption for services and projects
  • IT Chargebacks: Equitably charging lines of business for internal services and projects performed (or Showback)

IT Finance Organizations typically manage these processes through a series of multiple systems and offline spreadsheets. These processes are not ideal, as they create pain as far as inefficiencies and ineffectiveness in terms of results.

Our preferred solution for IT Service Costing—co-developed with Oracle—is based on PCMCS (Profitability and Cost Management Cloud Service). Oracle’s PCMCS is a cloud-based, packaged performance management application. It offers, in one package, a rules engine for cost allocations, embedded analytics and data management platform.

When developing the solution with PCMCS, the following were top priorities for our team:

  • That it required no large initial investment
  • That it was accessible to all
  • That it was always updated/up-to-date
  • That limited IT involvement was needed

Oracle IT Financial Management Solution Overview

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The ITFM solution, a joint development effort with Oracle and based on valuable feedback and results from multiple Ranzal customer implementations, offers all of the following in one package:

  • Pre-Packaged Content for Cloud or On-Premise
  • Pre-Built Data Model
  • Pre-Built Costing Model & Reporting Content
  • Pre-Built Interface Specifications

A key component of the PCMCS IT Costing & Chargeback Template is its approach to modeling IT Like a Service Business, which includes the following modules:

  • Model Financials & Projects: This first step is focused on modeling financial projects, allowing you to combine multiple data sources, perform cost center allocations and, for those customers without an existing project costing system in place, to perform basic project costing and project allocation functions.
  • Complete Costing of IT Operations: This second pillar of the solution provides a flexible framework that allows you to combine data from multiple sources, perform resource costing and perform service costing.
  • IT as a Business Service Provider: This third leg of the solution service considers catalogue & bill rates, contribution cost trace, consumer showbacks and consumer chargebacks.

 We Have Options, You Have Options

Our Flexible Maturity Model allows customers to start where they feel most comfortable, and progress in a way that is focused on maximum flexibility for maximum effectiveness. No one size fits all, and we believe in starting right where you are.

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For more information or to request a demo, email us. Be sure to ask if your company qualifies for our one-day complimentary PCMCS assessment of your IT Service Costing needs.