The Bill for ITProviding IT Cost Transparency with

HPCM and PFP

Mike Killeen

Sr. VP of Technology & Strategy

Edgewater Ranzal

Introduction to Ranzal

� Oracle Platinum Consulting Partner - 100% Focus on Oracle/Hyperion Business Analytics (EPM/BI)

o 195+ Full time EPM/BI Billable Consultants throughout the US, Canada and the United Kingdom

� EPM & BI Experience & Success

o 1,800+ Oracle EPM & BI projects for 850 clients successfully delivered since our founding in 1996o 1,800+ Oracle EPM & BI projects for 850 clients successfully delivered since our founding in 1996

� Depth & Breadth of EPM & BI Service Offerings

o Product Experts across the full EPM/BI Suite - Planning, HFM, HTP, FCM (ARM), HSF, HPCM, Essbase, BI/Endeca, DRM, FDMEE

o Visioning & Roadmaps, Full Life Cycle Implementations, Technical Review & Assessments, Staff

Augmentation

� Ranzal Oracle ACEs Across EPM/BI Platform

� Direct Line to Development, Customer Advisory Boards, Beta Testing, Author Certification Exams3

Edgewater Ranzal Service Offerings

● Enterprise Planning Full Life Cycle Application Delivery By Module:

● Oracle Hyperion Planning

● Oracle Hyperion Strategic Planning

● Oracle Hyperion Workforce Planning, Capital Planning & Project Financial Planning

● Oracle Hyperion Essbase

● Planning & Budgeting Cloud Service (PBCS)

● HPCM Full Life Cycle Application Delivery By Type:

● Shared Service Costing & Charge Backs

Financial Close & Consolidations

BusinessIntelligence

EnterprisePlanning & Analytics

● Operational Transfer Pricing & Inter-Unit Charges

● Global Expense Allocations - Dept & Project

● Management Profitability – Segment, Region & LOB

● Operational Profitability – Client, Product & Service

Edgewater Ranzal Resource Capability

● ~100 Experienced Full Time Consultants (95% Planning/Essbase Certified)

● Full Time Salaried Employees – Avg. 7+ Years with Ranzal; Sr. Mgmt 15+ Years

● Close Relationships with Oracle Development – involved in initial Product Architecture

● Authored Certified Planning Design Lead Exam Twice

● Deep Bench and Heavy Investments in Training and Growth

● Comprehensive approach incorporates other tools such as DRM, FDMEE & OBIEE

● Internal Lab available for POCs, Project Jump Starts & Exalytics Benchmarking

Data IntegrationServices

Training &Support Services

Advisory Services2Infrastructure

Profitability& Cost Mgmt

� Shared Service Center Overview

� Oracle EPM Solution Overview

� Oracle EPM Solution Elements at Work in IT

Agenda

● IT Budgeting & Forecasting with PFP

● IT Project Allocations & Service Charges with HPCM

� Closing & Q&A

5

What is a Shared Service Center?

� Reorganization of company resources that

perform similar activities into concentrated global or regional organizations with the goal of providing

standardized services to internal business partners of a higher quality and lower cost to the

organization as a whole.

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organization as a whole.

� Typically establishes a “company” within the

company that strives to optimize service delivery in a cost effective, flexible, and reliable way to their

internal business partners… “clients.”

� Benefits Are:

o Gain economies of scale that boost performance and lower admin costs.

o Improve quality of service.

� Challenges are:

o Understanding actual costs incurred by service providers in support of their internal “clients.”

o Charging business units for services consumed can be difficult

because of the wildly different results and methodologies.

o Supporting Organizational Change

Understanding the Value of a Shared Service Center

� Equitable Charge Back:

o Are we promoting fairness and appropriate internal

charges among internal customers?

A business that implements a shared service center will ask the following questions to gauge effectiveness:

� Behavioral Change:

o Are we rewarding BU’s that choose standardized and

more efficient processes?

o Are service providers rewarded for aligning “supply-side” cost structures with the actual business unit demand?

� Making Benefits Visible:

o Are we providing mechanisms to measure and report the benefits realized of shared service center deployments,

either via reduced costs, expanded service capability, or some combination of both?

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Oracle EPM Solution Overview

IT Shared Service Center EPM Solution Architecture

InformationDelivery

DashboardsProductionReporting

Ad-hoc Analysis

Office Integration

Search & Alerts

PFPPFP

9

Data Integration

EPM/BI Applications

ExcelXML

OLTP & ODSSystems

PeopleSoft, Oracle, JDE, SAP, Other GLs

BusinessOperations

Data MartsData Warehouse

OLAP Cubes

Planning & ForecastingFinancial Close Analytics/BI

Financial Master Data Management & Data Integration

Source Systems

HPCMHPCM

IT AllocsIT Allocs

PFPPFP

IT PlanningIT Planning

HPCM/PLNHPCM/PLN

IT ChargesIT Charges

Solution Component – Hyperion Planning

► Powerful workflow and process management

► Intuitive interface for end user data entry

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entry

► Robust data integration

► Leverages Essbase for powerful reporting and analysis

► Scalable Web infrastructure

► Shared EPM Administration Tools

PFP – Project Financial Planning

Project Planning

• Custom

Workforce Planning

• Custom

Project Financial Planning (PFP)

11

The Benefits to Implementing Project Financial Planning:

� Pre-configured with detailed capabilities and process flow to support a rapid deployment.

� Customizable framework for configuring around a client’s unique needs.

� Proven Hyperion Planning platform

� Oracle-supported application.

• Custom

• Pre-Packaged Module

Capital Planning

• Custom

• Pre-Packaged Module

Maximize Value

Minimize Risk

• Packaged Profitability functionality

• Computes Profitability for Units, Segments and Services

• Pre-Built Framework for profitability modeling:

• Pre-Built Data Model

• Support for Multiple Cost & Revenue Allocation methodologies

• Pre-Built Validation Reporting – Pre & Post Execution

HPCM - Hyperion Profitability & Cost Management

12

• Pre-Built Validation Reporting – Pre & Post Execution

• Graphical Interactive Traceability Maps

• A User-Driven application

• Measures, Allocates and Assigns Cost and Revenues via User Defined Rules

• Finance User-facing Model Development & Execution

• Provides Scenario Modeling for Decision Making

• Tightly integrated with the full Oracle Hyperion EPM Suite

• Shared Data and Master Data Administration

• Shared Reporting Tools like Financial Reports, Smart View for Office, OBIEE

• Shared Security Administration

• Proven Technology Stack

• Analyze different chargeback approaches to yield optimal mix of services versus costs incurred

• Provide key stakeholders confidence in the numbers produced and methodologies

• Define consistent allocation and charge back methodology across all management cycles.

Audit and Accuracy Shared Methodology

• Give units the detail costs they incur for the service consumed.

• Compare effectiveness

TransparencyFlexibility

Why HPCM? For these Key Requirements…

versus costs incurred by the entity.

• Rapidly evolve methodologies as the business changes.

• Provide What-If capabilities to assess impact of key business decisions on bottom line.

methodologies employed to ensure compliance.

• Achieve this through meaningful allocations, automation, and system controls.

cycles.

• Create consistent comparisons when reviewing and updating methodology result and planning for future management cycles.

• Compare effectiveness of internal unit services with those of external providers to ensure efficiency.

• Allow LOB managers to understand cost to serve and profitability results.

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Group HQ

Group Overhead (e.g. CEO)

Group Services (e.g. Property, Controllership, IT)

Inter Unit Charges ( e.g. Transfer Pricing, Contractual Charges)Inter Unit “Regulatory”

Division 1

Shared Services

Division 2 Division 3

Application Types

Division 1

Overhead

Services

Fully Allocated

P&L (e.g. Channel,

Fund, Region)

Expense Allocations

Fully

Allocated “Thin

Ledger”

Product Profitability

Customer Profitability

Operational Profitability

“BI”

Division 2

Overhead

Services

Fully Allocated

P&L (e.g. Channel,

Fund, Region)

Division 3

Overhead

Services

Fully Allocated

P&L (e.g.

Channel, Fund, Region)

HPCM and Planning- Better Together

EPMAHyperion Planning

Multi User Data Entry

Task Lists & WorkflowBottoms Up Calculations

Reporting & Commentary

HPCMMulti-Step Allocation Modeling

Validation ReportingTraceability Maps & AnalysisData synch:

Costs by Account & Dept & Project

Shared Dimensions &Hierarchies (EPMA)

15

EPM Reporting & AnalysisFinancial Reports

Smart View for Office

BI Foundation (OBIEEE/Essbase)

Data synch: Direct Attribution to LOB & Market

Data synch: Drivers by Account & Dept & Project & LOB & Market

Data synch: Results by Account & Dept & Project & LOB & Market

Level 1 Shared Service Center Solution Architecture

16

Level 2 Shared Service Center Architecture – for IT

HPCM/PLNHPCM/PLN

IT ChargesIT Charges

17

HPCMHPCM

IT AllocsIT Allocs

PFPPFP

IT PlanningIT Planning

IT Budgeting & ForecastingIT Budgeting & Forecastingwith PFP

• Account – supports planning workforce resources, capital assets and planning for projects

• Project – contains both existing and new projects and broken down into types: Contract,

Capital and Indirect

• Project Element – allows you to build up revenue, cost or other assumptions at line item detail

• Job – list of roles within an organization that are assigned to projects

Pre-Built Dimensions in PFP Application

• Job – list of roles within an organization that are assigned to projects

• Employee – contains employees of the organization as well as the ability for new hires

• Asset Class – breaks out the different categories of assets that a company owns. This is broken

down by tangible assets and intangible assets

• Asset Detail – supports the request of new asset purchases, either new leased or new owned

• Entity, Scenario, Version, Period, Year and Currency for multi-currency apps are also included as

standard dimensions

• Vendor - can be customized in older releases, was introduced to PFP in 11.1.2.3

19

PFP Dimensional Configuration* By Typical IT Expenditure Type

21

*Vendor is now an available dimension in the latest version, or can be customized in older versions.

WFP PRJCPX

6a

11

12

PROJECT FINANCIAL PLANNING

Flow of Dimensions, Hierarchies & Attributes

CCEMargin WFPMgmt

ReportingFixed Assets

ContractorManagement

InternalTime Entry

1

2

3 4 56c

7a 7b

8 8 10

Gen Ledger

6b

* External employees of the Employee dimension will include Vendor and Contract rollups as well as the Contractor ID to be the Employee ID.

9

Position ID

24

Actuals Data Flow

WFP PRJ

1

3

4

PROJECT FINANCIAL PLANNING

CPX

CCE

Margin

WFP

MgmtReporting

Fixed AssetsAP/POInternal

Time EntryGen Ledger

2

4

6

GL Accruals

5

25

Budget & Forecast Data Flow

WFP PRJ

1

CPX

PROJECT FINANCIAL PLANNING

CPX

CAPITAL

TBD

Interfaces #3 and #4 are dependent on configuration of:

CCEMargin WFPMgmt

ReportingFixed AssetsAP/PO

InternalTime Entry

Gen Ledger

3

4

5

configuration of:

o New accounts to be entered into CCEo Manual Adjustment account to refine data

loaded from PFPFurther review and design is required for

fulfillment of this requirement.

Interface # 5 will be developed but not operational for 1st release (Phase 2 requirement)

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Project Financial Planning Workflow

23

PFP includes user task lists that help project

users navigate through the application and enter

expenses for new and in-flight EH projects.

• Propose New Projects – Allows users to

create new capital and Opex project proposals

by cost center and enter expenses to each.

• Manage Existing Projects – Allows users to

view existing in-flight projects by cost center

and update/add expenses.

PFP Task Lists and Workflow

and update/add expenses.

• Review Projects – Allows users to review both

proposed and existing projects by cost center.

• Finance Analysis – Allows users to view total

project spend by cost center and compare to

budget and actual data.

27

PFP – Expense Planning in Action1. Project Requests – Create New Capital/Operating Project or Select Existing In Flight Project.

2. Expense Planning – Add Labor, Equipment, Material, or Other Direct Spend to Project Elements

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3. Review – Review, Approve & Reconcile Project Expenditures

IT Project Allocationswith HPCMwith HPCM

HPCM Workflow

Published Reports & Interactive Analytics

Model Development

System Administration:

• Create & Manage Dimensions & Hierarchies

• Deploy the Application

• Define Data Integrations from Source Systems

• Manage User Security

Master Data & Data Integration Management

Produce Management and Performance Reports:

• Financial Results Books

• Margin Analysis

• Cost & Revenue Contribution Analysis

• What-If Scenario Comparisons

• Genealogy Reports

Execute a Model POV:

1. Load Cost/Revenue Data

2. Load Driver Metric Data

3. Validate Model Inputs

4. Execute Calculations

5. Trace Allocations & Validate Model Results

6. Publish the Model POV

Create & Manage the Business Model:

1. Define the Stages (Std Only)

2. Create a Model Point-Of-View (POV)

3. Create Rules (Std & Detailed)

1. Define the Drivers

2. Define Assignment Rules

3. Assign Drivers

Model Execution

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EnterprisePerformance Management

Architect

DimensionsHierarchiesAttributes

Hyperion Profitability & CostManagement

Financial Reports, Smart View,Business Intelligence

Foundation

• Genealogy Reports6. Publish the Model POV

4. Create Assignments

4. Create Management Ledger Rules

StagesDrivers

Driver SelsRules

Assignments

Standard Model

Detailed Model

Management Ledger Model

Calc CubeBSO

Rept CubeASO

CalcsRDBMS

Contr.ASO

DestinationASO

Calc/ReptASO

SourceASO

Demo - Define POV, Business & Driver Metrics in EPMA

POV Dimensions Driver MetricsBusiness Dims

29

Illustrative Allocation Driver Options

IT Operating Expenses

Expense

Labor

Capital (D&A)

Cost Pools (Project Types)

Directly Aligned

(100% to a Segment)

Simple Intermed.

Segment 1

Applications

(e.g. Rx

Connect)

Segment 1

Infrastructure

(e.g. Store

WAN)

Segment 2

Applications

(e.g. Rx

Claims)

Segment 2

Infrastructure

Corporate

Applications

(e.g. Hyperion)

Corporate

Infrastructure

Corporate

Core Support

Segment 1

Core Support

Segment 2

Core Support

Typical IT Service Costing Approach

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Pro

ject

Segment 1 Segment 2 Corporate

Customer Segments or Lines of Business

Allocation Profile

1. Drivers will be refreshed annually / semi-annually

2. Driver selection is dependent upon the availability of data

The driver is used to create the allocation profile

Data Center (e.g. Scottsdale Data Center)

Enterprise wide Applications / Services (e.g. Learned)

Distributed Servers (e.g. x86)

Mainframe (e.g. i/zSeries)

Database (e.g. Oracle Platform)

Security (e.g. VPN, Firewall)

Storage (e.g. SAN Capability)

Network (e.g. Data Center Connectivity)

Headcount

Sq. Ft.

App Instances

MIPS

DB Instances

GBs

Cost Follows Cost

Sq. Ft + Power

CPUs

Tiered Instances

Cost Follows Cost

Tiered GBs

Ports

Tickets

Devices

Devices

Handsets/ Lines

Apps

Ap

plic

atio

n

Mobile (e.g. Blackberry)

Desktops / Laptops (e.g. Windows 7)

Voice, Video, Audio (e.g. Office Telephony)

End User Support (e.g. Help Desk)

En

d

Use

r

Users

App Specific DriverApp

Total IT Dept Exp

Resource GENERAL LEDGER

Financial Data

IT Costing Functional Flow in HPCM

31

Resource

&

Project

Cost Pool

& Service

Customer (LOB) &

Market

MANUAL INPUT

OPERATIONAL SYSTEMS

Drivers

HPCM – Modeling the Costing Flow via Stage Configuration

32

Stage definition is wizard driven, and provides the

appropriate selections for stage creation.

HPCM Rule Definition – The Four Steps

Source Stage

Project DetailTarget Stage

Customer

Project

Dept

Resource

Customer

ProjectDriver

Driver Selections – Defines what Driver Definitions to use against the Source stage,

typically the dimension identified as the driver definition.

Assignment Rules Definitions– Defines the member combination in the target dimension

for the assignment.Assignments– Defines the source

Driver Definitions – Create an allocation formula/methodology that references a

loaded metric within the model.

1

2

3

4

2 3

14

4

33

Assignments– Defines the source dimension combination and the target

Assignment Rule

44

Rule Definition Step 1: End Users Define Drivers in HPCM

Select from list of user defined

driver metrics and allocation

methodologies.

34

Rule Definition Step 2: Assign Drivers to Source Cost Pools in HPCM

35

Select Default Drivers for Cost

Pools, with an ability to provide

exceptions for unique projects.

Rule Definition Step 3: Create Target Assignment Rules in HPCM

36

Rule Definition Step 4: Map Source Stage to Targets Via Assignments

37

Or Allocation Assignments

can be bulk loaded via a

staging table.

Model Execution - Load and Validate Project Cost & P&L Data

38

Add Capitalization Rules to

Calculate P&L Impact of

Capital Project

Model Execution – Post Model Validation – Stage Balancing Report

All Costs areAllocated to Final

Stage

39

Traceability Analysis – What makes up a client charge?

35% of China Costs come from Asia Region Office Project

212375

2% of China Charge came from resource wswain from Dept X

working on Project Y

40

Closing and Q&AClosing and Q&A

Value of F-A-S-TFlexibility

• IT Finance Users can run multiple scenarios to assess impact of methodology and business

changes as company evolves their IT Allocations methodology. Examples include adding new

drivers, adding new cost pools, changing cost pools drivers, and project to cost pool relationship

• Scalability to support Profitability, Pricing and Compliance use cases in the futureAccuracy / Control

• Workflows deliver an automated, repeatable process for IT Allocations

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• Workflows deliver an automated, repeatable process for IT Allocations

• HPCM will support company change control process / segregation of duties

• Limited Publishing Capability will lock results when completeShared Methodology

• Apply FY14 Actual Methods and Drivers to FY15 Budget and Forecast

• Maintain One Engine for All Allocation Rules and Drivers across ScenariosTransparency

• Allow Segments to understand details of costs received all the way back to incurred cost

• Allow IT Management to understand Cost Per User, Cost to Serve, and implement efficiencies to

align with industry standards

Edgewater Ranzal108 Corporate Park Drive, Suite 105

White Plains, NY 10604Tel (914) 253-6600

Email: info@ranzal.comVisit Us at Booth 500

Contact Information

Visit Us in the

Exhibition Hall at Booth 500

Visit Us at Booth 500

PresenterMike Killeen, Sr. VP Technology & Strategy

45 Beech Street,

Suite 109

London EC2Y 8AD

United Kingdom

Tel +44 (0) 2033 717 174

150 North Michigan

Ave.

Suite 2800

Chicago, IL 60601

Tel (312) 624-7738

200 Harvard Mill

Square

Suite 210

Wakefield, MA 01880

Tel (781) 246-3343

Backup SlidesBackup Slides

Shared Service Center Guiding Principles

• Each service should have its price. The business can determine how much service it wants at that price.Transparency

• Manage the service like a business, not a fixed cost. Serve internal and potentially external customers.Business Management

SOURCE: Booz-Allen & Hamilton

• Provide the service levels the businesses want, not the levels staff think they need.Market Responsiveness

• Identify and deploy leading practices quickly and globally.Leading Practices

• Develop streamlined process standards that can be maintained and improved quickly.Process Standardization

• Treat business units like customers, offering services they value and charging for each.Service-Oriented Culture

46

Demo - Transparency into Details of Chargeback

Resource , Dept, Project & Expense Type Details of Expense Type Details of

What Makes up China Charge

47

THANK YOU!