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Oracle Integrated Operational Planning Align Operational Plans with Financial Goals. Hari Sankar Oracle EPM Products. Agenda. . Business planning challenges Oracle Integrated Operational Planning Solution Overview Hyperion Planning & IOP Oracle IOP demo - PowerPoint PPT Presentation
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1Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
Oracle Integrated Operational PlanningAlign Operational Plans with Financial GoalsHari SankarOracle EPM Products
3Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
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Agenda
• Business planning challenges
• Oracle Integrated Operational Planning• Solution Overview• Hyperion Planning & IOP
• Oracle IOP demo
• Customer success
4Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
The Business Planning ProblemThe Finance-Operations Disconnect
• Finance divorced from operational reality• Simplistic operational models and drivers• One way communication with operations• No way to calculate operational feasibility of the plan leading to…
missing the forecast
• Operations misaligned with financial goals• Detailed models to drive execution, not to dialogue with finance• Simplistic financial linkages• No way to evaluate financial impact of operational plan leading to…
adverse financial results
5Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
Today’s Integrated Planning ProcessBlood, Sweat and Excel
ERP System
Functional Operational Planning
DemandManagement
CustomerManagement
Human Resources Planning
SupplyPlanning
ProductPerformanceManagement
LogisticsPlanning
Financial Planning
Long-TermFinancial Planning
TreasuryManagement
Financial Planning & Budgeting
WorkingCapital
Planning
ProfitabilityManagement
PerformanceScorecards
6Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
Integrated Business PlanningBridging the Finance-Operations Disconnect
ERP System
Functional Operational Planning
DemandManagement
CustomerManagement
Human Resources Planning
SupplyPlanning
ProductPerformanceManagement
LogisticsPlanning
Financial Planning
Long-TermFinancial Planning
TreasuryManagement
Financial Planning & Budgeting
WorkingCapital
Planning
ProfitabilityManagement
PerformanceScorecards
IntegratedImpact
Analysis
FinancialPerformance
Modeling
StrategicOperational
Modeling
7Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
What is Integrated Operational PlanningBusiness planning layer complementing functional planning systems• Rough-cut modeling appropriate for business decision making• Replaces patchwork of spreadsheet models
Integrated cross-functional planning models• Captures financial targets and operational constraints in a single framework• Integrated business impact analysis
Interactive what-if scenario analysis• Transparent planning models with business user control• Enables iterative planning and decision making
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Change-Based Data ModelingCore Technology Behind IOP
1. Modeling of operational constructs• Rich expressiveness in modeling & calculation logic • Complex dependencies, relationships, transformations• Declarative calculations, not scripted
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2. Rapid analysis of cross-functional impact• “Change anywhere, analyze everywhere”• Evaluate financial desirability & operational feasibility• Interactive response times
3. Robust analytic transaction framework• Scenario management & change isolation• Reconciliation of concurrent plan changes• System of record for plan changes: audit trails
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Solution ArchitecturePurpose-Built for Integrated Planning
ERP / Functional Planning Applications
Change-Based Data Modeling Engine
Impact Analyzer Scenario Manager Federated Modeling
Application and Process Layer
Planning, Analysis and Reporting
Data Feeds Plan Updates
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Analyze Financial and Operational ImpactPlan Revisions Supported by Fact-based Decisions
• Model plan revisions in familiar Excel environment
• Review financial metrics and operational constraints
• Assess impact of plan revisions interactively
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Manage Business Scenarios and Collaboration
• Create, submit and approve business scenario’s
• Include planning participants across business functions
• Manage planning workflow
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Planning and Managing Financial Performance
Income Statement
Balance Sheet
Cash Flow Statement
Revenue Product Mix & PricesGrowth & Region Mix
Cost of Sales Direct CostsShared Costs
Payroll Expenses HeadcountSalary Increases
Capital Expenses New ProjectsPurchase Prices
Accounts Receivable A/R AgingCollection Rates
Business Entities
Business Data
Relationships
Rules
Chart of Accounts, GL Entity, Products, Customers, Regions,
Projects, Employees, Assets
Financial data, Operational Data, Market Data
Entity Hierarchies, Product Bills of Material, Distribution Networks
Budget Allocation Rules, Aggregation Rules, Variance
Thresholds
ConstraintsCapital Budget, Operating Budget,
Capacity, Materials, Resources
Key Drivers(Examples)
Planning Solution Needs
Financial Measures
IOP Focus
Workforce Plg.
13Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
Oracle IOP Business Scenario: Integrated Margin Planning
Revenue
Cost of Goods Sold
Gross Margin
Hyperion Planning
– Raw Material Costs– Labor Costs– Transportation Costs– Capacity Utilization– Product Mix– Granular Pricing
Oracle IOP
• High-level assumptions
• Standard costs
• No operational detail
• Annual adjustments
• Detailed cost drivers
• Bill-of-Materials modeling
• Time-phased calculations
• Multiple adjustments per month
14Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
Oracle IOP Business Scenario: Revenue Alignment
Revenue
Cost of Goods Sold
Gross Margin
Hyperion Planning
– Bottom-up product hierarchy models– Regional, channel & customer mix– Rough-cut capacity– Granular Pricing
Oracle IOP
• High-level assumptions
• Lack of product & customer level detail
• Quarterly adjustments • Driver-based revenue impact analysis
• Align dollar targets with unit plans
• Identify and reconcile operational constraints
• Multiple adjustments per month
IOP Solution Demo
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Demo Overview
Business Context: Electronics Manufacturer
• Missed our Q1 Revenue Target
• In Hyperion Planning adjusted Financial Plan upwards for 2HFY
• Looking to close revenue shortfall by pulling in a New Plasma TV
Product Launch
• Sent the new plan to IOP for detailed analysis
• Review both operational constraints and financial metrics
IOP Customers
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High Tech andElectronics
Discrete and Industrial Manufacturing Consumer Goods
Proven Value in Key Industries
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Move From Function-Centric Planning to Aligned Performance Across the Business
Before Manual processes using hundreds of
spreadsheets Disconnected decision making within
functional silos Lack of alignment across sales,
marketing and operations plans Long planning cycle times due to
batch oriented planning modules
Global manufacturer and marketer of high-quality, brand-name products for consumers throughout the world
After Integrated planning models across
sales, marketing and operations Operational decisions based on financial
impact assessment Improved alignment across demand
plan, sales promotion plan, capacity plan and financial plan
Reduced planning cycle times in line with business needs
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Align Product Allocation Decisions with Business Priorities
Before
Hundreds of Excel templates with little consistency across planners
Lack of visibility and coordination in demand-supply alignment
Lack of business and financial impact analysis
Limited scalability to handle growing business volume & complexity
Seagate is the worldwide leader in the design, manufacture and marketing of hard disk drives
After
Consistent data and planning models shared across all planners
Proactive management of supply hot-spots in response to demand variability
Responsive decisions based on operational and financial impact analysis
40% gain in planner productivity leading to staffing efficiencies
21Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
Key Takeaways
• Align financial goals with operational plans
• Enable responsive business decisions
• Attain financial targets with greater confidence
• Unlock the value of existing planning systems
22Copyright © 2008, Oracle and / or its affiliates. All rights reserved.
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