What is financial intelligence, I hear you say? Well it goes by many names and comes in many shapes…
Example 1: You have a single intercompany account in your ledger, but you need to present this in your consolidation and/or reporting solution as either an asset or a liability, depending on whether the balance this month is a debit or credit.
Example 2: You have 20 sales tax (VAT) accounts in your ledger. You need to evaluate the sum of all the accounts and present the entire amount as either an asset or liability in your consolidation and/or reporting solution, depending on whether the cumulative balance is a debit or a credit.
In my experience, there are the following three approaches to solving this challenge:
- use the ledger to present the information in the required format. This can be done via an automated or manual month-end journal;
- use the ETL (Extract Transfer Load) process via a rule based mapping to transform the data; and
- load the data into the consolidation and reporting tools in the format of the ledger, and use scripts within these tools to copy this data into presentation accounts.
Which of these three options are right for you, depends on your business process. I thought it would be useful to share the following considerations when you are deciding which of the three options to use:
- In my experience clients are often cautious about putting presentation journals in their ledger, because of the concern that these will not be visible or auditable in the consolidation and reporting solutions. There are effective solutions to this requirement via the ledger setup;
- Rule based mapping solutions should be evaluated to confirm that they a) do not jeapodise the audit trail and b) will support solutions that allow you to drill from a consolidation or reporting tool back to your ledger. For example, logic groups in Oracle Financial Data Manager (FDM) can affect the audit trail and the ability to drill through;
- If the mapping approach is selected, the mapping must be available to all the consolidation and reporting tools: say HFM (Oracle Hyperion Financial Management), Oracle Essbase and OBIEE (Oracle Business Intelligence Suite Enterprise Edition); and
- The third option, using scripts to create the presentation data in the consolidation and reporting tool, has the obvious risk that if these multiple scripts fall out-of-alignment, the tools will not reconcile.
As a final comment, in my experience, regardless of which of the three approaches you decide to use, incorporating a masterdata governance tool can provide a robust as well as a flexible long–term solution…
In a recent meeting I was asked whether there is a standard approach to signage in reporting. I think we can all agree this is a big question. “Reporting” covers a wide range of purposes and platforms. Did the client mean management, statutory or transactional? Were they looking at the consolidation tool, budgeting and forecasting or analytical? The implications of the decision are wide ranging for the usability of your financial applications, and therefore it needs significant thought.
However, it is a common question. There is no standard! With my consulting hat on, the solution is clear: an organisation needs to adopt a single reporting standard which addresses its management, financial and transactional reporting purposes. What that standard is, from my selfish point of view, is immaterial! I have included an example of signage standards, but this is by no means the only approach.
In my past life as a management accountant, I spent many a late night during month-end trying to reconcile reports across Oracle Hyperion Essbase, HFM (Hyperion Financial Management and Oracle E-Business suite (EBS). Were the numbers I was seeing correctly sign-flipped? As each application was using its own approach to sign-flipping, how could I be sure that the rules had not fallen out of alignment?
Then I discovered masterdata governance. I found that by centralising all our financial masterdata (including our report definitions) into a single location we could create a single definition of our core financial constructs, including a single definition of the signage rules. These rules were then published for use in all our financial reporting applications, thereby ensuring that they were using the standard definition. Once implemented, I spent less time reconciling and more time analysing, a benefit that I think all my fellow accountants and the business would see as a “positive”!
Until next week.
This week I have been working on a driven or calculated cash flow design. As is the common pattern in my experience, the requirement was initially expressed as a need for a consolidation tool, Oracle Hyperion Financial Management (HFM). When digging into the requirement, I asked whether this report definition needed to be shared with their relational reporting tool, OBIEE (Oracle Business Intelligence Suite Enterprise Edition) looking at Oracle E-business Suite (EBS) and their analytical reporting tool, Essbase? Would the cash flow report not be a valuable operational and analytical tool, rather than just a retrospective month-end report? Everyone agreed it would be, but this is when I noticed the elephant in the room. Everyone agreed that the cash flow could be calculated, but had assumed that the ledger did not have sufficient detail to populate the model.
Don’t get me wrong, I have yet to encounter a client that can calculate a full cash flow without some manual analysis, however this is the 5%. The other 95% is usually available in the ledger. I think what deters us, is that we are used to mapping to HFM at an account level only. The information that drives cash flow is often only available at sub-ledger and journal type. Using a masterdata management tool allows you to easily map all kinds of information, including sub-ledgers and journal types. If in doubt about the source of data, start by analysing the support for your cash flow journals or calculation …then get ready to look for elephants!
Some more good news to share!
We have been selected by a FTSE 100 global financial services client to implement Oracle Hyperion DRM (Data Relationship Manager) as the single repository to maintain all financial masterdata. Oracle Hyperion DRM will be responsible for publishing masterdata definitions and mappings to a wide range of applications, including Oracle Hyperion Essbase, HFM (Hyperion Financial Management), FDM (Financial Data Quality Management) and Oracle ERPi (Enterprise Resource Planning Integrator).
Seismi are responsible for delivering the Oracle Hyperion DRM solution, alongside an Oracle Hyperion Essbase reporting environment, which will be built using Oracle Hyperion EPMA (Enterprise Performance Management Architect) and Oracle ERPi. As always, Oracle Hyperion DRM will provide them with a comprehensive governance solution enabling efficient maintenance of all their core financial masterdata, whilst Essbase will provide an incredibly powerful analytical tool to transform their month-end financial reporting requirements.
The project has already started we look forward to sharing more details and a case study in due course..
Off for another celebration !
This week one of the team’s priorities has been working on defining the requirements for an integrated budgeting, reporting and consolidation solution. The key priority in this workstream is the importance of breaking down reporting requirements into distinct use cases…
We commonly find that there are two main use cases for reporting. The first use case is month-end reporting or journal support reporting. You are at working day one, posting your accruals: you need to have immediate visibility of the journal you have just posted, otherwise you risk duplicating the journal or wasting time investigating. This means you need real time reporting and the ability to drill from balances to transactions. Also, if your ledger and consolidation structures are different, you need your ledger data mapped to your consolidation tool format, to avoid an iterative loop of posting journals, loading, posting more journals….
The second use case is what we call analytical reporting: preparing the management reporting packs, writing up commentary, investigating discrepancies to budget or forecast, as well as add-hoc reporting. Here you need a far more flexible view of data. You also need a greater range of data: metrics, often combined with financial data to create key performance indicators, budget and forecast data. In addition there is often a difference in the timing of the data: normally this data needs to be synchronised with the data published in the consolidation tool for financial reporting. Coming back to the topic of the blog, for this reporting use case, quicker or more frequent data refreshes are not necessarily better!
Do these contrasting requirements ring true to your experience? Is so, the key point to take away from this blog is that different technology might be appropriate to address your distinct use cases. For example, in our experience, Oracle OBIEE or Oracle Essbase XOLAP are excellent online reporting tools for month-end; and a classical Oracle Essbase configuration delivers excellent cross-dimensional capability for analytical reporting.
If reporting is an area you are focusing on at the moment, I highly recommend putting the following on your pre or post holiday reading list:
If you would rather discuss it in more detail with a member of our team then do get in touch.
Some good news to share! We have started a comprehensive BI (Business Intelligence) Finance initiative for the UK’s favourite retailer. We have been asked to design a solution to use Oracle Hyperion DRM (Data Relationship Manager) as the single repository of all the retailer’s financial masterdata. Oracle Hyperion DRM will provide them with a comprehensive governance solution enabling efficient maintenance of all their core financial masterdata.
Oracle Hyperion DRM’s scope will encompass Oracle EBS, ERPi (Enterprise Resource Planning Integrator), FDM (Financial Data Quality Management), HFM, Essbase and OBIEE (Oracle Business Intelligence Suite Enterprise Edition) applications and tools.
This represents another great opportunity to show how masterdata management (MDM) should be a primary consideration at the start of any EPM (Enterprise Performance Management) initiative, not, an afterthought.
We look forward to sharing more over the course of the project. Off to celebrate!