Introducing Strategic Modeling: Oracle’s HSF Cloud Offering

It’s no secret that Oracle, along with the rest of the software industry, has been moving swiftly to the Cloud over the past few years.

Within Oracle’s Enterprise Performance Management platform, this transition began in 2014 with the launch of Planning and Budgeting Cloud Service (PBCS). In 2016, Oracle added out-of-the-box content to solve specific business challenges in areas like Workforce Planning and Capital Planning and bundled that with existing PBCS functionality to create Enterprise Planning and Budgeting Cloud Service (EPBCS).

Now in 2017, Oracle continues the impressive build-out of its Cloud offering with the introduction of Strategic Modeling, a new product that facilitates long-range planning and financial modeling in the Cloud.

As part of Oracle’s EPBCS bundle, the Strategic Modeling module is available at no additional cost to customers who already have purchased EPBCS. While Strategic Modeling is “new” in the sense that this functionality has never before existed in its Cloud offering, the module actually has its roots in Oracle’s Hyperion Strategic Finance (HSF) product and will look similar to HSF for those who are familiar with its on-premise capabilities.

Take Your Strategic 264

Robust. Flexible. Versatile.

Strategic Modeling provides customers with a multitude of out-of-the-box functionalities built to simplify and enhance financial modeling processes.

In particular, it adds robust capabilities in the area of Balance Sheet and Cash Flow forecasting that were either missing or limited in prior incarnations of the EPBCS suite. It also adds scenario-modeling capabilities that can be created and driven by end users on the fly as they are responding to questions or requests from Senior Management.

While Strategic Modeling provides significant incremental capabilities to EPBCS, it also leverages many common components of the suite to make the user experience consistent. For example, it provides both a Web and an Excel user interface allowing users to create models and report in the tools with which they are already comfortable. The user interface, navigation, data integration and reporting capabilities are the same across all components of EPBCS, which provides a seamless user experience across the platform.

Strategic Modeling Capabilities

Organizations often try to build strategic plans in Excel or by extending the time horizon of their budgeting applications. All too often, these patchwork solutions fall short primarily because they make use of tools that were not intended for strategic planning.

Strategic Modeling, on the other hand, was built specifically for this purpose and provides numerous out-of-the-box capabilities to address challenges in this area. The following is a sampling of some of the key pre-built capabilities that organizations can utilize to streamline and enhance their strategic planning processes:

  • Fully Integrated Financial Statements: The standard template that ships with Strategic Modeling contains an integrated Income Statement, Balance Sheet and Cash Flow Statement. The Balance Sheet will automatically balance based on the cash position as derived on the Cash Flow Statement. The circularity inherent in Interest Income/Expense calculations (i.e. as Cash increases, Interest Income increases, which leads to more Cash) is automatically solved for by the system.
  • What-if Capabilities: Strategic Modeling greatly facilitates the process of creating on-the-fly scenarios and comparing them against the base case or other scenarios. Scenario Modeling capabilities are designed for end users to create and run and provide immediate results to key strategic questions.
  • Robust Funding Capabilities: Strategic Modeling has a Funding Routine that allows users to specify a prioritized order of how cash deficits will be funded (e.g. Sell Marketable Securities, Draw upon a Revolver or Issue Commercial Paper, Issue Long-Term Debt or Equity) and how cash surpluses will be utilized (e.g. Pay Down Debt, Share Buyback, Dividends, Buy Marketable Securities).
  • Debt Scheduler Utility: A guided user interface allows for easy input of the parameters for a new debt issuance. Strategic Modeling then will calculate and perform all of the accounting for items such as Accrued Interest, Amortization of Debt Issue Costs and Current Portion of Long-Term Debt.
  • Integrated Enterprise Planning: Strategic Modeling is part of Oracle’s EPBCS Suite and as such benefits from tight integration with the other processes (Financials, Capital, Projects, Workforce) and the reporting cubes of EPBCS. This integration allows users to quickly and easily move data from their detailed budgets and operating plans to their strategic plans within Strategic Modeling. Once the strategic plan is complete, data can be easily exported as higher-level targets to seed the budget process.

Whether you own already own EPBCS and are interested in deploying the Strategic Modeling module, you are an existing HSF customer looking to move to the Cloud or you are new to Oracle and its Cloud offerings, Strategic Modeling has a compelling use case for all organizations looking to improve their modeling and strategic planning capabilities.

Register for our “Take Your Strategic Planning to New Heights” webinar: Please join us for our webinar on July 18, 2017, to see a demo of Strategic Modeling in action and to learn more about its capabilities — register here.

Missed the webinar? View the recording here.

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Ushering in the New Era of Hyperion Strategic Finance

Welcome to the first installment of our new Hyperion Strategic Finance (HSF) blog series. Edgewater Ranzal’s HSF team has been working closely with Ranzal’s other Hyperion practices (HFM, FDM, Planning/Essbase etc.) to hone in on how HSF can be utilized to its full potential in accordance with the other product offerings.  As part of that process we felt it was important to start a dialogue (blog) to share some of our insights on various topics ranging from new product release info to cutting edge integration best practices.  We are hoping this series will be a good resource for you and your organization on your HSF journey.

Given the major changes to HSF in the 11.1.2.2 release, and the exciting product roadmap ahead of us, I thought it would be good to start the series by discussing “The New Era of Hyperion Strategic Finance.”

So…What’s new?

With the 11.1.2.2 release comes probably the most significant change to the product since it was acquired by Hyperion.  A shift in the user interface from a traditional thick client to an Excel based Smart View Add-in is at the core of the change.  The enhancement enables the end user to perform the majority of HSF modeling activities directly in an Excel workbook.  With this change, the legacy reporting in the HSF client has been REPLACED with Excel reporting via Smart View.  This means that those who choose to implement 11.1.2.2 will be required to use the Smart View based reporting and/or export the data to an external database (i.e. Essbase) to utilize other reporting tools (i.e. Financial Reports, OBIEE etc.).  For any current HSF users looking to upgrade, it is important to note that the process of upgrading to 11.1.2.2 automatically converts existing HSF reports into the Smart View format, however, existing charts/graphs will need to be rebuilt and some formatting issues have been identified which may require some re-work.  While this does introduce a big change for end users, it also presents a great opportunity by opening up native Excel functionality like allowing the use of Excel graphing, conditional formatting, highlight sums, and the group / ungroup data feature etc. To view the full list of new features you can look through the 11.1.2.2 Read me, available here.

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Why make the change?

Some existing clients have asked me why this change was made in the first place.  The answer is really two-fold:

1. Tighter Integration with Hyperion Planning: If there has been one consistent theme throughout all of my meetings/conversations with Oracle’s HSF/Planning development team it has been a desire to continuously improve the integration between Hyperion Planning and HSF.  The integration I’m referring to doesn’t stop at data, but also includes seamlessly integrating the end user experience.  Everything from selling the tools as a combined solution (i.e. bundled pricing) to having both HSF and Planning users interact with the tool in a similar manner (i.e. Smart View) have been or will be addressed.  Below I will outline some additional roadmap items that are planned that will continue this theme.

2. Reporting: All legacy HSF users that have spent time creating, formatting, and modifying HSF reports are well aware that reporting has NOT been an area of strength previous to 11.1.2.2.  Both Oracle and our implementation team consistently receive requests to have HSF reporting operate “more like Excel.”  This move is a direct response to those requests, and it is definitely a big step in the right direction.

Current Challenges:

As with any major change / new release there are going to be some growing pains and the 11.1.2.2 release of HSF is no different.  We have been working closely with Oracle over the past couple of months to identify any issues, make recommendations, and test fixes that have been applied.  The main point I want to make clear is that from a functional perspective the tool has the EXACT same capabilities.  You are simply changing the way you do things, not what can be done.  There is a bit of a learning curve to understand the new menu bar, short cut keys etc…but in general it still functions much like its predecessor with the added benefit of the Excel look and feel.

A couple of things to look out for if you will be implementing AND going live prior to the 11.1.2.3 release:

1. Issues with large numbers of active reports:  We have experienced some performance issues when working with a file that has numerous reports (standard or freestyle) open at once.  This includes reduced speed of the check out / in process, flickering upon calc/refresh, and occasional freezing of the application.  Currently, the product seems to work more seamlessly when working with just the accounts tab or 1-2 reports, however, fixing this is at the top of Oracle’s priority list and we expect it to be addressed sooner rather than later.

2. Renaming of Time Periods: You want to avoid renaming the default time periods in the entities (i.e. Changing 2013 to FY13).  In the current release this can cause some calculation issues in system regarding the funding routine.  Again, this has been identified by Oracle and is expected to be resolved in the next patch set or release.

3. Smart View Parity: There are some features that are not currently in the Smart View interface which may require users to revert back to the old HSF client.  Some of these features include the debt/depr schedulers, ECM/ACM etc.  This means that the end user may have to jump between interfaces in certain instances.  The good news is that these features are expected to be added to the Smart View functionality in the next release (11.1.2.3) and can still be utilized in the traditional client if need be.  To see a full list of these items look to the 11.1.2.3 roadmap column below.

4. With the change in the technology, come some changes to the infrastructure component, so it is important to discuss these requirements with your technical team to diagnose hardware and software needs before moving forward. It is also important to note that the upcoming release of 11.1.2.3 will NOT be backward compatible with 11.1.2.2.  So, if you have a multiproduct implementation with integration components you would need to upgrade the entire suite.

Product Direction / Road Map

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The above picture is a snap shot of the HSF roadmap given to me by the Oracle product team.  You can see the current release (as of this blog post) on the far left, calendar year 2013’s scheduled release (11.1.2.3) in the middle, and the subsequent releases on the far right.  The focus this year is to truly stabilize the Smart View integration and incorporate all of the standard features of the thick client into the Smart View interface.  The exciting part of this is how the changes in 11.1.2.2 have set up the product for even more advancement in the future.  Post 11.1.2.3, a lot of the heavy lifting for HSF’s major changes will be complete.  This will allow the team to focus on true feature enhancements like adding a monthly depreciation scheduler or addressing the concept of parent level scenario modeling (possibly an idea for a future blog post!).  In addition, if you look at the future direction, in the Enterprise Readiness section, you will see items such as LRP Integration to Planning, Automated Data Loads, DRM support etc…This represents a future state which allows a user to manage both data and metadata in a consistent manner between HSF, Planning, and Essbase.  Imagine a world where you can have one excel worksheet open with your HSF model and another with a LIVE connection to an HSF reporting cube (via Essbase) for Ad-hoc purposes!  Not only that but a world where the Essbase cube is automatically updated as you make changes to the HSF model, meaning no manual metadata management between applications or tedious mappings that need to be maintained. This type of enhancement truly empowers the user to focus on the modeling aspects of HSF while allowing Essbase to shine for management reporting – truly using the right tool for the right job.

Our Recommendation

Overall we are very excited about the direction Oracle is heading with HSF.  The Smart View capability in 11.1.2.2 is really just the first step in what we see as a continued effort to make the product better for its users.  With that in mind, we have begun multiple 11.1.2.2 implementations, however, it is understood in all cases that there will be some issues to work through and there are no pending deadlines where these issues could put the project success at risk.  In fact, the Go Live dates are not expected to occur until a time when we believe 11.1.2.3 and / or an 11.1.2.2 patch set will be available.  Given that, we do recommend that all new HSF clients seriously considering starting with v11.1.2.2 while taking note of the challenges mentioned above.  Initially this approach eliminates the need for your end users to learn two different user interfaces.  Additionally, if you are willing to give feedback, as an 11.1.2.2 client you will definitely have the ear of the Oracle team as it pertains to resolving any existing product issues, as well as requesting new enhancements for the future.  Oracle is very eager to make this release a success and they truly value any input early adopters can provide.  So if you have the patience to work through some bumps in the road, and the time to resolve the issues you may encounter, I would definitely encourage giving the 11.1.2.2 release serious consideration.

I hope you found this information helpful.  We look forward to coming out with many more in the future. In that vein, if you have any ideas / request for blog topics please feel free to leave them in the comments section or reach out to me directly at rmeester@ranzal.com and we will make sure to address them in future posts.

About the Author

Ryan Meester is a Practice Director for the Strategic Planning Practice at Edgewater Ranzal.  His first encounter with HSF dates back to 2004 as a Consultant with Hyperion in the HSF practice.  After three years in that capacity, leading projects and assisting with business development efforts, Ryan co-founded Meridian Consulting International with two of his Hyperion colleagues, Andrew Starks and Ricardo Rasche.  At Meridian, Ryan, Andrew, and Ricardo focused exclusively on HSF implementation services until Meridian was acquired by Edgewater Ranzal in May of 2010.  This was a strategic acquisition for both Meridian and Ranzal. Both organizations were seeing more and more multiproduct implementations which required a broader EPM focus. The acquisition effectively rounded out Ranzal’s EPM service offering by adding HSF expertise to their repertoire.