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Unleashing Profit Potential and Cost Control at Skadden Arps
Using Oracle HPCMSession 12426
Ivan Orlic – Skadden ArpsRJ Linehan – Innovus Partners
Company Information
• Premier Global Law Firm• 23 Offices• 4XX Partners• X,XXX Attorneys• Ranked X by AmLaw (based on
Revenue)• Utilizes Hyperion Planning, Oracle
Essbase, and recently implemented Oracle HPCM.
• Innovative EPM and BI services and solutions.
• Specializing in Forecasting & Budgeting Solutions, Reporting Solutions, Profitability & Cost Management Solutions.
• Oracle Gold Partner.• Headquartered in NYC.
Only 5% of the work force understands the strategy
60% of organizations don’t link budgets to strategy
Only 25% of managers have incentives linked to strategy
85% of executive teams spend less than one hour per month
discussing strategy
9 of 10 companies fail to execute
strategy
The People Barrier
The Vision Barrier
The Management Barrier
The Resource Barrier
©1998-2012 Balanced Scorecard Institute
Today’s Management Challenges
Inability to Translate Vision into an Executable Strategy
©1998-2012 Balanced Scorecard Institute
Vision andStrategy
Objectives Measures Targets Initiatives
FINANCIAL
“To succeed financially, how
should we appear to our
shareholders?”
Objectives Measures Targets Initiatives
LEARNING AND GROWTH
“To achieve our vision, how will we sustain our ability
to change and improve?”
Objectives Measures Targets Initiatives
CUSTOMER
“To achieve our vision, how should we appear to our
customers?”
Objectives Measures Targets Initiatives
INTERNAL BUSINESS PROCESS
“To satisfy our shareholders and customers, what
business processes must
we excel at?”
Today’s Management Challenges
The Four Perspectives of Translating Vision and Strategy
Linking Tactics to Strategy
Customer Perspective• Strategy - Improve customer value to increase revenue
and profitability• Tactic – Define profitable customers, Identify those
customers, Acquire and/or retain those customers
Financial Perspective• Strategy - Manage financial resources more efficiently to
reduce costs and increase profitability• Tactic – Identify cost drivers, Decide what costs are
wasteful or unnecessary, Eliminate those costs
Today’s Management Challenges
Strategy and Tactics Lead to More Questions
• How do we define a profitable customer?
• How much does it cost to service our customers?
• What is the profit margin for products sold to our customers?
• What organizational resources does a customer consume?
• Why has an increase in revenue not translated into an increase in profitability?
Today’s Management Challenges
Measuring Profitability and Costs
Challenges of Measuring Profitability and Cost Drivers
• Homegrown disparate models are inflexible, inaccurate, and inconsistent
• Time lags to create and update profitability model
• Insufficient customer, product, or driver data at the correct grain
• Lack of integration with financial data• Excessive cost associated with maintaining
profitability solution
Measuring Profitability and Costs
Qualities of an Effective Profitability Solution
***Connecting the Dots***
• Integrated solution that is flexible, accurate, and consistent
• Owned and maintained by business users• Offers transparent results that are reliable• Provides traceability to source data for
easier visibility• Lowers total-cost-of-ownership
• Packaged Profitability functionality • Computes Profitability for Business Segments,
Customers and Products• Pre-Built Framework for profitability modeling:
• Pre-built Measures dimension• Support for Multiple Cost Allocation
methodologies• Pre-Built Validation reporting
• Graphical Interactive Traceability Maps• Genealogy Reporting shows flow from any stage
to any stage
• A User-Driven application• Measures, Allocates and Assigns Cost and
Revenues via User Defined Rules• Finance User-facing Administration• Provides Scenario Modeling for Decision Making
• Tightly integrated with the full Hyperion EPM Suite• Shared Data and Metadata via EPMA• Shared Reporting Tools like Financial Reports &
Web Analysis• Proven Technology Stack
Hyperion Profitability and Cost Management (HPCM)An Oracle EPM System Module
Oracle’s Enterprise Performance Management Platform
Common Integration & AnalysisData Quality and Consistent Dimensions
Common Reporting & Interaction
Strategic Planning
Financial Close
Planning & Forecasting
Profitability Management
EPM Architect / Financial Data Quality Management
Hyperion Profitability & Cost Management
DW / Excel / Text Files / Etc…
Skadden’s Business Requirements
Business Challenges Driving Business Requirements
•Flexibility•Integration•Traceability/Transparency•Ease of Maintenance
Solution Design - Architecture
Solution Design – Data Sources
Solution Design – Allocations
• Cost Center to Cost Center
• Cost Center to Profit Center
• Intra Cost Center• Intra Profit Center
Solution Design – ASO Reporting App
• Direct Revenue and Expense Data
• Allocation Results• Additional Detail
Lessons Learned
• Administrator / End-User training (much steeper learning curve vs Essbase/Planning)
• Scrub source data (research your data)• Define End-report first so that the
model is able to produce it (impacts outline / allocation models, etc)
• Who should own the solution? (IT? Finance? Hybrid approach?)
• Additional complexities to build and maintain not found in Planning applications / projects
• Proof of concept apps are important• Subject matter expert / business
analyst for your business' specific industry
Lessons Learned
Benefits Realized
• Centralized allocation system• Maintained by the business
users• Web-based solution• Transparency into allocation
model• Ability to modify allocation
model (drivers, assignments, etc.)
Future of Profitability Reporting at Skadden
• Review and redesign of allocation drivers for each cost pool
• Client-based allocations
Questions? Comments?
