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"Oracle has been helping customers like you manage your business systems and information with reliable, secure, and integrated technologies."
Source : Oracle
Enterprise Performance Management for Small and Medium Businesses
Enterprise Performance Management is also known as:
Performance Mangement,
EPM,
Performance Management Tools,
Business Performance,
Business intelligence,
Performance management solution,
Business Performance Mgmt,
enterprise performance management Resources,
BI And EPM Solutions.
Executive Overview
Finance and Information Technology (IT)
executives and staff in large enterprises around the
world are adopting business intelligence (BI) and
enterprise performance management (EPM) solutions
to provide insight into the factors driving performance and to better comply
with reporting regulations. But these tools should not be limited to large,
publicly held companies. Small and medium businesses (SMBs)
face many of the same challenges as large ones, although on a smaller scale, and
they also need the tools that provide insight into performance and management of
key company data.
This white paper will review the stages of business growth and provide
examples of how forward-thinking SMB companies have leveraged BI and EPM
solutions to manage expansion and address complex reporting and compliance
issues.
Introduction
As businesses move from simple beginnings to the early stages of expansion
and growth, resource and performance management challenges are acute because
scarce capital must be allocated and invested carefully. Each additional
location and human resource brings higher fixed costs and the need to understand
how these costs will be absorbed and funded: Are we adding head count to support
existing demand? Are we investing in new facilities to drive expansion of the
business? BI and EPM solutions can help answer these questions and give the
management team insight into the factors driving revenue, cost, and profits.
This white paper reviews the stages of growth that most companies experience.
Examples of forward-thinking SMBs will show how BI and EPM solutions have been
leveraged to manage expansion and address reporting and compliance issues.
A Simple Beginning With Simple Business Systems
Every large enterprise starts with modest beginnings, be it a single retail
operation, a small law firm, a one-person financial planning service, or a
basement manufacturing operation. Easy-to-use business systems such as
QuickBooks are designed for small businesses and handle accounting, payroll, and
purchasing. Business plans and budgets are developed in Microsoft Excel, Word,
and PowerPoint. With centralized management, an accessible accounting system,
and a business plan that is easy to update, the principal or CEO has complete
visibility into customer orders, payments, purchasing decisions, and hiring
activities. Information is readily accessible and decision-making is a simple
process. But the situation can change quickly.
All companies begin with small operations, so the CEO has complete visibility
into customer orders, payments, purchases, and hiring activities.
Multiple Locations, Products, And Technology Tools
As the small business expands into multiple locations with more staff,
products, and services, the principal or CEO will have less visibility into each
aspect of the business. Customer activities, marketing, and billings and
collections are delegated, and other managers make purchasing and hiring
decisions so the business can expand. New locations and divisions could drive
the need for additional operational systems and databases. There is a new need
to access, report on, and analyze data from different sources. Resource
management becomes critical decisions regarding where and when to add additional
resources must be matched with expected revenue and cash flow.
At this point, spreadsheet-based reporting and planning solutions start to
break down. An annual business plan will no longer suffice, because management
needs more-frequent reports on sales and expenses to allocate the right
resources. Rolling forecasts might also be required and the accuracy of these
forecasts can have a big impact on strategic decisions. Companies might now
begin adopting BI query and reporting tools to integrate data from multiple
operational systems and deliver timely, accurate sales and other management
reports monthly, weekly, or even daily. Customized dashboards might also be
leveraged to track key performance metrics and to personalize insights for
managers. Packaged budgeting and planning applications may be implemented to
replace spreadsheets and provide more control over the forecasting process.
DFCC Bank of Sri Lanka experienced this growth sequence. With 375 employees,
DFCC relied largely on numerous spreadsheets and databases to create its
budgets. As this process grew in complexity, the number of spreadsheets grew to
more than 1,000, and the occurrence of errors increased. In addition, the time
it took to complete the budgeting process became a growth inhibitor. By
implementing Oracle's Hyperion Planning a centralized, Excel and Web-based
planning, budgeting and forecasting solution DFCC was able to reduce the budget
consolidation cycle from three weeks to 24 hours. It also improved its
performance reporting at the bank and branch levels.
Oberto Sausage Company is privately held, with about 1,200 employees at four
processing plants. Before the year 2000, few people in the company had access to
information needed to make sound business decisions. Oberto's monthly management
reporting consisted of a printed 750-page report, generated by its enterprise
resource planning system, that managers had to sift through manually. By
implementing Oracle's Hyperion Interactive Reporting , within a few months
Oberto began delivering customized reports and dashboards to managers in
finance, operations, distribution, and customer service. These reports provide
daily views into orders, shipments, and inventories. As a result, managers are
able to provide enhanced customer service, better inventory and sales
management, and improved sales performance.
As businesses grow, spreadsheets are augmented with packaged budgeting and
planning applications. Companies might also need to implement BI query and
reporting tools and customized dashboards to track key metrics.
More Complexity And Risk With International Expansion
As companies expand into new locations, they might also encounter the need to
branch out beyond their home country's borders. Whether it's a Canadian company
expanding into the lucrative U.S. market, a Dutch company expanding into the
U.K. or France, or a Korean company expanding into other Asian markets,
international expansion brings greater complexity and risk to the business. This
includes the need to plan and report in multiple currencies, correctly account
for intercompany transactions, and report to different tax authorities.
During this phase, in addition to having more-complex budgeting, planning, and
management reporting needs, companies are also faced with more-complex
financial reporting requirements. This further reinforces the need to upgrade
from spreadsheet-based solutions for budgeting, planning, and management
reporting. Companies must seriously consider implementing packaged
applications that can handle the complexities of multinational financial
consolidation and reporting.
Here's an example of a mid-sized company in
the U.K. that addressed its multinational consolidation requirements with
Oracle's help. As one of the world's largest auction houses, with 50
subsidiaries globally, the company needed a better way to consolidate its
monthly financial results. It selected Oracle's Hyperion Financial
Management, a Web-based financial consolidation application, and Oracle's
reporting and analysis tools to streamline the period-end closing and
reporting process, and improve the delivery of management information
throughout the organization. After a few months, the company began to see the
benefits of the new system and is now considering using the system to handle its
planning and forecasting process
Expanding internationally has its own
set of requirements. Companies need to plan and report in multiple
currencies, correctly account for intercompany transactions, and report to
new tax authorities. At this stage, packaged applications that can handle
multinational financial consolidation and reporting are required.
Increased Scrutiny For Public Companies
Whether a company is expanding
internationally or not, the prospect of moving from being privately held to
being a public company brings a substantially new set of challenges. The
scrutiny placed on public companies by the financial markets drives the need
for a financial consolidation and reporting process that provides a high
level of integrity and control, as well as detailed audit trails that enable
traceability of data from its original source to consolidated financial
statements. The financial projections presented to potential investors before
a public offering must also be as accurate as possible, including cash flow
and funding requirements. And after a company goes public, the financial
guidance provided to external stakeholders, along with quarterly financial
results, must also stand up to scrutiny.
In today's global marketplace,
strictly producing financial statements is often no longer sufficient to meet
the transparency demands of investors, employees, customers, business
partners, and the community at large. These stakeholders are demanding more
disclosures related to executive compensation, energy usage,
environmental issues, hiring and labor practices, charitable programs, and other
social issues. Companies need software that supports the collection,
consolidation, and reporting of financial and nonfinancial information, key
performance metrics, and supporting commentary for internal and external
audiences.
Moreover, the challenge of running a complex organization drives
the need for comprehensive performance management systems. These systems
support the continuous management cycle of goal setting, modeling, planning,
monitoring, analysis, and reporting that allows managers to gain greater
insight into the business and more agility in decision-making. All corporate
resources must be aligned and focused on the right market opportunities to
maximize performance and meet stakeholder expectations.
Ashtead Group is
one of the largest equipment rental groups in the world, with a network of
more than 400 profit centers in the United States, U.K., Singapore, and
Canada, and more than £500K in annual revenue. As a public company traded on
the London Stock Exchange, Ashtead Group has been using Oracle's Hyperion
Financial Management, a financial consolidation application for financial
reporting, and Oracle's Hyperion Essbase analytic platform for management
reporting. In addition, it recently adopted Oracle's Hyperion Strategic
Finance, a financial modeling application, to support strategic financial
planning and regular reforecasting. Having outgrown a linked
spreadsheet-based solution, Ashtead Group has gained more control over its
financial planning process, with integrated financial statements and the
ability to quickly perform scenario analysis, address Financial Accounting
Standards Board and International Financial Reporting Standards impairment
testing requirements, and manage debt issuances.
Going public drives the
need for financial consolidation and reporting processes that provide a
high level of integrity and control. Detailed audit trails that can trace
data from its original source to financial statements are a compliance
requirement.
New Deployment Options For Small And Medium Businesses
SMBs might have limited IT resources or infrastructure to support sophisticated
software systems. In a fast-growing organization, IT typically focuses on the
transactional systems that handle the growing volume of activity so that
customer service is kept at a high level and information is kept secure. Due
to these other priorities, BI and EPM system requests might not receive the
funding and attention they deserve and various groups are left to fulfill
their requirements using spreadsheets or low-cost departmental solutions that
don't integrate with corporate systems. However, there are other options for
SMBs that need proven BI and EPM solutions but have limited IT resources and
budget.
One solution is managed service providers (MSPs). MSPs can act as
an outsourced IT department, providing the hardware and systems software
required to support sophisticated BI and EPM software solutions, and can
spread the cost of this infrastructure out over time. Some MSPs might also
provide implementation and administrative services for these systems; they
leverage their in-house expertise to customize the solution and relieve
resource-constrained companies of the cost and training required to support
these systems.
Another emerging trend is the software as a service (SaaS)
model. Unlike the MSP model, where the customer purchases a perpetual license
for the software, the SaaS model allows the customer to rent the hardware and
desired software solution on a pay-as-you-go basis. Companies such as
Salesforce.com and NetSuite offer SaaS-based customer relationship management
and accounting solutions based on a per user/per-month model. Although these
solutions cannot typically be customized to the same extent as installed or
MSP-based solutions, they do provide a fast, low-cost solution for growing
companies with constrained IT resources.
SMBs might have limited IT
resources and infrastructure to support sophisticated software systems.
New deployment options such as MSPs, SaaS, and subscription'based pricing
enable smaller companies to implement BI and EPM systems at a reasonable
cost.
BI And EPM Solutions For Small And Medium Businesses
Oracle and its
partners offer financial reporting, budgeting and planning, advanced
analytics, query, and reporting solutions to companies of all sizes, in all
industries around the globe. Oracle understands the requirements and
constraints of smaller, high-growth organizations and provides BI and EPM
software solutions that help finance and IT executives increase confidence in
their financial reports, management reports, and plans; improve business
predictability; and allocate resources more effectively.
Oracle's Hyperion
BI and EPM solutions for small and medium businesses include
- Market-leading, packaged financial management applications that can be
implemented rapidly
- Integrated dashboards and reporting and analysis tools
that support rapid information delivery
- Web-based interfaces for easy
deployment
- Easy integration with Microsoft Office
- Flexible deployment
options including in-house installation or off-site hosting to reduce your IT
requirements
Conclusion
Small companies rarely stay that way. Businesses
grow from sole proprietorships to multiple locations. They might even expand
to incorporate international operations or public ownership.
Regardless of
the stage of growth, there is always a need to access, report on, and analyze
data from different sources. Spreadsheets must be augmented with budgeting
and planning applications so that resource management decisions can be
matched with revenue. Companies also need to implement BI query and reporting
tools and customized dashboards to track key metrics so that performance can be
consistently monitored.
Oracle offers financial reporting, budgeting and
planning, advanced analytics, query, and reporting solutions to companies
regardless of their size. These BI and EPM tools meet the current and future
needs of growing businesses and make the most of valuable resources.
An Oracle White Paper
Updated July 2007