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Oracle Integrated Operational PlanningAlign Operational Plans with Financial GoalsHari SankarOracle EPM Products

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Agenda

• Business planning challenges

• Oracle Integrated Operational Planning• Solution Overview• Hyperion Planning & IOP

• Oracle IOP demo

• Customer success

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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

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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

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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

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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.

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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

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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

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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

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