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interRel Highlights and Company Overview

Strategizing for the Future with the Strategic Modeling

Framework

Learn how to use the Strategic Modeling framework to improve your strategic planning

Agenda

• Trends in Strategic Planning

• Case Studies

• Strategic Modeling in EPBCS Strategic Modeling Overview Models

• Accounts• Forecasting• Reports• Model Consolidations• Scenario modeling• Features

• Integrating Strategic Modeling

• Design and Tips and Tricks

• Questions

Results of the 2019 State of Business Analytics Survey

• Companies need to get to 0 day (continuous) close• Timely reports and interactive analysis• Multiple plans with different images of the future• Need to shift directions quickly in reaction to news

events and changes in the competitive landscape• Greater analysis across a wider scope - fewer surprises

and panic situations for agile businesses as they recognize pre-identified scenarios and patterns

• Machine Learning and AI will be key differentiator for those who can harness their power before their competitors

epm.bi/SoBA

Trends in Strategic Planning

• Agile Planning Timeliness over precision

Analysis over reporting

• It’s better to have a plan that’s recent at high-level versus one that’s detailed but out-of-date.

• Understand the immediate direction of your company to make quick, data-driven changes

How quickly can I come up with a number that will cause me to make a different decision?

• Continuous planning Is Dec 31 materially different than Jan 1?

Rolling forecasts

• Zero Based Budgeting Rethink business needs instead of just rolling costs forward

More data is available than ever before, but how do we use it efficiently?

Agile Strategic Planning Needs

• React to opportunities Focused on analysis vs. building

models

Bottoms up / Top Down

• Strategic planning vs. strategic thinking.

One is analysis, and the other is synthesis

• Strategy needs to be operationalized

StrategicExecutive Input

Strategic Plan

Strategic Planning

“The real purpose of effective planning is not to make plans but to change the mental models that decision makers carry in their heads.”

“The ability to learn faster than your competitors may be the only sustainable competitive advantage”

- Arie de Geus

Typical Planning Cycle

• Strategy needs to adapt real time

• Reason for Strategic Planning

Focus decisions

• Real World Issues using Excel

Budget obsolete after BOD approval

FP&A focused on minimizing variances not Analysis

LRPs with >100 tabs, frequently crashed Excel

#REF errors

Budget (Annual)

Forecast (Monthly)

Forecast (Monthly)

Strategic LRP (Quarterly)

Forecast (Monthly)

Forecast (Monthly)

Strategic LRP (Quarterly)

Forecast (Monthly)

Forecast (Monthly)

Strategic LRP (Quarterly)

Forecast (Monthly)

Forecast (Monthly)

Strategic LRP (Quarterly)

Typical Long Range Planning Process

Cash Flow Statement

Income Statement

(FP&A)

Balance Sheet

(Treasury)

⚫ FP&A creates Income Statement to Op Income (EBIT)

⚫ Treasury creates Balance Sheet

⚫ CAPEX assumptions link the two

⚫ Integrates in areas “Below the line” (D&A, Interest Inc/Exp, etc.)

⚫ Cash Flows are afterthought results

Typical Long Range Planning Issues

⚫ Executive wants new assumptions ASAP

⚫ New information from the field

⚫ Version control

⚫ Models need updating (hard coded cells, broken links)

Cash Flow Statement

Income Statement

(FP&A)

Balance Sheet

(Treasury)

Strategic Long Range Planning Process with Strategic Modeling / HSF

Strategic Modeling

Global Assumptions

Treasury

FP&A Capex

SM/HSF is the central repository for strategic financial data

Example: Long Range Planning Process

Example: Data Flow

Strategic Modeling

EPBCS Financials

Other

EPBCS Frameworks:

CapExProjects

Workforce

GL (EBS, HFM,etc)

Excel Schedules

Essbase

Reporting

Cube

Planning Forms

Strategic Modeling –Case Studies

Design

Many Foreign Entities

Currency Considerations (Constant Currency)

Memo Account Drivers

REIT Asset Testing

Integration

Input from Planning Forms to EBIT from multiple divisions

Output to Essbase (BSO then to ASO)

Case Study: Technology / Real Estate / REIT

Design Combined Scenarios (Fuel

Cones) Debt Modeling outside HSF Capex Cash Flows: Assets

constructed for others Drivers

• RASM / CASM• Fuel Prices• Stats (Fleet, BH, ASM,

etc.)• Treasury strategies

(Dividends/Debt repayment)

Integration Actuals / Forecast from

Planning as a base

Case Study: Airline

Design

Several Entities

• Simplified P&L’s

• Rollup / Consolidation / Unit Ownership

Drivers - Unit P&L

Revenue / Expense Assumptions

Integration

Debt / Depreciation

• Modeled in HSF at Corporate Entity

• Fed back to Planning

Case Study: Healthcare Staffing

Design

29 highly diversified models

Consolidations with NCIs, wholly owned entities and JVs

Regulated and non-regulated accounting

Multiple Consolidation Business Cases and Scenarios

Modeled different risk levels

IFRS vs. Adjusted vs. GAAP

New product (one of the first SM projects anywhere)

Case Study: International Energy Holding company

Strategic Modeling - Overview

Strategic Modeling - Overview

• Comes with EPBCS or PBCS +1 Enabled like the other frameworks

Custom financial engine, not Essbase based

• Integrates through Groovy Scripting or Data Maps

• Allows for agile creation of strategic plans with what-If scenario analysis

• Creates integrated financial statements with accounting integrity

Strategic modeling in Smart View

• Download the Strategic Modeling add-in from EPBCS

• Need to install Smart View first• Run the install program as Administrator

Strategic modeling in Smart View

• Creates new options in the Smart View Panel• Adds ribbon menu to Excel

Note: As of May 2019, Several Functions like Time, Funding Options and Creating Free Style Reports are available in Smart View only

Models

Models (Entities in HSF) contain the financial framework of Strategic Modeling

Models are checked in and out to maintain version control

Models can be linked together in a hierarchy in the Consolidation view

Security can be set at a global or model level (Modeler, Analyst, Viewer, None)

Considerations:• Legal structure / Geographic• M&A / Divesture• Impact of business scenarios• Plant / Store

Creating New Models

Can be created from:

• A Template

• An Existing Model

Models are stand alone entities and each contains an entire set of financials (I/S, B/S, CFS)

Depending on your corporation models may be legal entities, plants, stores, M&A targets, etc.

Templates

• Templates are used to quickly create a model based on various industries

• Templates provide different accounts and reports depending on the industry

• Templates include a hierarchical set of accounts but without data or time periods

• You can create custom templates or use the ones provided

Consolidation View

• Consolidations arrange models into a hierarchy and allow for combining models via various accounting methods

• Scenarios can vary by model to provide flexible views of the forecasts• Business Cases allow for agile what-if modeling of different Scenarios

Consolidation View

• More detail on consolidation can be controlled in Child or Parent attributes

• Groups of accounts for eliminations• Deal time periods to consolidate

Models - Accounts

The Account View is the main area for creating forecasts. It contains all accounts (I/S, B/S, CFS, Memo, Ratios, etc)

Accounts:• Predefined and are permanently

linked to maintain accounting integrity

• Can be sub-accounted for additional detail and memo accounts can be used for further customization

• Each account has 2 parts, input and output

• Can be grouped with custom grouping for easier navigation

Account Forecasting

• Accounts can be forecasted using predefined methods or free form formulas

• Can be linked to other accounts (ex. LIBOR, GDP, etc.)

Models - Features

Scenarios

• Create and manage scenarios to analyze what if situations

• Reports can be created to provide variance analysis between scenarios

• Scenarios can be used to create different business cases for consolidations

Models - Features

Audit Trail

• Provides transparency into calculated amounts

• Can drill back into components – All the way to the input

Models - Features

Goal Seek

• Allows user to set a target for an account by making changes in another related account

• Can be performed for a single period or a range of periods

• Can be adjusted by the same % or amount

Models - Features

Debt Scheduler

• Easy way to model all features of debt

• Capture and manage cash flow involved in debt investments (debt amortization, payments, interest, and interest rates)

• Automatically flows into appropriate financials (ex. Interest Expense on I/S, Principal amount on B/S, etc.)

Models - Features

Funding Options

• Balancing routine which maintains accounting integrity between all of the financial statements

• Users can specify what to do with cash surpluses or how to fund deficits

Models - Reports

Standard reports are available out of the box when models are created

Reports are automatically populated with data from the Account View

Audit Trail can be used from reports to drill back to account details

Freestyle custom reports can be created directly in Strategic Modeling (Smart View)

Strategic Modeling –Integrations

Integrating to Strategic Modeling

ProVery Flexible

Define complex mapping

Scaling

Con

Difficult for non-coders

Higher Maintenance

ProEasy for non-coders

Graphical interface

Excel template

Con

Limited flexibility

No scaling

Integrating to Strategic Modeling - Examples

Strategic Modeling –Considerations and Tips and

Tricks

Tips and Tricks - Design

• Get strategy right first, then build the models around that (Determine the point of having an LRP)

• Change Management - Get buy in from users, not just rebuilding Excel models, but creating a better method

• Use the Oracle SR system, follow up, provide feedback and stay active with the support team

Tips and Tricks – Strategic Modeling

Try to leverage SM functionality when possible• Build Account Groups for easy navigation• Audit Trail from reports to provide

transparency• Debt Scheduler integrates directly into

financial statements (Interest Expense, S-T and L-T Liabilities, etc.)

• Consolidation functionally to roll up models• Up front efforts to build master models to

use as a template

Design Issues

• Over complicating models Trying to fit every aspect of the business into a LRP

Immaterial details in out years

Loses agility

Increased maintenance

• Change management Users need to be on board with the tool

Relying too much on Excel

Refusing to admit past errors

Strategic Modeling –Conclusion Summary

Summary

• Trends in Strategic Planning

• Case Studies

• Strategic Modeling in EPBCS Strategic Modeling Overview

Models• Accounts

• Forecasting

• Reports

• Model Consolidations

• Scenario modeling

• Features

• Integrating with Strategic Modeling

• Design and Tips and Tricks

Continuing Education

• Build an Oracle Planning & Budgeting Cloud

• Application from start to finish• Administer and automate your

solution• Migrate from on-premises to the

Cloud• Best practices for setting up

your Oracle EPM Cloud Instance

Essbase

Admin Studio Smart View

• Build a report package • Execute the reporting cycle

from start to finish• Sign off or reject the final

product• Assign security• Migrate objects between

environments

• Steps to set up your Oracle

Analytics Cloud instance

• How to build Essbase Cloud

cubes from start to finish

• Maintaining dimensions and

loading data

• Creating calculations and

calculating data

• Assigning security

Admin End User Advanced

Smart View

Admin/End Users

Cloud

OAC Planning Narrative Reporting

Best Selling Oracle BI & EPM Books

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