Integrated Operations Planning

Oracle Integrated Operational PlanningProduct Awareness Training

Hari SankarVP, EPM Products

Copyright © 2008, Oracle and / or its affiliates. All rights reserved. 2

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Agenda

• Business planning challenges • Integrated business planning

• Oracle Solution• Integrated Operational Planning overview• Customer success

• Competition

• Positioning & Selling

• Summary – Key Takeaways


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


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


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

OperationalModeling


What the analysts are saying…

“Integrated business planning…fills the gap between the strategic and financial planning handled by corporate performance management suites and operational planning focused on the supply chain.”

Tim Payne & Nigel Rayner, Gartner Inc, Oct 2007

“What for decades has been a financial budget exercise to manage expenses has morphed to a continuous, integrated business planning process that aligns the entire business toward operational and financial excellence.”

John Hagerty, AMR Research, Nov 2007


Oracle Integrated Operational PlanningEnabling Integrated Business Planning

Financials SCM

Integrated Operational Planning

Human Resources

Long Term PlanningCorporate DevelopmentTreasury Management

Value Management

Hyperion Strategic Finance

Integrated Margin

Planning

Call Center Operations Planning

Key Materials & Capacity Modeling

Inventory Exposure Modeling

CRM Manufacturing

Only Oracle integrates…

• Operational planning to assess feasibility of financial plans

• Corporate finance to link operations to capital allocation and financing decisions

Annual BudgetingPeriodic Forecasting

Capital Expense PlanningWorkforce Financial Planning

Hyperion Planning


What is Integrated Operational Planning

Business 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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http://www.sap.com/index.asp

http://www.siebel.com/

http://www.peoplesoft.com/corp/en/public_index.jsp


Review Plan Exceptions Evaluate Alternatives

Assess Business ImpactUpdate Plan of Record

Marketing Sales

Finance

Supply Chain

• Create what-if scenario’s on plan revisions

• Rough-cut modeling• Resolve constraints

Enabling An Iterative Planning Process

Manage collaboration

Assess cross-functional impact

Enable fast decision-making

Perform interactive scenario analysis

• Approve plan revisions• Submit plan changes back to

planning and execution systems

• Analyze critical gaps between financial and operational plans

• Compare impact of alternatives on key financial and operational metrics


Integrated Planning Drives Key RequirementsNeed for Core Technology Innovation

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


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

http://www.sap.com/index.asp

http://www.siebel.com/

http://www.peoplesoft.com/corp/en/public_index.jsp


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


Operational Cost ManagementKey Business Challenge Today

• Escalation of raw materials prices

• Rising transportation and energy costs

Financial Impact

• Substantial COGS variability

• Price revisions & Product mix shifts

Finance-led initiatives around operational cost management


Oracle IOP: Extending Financial Planning With Operational Cost Modeling

Revenue

Cost of Goods Sold

Gross Margin

Financial Plan

– Raw Material Costs– Labor Costs– Transportation Costs– Capacity Utilization– Product Mix– Granular Pricing

Operational Model

• High-level assumptions

• Standard costs

• No operational detail

• Annual adjustments • Detailed cost drivers

• Bill-of-Materials modeling

• Time-phased calculations

• Multiple adjustments per month


High Tech andElectronics

Discrete and Industrial Manufacturing

Consumer Goods

Proven Value in Key Industries


Competition

The Difference: Change-Based Data Modeling

Adjacent Solutions Point Competitors Integrated Operational

PlanningKey Capabilities Supply Chain BI Steelwedge, Kinaxis

Modeling

Demand/Supply modeling Algorithmic optimization Limited

Financial linkage Limited Scenario Analysis

Data & model scale Rapid what-if analysis Limited

Business User Control

Transparent models User control of models Limited

Process Management

Process workflow Root cause analysis Limited

SAP

What they will lead with...SAP Sales & Operations Planning x-app

What their key messages are...• Out-of-the-box planning solution for SAP ERP customers• SAP integration, Fast deployment, Rapid time-to-value

Strengths• Good first demo & story• Easy path for installed base

looking to address S&OP needs– “you can’t go wrong choosing SAP”

Weaknesses• Operations centric, Lacks capabilities for

financial plan alignment• Lacks interactive what-if analysis for

decision support – largely a reporting and workflow layer

• Planners will continue in Excel hell for analysis and decisions

• Can’t address specific operational planning problems like product allocations, key materials planning etc.

Cognos / IBM

What they will lead with...Cognos Sales & Operations Planning Blueprint

What their key messages are...• Out-of-the-box template with pre-built analytic models for sales and operations

planning• Pre built integration, Fast deployment, Rapid time-to-value

Strengths• Perception of packaged application• Good first demo & story• Easy path for installed base – “you

already have it, no need to look elsewhere”

Weaknesses• Lack of depth in operational models• Doesn’t scale with real-world data and

models• Lack of real reference customers• Can’t address specific operational planning

problems like cost & margin mgmt, product allocations, key materials planning etc.


Positioning & Selling


Solution Positioning

• Configurable solution for high-value planning problems at the intersection of Finance and Operations• Target High-tech, Consumer Goods and Discrete Manufacturing now• Be opportunistic with other industry segments

• Complementary to Hyperion Planning• Extends financial planning into key operational areas• Ensures alignment between operational and financial plans

• Complementary to Supply Chain Planning & Demantra• Replaces Excel models, not Supply Chain Planning• Provides integrated planning layer consistent with Demantra and

Oracle ASCP• Prevents account penetration by point solution providers like Kinaxis


Oracle IOP: Where it fits…

Financials SCMHuman Resources CRM Manufacturing

• Long Term Planning• Corporate Development• Treasury Management• Value Management

Hyperion Strategic Finance

• Workforce Planning• Capital Asset Planning• Revenue Planning

Hyperion Planning Modules

• Cost Allocations• Product & Customer

Profitability• Multi-stage Allocations

Hyperion Profitability and Cost Management

• Financial Planning• Annual Budgeting• Periodic Forecasting• Variance Management

Hyperion Planning

• Demand and Supply Balance

• Consensus Planning • Monitor Operations

Performance • S&OP “Hub”

Demantra Real-Time Sales & Operations Planning

• Integrated Impact Analysis• What-if Scenario Planning• COGS & Margin Planning• Resource Planning

Integrated Operational Planning

• S&OP What-if Analysis • Supply Chain Network

Optimization • Contingency and Scenario

Planning

Strategic Network Optimization

• Demand Sensing • Statistical Forecasting &

Demand Modeling • Demand Planning

Demantra Demand Management

• Supply Planning • Production and Distribution

Planning • Constraint-Based Planning

Advanced Supply Chain Planning

Oracle Enterprise Performance Management Oracle Supply Chain Planning

Cross Functional Plan Visibility

Financial Models &

Assumptions

Operational Models &

Assumptions


Oracle IOPApplicable to Broad Range of Problems

Problem Characteristics Example Problems

• High-value planning problems poorly addressed with spreadsheet models

• Need to capture operational constraints and financial impact

• Need for transparent planning models managed by business users

• Iterative what-if analysis requirements

• Trade-off and risk analysis needs

Manufacturing• Integrated Cost & Margin Planning• Key Materials & Capacity Modeling• Inventory Exposure Management

Services• Integrated Revenue & Profit Planning• Key Resources Planning• Call Center Operations Planning

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Planning Maturity

Hyperion Customer

Pain

Selling Oracle IOPWhat to Look For

• Recent financial target misses

• Internal war stories on operational issues: escalating costs, inventory write-off, market share loss, product launch failures

• Investments in financial planning and supply chain planning solutions

• Evidence of maturity in planning processes

• Successful deployments of Hyperion Planning and/or Essbase planning solutions

Target Buyers & Key Messages

Finance

Operational Alignment Business Performance

Controller

VP/Director - Finance

CFO

• Establish alignment across financial and operational goals and planning processes

• Capture operational drivers for predictable financial performance

• Achieve consensus in planning through collaboration

IT

Excel Hell Integration

Director - IT

CIO

Manager - IT

• Eliminate ad-hoc “spreadsheet hell”

• Leverage existing planning solutions in finance and operations

• Deploy a consistent framework for Integrated Business Planning

Operations

Informed Decisions Operational Performance

Director - Planning

VP/Director - S&OP

VP-Operations

• Enable fact-based decisions at the speed of business

• Share planning assumptions and decisions with peers to avoid surprises

• Align operational LOB plans to the enterprise financial plan

Summary

Key Takeaways

• Align financial goals with operational feasibility• Make faster and better business decisions• Unlock the value of existing planning systems

For more information…

• Useful Web Links• IOP on Oracle.com• IOP on MyOracle

• Contacts• [email protected]• [email protected]• [email protected]• [email protected]

http://www.oracle.com/appserver/business-intelligence/operational-planning.html

http://my.oracle.com/portal/page/myo/ROOTCORNER/SALES_KIT_REPOSITORY/Enterprise%20Performance%20Management%20System/Performance%20Management%20Applications/Oracle%20Integrated%20Operational%20Planning

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Integrated Operations Planning

Documents

operational constraints

operational plans

financial excellence

financial targets

entire business

critical gapsbetween

financial budget exercise

business decision making