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Oracle continues to enrich the capabilities of its Hyperion suite of applications that support the finance function, but I wonder if that will be enough to sustain its market share and new generation of expectations.VI_Financialmanagement At the recent Oracle OpenWorld these new features were on display, and spokespeople described how the company will be transitioning its software to cloud deployment. Our 2013 Financial Performance Management Value (FPM) Index rates Oracle Hyperion a Warm vendor in my analysis, ranking eighth out of nine vendors. Our Value Index is informed by more than a decade of analysis of technology suppliers and their products and how well they satisfy specific business and IT needs. We perform a detailed evaluation of product functionality and suitability-to-task as well as the effectiveness of vendor support for the buying process and customer assurance. Our assessment reflects two disparate sets of factors. On one hand, the Hyperion FPM suite offers a broad set of software that automates, streamlines and supports a range of finance department functions. It includes sophisticated analytical applications. Used to full effect, Hyperion can eliminate many manual steps and speed execution of routine work. It also can enhance accuracy, ensure tasks are completed on a timely basis, foster coordination between Finance and the rest of the organization and generate insights into corporate performance. For this, the software gets high marks.

Unfortunately, this FPM suite remains more difficult to deploy and maintain than other vendors’ suites, and its user experience is becoming dated. As well, social collaboration is increasingly important in business, especially to fit specific requirements of the finance function, as I recently noted. Oracle understands that it must address changing user experience requirements as the baby boomers retire and are replaced by people who have fundamentally different expectations of how software is supposed to work. While there was plenty of evidence at OpenWorld that Oracle is taking steps to remedy this at a corporate level, it’s up to individual units to implement changes to their software portfolio, and it’s not clear that this is a priority for the Hyperion group. But in other areas, Oracle is busy addressing gaps in its FPM offerings. It is adding mobile enablement to Hyperion Financial Management and Planning, starting with an executive approval application to ensure that necessary signoffs can occur anywhere to speed the completion of routine work. To address the growing popularity of its cloud-based rivals, Oracle’s long-awaited Planning and Budgeting Cloud Service should be available by the end of 2013, providing budgeting, planning, collaborative forecasting and reporting as services to companies. And the company is offering financial and management and reporting in the cloud to streamline production and delivery of reports.

Hyperion still has the strongest franchise in the finance function, the legacy of achieving early market dominance in software for vr_fcc_financial_close_and_automationconsolidation, reporting, planning and budgeting. It succeeded because it gave the finance department autonomy from IT with applications designed by people who understood their needs. Hyperion offers a rich set of capabilities to automate the extended close cycle – all of the activities that start with the preclosing functions and continue through completion of external reporting. Our recent benchmark research on the financial close found a correlation between the time it takes a company to close and the degree of automation that it applies to the process. On average, those with a high degree of automation are able to close their books in 5.7 days, compared to 9.1 days for those that apply little or no automation. Oracle’s Financial Close Suite of applications is designed to enable companies to execute their period-end close faster and more accurately while requiring fewer resources. This is important because managing their close well is an issue for more than half of companies. Our research found that 61 percent of corporations take more than six business days to complete their quarterly or semiannual close (the consensus best practice is closing within six business days). Rather than achieving a faster close, which 83 percent of companies said is important or very important, the research found that on average it takes a day longer for companies to close than it took them five years earlier. In conjunction with better process design, using software to automate manual processes, manage all phases of process execution and limit the use of desktop spreadsheets is an effective way to shorten a company’s close cycle. Oracle’s Financial Management Analytics allows finance executives to closely monitor this extended close cycle.

One recent addition to Oracle Hyperion’s Financial Close Suite is Tax Provision. Accurately calculating and reporting direct (income) taxes is a time-consuming, labor-intensive process for almost all midsize and larger companies. I’ve written about the importance of using technology to bring the tax function into mainstream finance. There are two necessary IT elements to managing this process. One is ensuring that all of the data needed for provisioning and any subsequent audit is readily available. An option here is a tax data warehouse for companies that have a large number of legal entities and/or operate in multiple tax jurisdictions. Hyperion doesn’t have this capability. However, for companies that have less complex requirements or just want to simplify and centralize the gathering of tax data, it provides the second necessary element: an environment that manages tax data collection, improves the accuracy of the data and the calculations (by substantially reducing the need for desktop spreadsheets and rekeying of data from source systems) and automates data movement through configurable wizards. Especially in the quarterly and year-end accounting closes, numerous adjustments may take place that can affect the tax provision or changes in tax calculations that can have an impact on reported results. A tax provision application can speed up the back-and-forth adjustments, helping to shorten the accounting close cycle. It also can enhance the effectiveness of the tax function because those professionals will have more time to spend on analysis and optimizing a company’s tax position rather than wrestling with spreadsheets.

Oracle has added important new capabilities to its FPM suite since acquiring Hyperion. Expanding the suite has helped the company sustain its franchise in the face of determined competition from large to smaller sized software vendors such as IBMInfor and SAP, as well as smaller ones including Adaptive PlanningAnaplanHost AnalyticsLongview and Tagetik. The generational change that’s under way in corporations poses a serious competitive threat to Oracle. For finance professionals, word of mouth and brand loyalty count far more than “enchanted boxes” or “undulations”: That’s how Hyperion came to dominate the market. But times change, and Oracle is vulnerable because of the time and cost of deployment, ease of use and maintenance and user experience of its FPM suite. These were reflected in our 2013 Financial Performance Management Value Index. This year’s OpenWorld demonstrated that Oracle can pivot – albeit slowly – to address a rapidly evolving applications software market. With Hyperion it needs to focus more on addressing core competitive issues if it expects to sustain a leading market position.


Robert Kugel – SVP Research

This is the beginning of the season when companies that are on a calendar year begin their strategic and long-term planning. Ventana Research performed an extensive investigation in this area with our long-range planning benchmark research. Strategic and long-range planning is a process and discipline that companies use to determine the best strategy for succeeding in the markets they serve and then ensure they have the capabilities and resources needed to support their strategic objectives.

I use the term “strategic planning” to mean the formal conceptualization of strategy, which is more qualitative than quantitative. Typically, it involves a relatively small number of people on the senior leadership team. Long-range planning, on the other hand, is the formal quantification of the strategic plan, which translates ideas into numbers. This process involves fewer and more senior people than the annual budget, and it is designed to serve as a bridge that connects an organization’s strategic conceptualization with its operational planning and financial budgeting.

Our research shows that nearly two-thirds (64%) of participants – all vr_BG_Strategy_Execution_01_the_strategy_execution_disconnectof whom are involved in long-range planning – are satisfied with the results of their process. If that was all there was to it, companies wouldn’t have to worry about how well they connect strategy with execution. However, other financial performance management research we conducted, which includes a broader sample of executives and managers in a variety of corporate roles and departments, paints a different picture. Among those participants, two-thirds (64%) said that their company’s executives have a well-defined strategy, but only 14 percent said that their company manages it well on a consistent basis.

There are complex reasons for the disconnect between corporate strategizing and day-to-day execution. A clear statement of strategic objectives is necessary, of course, but translating it into objectives for business units and individuals is another matter. vr_BG_Strategy_Execution_02_few_understand_strategic_objectives_very_wellTypically, executives use a combination of methods for communicating strategy and goals, including verbal iterations, electronic messages and scorecards with quantitative objectives. Executives may think they are communicating effectively, but often their efforts fall short. Our research finds that only one-fourth of participants understand these objectives well. This is often the case, as our long-range planning research finds that only 27 percent of executives communicate clearly and – just as important – consistently. As well, a common management approach is to set specific, measurable objectives for each business unit: About two in five do that. However, these objectives typically focus mainly on financial measures and do not include the nonfinancial objectives that are critical to achieving corporate strategy, among others market share, quality, customer satisfaction and time to market. Fewer than half (45%) of companies lay out formal, strategy-driven objectives in a scorecard, and almost none of those outside of financial services incorporate risk factors as part of their formal assessments. Only one in five find that when they need to determine the underlying facts behind numbers, it’s easy to determine the “what, why and how” behind them. Nearly half (45%) present little or no information about the company’s operating data, and 80 percent get little or no information about leading indicators that would enable managers to anticipate opportunities or issues.

Another aspect of knowing how to manage to the company strategy is understanding how the objectives and actions of one part of the business affect the others. Since most companies do not operate in a rigid command-and-control environment, it is important for managers in one area of the business to be able to anticipate how a change in their part of the company will affect others. An important objective in any corporation is to ensure that strategy and objectives are aligned across departments and business units. Yet only one-fourth of our participants said they have a clear understanding of the specific goals of other parts of the business, such as sales quotas, production targets and profitability, and how these affect their own area. This helps explain other findings described above, such as why so few companies react to changes in their overall business in a well-coordinated fashion – and why it is so common for the left hand not to know what the right is doing.

Since in business the only constant is change, it’s crucial for companies to ensure that they maintain strategic alignment when managing change. Unfortunately, few do. Only 14 percent said that when market or economic conditions change, their company’s response is well coordinated. While six in 10 said their response is somewhat coordinated, I think “somewhat” is an unacceptable standard because it results in diminished performance. After all, a “somewhat coordinated” juggler drops a lot of balls. Improving coordination is an area in which better communication across the company and a clearer view of operations are likely to improve performance in a sustainable fashion. Issues of coordination generally arise from a lack of communication or information availability, both of which reflect what information a company gathers and how it makes it accessible. When the problem is an inability to coordinate actions, the underlying issue usually is an inability to share information easily. Here again, having the means to bring together information from multiple data sources can make it feasible to increase the visibility of actions and status across functional silos.

Improving the connection between strategy and execution starts with a relatively simple conversation between the CEO on the one hand and executives and managers on the other. If asking “What is our strategy?” elicits answers that are inconsistent or rambling (or just blank stares), there’s a strategy communication issue. If the answer to the follow-on question “Can you measure how well you are performing to the company’s strategic objectives?” is no or “sort of,” then the company has a performance measurement or data availability issue or both. Addressing these gaps can go a long way toward diminishing disconnects between strategy and execution. Even if your company does an excellent or very good job of connecting strategy and execution, there is still likely to be room for improvement, especially in terms of providing executives and managers with a more complete view of what’s happening outside of the company, including market trend information and competitive intelligence. Despite a massive, two-decades-long investment in making business data of all types widely available, a majority of companies have yet to fully break free of process and management behavior constraints that are artifacts of a bygone, information-poor era. At the start of the strategic and long-range planning season, it’s time to think about translating all of the thoughtfulness and hard work into better execution.


Robert Kugel – SVP Research

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