Emma Yu, Director of EPM Product Marketing at Oracle, interviewed Rich Wilkie, Vice President of EPM Product Management at Oracle, about four must-have attributes of a complete financial consolidation solution.
According to research by Aberdeen, best-in-class companies are more likely to use a complete, integrated enterprise performance management (EPM) solution. Unlike imposters, such an EPM suite includes powerful financial close capabilities like automated reporting with narrative analysis or detailed process orchestration for real-time visibility into close process status.
As a result, these companies have financial close cycles that are often shorter than five days. In fact, Oracle’s value of EPM survey showed that the highest-performing companies experienced shorter times to close their books using such capabilities.
When it comes to closing your company’s books, it’s important to have that report card finished in a timely fashion so management and investors can evaluate performance, make decisions for the path forward, and answer critical questions like: Are we on track to budget? Do we need to make operational course corrections based on these results?
So what are the key characteristics that separate comprehensive financial close solutions like Oracle EPM Cloud from the imposters? During the interview with Yu, Wilkie identified four differentiated traits of a complete financial close solution.
4 Must-Have Attributes of a Complete Financial Consolidation Solution
No. 1: Flexibility to Accommodate Change
Emma: Why is flexibility to accommodate change so critical for a close solution? It is not as obvious to me given strict accounting standards and rules.
Rich: Having time for in-depth analysis is critical in the financial close process. The reality is that it’s impossible to foresee all the ways you’ll want to analyze your business as it evolves, with strategy shifts, business restructuring or M&A actions. You may set up your reporting and tax structures a certain way to start with. Down the road, you may want to measure and analyze the business using different dimensions and metrics. For example, you may want to analyze the data using a specific dimension that may not have existed in your initial model. Having the ability to flexibly grow your model is critical for real-world operations.
Additionally, hierarchy changes and alternate roll-ups of the data are often requested on an ad-hoc basis. Therefore, the ability to react to those requests quickly, or allow finance users to make these changes themselves, helps make businesses more productive.
Emma: That makes a lot of sense. So how does Oracle EPM Cloud handle these changes differently than other EPM products on the market?
Rich: Oracle EPM Cloud enables users to easily add in dimensions without having to start models from scratch, as some other financial close solutions force you to do. Our financial consolidation and close solution allows users to makes these changes on their own schedule.
Emma: What if one measures and reports on activities differently in forecasting than in the close process?
Rich: I would hope an organization typically does that. Planning and close involve different perspectives and methodologies. Planning often uses more granular detail, but it doesn’t involve the accounting stringency of financial close. The advantage of Oracle EPM Cloud is that it doesn’t force you to standardize on one model because, quite honestly, that’s unnatural. One is accounting-driven, and the other is based on the company’s unique business management philosophy that may be more fluid. So, we are unique in the fact that we’re an integrated tool set, but we don’t force you to standardize on a single model to achieve the outcome.
If you are using a monolithic application for both close and planning, you really need to capture all your requirements upfront and not make any significant changes. And that’s just unrealistic. Model and process changes down the road can be very expensive and beyond the scope of what business users can handle on their own.
No. 2: Depth and Breadth Across All Business Processes
Emma: Depth and breadth definitely make sense as attributes to look for in a solution. Tell me how exactly Oracle EPM Cloud distinguishes itself with the depth of Financial Close.
Rich: Oracle EPM Cloud includes purpose-built modules for every aspect of financial close: financial consolidation, close process management, account reconciliation, analytics, tax provision and reporting, data integration and quality management, as well as narrative reporting and disclosure management. Each of these modules contains significant out-of-the-box functionality based on best practices. By leveraging these, you can deploy standardized best practices immediately — instead of spending time and effort building new workflows based on generic templates offered by imposter solutions.
In addition, imposter EPM vendors typically require significant consulting effort to get beyond templates and starter kits, extending your time and cost to realize business value. Also, these incomplete solutions often force you to invest in point solutions for specific needs such as account reconciliation.
Emma: What are some unintended consequences of using multiple vendors?
Rich: Not only does using more vendors introduce higher cost, but it also introduces more risk and complexity. You will be playing a system integrator role forever to manage across these multiple solutions and their frequent updates.
Emma: Very true, I would rather have one provider if possible, especially if that provider has the depth and breadth across various EPM processes.
Rich: Yes, that’s what Oracle EPM Cloud provides and it’s unrivaled. That’s why Oracle was the only vendor to be named a leader in in both Gartner EPM quadrants.
No. 3: Owned and Maintained by Finance Users
Emma: Tell me why being end-user owned and maintained is valuable.
Rich: With imposters, you have to rely on consultants to maintain the solution, because of the need for specialized IT skills (i.e., Visual Basic). In addition, it also means heavy customization due to the lack of packaged content—and that customization introduces risks during upgrades. Given these, you need external consultants on an ongoing basis, making it more difficult and expensive to manage the solution. In addition, some solutions depend on using third-party services such as Amazon Web Services or Microsoft Azure to host their cloud.
Emma: How is Oracle different from other vendors in this regard? Aren’t other EPM solutions also end-user owned and maintained?
Rich: They say they are, but the reality is that imposter EPM vendors require heavy customization to reach the depth and breadth of financial close capabilities available in Oracle EPM Cloud. These capabilities in EPM Cloud are based on best practices and do not require custom code to implement.
No. 4: Intelligent Process Automation (IPA)
Rich: Automation is highly applicable for repeatable processes like the financial close. In this context, there are many areas where automation can help speed up the close, reduce or eliminate manual work and improve accuracy. For example, systems can manage and automate account reconciliations based on configurable rules allowing users to focus on exception or risk accounts only.
A world-class organization can automate the entire process of closing the ledger, extracting and mapping balances, loading data into the consolidation process, and consolidating with applied accounting logic and eliminations. This eliminates any potential for human error and delays in notifications which all can negatively impact the close.
Emma: That sounds like it would save a lot of time. How is automation in Oracle EPM Cloud different from other vendors?
Rich: Oracle EPM Cloud provides Intelligent Process Automation (IPA) capabilities that allow for end-to-end automation and notification task management supporting not just EPM Cloud but a variety of cloud and on-premises solutions including Oracle ERP Cloud, E-Business Suite, SAP, Salesforce, and more. This frees users up to focus more on value-added work and less on routine processing and analysis.
Also, Oracle is investing in artificial intelligence (AI) and machine learning technologies so that we can continuously raise the level of automation through learning algorithms that observe human processing to automate non-routine tasks involving some level of judgment.
Imposter EPM vendors often make tall claims, but none are capable of the kind of investments in intelligent learning and automation that Oracle is making.
Keeping End Goals in Mind
Rich: Ultimately, a close solution should help finance teams respond to changes and address stakeholder demands for faster, more accurate, and more transparent reporting. You want to use the right tool for the job, something that is purpose-built with ready-to-use capabilities covering the full spectrum of end-to-end close tasks—not just templates for custom development of those capabilities.
Your solution should also automatically integrate data and make it widely available to users as a single source of real-time truth.
Finally, having granular visibility is essential to process control, both for immediate deadlines and to continuously improve processes over time.
A complete financial consolidation solution provides what best-in-class companies need in their financial close processes: flexibility, speed, transparency and accuracy. Imposter solutions fall well short of delivering on these needs.
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