EPM Architecture and the Effective Use of Consolidation Tools


December 6th, 2010

As a Solutions Architect I get to do quite a bit of presales work, often spending time with companies who are looking to optimize their consolidation system and run their calculations faster, or provide some other reporting that they currently cannot produce.  This gives me a unique opportunity to look into their systems and see how they are using their financial consolidation systems, either Hyperion Financial Management (HFM) or Hyperion Enterprise (HE).  In many cases I find the client is not only producing their consolidated actuals, but also have added their planning/forecasting and management reporting processes to the consolidation platform as well.

Mixing two or three distinct business processes into a single platform, designed for a specific function (consolidating actual results) is a great cause for the performance issues many clients experience.  The distinct calculations and data needs all mingled into a single tool require much larger data volumes, much more logic that often applies to only one type of data, and access by many users with different needs all vying for the same server resources, often ends up becoming a bottleneck in the corporate reporting environment.  Further, with the Sarbanes-Oxley rules and a company’s principal executive and financial officers’ certification of the financial results, allowing users from an unrelated business function into the primary financial system seems an undue risk.  Though Oracle/Hyperion security is able to segment users to only their data sets, a mistake by a system support person could inadvertently open access to unauthorized users.  Finally, the business process for consolidated actuals is loaded from ledger and other source systems, whereas planning (forward-looking estimates) data is usually input by corporate managers.  Management (internal) data often takes this process a step further and performs allocations to allow managers to see their results with the effect of fully-burdened costs.

The leading practice for system architecture for an Enterprise Performance Management (EPM) system is to each of these distinct business processes into their respective EPM tool.  Consolidation of actual results occurs in the consolidation tool (HFM or Hyperion Enterprise).  The planning and forecasting function occurs in Hyperion Planning, and the allocation and production of management reporting (internal reporting with profit centers fully burdened with their allocated costs) occurs in Essbase, the Hyperion multi-dimensional online analytical processing (MOLAP) technology.

HFM (or HE), without the burden of the planning and management reporting functions is much more efficient for calculations and user access.  Data can be calculated for sub-consolidations and submitted (effectively signed-off by each responsible users) using HFM’s internal process control function.  Many companies are able to shorten their period end close, without the additional overhead of unrelated data, logic, and maintenance for other business functions.

Hyperion Planning (HP) has specific functionality that allows users to drive future results from historical actuals (loaded from HFM) and trend data on preset, or user-defined curves, or according to defined business logic.  Users are able to input values using HP’s Web Forms, which allow context-specific calculations to run, allowing users to see the effect of their changes immediately.  In a mixed-consolidation platform, calculations are run against a much broader spectrum of data, which takes longer for end users to see the result of their forecast changes.

Finally, using Essbase to handle the calculation-intensive allocations, metrics and KPIs unloads the calculation burden from HFM and/or Planning.  Essbase’s strength is as a calculation engine and can handle the data-crunching much easier than HFM and can provide much greater maintenance and usability than Planning.  Essbase Studio provides the ability to create data cubes on the fly, based on the latest data set.

I will continue to discuss EPM architecture practices, both leading practices, and also areas of opportunity that my colleagues and I discover.  Please come back each week for a new blog entry by my colleagues and I and also please ask us questions as well.


About TopDown Team

The TopDown Team includes members of TopDown Consulting who want to let the community know about webcasts, conferences, and other events. The team also conducts interviews on various EPM industry topics.

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