Hyperion Financial Management (HFM) Architecture

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January 27th, 2016


Whether you are in the process of selecting a tool for your organization’s consolidation and reporting needs, conceptualizing the application design for an in-progress implementation, or familiarizing yourself with an application already in place, there are some key things you need to know about Oracle Hyperion Financial Management (HFM).

HFM is a consolidation tool that has the capability for currency translations, intercompany balance eliminations, cost allocations and multiple consolidation methods. It also allows users to view additional detail behind balances but it does not store transaction level detail. I will talk about additional detail under the “fifth thing.”

The second thing to know is that HFM is available through the Web. For IT this means that there is a Web tier to the application but for the users it means they can access from anywhere in the world using a secure connection, provided they have been granted appropriate security access.
A user with the appropriate link and credentials can open a data grid to view or enter data (e.g. in the following screenshot the user is looking at a grid called “InputGrid” in the application called “COMMA4”)

For those who feel more comfortable with Excel, there is an option to install a Smart View add-in on their laptops. Once installed, a Smart View tab will be visible in the Microsoft Office products like Excel. After logging in with appropriate credentials, the HFM user can access the same data grids as through the Web (e.g. “InputGrid” in the “COMMA4” application from previous example).

The third thing to know is that HFM utilizes the host network for external authentication. For IT this means that users without valid network credentials can’t access HFM no matter what (e.g. HFM users lose access the instant their account is locked on the network). HFM administrators provision users in HFM but they do not reset passwords since that is controlled exclusively by IT. For users this means they use the same credentials (i.e. ID, password) to log into HFM as they would to log into the network. This setup is standard for all HFM applications.
The fourth thing is that all HFM applications have the same eight (8) standard dimensions. They are:

  • Scenario – data type like actual and budget
  • Year – fiscal reporting year
  • Entity – reporting entity structure (e.g. legal entity, business unit)
  • Value – provides audit trail for translations, eliminations and consolidations
    • I will talk about the Value dimension under the “ninth thing”
  • Account – chart of accounts (e.g. P&L, BS, Statistical)
  • Period – the month is usually the lowest time period in application
  • View – frequency (e.g. YTD, QTD)
  • ICP – Intercompany partner for eliminating balances

The first four (Scenario, Year, Entity and Value) are also known as Page dimensions. HFM data is stored and retrieved in blocks and each combination of the four dimensions defines a data cube. Each cube contains the Sub-cube dimensions (Account, Period, View, ICP and the Custom dimensions). This is important to know because reports and data grids take longer to retrieve when numerous Page dimension members are referenced.
The fifth thing is that the function of custom dimensions is to provide additional detail. So these will vary among HFM applications depending on need. The minimum required is two Custom dimensions for an HFM application. They can be used for detail like brand or location but they have another purpose; in addition to detail they also store foreign currency exchange rates.

The fifth thing is that the function of custom dimensions is to provide additional detail. So these will vary among HFM applications depending on need. The minimum required is two Custom dimensions for an HFM application. They can be used for detail like brand or location but they have another purpose; in addition to detail they also store foreign currency exchange rates.

In the example below the application has four Custom dimensions. The member TotalProducts was selected for Product custom dimension, TotalCustomers was selected for Customers custom dimension, TotalC3 was selected for Channel custom dimension (the dimension name can be generic like C3 for the 3rd custom dimension) and ClosingBalance was selected for UnitsFlows custom dimension.

The sixth thing is that when retrieving data from HFM treat it like an onion. This means start at the top layer unless you are looking for a particular detail. In the preceding example the total for Product, Customers and Channel were selected. For UnitsFlows the closing balance was selected.

Some accounts may require a specific combination of custom dimensions. In that case you may see a message like “#Invalid” highlighted in orange signifying the application does not store data for that particular intersection of Custom dimensions.

In preceding screenshot, there is no LaborCost under National_Accts in the TotalC3 custom dimension. Instead, changing the selection to TotalGrades or simply selecting TotalC3 will provide the required data.
The seventh thing is data can be loaded as either YTD or Periodic depending on the scenario. Budget data, for example, can be loaded as Periodic while Actual is usually loaded as YTD. Note that in the preceding screenshot there is a POV (point of view) member called “.” This means that depending on how the scenario is defined in the application (in this case it is Actual) the default will be either YTD or Periodic (the HFM administrator will be able to answer that question).

The eighth thing is data can be loaded as either negative or positive but journal values always have to be positive. A journal is the only place in HFM where values are entered as either debit or credit. This means that you have to know how the account was set up (the HFM administrator will be able to answer that question).

The ninth thing is that journals are entered in the value dimension. As I mentioned in the “fourth thing” the value dimension provides an audit trail of data in HFM.

Once data is loaded in local entity currency to member it can be adjusted through journals in the member and then it rolls into , all in local entity currency. When running reports the starting point for the Value dimension will usually be because it will provide local currency for all entities and in the case of the top entity that would also be the reporting currency (e.g. USD or EURO).

Data in the Value dimension is then translated into parent currency, adjusted for equity and eliminated for intercompany balances.
Depending on whether the entity is set up to allow adjustments (for Entity Curr Adjs, Parent Curr Adjs) or allow adjustments from children adjustments (for Parent Adjs, Contribution Adjs) journals can be entered at the following points in the Value dimension:

  • – to adjust the data in local currency
  • – to adjust the data in parent currency
  • [Parent Adjs] – to adjust the data only for a particular parent
  • [Contribution Adjs] – to adjust the data after intercompany elimination and equity pickup

The HFM administrator will be able to tell whether specific adjustments are allowed.

Besides the data loaded into and the four journal points most of the remaining value members are dynamic. This means that data is not stored but is derived on the fly.

The tenth thing is that HFM is a relational database. This means that in addition to HFM application server and a Web service there is an Oracle or a SQL database that stores the information. This is important to remember when you think about the purpose of your application. Analysis and budgeting/forecasting functions can be performed in applications designed for these functions: i.e. Essbase and Planning, respectively (the differences among the applications will be the subject of another blog).

When looking at HFM, keep in mind that a dedicated HFM application runs faster, takes less space and will not be unnecessarily complicated.

For a deeper dive into what to consider when considering HFM, see this Things to Consider When Considering an Oracle Hyperion Financial Management Implementation or Upgrade, by Mike Arnoldy.


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