By Mike Arnoldy
February 14th, 2017
If your ERP systems will do consolidations, you may be asking the question: How would I benefit from spending the extra money to implement a separate EPM application for Financial Consolidation and Reporting?
ERP systems are transactional. They are designed to process large volumes of transactions, and put processes and controls around those transactions. And they do this very well. They do tend to be very costly to implement and because these systems are so integrated; they are also very costly and difficult to modify. Changes are typically done by IT, not Finance, and the changes typically take time to implement.
For large, diverse companies, it is often the case that there are multiple ERP systems. This is because an ERP system from one vendor may be more appropriate for one segment of the business while another segment may find that a different vendor’s package is a better fit. Multiple ERP systems can also be found as the result of M&A activity.
FCCS Eliminates These Challenges
An EPM solution such as Oracle’s FCCS helps companies address many of these issues. Consolidated Financial Reporting does not require the same level of granularity that is stored in an ERP system. In fact, to make the close process faster, the data should be summarized. The Consolidations team should be able to look at these summarized values and then drill into the details when needed. FCCS allows data from multiple, disparate ERP systems to be combined into a unified data set for consolidation and reporting. In the case of an acquisition, this can be done much faster than bringing the acquired company onto a global ERP system.
Flexible and Nimble Consolidated Financial Reporting
Consolidated Financial Reporting needs a tool that is flexible and nimble. During a close, changes to hierarchies, reports, and calculations are sometimes needed. Management decides to change the way they look at the business. FCCS puts these changes into the hands of Finance so that the required changes can be made in a timely manner, without major changes being made to the underlying ERP systems. It increases flexibility to change reporting with a much lower associated cost. The reporting tools for FCCS tend to be much more user friendly and more flexible than the reporting available from an ERP system. Financial Reporting and Smart View were both designed to be used by Finance to develop reports with the need to involve technical IT resources.
The bottom line is, your ERP system may have a consolidation module, but it may not be the best solution for Consolidated Financial Reporting. For increased flexibility and a faster close, an EPM solution such as Oracle’s FCCS is the better solution.