|Oracle Financials Concepts Guide|
Part Number E13424-03
This chapter covers the following topics:
By implementing transaction processing system Enterprise Resource Planning, Customer Relationship Management, and Supply Chain Management applications, firms have taken the first step towards automating their business processes. In addition, a large number of enterprises have also taken the critical next step by using Business Intelligence systems.
The mere implementation of these Business Intelligence systems however is not a guarantee that the firm is more effective. As an example, feed data from the transactional system assumes that the right processes are being executed. However, it serves no purpose to optimize a process that should not be carried out in the first place. In addition, a large segment of the data that is generated by a transactional system and fed into the data warehouse is aggregated information that reviews the past.
Oracle Corporate Performance Management helps reverse that trend by providing a set of tools and applications for tracking, analyzing, modeling, and delivering information in support of proactive decision making. It combines past performance along with goal setting, forecasting, analysis, and accountability.
The tools and applications provide the following advantages:
You can secure the strategic and tactical decisions of the organization within the Oracle Corporate Performance Management applications. Business Intelligence systems allow you to monitor and analyze the vast amounts of data generated by your transactional systems. The analysis of such data however is not independent of the strategic objectives of the firm. By linking forecasts and planning with the corporate strategies above it, and the operational data created below, accurate forecasts can be both created and followed.
Results can be deployed to any and all users and can be tailored to an employee's role. By extending their use to a wide range of users, from executives and line of business managers, to analysts and other knowledge or line workers, they provide the means to increase the level of intelligence across the organization.
The Corporate Performance Management solution allows you to consolidate all your enterprise data into portals or corporate dashboards to get complete visibility into the state of the enterprise. You can thereby monitor how closely your organization is aligned with corporate goals. Analysis takes less time, requires fewer resources, and is more accurate. Quickly identify those areas that may adversely affect your numbers.
Three major Oracle product families provide business analytics software that supports the full range of decision centric business intelligence needs, ranging from information delivery to advanced analytics. Oracle's complete business analytic offering now includes:
A Data Warehousing Platform
Business Intelligence Tools
Corporate Performance Management Applications
At the heart of the Oracle Corporate Performance Management solution is its data warehousing platform and tool kits consisting of the Oracle Database and Oracle Business Intelligence middleware. These provide the technology foundation for building a complete business intelligence and data warehousing solution.
Oracle's data warehousing platform is based on Oracle Database 10g for data warehouse management and the Oracle Business Intelligence Warehouse Builder tool for data warehouse creation and loading of quality data.
Analytic capabilities for multidimensional analysis (online analytical processing or OLAP) and data mining are built into the data server. A single database that delivers storage, OLAP, and data mining functionality eliminates the need for multiple engines with separate repositories, each specialized for a different analytic technique. The resulting environment eliminates the overhead of data synchronization between the data warehouse and individual OLAP or data mining engines, while decreasing data latency and storage requirements.
Oracle Warehouse Builder is a tool to enable the design and deployment of Business Intelligence applications, data warehouses, and data marts. Warehouse Builder enables users to design their own Business Intelligence applications from start to finish. Dimensional design, ETL (extract, transform and load) process design, extraction from disparate source systems, extensive metadata reporting, and integration with three products - Oracle Discoverer, Oracle Workflow, and Oracle Enterprise Manager - enable an integrated Business Intelligence solution with Warehouse Builder at the core.
Oracle Warehouse Builder is the only enterprise business intelligence integration design tool that manages the full life-cycle of data and metadata for Oracle Database 10g. It provides an easy to use, graphical environment to rapidly design, deploy, and manage business intelligence systems. The tool allows you to design your entire Business Intelligence system including relational schemas, dimensional models, and end user environments. Once you have designed your system you can use the same tool to design and run your data integration processes, allowing you to consolidate all design into one scalable environment.
Warehouse Builder supports both dimensional and relational data structure design. Designing an object in Warehouse Builder is easy because of the use of wizards throughout the product. Using the object creation wizards you can define all objects needed for your business intelligence system using this step-by-step process: for example, dimensions, cubes, tables, views, and materialized views.
Once defined, all data and dimensional structure objects can be deployed to the Oracle database. Combining schema design with the ETL design gives Warehouse Builder the unique advantage to know about all objects in the system. With the design in one place you can also benefit from metadata reporting like impact analysis.
Oracle Business Intelligence for Oracle Database 10g is a comprehensive offering designed to address the entire spectrum of analytical requirements and is built over the Oracle database. It includes tools for querying, reporting, analysis, data integration and management, desktop integration, and business intelligence application development.
Oracle Business Intelligence tools augment a traditional Enterprise Resource Planning (ERP) system by supporting activities such as:
Monitoring: Data from business (transactional) systems are monitored to get a reading on the state of current operations. Actual results can be compared with targets or goals that have been established.
Analysis: Time-oriented data from multiple systems is integrated into a data warehouse or mart in order to support in depth analysis. Deviations from expected results or targets can then be explored.
Reports are published and delivered to business users in a variety of formats such as web, wireless, and e-mail.
Oracle Business Intelligence is a member of the Oracle Fusion Middleware family of products, which bring greater agility, better decision-making, and reduced cost and risk to diverse Information Technology (IT) environments. Oracle Business Intelligence contains several integrated components for OLAP and relational online analytical processing (ROLAP) analysis and reporting including the following:
Oracle Business Intelligence Discoverer: Relational and OLAP data access and user-driven customizable dashboards.
Oracle Business Intelligence Spreadsheet Add-In: OLAP data access from within Excel spreadsheets.
Oracle Business Intelligence Beans: Building powerful custom business intelligence applications.
Oracle Reports Services: High-fidelity enterprise reporting.
Each of these tool kits are briefly discussed in the following sections.
Discoverer is an intuitive ad-hoc query, reporting, analysis, and web publishing tool that empowers business users at all levels of the organization to gain immediate access to information from data warehouses and online transaction processing systems like the Oracle E-Business Suite. It provides an intuitive interface that enables end users to easily design queries and deliver tables and charts of data. Business views hide the complexity of the underlying data structures, enabling you to focus on solving business problems.
Oracle Business Intelligence Discoverer provides the ability to access both relational and multi-dimensional data within a single reporting environment. This enables business users at all levels of the organization to make faster and more informed business decisions using any standard web browser.
The product can also be fully integrated with the Oracle Fusion Middleware Portal. For example, a portlet or a section of the portal can be used to deliver Oracle Business Intelligence Discoverer data. Exposing Oracle Business Intelligence Discoverer through the portal retains all the interactive features of Oracle Business Intelligence Discoverer, such as drill-down, sorting, filtering, and dynamic connections to charts.
Data from Oracle Business Intelligence Discoverer can be rendered to HTML, PDF, or exported to Excel while maintaining any formulas that were used in the original calculations. End users are also presented with Query Builder and Calculation Builder modules for building queries from scratch rather than using any of the prebuilt views.
Excel applications are typically based on static data that must be updated either manually or using error-prone macros. As a result, most Excel users spend more time creating their data sets rather than analysis and useful decision making. In addition, Excel applications typically contains their own set of business rules and terminology, making it difficult to compare and contrast results from different worksheets. What is needed is the ability to view business data intelligently from within Excel by accessing a central repository of data, rules and definitions and by executing the required query directly against the database.
The Oracle Business Intelligence Spreadsheet Add-In resolves all of these issues and many more. It combines the analytic power and scalability of Oracle OLAP with the familiarity of Microsoft Excel by embedding OLAP capabilities directly within Excel. Users report against common business definitions that are stored centrally in the Oracle Database. This provides a consistent and quality view of their corporate information. In addition, users can perform ad hoc analysis on this data using traditional OLAP exploration techniques such as drilling, pivoting, and paging multiple views of the data.
By running queries at the database level, users benefit from the performance and security of the Oracle database, and at the same time can be sure of getting the very latest information. Once the data has been retrieved, users can modify and enhance the result set using standard Excel features.
Oracle Business Intelligence Beans is a set of standards-based application building blocks designed for use with Oracle OLAP.
Using Oracle JDeveloper and Oracle Business Intelligence Beans, a developer can build advanced analytic applications for both casual information viewers and high-end users who require complete ad-hoc query, analysis, and reporting solutions. These solutions assist executives, managers, and analysts in making key business decisions with confidence and precision.
Oracle Reports is Oracle's enterprise reporting tool. It enables businesses to give immediate access to information to all levels within and outside of the organization in a scalable and secure environment. Oracle Reports consists of Oracle Reports Developer (a component of the Oracle Developer Suite) and Oracle Application Server Reports Services (a component of the Oracle Application Server).
Oracle Business Intelligence accelerates the decision making process and reduces the IT burden by empowering you with self service access to powerful analytics and customization capabilities. You get personalized access to the right intelligence, at the right time, and in the right format.
Together, the Oracle Business Intelligence and Database platform help you reduce IT complexity and total cost of ownership by eliminating the need for specialized servers and tools for ETL, reporting, and OLAP. It is a complete and pre-integrated business intelligence framework for building, deploying, and managing enterprise business intelligence solutions. You can now rapidly develop and deploy data warehouses and data marts with an integrated array of reporting and analysis tools.
Note: For more information on the integration of Corporate Performance Management applications, refer to the section on Enterprise Performance Foundation.
Across the enterprise, multiple initiatives are undertaken to meet corporate goals. For example, executives create strategies, operations have plans, and finance is always creating and tracking numbers and trends. In several organizations however, these efforts are executed in "non-unified silos". In addition, most businesses today focus on past performance using standard metrics in reports. Though these measurements are critical, they are inherently passive.
It is only when such measures and the processes supporting them are united with goal setting, forecasting, accountability through Key Performance Indicators (KPI's) and feedback loops across functional areas, that the system becomes proactive. In contrast to performance measurement, corporate performance management is inherently forward facing.
Oracle makes available a set of products that unify the many performance management elements under an executive dashboard. The Corporate Performance Management suite enhances understanding of the business through a range of powerful analytic applications that support consolidations, reporting, analysis, budgeting, planning, forecasting, activity based costing, and profitability.
These applications are ready to use out of the box and enable the proactive management of the full life cycle of business decision making. Oracle's Corporate Performance Management suite focuses on the following areas:
Strategic Goals Setting and Alignment (Oracle Balanced Scorecard)
Enterprise Data Consolidation (Oracle Financial Consolidation Hub)
Planning, Budgeting, Forecasting, and Modeling (Oracle Enterprise Planning and Budgeting)
Profitability Analysis and Modeling (Oracle Profitability Manager)
Operational Analytics and Reporting (Oracle Daily Business Intelligence)
Note: For more details on the Oracle Financials Consolidation Hub, see Accounting Consolidation in Oracle Ledgers.
The following diagram depicts a pyramid structure where the foundation layer includes direct data manipulation tools such as Discoverer, Spreadsheet Add-In, Beans, Reports, Database, and Warehouse Builder working directly on the Database. Daily Business Intelligence, operational reporting based on the line transaction processing tables is the next layer, and provides operation and managerial dashboards. The third layer is based on web data warehouses and includes Enterprise Budgeting and Planning and Profitability Manager. The fourth and top layer is the strategic analytic area, using Balanced Scorecard.
Together, these applications allow you to hypothesize, analyze, and model analytical solutions for your organization, for example you can now model a business problem with alternative solutions and the models predict the likely result of candidate solutions.
Oracle's unified data model (all data in one place and defined in one and only one way) provides a 360-degree view of the enterprise. This single source of truth enables a complete understanding of the firm from multiple perspectives. All the Oracle Corporate Performance Management applications (with the exception of Daily Business Intelligence) are integrated with this central repository of information. Such a data model allows you to move rapidly between reporting the past and projecting the future. Furthermore, such a data model allows you to drill as required into details to support your hypothesis and projections.
Corporate Performance Management applications are also delivered with a set of tools that allow users to configure them to their specific business requirements. Managers can provide all relevant information to the decision makers at the right time and in a format that best supports their business needs.
Oracle General Ledger is the central repository of financial information for a firm running the Oracle E-Business Suite. The information contained there is critical for activities such as financial and management reporting, profitability analysis, budgeting, planning, and consolidation.
Several applications in the Oracle Corporate Performance Management product suite feed off General Ledger based data including:
Oracle Enterprise Planning and Budgeting
Oracle Financial Consolidation Hub
Oracle Profitability Manager
However, all these applications access the General Ledger data for analytical processing through the Enterprise Performance Foundation (EPF) framework. It is therefore necessary for the source General Ledger data to be first transferred and stored in this underlying architecture before any analysis or planning can be conducted.
Note: Oracle Daily Business Intelligence and Oracle Balanced Scorecard do not interface with the EPF foundation but instead feed off ERP data directly.
The General Ledger Rules architecture provides a means to transfer information captured in Oracle General Ledger to the Enterprise Performance Foundation from which analysis, reporting, and modeling can be performed.
Note: For more information on Oracle Enterprise Performance Foundation, see the Oracle Enterprise Performance Foundation User's Guide. For more information on Oracle Financial Consolidation Hub, see the Oracle Financial Consolidation Hub User's Guide.
The following sections provide more details on the individual applications with the Oracle Corporate Performance Management Suite.
Strategic goal setting and alignment is the first tenet of Corporate Performance Management. Oracle Balanced Scorecard is a powerful framework to help leaders define and implement strategy. This is accomplished by translating the vision and strategy into a set of operational objectives that drive behavior and performance. The Balanced Scorecard concept is built upon the premise that measurement motivates and that measurement starts with a clearly described strategy. Key Performance Indicators (KPI's) such as profitability or performance to plan which feed the strategic goals can then be set and disseminated across the enterprise.
The Oracle Balanced Scorecard is a web-enabled design, administration, and delivery tool to deploy an organization-wide performance management solution. Within the Balanced Scorecard application users can develop and present information via cause-and-effect diagrams that are deployed as interactive maps showing relationships between organizational initiatives, events, and processes.
Using KPI's that feed off Enterprise Resource Planning (ERP) and other data sources, users can compare current performance against various benchmarks such as industry peers, internal plans, budgets, and historical data to assess current performance. Additionally, users can easily spot trends and compare performance along different dimensions such as business unit, product, geography, or sales channel. Color coding is used throughout the application to alert users to exceptions.
Collaborative decision making is supported through the addition of qualitative comments by end users. For example, owners of a specific KPI can supplement structured data presented in tables or charts with personal comments. Thus, Oracle Balanced Scorecard combines the best of both quantitative analysis and employee intuition. Furthermore, using Oracle's integrated workflow you can streamline inter-user approvals and participation in review processes.
Differences between industries and business models create unique performance measurement needs. Oracle Balanced Scorecard provides flexible design tools that allow you to create a performance measurement and management solution tailored to the needs of your organization. You can effectively create scorecards and dashboards that display the key strategic objectives and performance indicators for your business. Custom drill-down reports can be designed to support multi-dimensional drill-down analysis on key performance indicators.
For example, in addition to integration with the pre-built Daily Business Intelligence KPI's, users can identify other preferred KPI's and the software automatically generates the appropriate schema and materialized views for them. You can then use Oracle Business Intelligence Warehouse Builder to map data sources to this optimized data mart. In effect, end users are "developing" the data mart and thus taking an important step towards alleviating one of the perennial challenges in business analytics - the gathering of business requirements.
Balanced Scorecard is integrated with Oracle Daily Business Intelligence, which enables users to include over 250 pre-built Daily Business Intelligence KPI's on custom dashboards and drill-down reports. As these Daily Business Intelligence KPI's are already mapped to the E-Business Suite tables, you save the time required to map and load data. This gives a strategic time and cost advantage to corporations deploying a Corporate Performance Management solution.
You can design custom KPI's, dashboards, and drill-down reports and automatically generate the supporting database tables and summaries. Users can also link from custom scorecards to Daily Business Intelligence overview pages and reports. This allows them to drill from a high level strategic view to more granular and/or operational views.
Oracle Enterprise Planning and Budgeting controls the business processes of planning, budgeting, forecasting, monitoring, and analysis. Convert business strategies into actionable plans. Automate real-time monitoring of execution against plans. And integrate performance management with personal accountability.
Oracle Profitability Manager is an application that enables the accurate and detailed modeling of profit analysis across an enterprise. The module includes powerful allocation methodologies and multi-dimensional analysis to support profitability management.
Oracle Profitability Manager assists with strategic and operational decision-making by providing accurate information to answer questions about your business such as:
Which customers, products, or channels are the most profitable?
How much does it cost to serve my customers?
Where are the best opportunities to reduce costs?
Oracle Profitability Manager's multi-dimensional approach takes advantage of the richness of your detailed data. You can now analyze and model your organization from multiple points of view, for example multiple "dimensions".
Predefined dimensions are available including product, customer, channel, project, geography, activity, business unit, and calendar period. Additionally there are seeded "user configurable" analytic dimensions that you can customize to meet your distinct needs. Upon any of these analytic dimensions, you can define an unlimited number of hierarchies, each with as many levels as needed. The hierarchies and dimensions are actively used in the creation of modeling rules and business definitions.
Oracle Profitability Manager enables analysis and reporting of profitability along any of these dimensions and hierarchies. Armed with this information, you can make supportable decisions about your customers, your products, as well as your business policies and processes. In short, Oracle Profitability Manager helps you manage all the significant facets of your business.
Analytical capability in the application is driven by an engine that uses your preferred allocation methodology, from the simple to the complex. Comprehensive support for the activity based management allocation methodology, now becoming widely adopted, is also included.
Activity-Based Management and Costing methodologies provide a more accurate and complete view of the profits and costs of doing business than traditional costing. Costs are distributed to activities and cost objects based on business processes, allowing you to identify the true cost of activities.
Using Oracle Profitability Manager, you learn the value added by each activity and can perform detailed analysis to enable continuous improvement and competitive benchmarking of your business process. In addition, Oracle Profitability Manager has the power and scale to create distinct customer level cost objects instead of summarized cost object pools. This results in the accurate "cost to serve" of individual customers.
Data loading utilities are provided with Oracle Profitability Manager through the functionality of the Enterprise Performance Foundation.
Note: For more information on Oracle Enterprise Performance Foundation, see the Oracle Enterprise Performance Foundation User's Guide.
Dimension data, dimension hierarchies and customer and transaction detail data can be loaded into the Enterprise Performance Foundation through interface tables provided, using seeded loader programs. Seamless integration with Oracle General Ledger allows you to easily load ledger data, and open API's help you to load data from any other source. All required validation checks are performed at the time of the data load, ensuring consistent and reliable data is loaded into the model. Custom data transformations and validations, if needed, can be performed using Oracle Warehouse Builder, or your preferred extract, transform, and load (ETL) tool.
Oracle Profitability Manager provides the capabilities to support a rich reporting and analysis environment, with built-in reporting using Oracle Business Intelligence Discoverer. Additionally, Oracle's open standards allow any third-party reporting tools to be integrated.
Oracle Daily Business Intelligence provides a set of dashboards that display business performance information for key performance indicators such as revenue, expenses, and profit margin. Overview pages highlight trends, which can then be further analyzed by drilling into detail reports.
Daily Business Intelligence dashboards are supported by hundreds of drill-down reports that enable users to drill to the level of detail they need to understand the root cause of a problem and take appropriate action. For example, managers can analyze past due shipments to understand which products or warehouses are causing the backlog. They can then determine which customer orders are being delayed and take corrective action immediately.
Dashboards have built-in time summarization options from calendar week or month to rolling periods to fiscal periods depending on the analytical subject area. Furthermore, these time periods can be compared to prior periods and years. All dashboards offer a variety of visualization options including KPI's, graphs, tables, and guiding links.
Pre-built dashboards and reports are available for all the major functional areas including Financials, Sales and Marketing, Human Resources, Projects, Supply Chain, Procurement, Manufacturing, and Product Lifecycle Management. Specifically, Daily Business Intelligence provides analytical subject areas or modules including (but not limited to) the following:
Daily Business Intelligence for Compliance
Daily Business Intelligence for Financials
Daily Business Intelligence for Human Resources
Daily Business Intelligence for Projects
Daily Business Intelligence for Procurement
Daily Business Intelligence for Supply Chain
Each of these modules map to corresponding Oracle enterprise applications. For example, the Human Resources family of E-Business applications has a pre-built analytical module called Daily Business Intelligence for Human Resources. Similarly, all other E-Business applications have similar Daily Business Intelligence modules to provide the right "cockpit" or interactive dashboards, queries, reports, and KPI's.
A key inherent strength of Daily Business Intelligence is its ability to provide analysis across different functional silos such as Human Resources, Finance, and Customer Support. For example, Profit and Loss is a Daily Business Intelligence for the Finance dashboard that can provide information by line of business and by manager as defined in the organization hierarchy specified in the Human Resources application. Similarly, measuring marketing's contribution to company revenues has been a sought after capability to optimize marketing investments. Daily Business Intelligence for Marketing incorporates data from the Finance, Marketing, and Sales E-Business application modules to compute impact by calculating total closed deals that were marketing driven.
You can also drill down to the underlying operational applications to better understand root causes or to take immediate action. These strengths are critical in providing the business context for analytical applications.
Traditional business intelligence solutions typically involve designing a separate database to store summarized information. Most of these solutions require significant custom development effort to design the reporting database and the corresponding data extraction routines needed to populate it.
Instead of implementing a separate reporting infrastructure and moving a subset of data from the transaction system to a separate reporting system, Oracle Daily Business Intelligence maintains summaries in the same database where transactions are stored. As a result, users have access to both summary data and transaction details in a single system. Therefore users have access to more complete and up-to-date information, while at the same time reducing the amount of time and cost to implement and maintain the solution.
Beyond the database, Oracle Daily Business Intelligence's ability to provide cross functional business context, drill-down and through capability is a direct result of its seamless integration with the E-Business Suite. In fact, Daily Business Intelligence can be thought of as an embedded analytical solution that is built by extending the same framework that is used to build the underlying operational application or Oracle Application Framework
In addition, a critical benefit of an organic integration with the underlying applications is that they share the same security model – from authentication to authorization to auditing – ensuring data level security across the organizational hierarchy.
With Oracle Daily Business Intelligence, KPI's and reports can be renamed, hidden, or rearranged on the appropriate Daily Business Intelligence Dashboard, tailoring intelligence for the needs of your specific industry. Daily Business Intelligence is also extensible, allowing you to create new KPI's and reports, based on both Oracle and non-Oracle data sources. The framework provides a toolset to create custom Daily Business Intelligence dashboards from scratch in a "drag and drop" environment.
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