Introduction

This 15-minute tutorial shows you how to specify drivers to calculate revenue and expenses.

Background

To accelerate the planning process, you can set up key drivers to derive revenues and expenses. You can also base future data on past trends. You can leverage from out-of-the box content based on best practices.

Before building a plan or forecast, you can verify and if needed adjust key drivers set up by your administrator.

Prerequisites

Cloud EPM Hands-on Tutorials may require you to import a snapshot into your Cloud EPM Enterprise Service instance. Before you can import a tutorial snapshot, you must request another Cloud EPM Enterprise Service instance or remove your current application and business process. The tutorial snapshot will not import over your existing application or business process, nor will it automatically replace or restore the application or business process you are currently working with.

Before starting this tutorial, you must:

  • Have Service Administrator access to a Cloud EPM Enterprise Service instance.
  • Have the Planning sample application (Vision) created in your instance.
  • Set the navigation flow to Financial Flow - Admin.

Note:

If you run into migration errors importing the snapshot, re-run the migration excluding the HSS-Shared Services component, as well as the Security and User Preferences artifacts in the Core component. For more information on uploading and importing snapshots, refer to the Administering Migration for Oracle Enterprise Performance Management Cloud documentation.

Drivers Overview

In this section, you learn about drivers. You can specify driver values such as the number of trips, or average salaries. Those drivers can then be used to calculate expenses. For example, travel expense could be based on the number of trips and an average per trip value.

Set Expense Driver Assumptions Form

You can reference and adjust current, past, or projected trends such as:

  • Prior Year Actual Average
  • Forecast Average
  • Year Over Year Increase/Decrease to adjust the last business year’s value by percentage

In this example, advertising is calculated using a driver and is based on a percentage of revenue. In this case, advertising is calculated as 1% of revenue. Utilities expense is calculated based on square feet using a method defined as last year’s actual data plus or minus a percentage, in this case plus 5%.

Set Global Assumptions

Specifying Drivers in Planning

In this section, you specify revenue and expense drivers and you base some calculations on other data such as the current year’s plan.

Specifying Revenue Drivers in Planning

You specify drivers to calculate revenue.

  1. From the Home page, click Financial Plan, then Revenue.
    2. Home Page Revenue Highlighted
  2. Click the Services Revenue Plan horizontal tab.
    3. Product Revenue Plan page with Services Revenue Plan Highlighted

    Services revenue has a dependence on another driver. It is derived as a percent of total revenue for computer equipment sales.

    Services Revenue Assumptions Form
  3. For 4120 Support, enter 27%.
    4. Set Services Revenue Assumptions with Support Highlighted

    The calculated quarterly values for support are updated. Total revenue, cost of sales, and gross profit are also updated. Green cells indicate that the updated values were automatically saved.

    Set Services Revenue Assumptions after autosave

Setting Global Expense Assumptions in Planning

Your administrator can define a global planning methodology used for each account. Individual users can update their assumptions or keep what was already defined by the administrator, thereby minimizing assumption changes to only those that need changing.

  1. Click Expenses.
    2. Set Services Revenue Assumptions with Expenses card Highlighted
  2. On the Expense Trend Assumptions tab, for Advertising, for Rate %, enter 1.5%.
    3. Set Global Planning Assumptions
  3. Click Save.
    4. Set Global Planning Assumptions after changing rate
  4. In the Operating Expenses Plan dialog, for the Working version, click Launch.
    5. Operating Expenses Plan dialog

    Advertising expense is calculated as 1.5% of revenue.

    Set Global Planning Assumptions after saving

Specifying Expense Driver Assumptions in Planning

Operating Expenses are made up of compensation expenses, capital expenditures, and office expenses. You can define expense drivers to generate operating expenses.

For example, the number of trips planned could be used to derive Travel and Entertainment expenses. When you make changes to these drivers, operating expenses are automatically recalculated. A driver such as Square Feet is used to derive a cost per unit of the driver.

  1. Click the Expense Driver Assumptions horizontal tab.
    2. Set Global Planning Assumptions form with Expense Driver Assumptions Highlighted
  2. For Sales East, change the number of trips to 350.
    3. Set Planning Expense Driver Assumptions Form
  3. Click Save.
    4. Set Planning Expense Driver Assumptions Form Before Saving
  4. In the Operating Expenses Plan dialog, ensure the version is Working and click Launch.
    5. Operating Expense Plan dialog

    Calculations based on number of trips are recalculated.

Specifying Headcount Expense Driver Assumptions in Planning

Salary and benefit expenses are calculated based on headcount, average salary, and employee benefits % drivers. After you change headcount drivers, salaries and expenses are automatically recalculated.

  1. Click the Headcount and Salary horizontal tab.
    2. Set Planning Expense Driver Assumptions with Headcount and Salary tab highlighted
  2. For International Sales, change the headcount for March to 5.
    3. Set Headcount and Salary Plan Assumptions

    After you change the headcount driver, the salaries and expenses are automatically recalculated.

    Set Headcount and Salary Plan Assumptions after saving

Changing Operating Expense Drivers in Planning

Operating expenses are calculated based on drivers and rates. The method used to calculate the planned value, such as last year actual, current year plan, or current year forecast, and the rate, such as percent of revenue or square feet are set globally. You can change the driver.

  1. Click the Plan Operating Expenses horizontal tab.
    2. Set Headcount and Salary Plan Assumptions with Plan Operating Expenses highlighted
  2. Click Entity View.
    3. Adjust Plan Operating Expenses with Entity View highlighted
  3. Select Sales East.
    4. Select a Member dialog
  4. Click OK.
    Select a Member dialog with Sales East selected
  5. For Legal Services, click in the Plan FY23 Driver cell.
    6. Adjust Plan Operating Expenses with Plan FY23 Driver cell highlighted
  6. In Legal Services for the Plan FY23 cell, click the down arrow, and from the drop-down list, select Sales Calls.
    7. Adjust Plan Operating Expenses with Smart List
  7. Click Save.
    8. Adjust Plan Operating Expenses after selecting Driver
  8. In the Calculate Plan Operating Expenses dialog, click Launch.
    9. Calculate Plan Operating Expenses dialog

    The Driver Volume, and Driver Rate values are updated and the expense is calculated based on the volume times the rate.

    Adjust Plan Operating Expenses after saving