Introduction

This 25-minute tutorial helps you consider which of two preparation methods: bottom-up or top-down to use as you prepare your plans.

Background

You can perform bottom-up or top-down budgeting with bottom-up and target versions.

With bottom-up versions, you enter data into bottom level members; parent level members are display-only and don't permit data entry. Parent member values are aggregated from bottom level members.

For target versions, you can enter data for members at any level in the hierarchy. You can use business rules to distribute values from parent members to their descendants.

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.

Planning Strategies Overview

In this section, you learn about bottom-up and target setting planning strategies.

bottom-up Budgeting in Planning

For bottom-up Planning, data is input at the leaf member level or bottom level, and consolidated by rolling data up the organizational hierarchy. When the budget is started, data is populated for each scenario and version combination or approval unit. The approval unit ownership follows the hierarchy of approval in bottom-up mode. Users can view or edit data based on access permissions defined for the approval unit. The topmost Budget Group owner consolidates individually approved budgets into a final consolidated budget.

bottom-up Sample Form

Top-Down Budgeting in Planning

Target versions use top-down budgeting. Manage approvals Tasks are not allowed, and children of target members must be blank (for example, #MISSING) to enable data input at the top level. Target members must be set to Store (Dynamic Calc overrides data input with sum of children).

Upper management, can use target versions to set high-level targets. Those targets are then allocated to individual departments, and those departments build their own budgets within those budget parameters.

Planners working with bottom-up versions can reference these targets when they enter plan data.

Plan vs Target Form

Planning Strategy Advantages and Disadvantages

Some organizations plan completely starting from the top, where senior management determines all the goals and targets for all departments. The outcome is a detailed budget driven by these top goals. However, these goals could be very unrealistic since department managers may not be able to commit to them.

Consider the advantages to applying a top-down strategy:

top-down Advantages Slide

Consider the disadvantages to applying a top-down strategy:

top-down disadvantages slide

Some organizations have their entire organization develop a detailed budget, which starts at the bottom level of the hierarchy and flows up the hierarchy for approval. Top-line management goals may not be considered or achieved with this method.

Consider the advantages to applying a bottom-up strategy:

bottom-up Advantages Slide

Consider the disadvantages to applying a bottom-up strategy:

bottom-up Disadvantages Slide

Creating top-down Plans in Planning

In this section, you create top-down plans. You enter targets and then allocate them to departments.

Entering Revenue Targets in Planning

You can enter revenue targets and then allocate them to departments.

  1. From the Planning home page, click Data.
    2. Home Page
  2. Expand Long Range Plan.
    3. Data Page
  3. Scroll and select Long Range Plan Revenue Targets to open it.
    4. Data Page with Long Range Revenue Targets Highlighted
  4. Ensure the POV includes Plan, No Department, FY23, and Baseline.
    5. Form for Entering Targets
  5. For Hardware, for Sentinal Standard Notebook, for Yeartotal, enter 23m.
    6. Target Data Entry Form
  6. For Hardware, for Envoy Standard Netbook, for YearTotal, enter 9m.
    7. Target Data Entry Form
  7. For Hardware, for Tablet Computer, for YearTotal, enter 120m.
    8. Target Data Entry Form
  8. Click Save.
    9. Target Data Entry with Save Highlighted
  9. At the information message, click OK.
    10. Information Prompt
  10. Click X to close the form.
    11. Target Form with Close Highlighted

Entering Expense Targets in Planning

You can enter expense targets and then allocate them to departments.

  1. On the Data Entry page, click Long Range Plan Expense Targets.
    2. Data Entry Page with Form Highlighted
  2. Ensure the POV includes Plan, No Department, FY23, and Baseline, and scroll to the right until the YearTotal column is displayed.
    3. Target Expense Form
  3. For Salaries, for YearTotal, enter 40m.
    4. Target Expense Form
  4. For Rent Expense, for YearTotal, enter 35m.
    5. Target Expense Form
  5. Click Save.
    6. Target Expense Form Save Highlighted
  6. At the information message, click OK.
    7. Information Message
  7. Click X to close the form.
    8. Target Expense Form with Close Highlighted

Allocating Targets in Planning

After adjusting the revenue and expense targets, you allocate them throughout the organization.

  1. From the Data Entry page, click Home Icon (Home).
    2. Target Allocation Form
  2. From the Planning home page, click Financial Plan, then Analysis.
    3. Home Page
  3. Select the Strategic Targets horizontal tab.
    4. Corporate Outlook Page
  4. For Plan Targets to be Allocated, ensure Baseline is selected.
    5. Strategic Targets Form
  5. Right click a cell and select Allocate Plan Targets. You can also select from the Actions Menu on the top right of the form.
    6. Actions Menu
  6. In the Allocate Plan Targets dialog box, ensure Baseline is selected, and click Launch.
    7. Allocate Plan Targets Dialog

    Allocated plan targets are updated.

    Targets Allocated

Creating bottom-up Plans in Planning

In this section, you create bottom-up plans.

Entering Revenue Plans in Planning

You can make revenue plans for your department.

  1. ClickHome Icon (Home) to navigate to the Home page.
    2. Strategic Targets Page
  2. From the Home page, click Financial Plan, then Revenue.
    3. Home Page
  3. Select the second horizontal tab – Accessories Revenue Plan.
    4. Product Revenue Plan Form
  4. In the upper right of the top grid, click Maximize Icon (Maximize).
    5. Accessories Revenue Plan Form
  5. Ensure the POV is set to Plan, FY23, International Sales, Working, and Units, and for Accessories in Q1, enter 20k.
    6. Revenue Assumptions Accessories Form
  6. For Network Card in Q1, enter 20k.
    7. Revenue Assumptions Accessories Form

    With autosave enabled on this form, the saved data is displayed with a green background

    Revenue Assumptions Accessories Form After Adding Data
  7. Click X to close the form.
    8. Revenue Assumptions Accessories Form with Close Highlighted

Entering Expense Plans in Planning

You can make expense plans for your department.

  1. From Accessories Revenue Plan, click Expenses.
    2. Accessories Revenue Plan Form
  2. Click the Other Expenses vertical tab.
    3. Expense Trend Assumptions Form
  3. Ensure the POV is set to FY23, Plan, CEO Office, and Working, and for Advertising, in Q1 enter 90k.
    4. Set Operating Expenses for Overhead Departments Form
  4. For Utilities, in Q1, enter 100k.
    5. Set Operating Expenses for Overhead Departments Form

    With autosave enabled on this form, the saved data is displayed with a green background.

    Set Operating Expenses for Overhead Departments Form After Save
  5. Click Home Button (Home) to return to the Home page.
    6. Set Operating Expenses for Overhead Departments Form with Home Highlighted

Combining top-down and bottom-up Methods in Planning

In this section, you compare bottom-up plans with top-down targets.

Combining bottom-up Plans with top-down Plans in Planning

The Best Practice is to combine the top-down and bottom-up methods. With this approach, the bottom-up plan meets the top-down (target) plan and there is a collaboration and negotiation to come to agreement for the final plans. This approach may lead to some disagreement within the organization due to constraints on time and resources.

Consider how combining top-down and bottom-up planning strategies can work well for your organization:

Combining top-down and bottom-up Slide

Reviewing bottom-up Plans with top-down Plans in Planning

You can review your bottom-up plans with your top-down plans in a dashboard. The Working version has a bottom-up plan. While the Target version has a top-down plan.

  1. From the Planning Home page, click Financial Plan, then Expenses.
    2. Home Page
  2. Select the second vertical tab – Overview.
    3. Set Operating Expenses Overhead Targets Form
  3. Select the Income Statement horizontal tab.
    4. Expenses Dashboard
  4. Compare the plan to top level targets.
    5. Income Statement Dashboard