5.3.1.1.2 Initial Definition Process Tab

The Detail Screen launches itself into the first tab called the Initial Definition Process Tab. The Initial Definition Tab is organized under two panes.

The Initial Definition pane allows user to specify the Rule Name, Rule Description, Folder, and the Access Type of an Allocation Rule.

The Allocation Type pane allows you to specify the Allocation Type of the Allocation Rule.

Initial Definition Pane

Specify the Allocation Rule Name and Description, select a Folder in which the Allocation Rule is to be stored, and specify whether you want the Allocation Rule to be Read/Write or Read Only (Access Type). Naming your Allocation Rule is required before it is saved. Default values for Folder and Access Type are stored in Application Preferences for Profitability Management Cloud Service. It also hosts the toggle button of Variable Rule.

Figure 5-7 Initial Definition Pane

Variable Rule

Legal Entity is an optional Run-time Parameter. If the Disable Legal Entity check box in the Application Preferences Screen is checked, then the Legal Entity will no longer be a Run-time Parameter.

If Legal Entity is disabled, then you must select a value for the Legal Entity Dimension in all applicable tabs while defining a Variable Allocation Rule in the Allocation Specification Screen.

Figure 5-8 Initial Definition Pane with Variable Rule selected

For already defined Variable Allocation Rules, edit the Allocations, and modify the value of the Legal Entity Dimension in all applicable tabs in the Allocation Specification Screen. The value of Legal Entity is used when your Rule Execution is specified within your Batch Definition (for Batch Processes) or is obtained from your Profitability Management Cloud Service Application Preferences (for interactive executions launched from a Summary Screen). If this check-box is not selected on the Initial Definition Process Tab, then you must specify a value for Legal Entity in your Allocation Rule's Source, Driver, and Outputs.

Note:

Legal Entity is designed to support implementations that require Multi-Entity or Multi-Tenant functionality. If your implementation does not require this functionality, you may utilize the Default Legal Entity in all your processes and you may declare all your Allocation Rules to be Variable.

Allocation Type Pane

When you initially build an Allocation Rule, you must select its Allocation Type. After an Allocation Rule is saved, you may no longer change its type. After you have chosen an Allocation Type on the Initial Definition Process Tab, the appearance of subsequent Process Tabs depends upon the Allocation Type you have chosen.

The available rule types are as follows:

• Constant
• Static Driver
• Leaf
• Field
• Dynamic Driver
• Static Driver Table

Allocation Types

The following list describes the Allocation Types:

• Constant: A Constant Allocation Rule creates a simple balanced transaction consisting of one debit and one credit. You may optionally specify either one debit or one credit (at a minimum, you must supply at least one debit or one credit). The Constant Rule Type only operates against the Management Ledger. For Constant Allocation Rules, the Operator and Driver Process Tabs are disabled; specify a fixed amount in the Source Tab and debit and/or credit in the Outputs Process Tab.
• Static Driver: The Static Driver Method enables you to perform simple factor calculations against a set of source balances. The source balances can be drawn from the Management Ledger Table, Instrument Tables, or Transaction Summary Tables. For Static Driver Rules, the Driver Process Tab is disabled. For this kind of rule, define where to get your Source Data on the Source Process Tab, a Static Driver Amount on the Operator Process Tab, and the resulting debits and/or credits on the Outputs Process Tab.
• Leaf: Leaf type Allocations are used only against the Management Ledger Table. They are used to operate between two sets of rows that differ in a single Dimension.
• Field: A Field type Allocation is used to multiply two columns within a single row in an Instrument Table update Allocation Rule.
• Dynamic Driver: Dynamic Driver Allocation Rules aggregate or distribute balances using Dynamic Data (Business Resident Driver Data) such as Headcount, Square Footage, or Instrument-Level Balances. Dynamic Driver Data is not limited to statistics sourced as part of your ETL load to the OFSAA Data Model. Dynamic Driver Data can be “captured” or developed within an Allocation Rule. For example, balances by product within each Cost Center can normally be obtained from your Instrument Data. You can build Allocation Rules to aggregate these statistics from your Instrument-Level Data and post them to your Management Ledger for use in subsequent rules, or you can write an Allocation that develops this set of driver data by querying your Instrument Data at Runtime. The Driver Data obtained from your instruments is not limited to balances. Examples of Instrument Level Dynamic Drivers you might use in Allocation Rules include:
  • The number of accounts by product by Cost Center by year of origination.
  • The number of loan payments processed by the loan processing center by month.
  • ATM transaction counts by region by month.
  Uniform Method: The most common Distribution Methods for the Dynamic Driver type of allocation are:

  • Percent-to-Total
  • Force to 100%
  • Simple Method

    Dynamic Driver Allocation Rules and Methods are described in detail in the Driver Process Tab and Output Process Tab sections.

• Static Driver Table: Static Driver Table Allocation Rules offer functionality similar to Dynamic Driver Allocation Rules but use Driver Data that is stored in a Profitability Management Rule type called Static Table Driver. For more information on how to build and use Static Table Driver Rules, see Static Table Drivers.

Definitions of Static and Dynamic Drivers

Most Allocation Rules distribute, or aggregate balances using the Driver Data and can be used in the following ways:

• Expense Allocations as a function of Square Footage occupied or Headcount.
• Aggregation of Instrument Balances to the Management Ledger.
• Reclassification of Management Ledger Balances to Dimensions not found in the original General Ledger Data.

Drivers can be stored as components of your overall Allocation Model, or they can be stored as facts within your Business Data. Headcount and Square Footage Statistics, for example, are frequently stored as memo accounts within your General Ledger. When you load the OFSAA Management Ledger Table with your General Ledger Data, those Headcount and Square Footage statistics can be utilized as drivers within your Allocation Rules. These kinds of Business-Data Resident Drivers are referred to as Dynamic Drivers.

In some other cases, you will embed your Driver Data into an Allocation Rule or into a Driver Table that the Allocation Engine supports. These kinds of drivers are referred to as Static Drivers. The Profitability Management Cloud Service supports the following types:

• Static Driver
• Static Driver Table

Dynamic Drivers often have many advantages over Static Drivers. An Allocation Rule that uses a Static Driver takes the same value or values every time you use it in a rule, but an Allocation Rule that uses a Dynamic Driver may have different driver sets from day to day or month-to-month. Additionally, you must normally pre-compute your Static Drivers and Dynamic Drivers that are generated at Run time. Dynamic Drivers, frequently used in full cost-Absorption Allocation Models, are generated by other Allocation Rules.

Static Drivers sometimes have advantages over Dynamic Drivers. For example, you may have pre-computed unit costs that you wish to use to drive your allocations to generate Partial Absorption Costing.