What are my competitors using Essbase for (or: why do they know more faster)?
Essbase has a reputation of being an excellent platform for financial analytical applications, but not much else. In some part this perception is created by competitive vendors who benefits from pigeon-holing Essbase, so that their tools can rather be used. Also Hyperion were traditionally strong selling into finance departments, and neglected IT in the pure BI applications arena. While it is certainly true that certain types of financial uses hit the sweet spot for Essbase, it can definitely be used for a large number of other analytical applications beyond the financial arena.
Essbase offers a OLAP platform for the construction of basically any kind of analytical application. With the addition of aggregate storage functionality the possible uses for Essbase expanded exponentially. While very strong in complex calculations and financial-type functionality, Essbase suffered badly from multidimensional explosion if the number of dimensions or number of members in dimensions increased to very large numbers (more than 10 dimensions, more than million member dimensions). Aggregate storage addressed these issues and it is now possible to create cubes with large numbers of dimensions, and multi-million members in dimensions. All this while not loosing the intuitive and responsive end-user experience Essbase offers.
In this blog I would like to share some of the Essbase applications I have experience of beyond just pure finance. Hopefully this will provide a reference of other uses for Essbase to help people trying to sell Essbase, as well as people already using Essbase and thinking of ways to expand its usage. Note this is just a selection of some of the applications I have personal experience with, please feel free to comment on any other non-financial uses of Essbase you might have come across.
Telecommunications industry
- Customer usage analysis – a cube based on the call detail records (CDR’s) which allows analysis of subscriber usage by minute, region, package customer demographic. Helps to understand usage of packages and customer segments and plan for better focused products.
- Customer demographic analysis – analyze the customers by all demographic information, such as age, gender, income, region etc. Helps to understand the customer base and better target products.
- Customer profitability – understand which customer segments are the most profitable, and maybe more importantly which are not, and who to target for better structured packages.
- Network quality – a cube which get loaded with hourly raw data from base stations, and which then calculates a large number of key statistics. which allows for better analysis of the quality of the network, where problem areas are, and helps plan expansions an network reconfigurations.
Motor vehicle manufacturing industry
- Market share analysis – use publicly available data to build a cube which shows all car manufacturers market share, by all vehicle attributes. Helps to determine where strong and weak points are, and support marketing efforts.
- Car flow planning – plan the flow of vehicle construction from parts to vehicle stock yard, based on demand forecast. Handles complex issues like ensuring optimum stock levels, planning for enough raw parts to meet demand, and the flow tempo through each segment of vehicle construction.
- Sales analysis and planning – analyze the vehicle sales by region, dealer and vehicle type, as well as customer demographic, to better understand the market and plan distribution to the dealer network.
Banking industry
- Customer Profitability analysis – understand profitability per individual customer (in the millions, this is an aggregate storage cube) to see which offerings actually make money, and across which customer segments.
- Market Share analysis – use publicly available data from banking regulators to understand market share in a large number of banking instruments, such as loans, mortgages, deposits etc. Helps to quickly identify growth areas as well as areas with declining share, and to plan better products.
- Risk Scoring models – use Essbase to calculate the risk for corporate customers based on quantitative (financial statements) as well as qualitative (perception of the company, market strength) factors. Essbase calculates key ratios, scores, and risk ratings based on a complex set of rating business rules.
- Exposure analysis – understand the exposure the bank has across various instruments and clients, to help early identification of risks and better plan investment activity.
- Funds Transfer Pricing modeling – perform complex FTP modeling in Essbase, where the flow of cash within the bank based on complex rules is calculated.
- Cash flow forecasting – model cash flow on a daily basis based on surplus and shortfalls, using treasury rules to determine investment options and movements of cash.
Energy utility
- Demand forecasting – use Essbase to forecast energy production and usage demand based on various factors such as seasonality, historical usage, expected growth factors etc. Use as a basis for revenue planning, as well as production plans.
- Environmental analysis – understand the environmental impact of energy generation based on models in Essbase. Track emissions and pollution factors per generating unit over time, and serve as early warning system.
- Production/generation analysis – cube which houses production of energy per generating unit to serves as basis for dashboards used at board meetings to discuss generation issues and forecasts.
Insurance industry
- Broker performance – a cube which provides daily updates of each broker’s performance compared to their peer group, based on sales per product, region, demographic. Used as a basis for broker commission calculations, and to run broker competitions to award top-performing individuals.
- Customer profitability – understand profitability per customer and customer segment across all types of insurance products.
So as you can see, the usage of Essbase spans way beyond the pure financial reporting and analysis applications most companies use it for. If you would like details on any of the applications above feel free to contact me, details below.
To read more on Hyperion Essbase go to the following URLs:
http://www.intellient.co.za/live/content.php?Item_ID=1157
http://www.oracle.com/appserver/business-intelligence/essbase.html
Target vs Bottom-up Planning
Target vs. Bottom up Planning
In most organisations, budgeting is highly iterative process, sometimes requiring dozens of budget recalculations and adjustments in assumptions before the best possible results are obtained. There are various ways to streamline and simplify the budgeting or forecasting process, one method involves defining the organisation’s strategy and tactical goals at the beginning of the budget model.
All too often, a planners at Cost Centre level will lose sight of the organisation’s total targets when going through the many iterations that are needed to develop his realistic budget for the Cost Centre. By defining the target and strategy upfront in the budgeting or forecasting model, it is much less likely that the final budget will deviate significantly from the organisation’s original plan.
The Oracle Hyperion Planning tool provides an organisation with the capability to budget in a target (top down) or bottom up method, or to use a combination of the two methods to plan streamline and shorten the budgeting process.
- Target (Top down)
For target versions, planners enter budget data for members at any level in the dimension hierarchy herby defining the organisation’s high level target. Business rules can be used to distribute and allocate values from parent members (high level) to their descendants (lower level).
For example, sales numbers are set at the corporate head office level by the Head of Sales. These figures are then used to drive sales quotas and revenue plans for the organisation. This method of budgeting is often called Top-down or Target Budgeting.
- Bottom up
With bottom up version of the budget, planners enter budget data into bottom level members, and the parent member values are aggregated from bottom level members. The budget process builds a version of the budget from the lowest level of information up to the high-level total organisational plan.
For example, sales numbers are input by the individual employees responsible for doing the selling. They forecast what they think they can sell. These numbers are rolled up to create the total organisation revenue plan. This method of planning is often called Bottom-up Budgeting.
- Combining both Methods
Organisations can use target versions to set high-level targets for the budget model. Planners working with bottom up versions can reference these targets when they enter their department’s budget information. If there is a discrepancy between the top-down numbers and the bottom-up numbers, adjustments are made to the budget until the two versions meet. This solution addresses the challenge of performing top-down and bottom-up budgeting in the same plan.
For more information on Oracle Hyperion Planning:
http://www.oracle.com/technology/products/bi/planning/index.html
Financial Data Integration made easy with Oracle Hyperion FDM
Finance organizations need to enhance the quality of internal controls and reporting processes. To meet these goals, you need a source-to-report view of financial data. Oracle Hyperion Financial Data Quality Management allows business analysts to develop standardized financial data management processes and validate data from any source system—all while reducing costs and complexity. Fully integrated with Oracle enterprise performance management, Oracle Hyperion FDM is the only enterprise-class system of its kind for managing the quality of financial data and drill-through to detail.
Specially designed source adapters make it easy to load data from any data file (text or spreadsheet), or connect and drill back directly to a variety of transaction systems, including
• Oracle E-Business Suite Financials
• PeopleSoft Financials
• SAP Financials
• Any ODBC data source
For more information go to www.oracle.com/epm, or view video demo’s at www.oracle.com/demos. Look for Record-to-Report (Consolidation) and Planning with Oracle E-Business Suite.
