Utililizing Key Aspects Of Oracle Essbase To Run Finance In Sixth Gear

Session #2071A —Hyperion Essbase at AT&T Long Distance: Utilizing Key Aspects to Run Finance in Sixth Gear Curtis Neumann, CPA Associate Director, Financial Planning & Analysis AT&T Long Distance

Agenda Introduction Company profile Business case Business Performance Management requirements Solution – first to sixth gear Results Important success factors Questions and answers

Introduction Responsible for Business Performance Management processes Monthly financial reporting of profit and cost center results Annual profit and cost center financial planning process Customer and geographic studies for monitoring of divisional strategies Quarterly regulatory reporting Product and regional profitability studies Net Present Value, IRR analysis, M&A, and business valuation Ad hoc reporting Curtis Neumann – Associate Director, Financial Planning & Analysis

AT&T Long Distance Division Profile In 2000, this division began as a “Start-Up” of SBC Communications Inc., and was called SBC Long Distance SBC Long Distance Mission: Its initial strategy was to gain long distance customer market share by adding long distance voice and data products to SBC’s existing portfolio of telephony products Result of the 1996 Telecom Act Business launched in mid 2000, and grew revenue to several billion and 21 million customers within five years At the end of 2005, AT&T and SBC Communications merged and named itself AT&T. SBC Long Distance became a division of AT&T. Division headquartered in Pleasanton, California

An Oracle general ledger with access to account balances via a browser tool Plan data stored in Excel that linked with financial data exported from Oracle to create variance analyses A manual Excel calculation of cost of goods sold (COGS) based on prior month vendor invoicing (Wiltel carries SBC Long Distance traffic and presents an invoice two weeks after the month-end close) A weekly reporting of new customer counts prepared manually in Excel Billing system data stored in an Teradata Electronic Data Warehouse (EDW) Business Case Business Performance Management History: A Start-Up before Hyperion Essbase, SBC Long Distance had:

Oracle general ledger browser reporting shortcomings No flexible income statement trend IT Oracle report changes were slow Report subtotals could not be “drilled” to lower account levels No ability to run ad hoc analysis No plan data to calculate actual verses plan variances Plan data stored in Excel had limitations No central repository for data Consistency problems amongst disparate files No automatic data rollup Lack of automatic refresh ability Lack of consistent assumptions across the business Scalability and flexibility limitations Business Case Resulting Challenges – Actual Results & Planning Process

Excel process to calculate cost of goods sold did not take into consideration current month traffic flows Cost of goods sold booked, based on prior month data, was off because the business was growing 10% to 20% per month The accrual reversals and booking of actual invoices caused COGS to fluctuate wildly month over month Weekly reporting of new customer counts prepared manually in Excel was prone to spreadsheet errors Business Objects (BO) was used to query the EDW system BO queries were slow, had to be exported to Excel and then converted to pivot tables Process was labor intensive No central repository for data Business Case (continued) Resulting Challenges – COGS & Sales Reporting

Business Performance Management Requirements

Business Performance Management Requirements Users needed single repository for monthly financial results that could immediately improve reporting flexibility and provide performance visibility to lower levels of detail Financial analysts needed to create and modify their own ad hoc reports, customizing them to their particular responsibility areas The business needed a “single version of the truth” The finance group needed a process to control planning consistency across cost centers and provide adherence to planning assumptions The solution needed to be easily scalable and flexible to improve productivity, while maintaining data accuracy “ One Stop Shop” needed for monthly financial reporting and analysis

Business Performance Management Requirements (continued) To improve accrual accuracy, Accounting required an automated standard costing solution to calculate the approximate COGS within 1% of the monthly vendor bill, with the capability to Load thousands of input data points at multiple dimensions Perform cost accrual computations, including averaging, multidimensional allocation and other math calculations, in a reliable sequential process to finally calculate costs (= average cost per min. x number of allocated network minutes) Be repeatable every month, and be rerun quickly if source data was bad Run the process end-to-end over a three-hour duration on the first workday of each month Excel by itself was not suited for large amounts of input

Business Performance Management Requirements (continued) Financial analysts needed to have access to aggregated customer billing records to understand business trends and be able to model from that operational information Customer revenue by various dimensional slices Corporate development needed data for strategic initiatives Geographic data to isolate lower performing cities Operational data access was needed to help explain financial results

Solution – First to Sixth Gear

Solution – First to Sixth Gear Most important was that it had features and functionality the business needed Used Hyperion Essbase in other positions and had good experiences with it Hyperion Essbase had a long history of customer acceptance and Hyperion was committed to continued Business Performance Management excellence and market leadership For the end user, the Hyperion Essbase add-in could be incorporated into existing spreadsheets, and it was easy to learn No more massive pivot tables which had inherent risks Security was robust, but simple to maintain Last but not least, I didn’t need IT’s help to install or maintain the software (Hurrah) Hyperion Essbase selected as best alternative in 2000

Evolution of Hyperion Essbase 7.X – First to Sixth Gear * MDX = MultiDimensional expressions Solution – First to Sixth Gear (continued) Development Year Complexity & Value 2000 2006 Operational Financial 5 th Gear: Essbase Integration Services 4 th Gear: Aggregate storage cubes for customer and geographic analysis 6 th Gear: MDX* Queries 5 th Gear: Hyperion Essbase Integration Services 3rd Gear: Partitioning of data between block storage cubes 2nd Gear: Calculation scripts to write back to block storage cube 1st Gear: Basic Rollup Reporting Cube – General ledger data along with plan data

Solution – First to Sixth Gear (continued) First developed general ledger and plan rollup master cube (orange) Plans compiled with standard spreadsheet templates Tip: To control cube sparsity, minimize member redundancy from ERP sources As Master cube got too large, performance degraded and monthly calculation time increased to 1 hour So, created new close cube (dark blue) with parent plan data partitioned from master cube Used Replicated Partitioning Close cube calculates in 20 minutes for a 66% improvement Excel retrievals much faster 1st gear: Basic Rollup Cubes & 3rd gear: Partitioning Fast

Solution – First to Sixth Gear (continued) How many of you are aware of Finance organizations that use multiple linked spread-sheets to calculate? Costs per widget Revenue per widget Expense per headcount Or any other kind of metric What you see to the right is just the inter-spreadsheet part 2nd gear: Calculation scripts & 3rd gear: Partitioning

Solution – First to Sixth Gear (continued) This spreadsheet represented only one region or 20% of the cost per minute calculation Several hundred pivots 200 columns 1000 rows Links = 9.9 x 10 ? Incredible amounts of work to add products, etc. What would be a better solution? 2nd gear: Calculation scripts & 3rd gear: Partitioning

Solution – First to Sixth Gear (continued) In addition to its uses for planning and reporting, Hyperion Essbase is a great number-crunching machine Tip: Don’t try to perform all calculations in one cube Used replicated partitions to copy relevant calculated numbers to the main cube (dark grey) Took advantage Hyperion Essbase robust calculation function library Benefits Efficient & accurate Manageable process Can run parts in minutes or the whole application in < 1 hour 2nd gear: Calculation scripts & 3rd gear: Partitioning

Solution – First to Sixth Gear (continued) Enterprise customer cube reports yield from largest business customers Hyperion Essbase 7.X Aggregate Storage is a powerful alternative to relational reporting practices Benefits Lots of dimensions Quick loading Fast materialization Lightening fast retrieval 4th gear: Essbase Aggregate Storage for customer analysis

Solution – First to Sixth Gear (continued) Wirecenter cube shows product revenue trends by region, state or city Tips Hyperion Essbase Integration Services allows for automatic outline updates and data loading MDX a better alternative to using Excel and drilling to level -0-, because Excel cannot drill down on and display very large outlines 4th gear: Hyperion Essbase Aggregate Storage - geographic analysis

Solution – First to Sixth Gear (continued) As operational data gathering and the number of cubes increased, Hyperion Essbase Integration Services was launched It facilitates outline maintenance and data loading by connecting directly to SQL server tables Benefits Allows cubes to be created very quickly from relational tables Ideal for Aggregate Storage cubes that have very large outlines and millions of records to load 5th gear: Hyperion Essbase Integration Services Tips Aggregate detail transaction data onto a staging server, like SQL server first The parent/child recursive hierarchy works best

Solution – First to Sixth Gear (continued) MDX is ideal for use to extract data from aggregate storage cubes Excel is unable to zoom in on large dimensions (not enough rows) Can apply criteria to filter data similar to SQL Tips Run in MAXL Shell Use a text editor to prep output for Excel Better to have a quad processor server for better performance 6th gear: MDX Queries

Results Hyperion Essbase 7.X has provided AT&T Long Distance with huge productivity gains in financial and operational reporting, planning, and analysis Since the software is relatively easy to use, a simple cube can be created the same day the software is installed Hyperion Essbase is very functional, flexible, scaleable, and customizable to the point of replacing dozens of spreadsheets Can be deployed on a modular basis First, financial reporting implementation is “low-hanging fruit” (1 st – 3 rd gears) Then, replace spreadsheet intensive financial planning / modeling (2 nd – 3 rd gears) Lastly, integrate with relational sources to bring operational reporting into the fold (4 th – 6 th gears)

Success Triangle Results Processes Relationships Success Factors

Most important factors Sponsorship from CFO and/or leadership – give him/her access Personally feel confident about change Communicate effectively to user community, attempting to gain as much support as possible Insure IT is on board and understand its role Attack “low-hanging fruit” first Roll out some cubes that will create immediate value for the Finance organization Create leverage from those that understand value of best-in-class financial software tools Continue rolling out new applications to help users Continue to innovate Upgrade as often as possible to gain access to new functionality Success Factors (continued)

Session #2071A —Hyperion Essbase at AT&T: Utilizing Key Aspects to Run Finance in Sixth Gear Curtis Neumann, CPA Associate Director – FP&A, AT&T Long Distance Contact Info: [email_address] or 925.548.7161 Please Complete Your Session Evaluation

Utililizing Key Aspects Of Oracle Essbase To Run Finance In Sixth Gear

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