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Oracle continues to enrich the capabilities of its Hyperion suite of applications that support the finance function, but I wonder if that will be enough to sustain its market share and new generation of expectations.VI_Financialmanagement At the recent Oracle OpenWorld these new features were on display, and spokespeople described how the company will be transitioning its software to cloud deployment. Our 2013 Financial Performance Management Value (FPM) Index rates Oracle Hyperion a Warm vendor in my analysis, ranking eighth out of nine vendors. Our Value Index is informed by more than a decade of analysis of technology suppliers and their products and how well they satisfy specific business and IT needs. We perform a detailed evaluation of product functionality and suitability-to-task as well as the effectiveness of vendor support for the buying process and customer assurance. Our assessment reflects two disparate sets of factors. On one hand, the Hyperion FPM suite offers a broad set of software that automates, streamlines and supports a range of finance department functions. It includes sophisticated analytical applications. Used to full effect, Hyperion can eliminate many manual steps and speed execution of routine work. It also can enhance accuracy, ensure tasks are completed on a timely basis, foster coordination between Finance and the rest of the organization and generate insights into corporate performance. For this, the software gets high marks.

Unfortunately, this FPM suite remains more difficult to deploy and maintain than other vendors’ suites, and its user experience is becoming dated. As well, social collaboration is increasingly important in business, especially to fit specific requirements of the finance function, as I recently noted. Oracle understands that it must address changing user experience requirements as the baby boomers retire and are replaced by people who have fundamentally different expectations of how software is supposed to work. While there was plenty of evidence at OpenWorld that Oracle is taking steps to remedy this at a corporate level, it’s up to individual units to implement changes to their software portfolio, and it’s not clear that this is a priority for the Hyperion group. But in other areas, Oracle is busy addressing gaps in its FPM offerings. It is adding mobile enablement to Hyperion Financial Management and Planning, starting with an executive approval application to ensure that necessary signoffs can occur anywhere to speed the completion of routine work. To address the growing popularity of its cloud-based rivals, Oracle’s long-awaited Planning and Budgeting Cloud Service should be available by the end of 2013, providing budgeting, planning, collaborative forecasting and reporting as services to companies. And the company is offering financial and management and reporting in the cloud to streamline production and delivery of reports.

Hyperion still has the strongest franchise in the finance function, the legacy of achieving early market dominance in software for vr_fcc_financial_close_and_automationconsolidation, reporting, planning and budgeting. It succeeded because it gave the finance department autonomy from IT with applications designed by people who understood their needs. Hyperion offers a rich set of capabilities to automate the extended close cycle – all of the activities that start with the preclosing functions and continue through completion of external reporting. Our recent benchmark research on the financial close found a correlation between the time it takes a company to close and the degree of automation that it applies to the process. On average, those with a high degree of automation are able to close their books in 5.7 days, compared to 9.1 days for those that apply little or no automation. Oracle’s Financial Close Suite of applications is designed to enable companies to execute their period-end close faster and more accurately while requiring fewer resources. This is important because managing their close well is an issue for more than half of companies. Our research found that 61 percent of corporations take more than six business days to complete their quarterly or semiannual close (the consensus best practice is closing within six business days). Rather than achieving a faster close, which 83 percent of companies said is important or very important, the research found that on average it takes a day longer for companies to close than it took them five years earlier. In conjunction with better process design, using software to automate manual processes, manage all phases of process execution and limit the use of desktop spreadsheets is an effective way to shorten a company’s close cycle. Oracle’s Financial Management Analytics allows finance executives to closely monitor this extended close cycle.

One recent addition to Oracle Hyperion’s Financial Close Suite is Tax Provision. Accurately calculating and reporting direct (income) taxes is a time-consuming, labor-intensive process for almost all midsize and larger companies. I’ve written about the importance of using technology to bring the tax function into mainstream finance. There are two necessary IT elements to managing this process. One is ensuring that all of the data needed for provisioning and any subsequent audit is readily available. An option here is a tax data warehouse for companies that have a large number of legal entities and/or operate in multiple tax jurisdictions. Hyperion doesn’t have this capability. However, for companies that have less complex requirements or just want to simplify and centralize the gathering of tax data, it provides the second necessary element: an environment that manages tax data collection, improves the accuracy of the data and the calculations (by substantially reducing the need for desktop spreadsheets and rekeying of data from source systems) and automates data movement through configurable wizards. Especially in the quarterly and year-end accounting closes, numerous adjustments may take place that can affect the tax provision or changes in tax calculations that can have an impact on reported results. A tax provision application can speed up the back-and-forth adjustments, helping to shorten the accounting close cycle. It also can enhance the effectiveness of the tax function because those professionals will have more time to spend on analysis and optimizing a company’s tax position rather than wrestling with spreadsheets.

Oracle has added important new capabilities to its FPM suite since acquiring Hyperion. Expanding the suite has helped the company sustain its franchise in the face of determined competition from large to smaller sized software vendors such as IBMInfor and SAP, as well as smaller ones including Adaptive PlanningAnaplanHost AnalyticsLongview and Tagetik. The generational change that’s under way in corporations poses a serious competitive threat to Oracle. For finance professionals, word of mouth and brand loyalty count far more than “enchanted boxes” or “undulations”: That’s how Hyperion came to dominate the market. But times change, and Oracle is vulnerable because of the time and cost of deployment, ease of use and maintenance and user experience of its FPM suite. These were reflected in our 2013 Financial Performance Management Value Index. This year’s OpenWorld demonstrated that Oracle can pivot – albeit slowly – to address a rapidly evolving applications software market. With Hyperion it needs to focus more on addressing core competitive issues if it expects to sustain a leading market position.

Regards,

Robert Kugel – SVP Research

IBM this week announced its pending acquisition of the Star Analytics product portfolio. Star Analytics is a privately held company that offers products designed to provide easy access to and integration with Oracle Hyperion data sources. While Star Analytics has a good product and solid references, it has lacked critical mass to support more effective sales and marketing efforts. Star Analytics’ strategic value to IBM lies in its ability to unlock data held in Oracle Essbase multidimensional databases, which is the repository for applications such as Hyperion Enterprise, Financial Management and Planning. It supports IBM’s aim to offer comprehensive business analytics capabilities, which means it must be able to facilitate access to all data sources. Longer term, it enables IBM to compete with Oracle for finance department customers with IBM’s own financial performance management applications. Star Analytics gives IBM a means of fostering relationships with existing users of Hyperion applications and a more graceful migration path to using IBM’s financial, analytics and business intelligence software.

Finance organizations have been heavy users of Hyperion financial applications. While these applications are workhorses for important finance tasks, the information in their data stores has been difficult to access from outside of Hyperion environments. Larger companies often must try to knit together their complex applications and databases with hard-to-maintain custom integrations, or use spreadsheets to combine data from multiple sources. Since companies maintain a great deal of useful information, they wind up spending a considerable amount of time and effort working around accessibility issues. Star Analytics’ software helps companies make data much easier to integrate into financial information processes, enabling consolidated reporting and analytics that can accelerate the time it takes to assess overall financial results.

Larger companies that have significant, longstanding investments in Hyperion software often store a great deal of information in multidimensional databases (“cubes”) that serve as the foundation for their consolidation, reporting and planning software. These databases are extremely useful for analysis and reporting and are a considerable improvement over desktop spreadsheets for collaborative and repetitive tasks. Yet their utility is confined mainly to the needs of the finance department’s specific application because, in practice, it’s very difficult to extract the information contained in these databases into data warehouses accessible to the rest of the organization by using standard business intelligence (BI) tools. This is a serious ongoing problem. Today, to produce the kind of advanced analyses and reporting that generate deeper insight and more useful, effective business models, it is necessary to integrate financial and operational information. The operational data comes not only from a company’s ERP system but also supply chain and logistics systems, customer relationship management and other software that manages processes and tracks business performance. The finance department itself likely has multiple cubes in use, and the process of extracting data from them and synthesizing it into a report or analysis can be time-consuming.

To address these issues, Star Analytics developed the Star Integration Server so that companies that have Hyperion applications (Planning, Financial Management or custom-built software built on Essbase) can more easily extract information for wider use (say, in a company-wide data warehouse or financial data mart). All departments within a corporation can then use the data in their applications or analyses. They can create reports (using whatever reporting and analysis tools they currently use) that use this information in conjunction with operational data from other sources. Moreover, the software allows companies to bring together data from multiple cubes so that they can analyze and report on all of the information that is kept in these separate data stores. Finance departments in particular are able to consolidate and manage complex hierarchy structures in their cubes so that they can speed up processes such as business analyses, periodic reporting, forecasting and planning. The Integration Server also enables companies to pull out proprietary data structures, embedded calculations (such as allocations or ratio analyses), business rules (consolidation parameters), security protocols and supporting detail from Hyperion applications. The software can support the data volumes larger companies use, as well as ensure that data security protocols are observed. The Integration Server has native support for exporting to major relational databases such as IBM’s DB2, Oracle, Microsoft SQL Server, MySQL and Sybase.

The Star Command Center automates data movements, database consolidations and schedule-related processes, eliminating the need to devote IT resources to repetitive mechanical tasks. It is a far more comprehensive, flexible and easy-to-maintain alternative to the custom coding approach organizations often adopt to lash together their disparate applications and databases. It is designed for point-and-click simplicity so that it is usable by finance/IT-types, in contrast to other tools aimed at IT/data center professionals. The Command Center even enables integration between on-premises and cloud-based data sources, and can be accessed and operated via a mobile application.

Currently, most companies either extract information from their Oracle/Hyperion systems in a laborious and time-consuming fashion, or have consultants build custom solutions. Companies that use Oracle’s Financial Management, Planning, Enterprise or custom applications running on Essbase should make it easier to integrate data from these systems for broader business analytics purposes. Users of Star Analytics’ software can save considerable amounts of time in performing analyses and generating reports – in some cases going from days down to hours. This technology will help IBM enable its vision for finance that I outlined last year and help companies using Oracle to find value from existing investments. Since financial information is available quickly, the data can be used to do more rapid planning and analysis cycles or have management or financial reports available sooner. Moreover, unlocking financial and other information enables corporations to do more integrated business analysis, planning and reporting. Information that was once inaccessible can be readily available when it’s needed. Knowing more enables companies to do more.

Regards,

Robert Kugel – SVP Research

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