MHopkins Case Study - HFM With Essbase for Seamless Reporting Whitepaper

CASE STUDY: MID-MARKET ENERGY COMPANY USES HFM WITH ESSBASE FOR SEAMLESS REPORTING Matt Hopkins, C.P.A., Perficient, Inc. Introduction Learn how a mid-market energy company reviewed their unique financial and reporting needs and selected Oracle’s Hyperion Financial Management (HFM) to perform their financial close and external reporting process and leveraged Oracle’s Hyperion Essbase to perform their detailed operating and management reporting. See how the Essbase solution addressed the needs of reporting their operations for Gross and Net Dollar Amounts and reporting based on General Ledger and Production Dates.

About Perficient Perficient is a leading information technology consulting firm serving clients throughout the United States. We are experts in designing, building and delivering business-driven technology solutions. We help our clients gain competitive advantage by developing and implementing technologies to make their businesses more responsive to market opportunities and threats, strengthen relationships with customers, suppliers and partners, improve productivity and reduce information technology costs. Perficient’s Enterprise Performance Management Practice specializes in delivering Oracle Hyperion solutions. Oracle is well positioned to take advantage of the latest trends in the Enterprise Performance Management (EPM) space. These trends include: the convergence of EPM and BI; improved integration with ERP systems; improved query performance; increased drill down capabilities; combined delivery of both relational and multi-dimensional reporting; and improved delivery methods and alert capabilities. We are a Certified Platinum Partner, Oracle/Hyperion Authorized License Reseller, Certified Education Partner with our own in-house training center, and a member of the Hyperion Partner Advisory Council. Perficient is dedicated to assisting clients in making full use of their Oracle-based technology investments. With over 350 successful client implementations to date, we are recognized by the Oracle team as a “go-to” partner for Hyperion implementations across the U.S.

Project Background The srcinal scope of the project encompassed implementing Oracle Financial Data Quality Management (FDM) and Hyperion Financial Management (HFM). Included was to create the appropriate Entity Hierarchy to support current and future reporting needs, create the appropriate Dimensions to support profitability analysis, facilitate consolidations, and create the requested reports to support the business. Initial challenges from the legacy process included the use of different systems and manual processes. The financial reporting department relied on data from the legacy accounting system; however, Excel was leveraged to produce the quarterly SEC & Press Release reporting packages. Also, the close cycle was longer than desired. The company performed ad hoc analysis utilizing Crystal Reports and Excel. Crystal Reports required the assistance of I.T. to create custom reports. The custom reports were static; therefore, multiple reports were created to analyze the same information from a different point of view. Excel was used extensively across the organization and could contain as many as several hundred thousand records; increasing the risk for human error. Although there was no pervasive evidence, there was a lack of confidence in some of the non SEC related data. The client was looking for an all inclusive solution that would give them, “One version of the truth”.

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Case Study: HFM & Essbase for Seamless reporting

Copyright ©2013 Matt Hopkins

Unique Requirements In addition to the scope identified above, the client also requested certain Custom Dimensions. They requested a Dimension to perform Rollforward Calculations as a way to store balance sheet movement activity. Additionally, they were interested in a way to track their Property Hierarchy/Well Location – this was different than their Entity Dimension in the sense that it was a true physical location of the well properties. They also had a further breakdown of certain accounts that they referred to as Bill Codes, which were in effect, sub-accounts. The client had a requirement to track “Service Date”. Service Date is the date that product (e.g., oil or gas) is extracted from the ground. It was used for reporting revenue and expenses for well ownership and regulatory purposes, not for General Ledger or SEC purposes. The majority of mineral rights (oil and gas) are leased. Thus, the owners of the mineral rights share in the revenue and expenses of a well with the Company extracting the minerals. This revenue and expense is reported by the Service Date. The date does not match GAAP Revenue Recognition rules and thus, was a unique Dimension. The final item that they wanted to track was the Gross (total amount) and Net (Company owned amount) portion of the extracted mineral rights, also known as the “8/8’s”. This is the ownership percentage of the product extracted. The product ownership could be divided between multiple well owners and/or the Company extracting the product. The term “Gross Value” relates to total value (8/8) and the term “Net Value” relates to the value that is owned by the Company and will be recognized as Income. Detail analysis determined that the client also required certain statistical volumes in addition to the other Custom Dimensions mentioned above. We performed a detail review with the key stakeholders and determined that they were in need of management and operational reporting in addition to their financial reporting solution. Their unique dimensional requirements combined with their reporting requirements led us to an optimized, best of breed solution. It was decided to leverage HFM to import financial data to perform financial consolidations and calculations to support SEC and Press Release reporting. Additionally, an Essbase Cube was designed to import financial and operational data from their legacy accounting system. The legacy accounting system contained both financial and operational data. Operational reporting would be performed from the Essbase Cube. The operational reporting could be performed and the Cube updated at any time, and on any schedule, and would not impact the timing or process of Financial or SEC reporting.

Final Solution HFM was implemented and imported data from the legacy general ledger using FDM. Calculations were executed, eliminations of intercompany transactions were performed and “On Top” entries were made to support SEC reporting and to capture additional data for Press Release reporting. Both SEC and Press Release reporting were performed using Hyperion FR Studio. Additional ad hoc reporting was performed leveraging Smart View. Multiple hierarchies were implemented to support reporting partial ownerships. Statistical information was entered to support financial and Press Release reporting. Three years of historical information was loaded to provide period over period comparison. One Custom Dimension was created to store Balance Sheet movement activity. The information is entered directly into HFM and is used to create future Roll-Forward Schedules and to also assist in Cash Flow Reporting. Three Custom Dimensions were left for future use. One Essbase cube was created for the operating and management reporting of financial and statistical data from the legacy accounting system. Five years of historical data was loaded for year over year comparison reporting. The data was loaded via MaxL scripts. The Account values and dimensionality allowed the data to be sorted/generated at varying levels on the Property Hierarchy for either GL Date & Net Value or Service Date & Gross Value. Additionally, a Management Book was created that allowed for comprehensive reporting of operations in a variety of formats including one Balance Sheet and thirty Operating Reports using FR Studio and one custom Smart View. The FR Studio reports could be sorted by the Property Hierarchy, a variety of period over period comparisons ( YTD for Current Year and Prior Year, trailing 12 month, Month to Month comparison, etc.), and providing information either at the Service Date and Gross values or the GL Date and Net Values. Additionally, as part of the Essbase data load, trial balance data was loaded from the legacy accounting system to Essbase and a balancing process put in place to ensure the HFM and Essbase data were in synch and could be validated.

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Case Study: HFM & Essbase for Seamless reporting

Copyright ©2013 Matt Hopkins

Essbase Dimensions The Essbase Dimensions were the key for being able to create flexible management and operational reporting and allow the client the ability to consistently and efficiently analyze their data. The dimensions included a Period for the months and quarters, a Year Dimension, an Entity Dimension for the legal entity, and a Property Dimension for the physical location of the wells. The Property Dimension also included an attribute to indicate if the well was operated by the client or by a third party. A Scenario Dimension was created for Actual, Budget, or Forecast. This implementation included all three scenario members; with the “Actual” member being populated with data, the other two being available for future use. The solution also included two “Actual” members for Gross Actual and Net Actual reporting. Gross Actual represents Property related revenue and expense activity at the Total level. Net Actual represents Property related revenue and expense activity at the Company ownership level. The Essbase Account Dimension represents a hierarchy comprised of the Accounting Chart of Accounts and Bill Codes combined. The Bill Codes are account specific and were added as sub-accounts to their associated general ledger account. The Service Period Dimension was populated with a service period for all Property related revenue and expense activity. Non-Property related expenses will use a no-zone (no-date) service period. Service Period will also include combined years and quarters in the dimension hierarchy. Service period reporting will be principally used for gross monthly reporting (non-GAAP) of well production. Service period reporting will also be available for net monthly reporting should it be needed. A Cost Center Dimension and a Future Dimension were included for future use.

The unique requirements and dimensions of the client required the use of two key components of the Oracle Hyperion EPM Conclusion Suite of products, HFM and Essbase. By leveraging each Hyperion application strengths, the client was able to obtain a comprehensive financial close, financial reporting and operational reporting solution that met their needs.

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