FSN gets a sneak preview of Oracle Hyperion “Close Management” and “Disclosure Management”

24th May 2010

“Hyperion” has been the dominant brand in the financial reporting space for as long as most of us can remember. But along with other competing products the performance management applications sat astride ERP applications, i.e. superimposed on top of ERP and operational systems – unable to deliver end-to- end visibility of the financial reporting process from subsidiary to consolidation. But when Oracle acquired Hyperion in March 2007 market expectations were generated that this would eventually lead to a coupling of information and transaction systems that would streamline the financial reporting process.

Almost exactly three years later and Oracle has delivered on its ‘promise’, adding two significant new products to its Enterprise Performance Management suite of solutions, namely; “Oracle Hyperion Financial Close Management” and “Oracle Hyperion Disclosure Management”. Both products are designed to close the gaps that companies frequently experience in the financial reporting supply chain, but as Gary Simon, FSN’s managing editor discovers the integration capabilities across the Oracle platform and beyond now make Oracle a compelling one-stop shop.

Oracle Hyperion Financial Close Management

Oracle Hyperion Financial Close Management manages the ‘central nervous system’ of the financial reporting supply chain.  It is a complete repository of all of the tasks necessary to manage the reporting supply chain from period-end close in subsidiaries through to the financial close at the group consolidation level, culminating in the production of the Board pack, Annual Report and Accounts and statutory filings as appropriate.

Like the body’s nervous system each pathway (task) is intimately linked to the next so that it is possible to view the chain of connected tasks (critical path) necessary to deliver a balance from one end of the organization to the other. Each task has an owner and like the nervous system, pain receptors (late tasks) are highlighted for remedial action.

Depending on security permissions users can obtain a complete overview or limited roles-based overview of the tasks that they need to view and manage through action-oriented dashboards that instantly show the status of the process. These can be viewed at different levels of granularity in the organisational hierarchy and in different reporting dimensions.

 

The application is designed to replace ring binders of procedures and spreadsheet checklists that normally accompany the close process but it also goes well beyond this limited ambition.

Oracle Hyperion Financial Close Management leverages Oracle Fusion Middleware technology to enable Web services-based integration with EPM, ERP and other systems involved in the close process. This means that automated tasks, such as the upload of a submission from an entity can be automatically notified and combined with manual tasks for centralised tracking and status reporting. The ability to reach out across applications to automatically ‘inform’ the workflow and generate the next steps in the process sets Oracle Hyperion Financial Close Management apart from other solutions in the market which are limited to passively recording manual tasks.

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Furthermore, the ability over time to build a complete repository of tasks along with completion times and delays provides a valuable knowledge base which can be harnessed and analysed for continuous process improvement.

Oracle Hyperion Disclosure Management

This second application helps companies ensure the completeness and accuracy of external and statutory financial reports, and their transformation into specifically stylised statutory filings using XBRL.

In 2008, the United States Securities and Exchange Commission (SEC) mandated that public companies provide their financial statements to the Commission and on their corporate Web sites in XBRL.

Companies with a valuation of $5 billion-plus were first to comply beginning in June 2009 to be followed by other domestic and foreign large accelerated filers using U.S. GAAP (Generally Accepted Accounting Practices) in June 2010. Also coming into effect in June 2010 is a new and more stringent detailed tagging requirement.

UBmatrix’s XBRL tagging engine is ‘baked’ into the Oracle Hyperion Disclosure Management application.  This makes a difference because users do not have to step outside of the application in order to allocate XBRL tags to reports or source data. This compares favourably with third party solutions where the tagging process is a completely separate endeavour.

Using the built-in XBRL reporting capabilities users can modify taxonomies to create individually tailored extensions where necessary and map balances at the document level or using source meta data.  Once this is done an instance document can be created, validated and submitted to regulators.

Particularly appealing is that tagging (using drag and drop technology) can be achieved in Microsoft Word tables or in Excel files and if multiple users are working with different media the resulting tagging can be combined. In fact the application leverages extensively Microsoft Word to simplify the end-user experience in the creation and management of financial reports and documents.

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Output from Oracle Hyperion Disclosure Management supports various regulatory authorities including the SEC (U.S. GAAP) with full support for the new detailed tagging requirement, as well as European and Asian exchanges (IFRS – International Financial Reporting Standard).

Overall, Hyperion Disclosure Management greatly simplifies the financial disclosure process and most importantly allows the organisation to take ownership of the reporting process rather than outsourcing the tagging to third party printers and agencies.  In fact outsourcing this specialised activity has become so expensive (and in some cases error prone) that companies may find that bringing the activity in-house could pay for itself very quickly.

Like other aspects of the close process, tagging tasks together with the preparation of final documents and statutory filings such as 10Q’s and 10K’s, form a critical part of the financial reporting process and can be captured as part of the Oracle Hyperion Financial Close Management application described earlier.

Summary

Through these two new applications Oracle has expressed the promising synergy of its merger and the ground-breaking possibilities that Oracle Fusion Middleware brings to the party. The ability to use automated tasks to drive the workflow (or vice versa) brings with it the possibility of a step-change in process improvement and dependability.  At launch it is only the core consolidation, reporting and data quality management applications (part of Oracle’s EPM suite) where the integration work has been completed. The other integration pieces, for example to GRC (Governance, Risk and Compliance) are likely to appear over time although in the meantime there is nothing preventing organisations using Web Services to link to whatever data sources, such as SAP ERP, they require. But for Oracle users there are now compelling reasons for keeping the ‘faith’ rather than looking at third party applications. Furthermore, it wouldn’t be surprising if these new applications cause users of other vendors’ applications to jump ship.

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