Video"OLAP is a bit like when we were moving systems off the mainframe computer due to the advent of the PC," says Jim O'Connor, formerly IT operations and OLAP supervisor and currently integration design engineer at Adelphia. "OLAP is empowering users in just the same way."
Faster and Easier to Use
Speed makes a huge difference. Robert Cox, senior director of financial planning and analysis at Erickson Retirement Communities, says that adopting a hybrid ROLAP system that combines an enterprise resource planning (ERP) system and Essbase has allowed users to "load some source data from the ERP [into Essbase] and it basically does the aggregations, calculates your metrics — all of these things on a scheduled basis." "Then when people need the information," he continues, "it's blisteringly fast to get it. Before, you'd submit it before lunch and when you came back in the middle of the afternoon, your report would be ready. Running a simple report out of an ERP system that had to go through multiple departments and multiple time periods could take several hours and be a batch process. Now, the reports run in seconds."
Vendors have developed simple and intuitive front ends for CPM systems, resembling the Excel spreadsheets that they replace. "It's like Excel on the Web," says Greg Johnson, financial analysis director at insurance giant Aetna, which recently converted from a system largely based on E-mailing spreadsheets back and forth to a combination of OLAP and relational databases from Clarity Systems. Together, these enable the finance department and its counterparts in the company's various divisions to create customized reports more easily than in the past, making the company less dependent on help from the information technology desk.
That means greater freedom for users to stretch out, developing new analytic approaches tailored to their company's specific, evolving needs. Some companies have used their new capabilities to develop new charge-back models for pricing the overhead costs of, for example, real estate or information technology's contribution to their product offerings. The deeper-drill analysis that they can do with a combination of OLAP and relational databases has also helped users to develop multi-year budgeting models that quantify an individual salesperson's contribution to the bottom line. That helps in making decisions about hiring and firing, and which market or geographic sectors deserve the most attention.
The net result: more accurate and reliable data, greater ownership of data for its users, and greater room for users to apply some real analytic intelligence in telling the story of how the company is performing. "The ability to retrieve data, look at it, decide if it is or isn't what you want, modify it, retrieve it again — just really changes the dynamics of how the work gets done," says Erickson's Cox, "because you're no longer waiting for information. I think that allows people to be a lot more creative in their processes and try, through trial and error, things that they would never have even tried to do in the past."
This article is excerpted and adapted from Best Practices in Selecting Performance Management Software: Finance Searches for Increased Flexibility and Control, a report that summarizes suggestions and recommendations from senior finance executives who have successfully implemented CPM systems within their organizations. CFO Research Services and software provider Clarity Systems developed the hypotheses for the research jointly. Clarity funded the research and the publication of the findings; CFO Research Services produced the final report. You may download a copy of the full report by filling out a brief form.
Getting Started
Moving your company's budgeting, general ledger, and other financial reporting systems to sophisticated databases operating on a Web-based platform is a major step. But for most companies, it's just the first step in a progression that could see more and more data applications moving into the new environment. In deciding to go ahead with a corporate performance management overhaul, top executives need to make sure that their up-front decisions make it easier, not harder, to expand the system and add users.
Lessons learned by companies that have already gone through the process include:
Take small steps. Don't try to do too much, too soon. Many companies start with budgeting — the single most critical financial activity — which can serve as the hub of a system that expands to include other activities as well. But even budgeting itself can be broken into sub-components such as HR planning, capital planning, expense planning, revenue planning, and balance sheet and cash flow forecasting. Many companies will choose to start with P&L planning to get a quick, early "win" for their new system by tackling the piece that takes most of their time and is the fastest to integrate.
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