HPCM – Hyperion Profitability & Cost Management Complimentary Positioning: Oracle Cost Mgmt + HPCM

2. Hyperion Profitability and Cost Management HPCM – Hyperion Profitability & Cost ManagementComplimentary Positioning: Oracle Cost Mgmt + HPCM Bart Stoehr, John Fitzmaurice – EPM Product Management/Strategy 19-Mar-2013

3. The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

4. Program Agenda • Challenges around O/H’s, allocations and profitability • Solution approach • Introduce Hyperion Profitability & Cost Management (HPCM) • Simple model example and report insight • Q&A

5. Challenges facing Oracle Cost Management customers today Item Cost Overhead analysis Product line and customer profitability Strategic and tactical decision making

6. Item Cost Overhead analysis • Challenge • Overhead is a big proportion of total COGS • Overhead pools/rates in numerous spreadsheets & one-off efforts • Lack coordination with system-wide cost reduction/efficiency initiatives; Often poor or no justification of O/H assignment logic • Non-inventoriable overheads and controllable costs – the GAAP view vs. total overhead costs that you are responsible for controlling

7. Product line and customer profitability • Challenge • Revenue adjustments and numerous cost allocations needed beyond direct revenue and COGS • Like COGS, need a consistent approach to SGA allocations • Cost to serve can erode some to all Gross Margin • Some higher volume products and some larger customers may be subsidizing low volume products and unprofitable customers

8. Strategic and tactical decision making • Challenge • Do the profitability numbers we’re using tie back to the G/L view that Executive Management are basing their decisions on? • Are we capturing the variability of costs/expenses across Products and LOBs so that we can model new product costs? • Are we integrating our planning and costing, using the latest Annual Budget or Forecast numbers as the basis for overhead rate development (– driver-based planning)?

9. Program Agenda • Challenges around O/H’s, allocations and profitability • Solution approach • Introduce Hyperion Profitability & Cost Management (HPCM) • Simple model example and report insight • Q&A

10. Profitability Management Lifecycle Cost Allocations Profitability Management Who are the most and least profitable customers? What products contribute the most to the bottom line? Does customer or product profit vary by region? What is the profit contribution margin of a product or a service? • Why are customers profitable or unprofitable? • Why is the cost to sell or service different across the customer base? • How do business processes impact customer profitability? • How is resource consumption affected by product maturity? Profitability Analytics What is the impact on Profitability when: - change in price - reassignment of resources - introducing a new product -change in product mix

11. One System for Profitability Reporting, Profitability Analytics, and Profitability Management Drive Profitable Growth – Measure the value added by a product, customer, or a segment, to your business profitability Discover drivers of Cost and Profitability– Discover how much each activity costs to sell or service a product What? Why? Now What? Use Insight to Guide Actions– Lead people to take action based on verifiable facts for effective decisions An integrated system for Profitability Reporting, Profitability Analysis and Profitability Management will drive the next level of value creation and competitive advantage for organizations

12. Program Agenda • Challenges around O/H’s, allocations and profitability • Solution approach • Introduce Hyperion Profitability & Cost Management (HPCM) • Simple model example and report insight • Q&A

13. Hyperion Performance Management Applications Market-Leading, Integrated Suite • Integrates data from multiple transaction systems • Automates and links strategic and financial management processes • Modular, integrated suite • Fast time to value; Low TCO • Over 6,000 customers Strategy Management Planning and Forecasting Financial Close and Reporting Profitability and Cost Management Common Administration Services Oracle BI Foundation

14. Hyperion Profitability and Cost Management Providing Value in All Industries 14

15. Hyperion Profitability and Cost Management Delivers Detailed Cost and Profitability Insight • Flexible measurement, allocation and management of costs and revenues • Computes Profitability for any dimension such as Products, Customers, Channels & LOB • Provides Scenario Modeling for Decision Making • Computes Profitability across any view such as Actual, Budget & Forecast

16. Accurately allocate costs with a flexible allocation engine that supports any methodology Gain confidence in cost allocations and revenue flows with graphical traceability maps Quickly validate models with user-defined business rules Hyperion Profitability and Cost Management Empower Users with Visibility and Flexibility

17. Hyperion Profitability and Cost Management Empowers the Business User to Own & Operate the system in partnership with IT • User defined allocation stages • Accounts, cost centers, products, activities, customers, LOB, channel….your choices • User defined dimensionality • Time, account descriptors, scenarios, attributes…et al • User defined allocation formula • Supports several delivered methods • Ability to build configurable allocation methods

18. Hyperion Profitability and Cost Management Integrated Reporting & Analysis Multiple End User Options • SmartView for MS Office • Excel / Word / PowerPoint • Report Distribution Capabilities • Interactive Dashboard Analysis

19. Program Agenda • Challenges around O/H’s, allocations and profitability • Solution approach • Introduce Hyperion Profitability & Cost Management (HPCM) • Simple model example and report insight • Q&A

20. An Example: Using HPCM to Assign Costs to Products, Branch, and Activity GL $$$ Drivers & Assignment Paths Stages & Dimensions $$$$ $$$$ $$$$ $$$ $$$ $$$ $$ $$ $$$ % of Time Spent Even Split # PCs in Use Square Feet # of Trans # of Trans $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

21. Traceability map – insight into model logic

22. HPCM – a great foundation to begin the journey • Actionable information • Consistent • Repeatable • Reliable • Better internal controls • Insight • Traceability and validation reporting built in • Easy reporting development & analysis

23. Program Agenda • Challenges around O/H’s, allocations and profitability • Solution approach • Introduce Hyperion Profitability & Cost Management (HPCM) • Simple model example and report insight • NEW – HPCM Shared Services Flash Demo • Q&A

24. NEW HPCM Flash Demo– Shared Services • Just completed and posted to Oracle.com

25. HPCM Flash Demo – Shared Services- broad applicability • IT Shared Services is often the primary focus • Other Shared Services include: • Support Desks/Call Centers • Human Resources (HR) • Facilities/Real Estate/Occupancy Costs • Legal, & Compliance (GRC) • Developing manufacturing overheads

27. Do we need to have EPM installed before HPCM? • Please refer to slide # 13 • The Oracle EPM Suite: • Budgeting/Planning/Forecasting • Profitability & Cost Management • Financial Close & Reporting • Strategy Management • shares a common foundation and setup infrastructure • You install the foundation and then the application modules

28. How does this product relate to Hyperion Planning? The Oracle EPM Suite includes both Planning and HPCM Both of these solutions are on the common foundation we see in Slide # 13 Yes, some HPCM customers are also using Planning Integrated usage we’ve seen includes flowing the G/L data into Planning for Actuals vs. Budget or Forecast analysis and flowing the data from within Planning into HPCM Via EPMA, dimensions and hierarchies can be shared by both solutions

29. We are not using an Activity-Based approach/model – can it be skipped? • Please refer to slide # 20 • Great question • We showed an example that included activities in one of the Stages • No, this is not required • With HPCM, you, the Functional Business User, define the model you need: • dimensions; hierarchies; attributes • stages; dimensions for each stage; the process/data flow • So, if you do not want/need to define or include activities, that is OK

30. From a solution perspective, is it imperative that the user know both HPCM, and EBS Cost Mgmt and G/L (the latter being two being the underlying data source). Thoughts? For the types of situations we discussed today, yes, it would be beneficial to have some of your Team know Cost Management solutions, and be familiar with G/L systems, in addition to being your HPCM cost/profit guys. No, you don’t need to be experts on all of these data sources --- but you’ll want to have a good high level understanding so that you can interact effectively with all the solution owners We expect most FP&A groups have these skills/talents As we commented on Slide # 17, projects are successful where the Finance/Business Teams partner up with the IT Team, and HPCM helps facilitate that versus a black-box spreadsheet or custom solution approach

31. How are HPCM and In Memory Cost Management integrated? Do we need both or HPCM can address all business needs? HPCM complements the new (and in development) offerings from Oracle Cost Management. With HPCM you can allocate your overheads and pass these calculated overheads to Oracle Cost Management (TBD). HPCM can do overall customer and profit line profitability. But to get item level or SKU profitability, you will need the new in-memory solutions from Oracle Cost Management.