Hyperion Strategic Finance
Introduction and Update
Will Kaffenberger, Director, Business Analytics
Suren Seshadri, Director, Software Development
Ray Mettetal III, Director of FP&A, CVR Energy
September 29, 2014
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
1
Solution Overview & Demo
2
Development Update and Roadmap
3
Strategic Planning at CVR Energy
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Strategic Financial Planning
Measure Financial Impact of Key Business Strategies
CFO
Finance
Corporate
Development
Treasury
• Long Range Planning
• Covenant/Ratio Analysis
• Mergers & Acquisitions
• Internal Investment Decisions
• Credit Ratings
• Valuation Analysis
• Shareholder Policy
• Divestitures
• Strategy Screening
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
How Effective is Your Strategic Planning Process?
CFO
Finance
Treasury
Corporate
Development
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Challenges in Strategic Planning
CFOs Long for Growth But Hesitate to Invest
Finance chiefs are focused on growth, but they're holding back on making
the moves that actually drive sustained expansion, according to Ernst & Young.
Marielle Segarra
January 23, 2014 | CFO.com | US
OECD Admits It Flubbed Growth Forecasts
The Organization for Economic Cooperation and Development says it overestimated economic growth
worldwide in the years following the financial crisis.
Vincent Ryan
February 11, 2014 | CFO.com | US
Source : EY Capital Confidence Barometer April 2014 | ey.com/ccb
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Risks to Global Economic Growth
Source : McKinsey Global
Survey results, Economic
Conditions Snapshot,
September 2014
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Key Market Trends – April 2014
Executive Survey
Source : EY Capital Confidence Barometer April 2014 | ey.com/ccb
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Key Market Trends – December 2013
Executive Survey
Source : EY Capital Confidence Barometer December 2013| ey.com/ccb
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
“A company will find great value in
understanding the financial profile it
would need in order to maintain a
particular rating .”
– Gurdip Dhami, How to Work With Credit Rating Agencies,
Treasury & Risk, August 18, 2014
Tips :
• Understand the key financial ratios that the agency uses and how the
ratios impacted the rating decision
•Model expected rating, current, and projected financial profile
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Statistical Tools
Improve Forecast Accuracy and Understand Plan Risk
 Calculate certainty of hitting plan
targets
 Assign probability distributions to
uncertain assumptions
Source : EY Capital Confidence Barometer April 2014 | ey.com/ccb
 Understand the full range of outcomes
and overall risk
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
The HSF Customer Experience
…Develop strategies for retaining current customer base and to plan for continued
growth in expanding markets….
…Run stress tests for a proposed budget and long term plan…
…Analysis of new product lines and acquisition targets….
...We successfully executed a sale of the unit after the market crashed, at the price we
had established before the market crashed…
…Over the course of one month, over 1,200 scenarios were run to review ability to
service debt, capital adequacy, and capital structure….
…Better understand the impact of raising debt and equity…
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Reduce Scenario Analysis
From Days to Hours
AVG. HOURS FOR FINANCIAL MODELING
18
16
14
12
10
8
6
4
2
0
Marginal
Stable
Best in Class
Pre
Transformational
Post
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
40%
Link Strategy
with Budgets
Source: Palladium Group
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Aligned Objectives
• Allocate Strategic Targets to
Broader Community of
Departmental Managers
Strategic
Plan
Budget/
Operating
Plan
Enterprise
Planning
• Perform Variance Analysis,
Analyze Historical Trends,
Update Plans
Rolling
Forecast
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
• Build Individual Department
Plans Aligned to Allocated
Strategic Targets
Oracle Hyperion Enterprise Planning Solutions
Predictive Modeling and Simulation
Specialized Modules
Plan for Profitable
Growth
Strategic
Financial
Planning
Workforce
Planning
Capital
Asset
Planning
Project
Financial
Planning
Planning, Budgeting and Forecasting
Middleware
Database
Systems and Hardware
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Profitability
and Cost
Management
HOW – MUCH SAVINGS
Productive Hours Spent for Multi-Year Plan (per version)
Productive Hours Spent for Implementation
120
800
700
114
680
100
Hours
Hours
600
500
400
340
300
80
60
40
40
200
20
100
0
0
Excel & Multi-Year Scenario
Hyperion Strategic Finance
Hyperion Strategic Finance
Excel & Multi-Year Scenario
Platform
Platform
1. Implementation Savings – In dollars, application and installation costs totaled less than 77% of building a “multi-year” scenario in
Hyperion Planning (which did not have all the functionality of Strategic Finance)
2. Each version created has approximately a $6,000 savings in labor hours. Considering, each of our five-year plans has had at least 5
versions, that is a savings of $30,000 per year (over the last 3 years).
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Scorecard and Strategy Management
Thursday, October 2 11:30 AM
• Strategy
–
Strategy Maps and Trees
–
Cause and Effect Maps
–
Contribution Wheel
–
Watchlists
–
Custom Visualizations
• Scorecards
– Supports all methods and custom methods
• Collaboration
–
Initiatives
–
Threaded Discussions
–
Related Documents
–
Action Links and Agents
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Oracle Confidential – Internal/Restricted/Highly Restricted
18
Program Agenda
1
Solution Overview & Demo
2
Development Update and Roadmap
3
Strategic Planning at CVR Energy
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle Hyperion Strategic Finance: What’s New & What’s Coming….
Past 18 months: Highlights
Past 18 months: Highlights
• Strategic Finance 11.1.2.3 release
• Office 2010 64-bit Support
• SmartView Features
– Depreciation Scheduler
– Debt Scheduler
– Actual/Deal Periods
– Change Fiscal Year End
– Entity Structures
– Entity/Account Change Manager
– Client Side Consolidation
• Batch import/export to ASO cubes
• Automatic export to Essbase and HFM
after consolidation
• Performance improvements for Excel
based Reports
• Stabilization
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Safe Harbor Statement
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.
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle Hyperion Strategic Finance: What’s New & What’s Coming….
Next 12 months: Highlights
•
•
•
•
•
•
Flat file import/export – facilitate DRM integration
FDMEE integration for automated data loads to HSF
Crystal Ball integration in SmartView
Enhanced logging and error reporting
Distributed deployment support
Improved SmartView display performance for Accounts and Reports
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle Hyperion Strategic Finance: What’s New & What’s Coming….
Next 18 months: Highlights
Enterprise Readiness
• Linux Deployment
• Web User Interface
• Unified Application Creation
• Project Financial Planning Integration
for Funding Analysis
• Life Cycle Management for HSF
• REST based Web Services
Next 18 months: Highlights
Product Features
• Consolidation of Business cases with
import and export
• Hierarchical Accounts and Sub
Accounts – Essbase/Planning like
Accounts dimension tree
• Monthly Depreciation Scheduler
• Improved Consolidation performance –
Multi-threaded Consolidation
• Multiple Days Audit Transactions
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
CVR Energy
Bluestone – a Huron Consulting Group solution
Integrating the Long-Range Planning Process
September 29, 2014
Presented by:
Scott Leshinski
Managing Director
Huron Consulting Group
Scott Song
Director
Huron Consulting Group
Ray Mettetal
Director-FP&A
CVR Energy
About CVR Energy
Petroleum Refining and Nitrogen Fertilizer Manufacturing
About CVR Energy
Headquartered in Sugar Land, Texas, CVR Energy is a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing
industries through its holdings in two limited partnerships, CVR Refining, LP and CVR Partners, LP. CVR Energy subsidiaries serve as the general partner and own a
majority of the common units representing limited partner interests of CVR Refining and CVR Partners.
The CVR Energy portfolio of companies employs more than 1,200 employees and generated approximately $9 billion in net sales in 2013. CVR Energy’s common stock is
listed for trading on the New York Stock Exchange under the symbol "CVI."
Limited Partnerships
In 2007, CVR Energy formed CVR Partners, LP to own, operate and grow its nitrogen fertilizer business. CVR Partners completed its Initial Public Offering in April 2011
and trades on the New York Stock Exchange under the symbol "UAN."
In 2012, CVR Energy formed another limited partnership, CVR Refining, LP, to own, operate and grow its petroleum refining and related logistics businesses. CVR
Refining completed its Initial Public Offering in January 2013 and trades on the New York Stock Exchange under the symbol “CVRR.”
CVR Energy subsidiaries serve as the general partner and own a majority of the common units of both CVR Refining and CVR Partners.
25
About CVR Refining
Petroleum Refining
Headquartered in Sugar Land, Texas, CVR Refining is an independent downstream energy limited partnership formed by CVR Energy, Inc., to own, operate and grow our
refining and related logistics businesses.
Our petroleum business includes a complex full coking, medium-sour crude oil refinery with a rated capacity of 115,000 barrels per calendar day operated by Coffeyville
Resources Refining & Marketing in Coffeyville, Kan., and a medium complexity crude oil refinery with a rated capacity of 70,000 barrels per calendar day operated by
Wynnewood Refining Company in Wynnewood, Okla. CVR Refining's subsidiaries also operate approximately 336 miles of owned and leased pipelines, more than 150
crude oil transports, a network of strategically located crude oil gathering tank farms, and more than six million barrels of owned and leased crude oil storage capacity.
CVR Refining, LP is traded on the New York Stock Exchange under the ticker symbol “CVRR.” CVR Energy subsidiaries serve as the general partner of CVR Refining and
own the majority of the common units representing limited partner interests of CVR Refining.
26
About CVR Partners
Nitrogen Fertilizer Manufacturing
Headquartered in Sugar Land, TX,CVR Partners is a growth-oriented limited partnership formed by CVR Energy, Inc. to own, operate and grow our nitrogen fertilizer
business. Our nitrogen fertilizer manufacturing facility, which produces ammonia and urea ammonium nitrate (UAN) fertilizers, is located in Coffeyville, Kan. Coffeyville
Resources Nitrogen Fertilizers, LLC is a wholly-owned subsidiary of CVR Partners, and directly owns and operates the CVR Partners nitrogen fertilizer plant.
The CVR Partners nitrogen fertilizer plant is the only such operation in North America that uses a petroleum coke gasification process to make hydrogen, a key ingredient
in its manufacturing process, and produces about 5 percent of total UAN demand in the United States. In 2013, Coffeyville Resources Nitrogen Fertilizers produced
402,000 tons of ammonia, of which 37,900 net tons were available for sale, and also produced 930,600 tons of UAN.
CVR Partners, LP is traded on the New York Stock Exchange under the ticker symbol “UAN.” CVR Energy subsidiaries serve as the general partner of CVR Partners and
own a majority of the common units representing limited partner interests of CVR Partners.
27
CVR Energy - History
Why EPM was needed…
Timeline of Major Events
•
1906 – The Coffeyville refinery began operations; 2000 - the fertilizer plant was built
•
March 3, 2004 - Both assets were acquired by Coffeyville Resources through bankruptcy court from Farmland Industries
•
June 24, 2005 - Coffeyville was purchased by funds of Kelso & Company, L.P. (subsidiary of Goldman Sachs & Co.)
•
October 26, 2007, CVR Energy consummated its IPO
•
February and May of 2011, Kelso and Goldman completely sold their ownership interest
•
April 13, 2011, CVR Partners, LP completed it’s IPO
•
December 15, 2011, CVR Energy acquired a 70,000 bpd refinery in Wynnewood, Oklahoma
•
April 18, 2012, CVR Energy entered into a transaction agreement with IEP
•
May 2012, IEP acquired 82% of the common stock of CVR Energy
•
January 23, 2013, CVR Refining, LP completed it’s IPO
Summary of Major Events
•
3 separate IPO’s
•
2 different private equity owners
•
1 major acquisition
•
CVR Energy 2009 Full Year Adjusted EBITDA $206.8 million
•
CVR Energy 2012 Full Year Adjusted EBITDA $1,264.5 million
•
Growth and multiple transactions led the need for an EPM suite and Hyperion was purchased in December 2012
28
CVR Energy – Hyperion Implementation
Phased Approach
Phase I – Kicked off April 2013
•
Phase I Mantra – “replicate current state”
•
Shorten close cycle
•
Acquisition readiness
•
Improve reporting
•
Reduce dependency on Excel
•
Crawl, walk, run
April 2013
Aug
Hyperion
Kickoff
HP OpEx/SG&A
Workforce Planning
Sept
Nov
Centralized Essbase Cube
Hyperion Strategic Finance (HSF)
29
August 2014
Data Relationship Manager (DRM)
CVR Energy – Hyperion Implementation
Phased Approach
Phase I+
•
Driven by a general ledger optimization project
•
Oracle EBS General Ledger String was improved
•
All Hyperion Applications needed to be updated due to the change in account structure
•
Great opportunity to improve reporting within Hyperion Essbase and go beyond “current state” with the powerful EPM suite that had been implemented
Phase II
•
This is what’s next
•
Time for an even better and more powerful state
30
Existing Pain Points – Current Forecasting State
Understanding the needs of the business
Forecasting and the refining business
•
•
Driven by volatile commodity prices
•
Prices can move quickly and unexpectedly in unforeseen directions
•
Changes in prices have material impacts on expected earnings
Plant operations can be interrupted due to unplanned down time
•
Plants go down, sometimes a partial shut down, sometimes it isn't known how long a plant will be down until engineers dig into the process units
To meet management expectations
•
•
31
Forecast must be updated frequently and scenarios stored
•
As prices move, the forecast model needs to be flexed
•
As changes in unexpected downtime assumptions are updated, forecast model needs to be flexed
•
Very difficult to integrate actual statistical and financial data with forecasted data using excel
Variance of scenarios becomes key
•
Difficult to maintain all of the scenarios and the assumptions used in excel
•
Difficult to compare assumptions used in the various scenarios in excel
•
Difficult to “trust” excel and the multitude of spreadsheets
Solutions Developed
Understanding the needs of the business
Hyperion Strategic Finance, Hyperion Planning, and Hyperion Essbase
•
•
•
Hyperion Strategic Finance – brains of the operation
•
HSF contains the complex logic to calculate sales and cost of sales for the refining business
•
HSF calculates the forecasted balance sheet and cash flow
•
HSF calculates the variety of scenarios required by management
Hyperion Planning
•
HP is used to update operating, SG&A, and a few other select items
•
HP is used to calculate the sales and cost of sales of the simpler nitrogen business
•
HP is used to marry the data from HP and HSF and contains a few reports used for a first pass review
Hyperion Essbase
•
Essbase is used to tie everything together
•
Houses up to six different versions within a given scenario
•
Combines actuals and forecast with ease
•
Stores all scenarios that can be called up and analyzed against other scenarios in very short order
Requires strong collaboration among all parties involved
32
Benefits Achieved
Improving the Process
•
Structured process allows for weekly Flash update instead of just monthly
•
Automated vs. manual reporting
•
Centralized environment; data readiness allows for deeper analytics
•
Integrated financials and operating statistics paired with driver-based forecasting
•
Standardization of metadata leading to improved variance analysis and cross functional communication
33
Current Architecture
Understanding the needs of the business
•
•
•
Sales and COGS
Balance Sheet
Cash Flow
Hyperion Strategic Finance
Hyperion Planning
•
•
•
34
Input Operating Expenses
Input SG&A
Input Fertilizer Model
Hyperion Financial
Management
Hyperion Essbase
•
•
•
Actuals
Budget
Flash
•
Actuals
Phase II HSF
Changing the flow of data
•
•
Specialized Reporting Cube
Smartview / FR
Hyperion Essbase
For HSF
•
•
•
Scenario Modeling
M&A Modeling
Capital Structure and Value Analysis
•
•
•
•
Actual
Budget
Flash
Smartview / FR
Hyperion Strategic Finance
35
Self contained detail for flash and budget
Direct integration with HSF
Auto-export to EB upon check-in and consolidation
Ability to consume data across all EB users
Slice and dice information / adhoc reporting
•
•
•
•
•
Playground for Strategic Analysis
Flex prices, business combinations
Flex changes in working capital
Flex changes due to secondaries
Flex changes due to crude rates
Hyperion Essbase
Hyperion Financial
Management
Hyperion Planning
•
•
•
•
•
•
Actuals
Goals of HSF Phase II
Playground for strategic analysis
Change the flow of data
•
Hyperion Strategic Finance – brains of the operation
•
•
36
•
Layer Multiple Scenarios
•
High-level, but accurate and important drivers
•
Data will flow into HSF where it can be flexed and analyzed
•
M&A Modeling
•
Capital Structure Analysis
•
Strategic Plan
Hyperion Planning
•
•
Scenario Analysis
HP is used to handle the nuts and bolts of the detail forecast and budget
Hyperion Essbase
•
Existing Essbase is used to tie everything together
•
HSF Essbase will be used to report on the special scenarios and analysis
Lessons Learned
Be flexible, anticipate change
•
•
•
37
People and knowledge
•
There are many people who understand Hyperion Planning and Hyperion Essbase
•
There are not as many people who understand Hyperion Strategic Finance
•
Typically, the people who understand HSF also understand Planning and Essbase
•
It is important to understand all three when designing a system
•
Training upfront pays dividends in the future
Data
•
It takes time and effort to validate data
•
It takes patience and team work to validate data
•
It takes more work than anticipated
Time
•
Keeping current processes going while creating new processes and developing a system takes time
•
Remember that one day it will work for you instead of you working for it
Please Join Us!
Date: Monday, September 29th
Time: 6:30 – 9:30pm
Location:
B Restaurant & Bar
720 Howard St.
San Francisco, CA 94103
38
Contact Info
Ray Mettetal III, CPA
Director of FP&A, CVR Energy
Houston, Texas I USA
Mobile
Email
+1 312 560 5556
[email protected]
Scott Leshinski
Managing Director, Huron Consulting Group
Chicago, Illinois I USA
Mobile
Email
+1 312 560 5556
[email protected]
Scott Song
Director, Huron Consulting Group
Chicago, Illinois I USA
Mobile
Email
39
+1 312 375 3706
[email protected]