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Hyperion Strategic FinanceIntroduction and Update
Will Kaffenberger, Director, Business AnalyticsSuren Seshadri, Director, Software DevelopmentRay Mettetal III, Director of FP&A, CVR EnergySeptember 29, 2014
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Solution Overview & Demo
Development Update and Roadmap
Strategic Planning at CVR Energy
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Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Measure Financial Impact of Key Business StrategiesStrategic Financial Planning
• Long Range Planning• Internal Investment Decisions• Strategy Screening
• Covenant/Ratio Analysis
• Credit Ratings
• Shareholder Policy
• Mergers & Acquisitions
• Valuation Analysis
• Divestitures
CorporateDevelopment
Treasury
CFO
Finance
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
How Effective is Your Strategic Planning Process?
Finance CorporateDevelopment
Treasury
CFO
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Challenges in Strategic Planning
OECD Admits It Flubbed Growth ForecastsThe 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
CFOs Long for Growth But Hesitate to InvestFinance 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
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. |
Executive SurveyKey Market Trends – April 2014
Source : EY Capital Confidence Barometer April 2014 | ey.com/ccb
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Executive SurveyKey Market Trends – December 2013
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 ToolsImprove Forecast Accuracy and Understand Plan Risk
Calculate certainty of hitting plan targetsUnderstand the full range of outcomes and overall risk
Assign probability distributions to uncertain assumptions
Source : EY Capital Confidence Barometer April 2014 | ey.com/ccb
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. |
AVG. HOURS FOR FINANCIAL MODELING
Reduce Scenario Analysis From Days to Hours
Marginal Stable Best in Class Transformational0
2
4
6
8
10
12
14
16
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Pre 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
Rolling Forecast
Strategic
Plan
Budget/
Operating Plan
EnterprisePlanning
•Allocate Strategic Targets to Broader Community of Departmental Managers
•Build Individual Department Plans Aligned to Allocated Strategic Targets
•Perform Variance Analysis, Analyze Historical Trends, Update Plans
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle Hyperion Enterprise Planning Solutions
Profitability and Cost
Management
Strategic Financial Planning
Planning, Budgeting and Forecasting
Plan for Profitable Growth
Predictive Modeling and Simulation
Specialized Modules
Workforce Planning
Systems and Hardware
MiddlewareDatabase
Capital Asset
Planning
Project Financial Planning
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
HOW – MUCH SAVINGS
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).
Productive Hours Spent for Implementation
680
340
0
100
200
300
400
500
600
700
800
Hyperion Strategic Finance
Platform
Hou
rs
Productive Hours Spent for Multi-Year Plan (per version)
114
40
0
20
40
60
80
100
120
Hyperion Strategic Finance
Platform
Hou
rs
Excel & Multi-Year ScenarioExcel & Multi-Year Scenario
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Scorecard and Strategy Management
• 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
Oracle Confidential – Internal/Restricted/Highly Restricted 18
Thursday, October 2 11:30 AM
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Program Agenda
Solution Overview & Demo
Development Update and Roadmap
Strategic Planning at CVR Energy
1
2
3
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Past 18 months: Highlights
• Strategic Finance 11.1.2.3 release
• SmartView Features – Depreciation Scheduler– Debt Scheduler– Actual/Deal Periods– Change Fiscal Year End– Entity Structures– Entity/Account Change Manager– Client Side Consolidation
Past 18 months: Highlights
• Office 2010 64-bit Support
• Batch import/export to ASO cubes
• Automatic export to Essbase and HFM after consolidation
• Performance improvements for Excel based Reports
• Stabilization
Oracle Hyperion Strategic Finance: What’s New & What’s Coming….
Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Safe Harbor StatementThe 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. |
Next 18 months: HighlightsEnterprise 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: HighlightsProduct 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
Oracle Hyperion Strategic Finance: What’s New & What’s Coming….
CVR EnergyBluestone – a Huron Consulting Group solution
Integrating the Long-Range Planning Process
September 29, 2014
Presented by:
Scott Leshinski Scott Song Ray MettetalManaging Director Director Director-FP&AHuron Consulting Group Huron Consulting Group CVR Energy
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About CVR EnergyPetroleum 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.
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About CVR RefiningPetroleum 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.
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About CVR PartnersNitrogen 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.
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• 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
CVR Energy - HistoryWhy EPM was needed…
Timeline of Major Events
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
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• Phase I Mantra – “replicate current state”
• Shorten close cycle
• Acquisition readiness
• Improve reporting
• Reduce dependency on Excel
• Crawl, walk, run
CVR Energy – Hyperion ImplementationPhased Approach
Phase I – Kicked off April 2013
April 2013 Aug Sept Nov August 2014
Hyperion
Kickoff
HP OpEx/SG&A
Workforce Planning
Hyperion Strategic Finance (HSF)
Centralized Essbase Cube Data Relationship Manager (DRM)
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CVR Energy – Hyperion ImplementationPhased 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
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Existing Pain Points – Current Forecasting StateUnderstanding 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
• 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
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Solutions DevelopedUnderstanding 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
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Benefits AchievedImproving 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
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Current ArchitectureUnderstanding the needs of the business
Hyperion Strategic Finance
Hyperion Planning Hyperion EssbaseHyperion Financial Management
• Sales and COGS
• Balance Sheet
• Cash Flow
• Actuals
• Budget
• Flash
• Actuals• Input Operating Expenses
• Input SG&A
• Input Fertilizer Model
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Phase II HSFChanging the flow of data
Hyperion Strategic Finance
Hyperion Planning
Hyperion Essbase
Hyperion Financial Management
Hyperion Essbase
For HSF
• Self contained detail for flash and budget • Actuals
• Actual
• Budget
• Flash
• Smartview / FR
• Scenario Modeling
• M&A Modeling
• Capital Structure and Value Analysis
• Specialized Reporting Cube
• Smartview / FR
• Playground for Strategic Analysis
• Flex prices, business combinations
• Flex changes in working capital
• Flex changes due to secondaries
• Flex changes due to crude rates
• 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
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Goals of HSF Phase IIPlayground for strategic analysis
Change the flow of data
• Hyperion Strategic Finance – brains of the operation
• Scenario Analysis
• 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
• 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
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Lessons LearnedBe flexible, anticipate change• 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
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Please Join Us!
Date: Monday, September 29th
Time: 6:30 – 9:30pm
Location:
B Restaurant & Bar
720 Howard St.
San Francisco, CA 94103
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Scott LeshinskiManaging Director, Huron Consulting GroupChicago, Illinois I USA
Mobile +1 312 560 5556Email [email protected]
Contact Info
Scott SongDirector, Huron Consulting GroupChicago, Illinois I USA
Mobile +1 312 375 3706Email [email protected]
Ray Mettetal III, CPADirector of FP&A, CVR EnergyHouston, Texas I USA
Mobile +1 312 560 5556Email [email protected]