WHITE PAPER

HOW TO OPTIMIZE CLOSE CYCLE

USING HYPERION FINANCIAL
MANAGEMENT
- Navpreet Singh, Principal Consultant
 Not long ago, the advent of sophisticated computing and advancements in
communications led companies to aspire to a “virtual close”. Recent studies
conducted by the Hackett Group suggest that the top 10% of companies close
their financial books in less than five days and want to reduce this further.1 The
introduction of the Sarbanes–Oxley Act (SOX) and eXtensible Business Reporting
Language (XBRL) has moderated these perceptions resulting in a clear shift of
companies’ preference from speed to accuracy. However, the need of the hour is
a judicious mix of speed and efficiency in the financial reporting process without
undermining accuracy.
Financial consolidation solutions centered on Hyperion Financial Management
(HFM) are highly effective in helping businesses streamline their close process. It is
possible to significantly enhance efficiency and performance through HFM solutions,
especially when the company has accumulated a number of discrete financial
systems.

1
The Hackett Group Benchmarking - Solutions Book of Numbers

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 Stages of Automation in HFM
Improvements in computation methodologies, close-
integration and standardization of Hyperion Enterprise
Project Management (EPM) systems like Strategic Planning,
Budgeting and Financial Consolidation are facilitating the
dissemination of management analysis. However, many
times, internal processes leave little scope for organizations
to condense their reporting timetable or to allow major
advances in the depth of management information.

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 Before rolling out any improvement initiative it is important to establish the nature of bottlenecks and determine whether these are process-
oriented or technology-oriented.

1. Process Changes
It is observed that a longer close cycle is associated with inaccuracies and a need for rework – thus, ‘getting it right the first time’ must
be the key principle for finance and accounts staff. Organisations often view the internal deadlines as moving targets. Such a view
need to be avoided at all costs. In such a situation, the operational changes necessary can range from a full-fledged process revamp
to minor tweaks for quick wins.

a. Elimination of non-value-add It is critical to conduct a well thought- Harmonization of the chart of accounts
activities out analysis to ascertain whether such becomes a vital requirement to break these
extensions in reporting objectives could resultant silos. The importance of a unified
lead to a longer close cycle. reporting layer built over the common
chart of accounts cannot be undermined.
b. Common chart of accounts In many organizations, roll-outs of an
HFM solution are often seen as a first step
towards the long-term vision of unifying
management information systems. HFM,
along with its arsenal of data integration
tools like Hyperion Financial Data Quality
Management (FDM) and Oracle Data
Integrator, can offer quite a few tactical
solutions to meet the organization’s
requirements for management and
Often the capabilities of consolidation statutory reporting during such transition.
systems are extended to leverage financial
data for internal management reporting.
At times, data related to key performance
indicators (KPIs) is fed into systems that are One of the common pitfalls of inorganic
no longer relevant in light of the evolving growth is the plethora of discrete
business scenario. information sources.

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c. Process of soft close at month- d. Integrated solution for statutory e. Dedicated team for financial
end filings reporting

The saying, ”the more you sweat in peace In most organizations, the task of XBRL Where economies of scale permit,
the less you bleed in war” holds true in the tagging is either outsourced or performed organizations must use a managed
corporate context. Typically, controllers internally after finalizing financial services or a factory approach. This can
conduct multiple reviews before the statements. Either of these situations bring a sharper focus to operations and
monthly financial statements are finalized. stretches the overall duration of the close lead to a substantial reduction in the
In the long run, a soft close can continue cycle. Tools like Hyperion Disclosure close cycle. Besides, these approaches can
to reduce variability in the estimates and Management offer the opportunity to fully provide an added advantage of greater
accruals. integrate and thus automate the record-to- standardization and predictability to the
report cycle. reporting function.
Most organisations are able to integrate
their trial-balance loads with HFM which Likewise, the newly introduced Hyperion
provides them a head-start. By instituting Tax Provision solutions offer a single
a soft close many reconciliation activities version of data for both financial reporting
can be shelved. Introducing the soft close and tax requirements. This integrated
process can also reduce the top-side solution reduces the data collection effort
adjustments being applied directly in HFM. and provides a better audit-trail through
easy traceability of information.

Technology Initiatives Process Change

Eliminate Non- value-add activities IT Systems Consolidation

Common Chart of Accounts Master Data Management

Introduce Soft Close Automate Administration tasks

Integrated Reporting Solutions

Dedicated Teams for Financial Reporting

ycle
im ize close c
ors to opt
Bala ncing fact

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 2. Technology Initiative
HFM is often described as a finance-owned
and IT-supported system. On most occasions,
the organizational challenge is not concerning
the lack of information, but to have a reporting
tool that works ‘the way business thinks’. Thus,
in order to realize the true value of HFM, it is
crucial that business users are able to assume
greater self-sufficiency.
Technology plays the role of an enabler
during the implementation of HFM systems
as addressing the business and regulatory
complexities often becomes a priority. It is
incorrect to assume that technology alone can
solve major problems surrounding the financial
close. Nonetheless, some key factors related to
technology can make the journey easy.

a. Consolidate IT systems for b. Streamline metadata c. Automate admin routines

smooth operations management

Apart from operational glitches, Absence of a proper master data For the financial close process, substantial
maintaining a wide range of products can management strategy often results in information is required from General
introduce an additional challenge in the information mismatch across different Ledger (GL), Human Resource (HR), Tax and
timely compilation of monthly results. It sources. Essentially, master data updates other sources. Oracle Data Integrator or
always helps to unify the IT backbone on need to be completed in a narrow window other integration tools can be extensively
a common platform. This standardization prior to the start of the monthly close leveraged to automate some intensive and
can provide an edge to the company’s cycle. With the passage of time, ongoing recurring tasks such as:
endeavour to improve their IT service and maintenance of master data across EPM • Data load process
shorten the close cycle. applications like HFM or Hyperion Planning • Balance roll forward
can become challenging. Automation • Routine calculations or KPIs
of this process using Hyperion Data Automating these tasks greatly reduces the
Relationship Management (DRM) or administrator’s involvement and provides
custom integration tools can improve the self-sufficiency to end users. This can set
data quality. the platform for optimizing the month-end
cycle.

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References
With the objective of addressing growing aspirations, implementation programs need to be sufficiently
flexible and balance the priorities of different stakeholders. Increasing advancements in technology
make it imminent that a multi-prong strategy be deployed to make the entire process a success. A
smooth transition requires all-round synergy that can overcome the challenges involved at different
levels – technology, process and human resource.

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