Leveraging Oracle Hyperion EPM Technology to Support Ongoing Growth

Issue: Summer 2015 OAUG Insight magazine  

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Acknowledgement: 

This article appeared in the summer 2015 issue of OAUG Insight magazine and is reprinted with permission.


Leveraging Oracle Hyperion EPM Technology to Support Ongoing Growth

By Erik Torseth, HomeStreet Bank, and Leo Gonzalez, Key Performance Ideas

HomeStreet Bank has made strategic investments in the Oracle Hyperion EPM solution in order support ongoing growth, including the ability to forecast expansion plans and expected financial results for one- and three-year plans; develop a new method of forecasting production, staffing and commissions; and provide new and improved management reporting capabilities, including drill-through to transactional detail.

HomeStreet Bank is headquartered in Seattle, Wash., and serves consumers and businesses in the Pacific Northwest, California and Hawaii. The company has two primary business segments: Mortgage Banking, which originates and purchases single family residential mortgage loans, primarily for sale into the secondary markets; and Commercial & Consumer Banking, including commercial real estate, commercial lending, residential construction lending, retail banking, private banking, investment and insurance services.

The company has grown through organic growth as well as several acquisitions. In 2013, the company acquired Fortune Bank and YNB Financial Services Corporation and purchased two retail deposit branches and related assets from AmercianWest Bank. Additionally, in 2015, HomeStreet Bank merged with Simplicity Bancorp, Inc. and is now recognized as one of the fastest growing financial services companies in the nation.

Due to the overwhelming growth, the company’s legacy budgeting and forecasting system was extremely complicated, as illustrated in Image 1.

 

The company realized it needed a new technology footprint to manage constant change and selected Oracle’s EPM suite. HomeStreet Bank built a three-phase plan to meet the demands of the business and users and included:

Phase 1: CEO Demands

  • Model expansion plans and expected financial results separately from “same-store” growth
  • Forecast complicated staffing and commissions.

Phase 2: Scenario Analysis

  • Forecast scenarios with and without acquisition by time.
  • Improve system performance.

Phase 3: BSO/ASO and Drillbridge

  • Drill into transactional detail. 
  • Complete new allocations.

Phase 1: CEO Demands

The CEO and the entire executive management team needed to model expansion plans and required financial results, separate from “same-store” growth, including allowing a split of existing (same store) vs. expansion (new store) with the ability to report the split in the income statement. They wanted to drive income statement accounts and results based on input from users, i.e., percentage split for certain types of loans, runoff factors to drive different types of loan commitments, targets and ending balances. HomeStreet’s team leveraged Hyperion Planning and Essbase, as well as Attributes, to support the required reporting.

The results of phase one’s Modeling Expansion plans resulted in additional enhancements needed, as well as efficiency gains. Several over-engineered models were simplified, including:

  • Loan production/volume entry. 
  • Number of loans calculations. 
  • Commissions model. 
  • Gain on sale model. 
  • Leverage detailed employee load to identify production volume type employees to support the Additional FTE and Compensation model.
  • Additional FTE and Compensation model.

Today, the CEO and executive team can report expansion plans and expected financial results separately from “same-store” growth.  

Additionally, the acquisitions from the past years placed extensive pressure to forecast the workforce accurately, both for the finance team and each business unit. At the time Phase 1 began, HomeStreet Bank did not have a human resources system in place, and the company was experiencing several changes on how to complete commissions. Not only was the process very complex, the estimations required new logic, Web forms and calculations.

The company leveraged the Workforce Planning module within Hyperion Planning for a new method to forecast production, staffing and commissions and built the solution to accommodate future employee growth. The HomeStreet team simplified the overly complex commission model and discontinued the old model. By removing offline, top-side adjustments previously calculated by data owners, a new and improved process was developed designating production volumes for employees.

 

Phase 2: Scenario Analysis

In phase two of the overall EPM implementation, HomeStreet Bank wanted to create forecasting models in order to separate acquisition scenarios. For example, if acquisition of bank A, B and C were to occur at the same time, they needed to look at the financial impact of Bank A vs. all three acquisitions. HomeStreet Bank was able to leverage the Hyperion Planning and Essbase system to create forecasting reports that provided visibility into different acquisition scenarios, as illustrated in Image 3.  

Additionally, during Phase 2, HomeStreet engaged Key Performance Ideas’ experience with Oracle EPM applications to improve the overall system and provide users faster, real-time reporting. The experts at Key Performance Ideas leveraged Essbase to load general ledger (GL) actuals. This solution allows the CFO insight into financial performance during the close process and also assists the accounting staff with the financial close process.

Phase 3: BSO/ASO and Drillbridge

The third phase of the Oracle EPM technology implementation included the development of a block storage/aggregate storage (BSO/ASO) hybrid reporting cube via Essbase. By implementing a BSO/ASO solution, HomeStreet created a single platform for company-wide planning and reporting to complete analysis needed when adding new locations. Users in every cost center across the bank utilize the same reports, planning methodologies and technology. This solution has streamlined and standardized the budgeting, forecasting and reporting process. Additionally, the BSO/ASO solution simplified the Planning application by removing all “overhead” from the month-end actuals process and decreased down time for Planning users during month-end close cycle maintenance. Plus, the company can now increase the frequency of GL actual loads into Hyperion during the month-end close cycle.

 

As illustrated in Image 4, not only did the creation of BSO/ASO via Essbase support the integration of the EPM system, the company can now complete new expense allocations and eliminate manual expense allocation processes completed in the GL, as well as allocate expenses by head count and by location. Additionally, HomeStreet now has the capability to drill into transactional detail within the GL. Overall, the system provides better and faster reporting capabilities.

Finally, Phase 3 also included the turn-key solution of Drillbridge. Like many organizations, detail data that is consolidated and loaded in an Essbase cube is not available to users querying the cube with Smart View of Hyperion Planning. Drillbridge is a drill-through provider that maps from dimensional intersections to data stored in any relational database. It does not require changes to existing automation or administration and is also easy to deploy. HomeStreet leveraged Drillbridge in order to provide the ability to look up original details (such as transactions) behind summarized data for their users.

 

Benefits Achieved

After years of growth, HomeStreet Bank realized it needed a new technology footprint to manage constant change. By developing a three-phase plan of implementing Oracle’s EPM suite of products, the company now has the ability to forecast expansion plans and expected financial results for one- and  three-year plans. The company developed a new and improved method of forecasting production, staffing and commissions and has improved management reporting capabilities, including drill-through to transactional detail.

 

Lessons Learned

Several lessons were learned throughout each phase’s implementation. Key to HomeStreet’s success was acknowledging that aligning management expectations and development design would be difficult.  Therefore, it was critical to get all stakeholders involved, gather all requirements and identify what the technology could do for the entire organization. HomeStreet realized that the Oracle EPM platform could do much more than what was initially expected, and engaging an expert to match user demands with current investments was advantageous. Most important, however, was executive management’s ownership of the overall strategic investment to create a culture of accountability necessary for technology investment realization. Finally, there is never enough communication! Communication at all levels of the organization generated acceptance and willingness to actively support the solution.

  • Critical to gather requirements before building foundation.

  • Alignment of management expectations and design difficult: Key is executive management ownership and communication!

  • Get all players involved and identify what the technology can do for entire organization.

  • Oracle EPM platform can do so much more than initially expected.

  • Engage an expert to match user demands with current investments.


Erik Torseth is a financial planning systems and reporting manager at HomeStreet and is responsible for the management of all external and internal reporting functions and Financial Planning & Analysis system.  He can be reached at Erik.Torseth@homestreet.com.

Leo Gonzalez  is an Oracle Hyperion Essbase and Planning certified professional with more than 12 years of application design, development, deployment and administration of Hyperion Planning, Essbase, HFM, Financial Reporting, FDM and ODI.  He can be reached at lgonzalez@KeyPerformanceIdeas.com.


 

 

 

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