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A new enterprise resource planning system will affect the HFM

Running an enterprise resource planning system and HFM projects together can be hard, but it offers a time to improve the HFM system and better align reporting.

Implementing a new enterprise resource planning (ERP) system requires changes to the Oracle Hyperion Financial...

Management (HFM) application. Regardless of the approach, these projects are challenging due to the magnitude of implementing ERP and the resource constraints most of these projects face. However, these projects also provide an opportunity to improve your HFM application and the overall reporting to align with current business needs.

When an entire company is moving to a new ERP system, building a new HFM application makes sense. The current application is usually designed for the current general ledger. The accounts and custom dimensions are based on what is available. With a new ERP system, the available data will most likely be different. Moreover, the new ERP application will probably use different dimensions. A new HFM application can better capture that data utilizing the new dimensions. Building a new HFM application also allows you to align the metadata labels with the new ERP application, which leads to simpler data loads and streamlines workloads because users have to learn and use only one set of accounts.

Building a new HFM application will require loading and validating history. This part of the project can present challenges because the historical data may not fit exactly into the dimensions in the new application, thus making validation difficult. However, because the data is usually sourced from the existing HFM application rather than the various legacy ledgers, you have to build only one set of maps to the new HFM application. The minimum amount of history you need to load is the current and prior year. You can access all other data from the old HFM application. When time permits, you can bring over additional years of history.

When updating the HFM system may make sense

When only part of a company is moving to the new ERP system, updating the existing HFM application may make more sense, at least as an interim step. Because not everyone is moving to the new ERP application, you will still have multiple ledger systems with multiple charts of accounts, and the existing HFM metadata can serve as the common chart of accounts for consolidation purposes. Although you may not gain all the benefits of a complete rebuild, the project will be smaller and less disruptive because it does not affect those parts of the business not moving to the new ERP system.

When updating the current HFM application, you can still incorporate elements of the new ERP system by adding in new accounts and custom dimension members. You can also add some custom dimensions to the application if you are on Oracle enterprise performance management, or EPM, system release 11.1.2.2 or later.

Another benefit of this approach is that you don't need to reload the historical data; the data in the existing application will remain. As of the go-live date, the source of the data will change for those parts of the business moving to the ERP system; the parts of the business not included in the ERP project will continue to load data using the same processes as before. As more parts of the business move to the new ERP system, they will switch their data loads when they go live. When you reach the point where the majority of the business is on the new ERP system, you should reconsider the option to rebuild the HFM application.

The challenges of running ERP and HFM projects together

Running an HFM project in conjunction with an ERP project presents unique challenges. The first is resources. Typically, these are two large projects and the same resources will be required for both. From the HFM perspective, it will be frustrating that your resources are not available because they are working on the ERP project. However, keep in mind that the ERP application comes first. If it is not successful, it will not have data to send to the HFM application.

The second challenge is testing. You will get very limited data from the ERP software to test the HFM application. An ERP project will include user acceptance testing and various other tests. You should try to get a data load for HFM from all of these. That said, the chances are good that none of them will be a complete data set, no matter how hard you try to get one. Also, an ERP project has no parallel -- running all aspects of a business in parallel is not practical from a resource perspective. This is foreign to an HFM project, which always has a parallel. In this case, though the HFM project will also have to go live without a parallel. A best practice is to go live on the first month of a quarter, with the goal of getting all issues resolved by quarter-end.

The third challenge is the delays that inevitably come with an ERP project. Remember, these projects are very large and include the general ledger and many different subsystems like A/P, A/R and inventory. Configuring and testing these subsystems takes time. ERP applications are tightly integrated, so all elements have to be ready or none can go live. These delays are out of the HFM team's control, but they are a good thing from the perspective of the HFM project because they give you more time to build the application. As an added bonus after the two applications go live, the problems with the ERP project will almost always make the HFM project look good in comparison.

The HFM project plan should start the application design and build after the metadata in the ERP system is relatively stable. However, you should have discussions with the ERP project team upfront to ensure that any requirements for HFM are considered in their design. The ERP team will continue to add metadata throughout the project, so you will want to make sure the HFM team is notified of metadata changes to keep the two applications in sync. Tests of the ERP system will use many of the HFM resources, but you will have down time between the user acceptance tests, as well as the delays discussed above. Use this time to validate the historical data in HFM.

Next Steps

Learn about redesigning your Hyperion Financial Management consolidation

Oracle's enterprise resource planning system is headed for the sky with Quantas

This was last published in March 2015

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