Infosys’ blog on industry solutions, trends, business process transformation and global implementation in Oracle.

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October 25, 2013

Leading the Customer Service Commitments (Part-2)

Guest post by
Saurabh Dwivedi, Consultant, Infosys

 

In the last part, I have recalled how the lack of information with the service agent led him to overcommit which in turn brought down the service level commitments severely. Then I talked about the information gap which can be potentially plugged in by the CRM system. In continuation of that, in this part, I will try exploring the Siebel CRM system capabilities which can ensure that the customer service agent has access to complete information in their CRM systems and is also able to pass on the complete service requirements and commitments to the assigned technician.

To plug these gaps, CRM users shall be able to raise purchase order, maintain all types of products, manage complex pricing models including discounts, perform part availability check, do stock transfer, manage vendor information as well as route all the said service commitments to the assigned technician/mechanic immediately, doing all this in addendum to performing generic service activities like service request creation, scheduling and so on.

Employing Siebel CRM for achieving the Customer Service Excellence

Of the many existing CRM systems in the market, I am not sure if there would exist more robust system than Siebel CRM to build this linkage. It not only provides the exhaustive CRM capabilities like Service Request Management etc but also offers lot of out of box functionalities which can be leveraged to get the required operational information in the CRM system. Some of these capabilities include

  • Maintaining the vendor information in the CRM system including assets, buysites, paysites etc
  • Maintaining the products, dynamic pricing and discount matrices
  • Capabilities to raise purchase and return orders
  • Internal parts availability check as well as integration with 3rd party application to check the same
  • Ensuring tab on the shipments and track the status of orders
  • Receiving and consuming parts
  • Making payments for Vendor invoices and credit memos
  • Verify the Vendor audit ratings

Additionally to bring in more visibility and effectively connect the service and operations, we can design an embedded 360 view of the vendor in the Siebel CRM system. This tight linkage could ensure that customer service agents can quickly check the requested part availability with preferred supplier, compare costs, verify the shipment status of order, and accordingly commit to the customer. 

Building Vendor 360 Degree View

  • This vendor 360 view shall enable any CRM user to view the Level 0 information for Vendor and other related entities like Orders, Invoices/Credit Memos, and Parts etc.

 Saurabh_2_1.jpgWOW customer service

When all this single version of information, in a standalone system, is available to the customer service agent, there are very remote chances for organizations from deviating on service commitments. On the contrary, organizations shall be able to pass on the accrued benefits from operational and service excellence to the end customer leading to WOW customer service.

It will also lead to lower IT costs to the organization as all this will be maintained and managed in single system instead of managing different, disparate systems. What is your view?

Face of the CRM Apps (Part-2)

Guest post by
Richa Thakur, Senior Associate Consultant, Infosys

 

CRM landscape is an uneven terrain, with various players battling it out in the global markets. It is challenging for the organizations to differentiate their offerings from the competitors. Likewise, the customers feel lost in the wide array of options that are offered to them. We present the next two trends which we feel could be the differentiators in the organizational offerings.

Trend 2: Augmented Reality

We are living in the era of augmented reality. Augmented reality has varied applications in the Consumers, Business and Employees (B2C, B2B and B2E) space. For e.g. in the B2B space it could be used for Product Exhibitions or demonstrations, industrial usage of the equipment being guided on the mobile device, field repairs and many more.

Even the businesses can use the apps for their employees and can be collaborated with the organizations' knowledge initiative; wherein the details about their knowledge submissions in the repository could be listed as you walk past them or their skillsets. 

Trend 3: Business Intelligence

Not long ago analytics used to be key differentiator for the various organizations selling CRM applications. Nowadays, it has become an embedded part how organizations do business. Sales and Service Data is sliced and diced to aid in informed decision making.

Often the information is rolled up to the global level and gain the contextual intelligence. With the real time and the historical analytics the enterprises can go ahead with their adaptive Business Planning. CRM Apps are often embedded with various functional area specific analytics linked directly to the key business processes which impact the business operations.

Businesses want one comprehensive solution for their employees whether it is accessing the daily sales report or entering customer specific data. They are not interested getting into the hassle of having separate systems doing standalone tasks to increase their costs.

Trend 4: Increased Mobility

In the mobility CRM apps market space, not one vendor will be dominating the market space but there will multiple vendors battling it out. Most of them would often specialize in their niche markets chosen at a horizontal level or at the industry level. IT Consumerization has given birth to a new phenomena's like "Bring your Own Device (BYOD)" User Experience and they are picking up pace are seen as a strong boost to mobile CRM apps which would in turn boost the sales productivity. Organizations have to consider "Mobility" as cannot be separated aspect from CRM Apps.

Note: I like to thank Samir Kumar Samal (Technology Architect, Infosys) and Poonam Gujral Nagra (Consultant, Infosys) for their inputs in this blog.

October 23, 2013

Cloud Vs On Premise - Where do you go? Part 3


In continuation to my previous blogs Cloud Vs On Premise Where do you go? Part 1  Part 2, we will be weighing in on the critical factors the Customer should look for before taking the plunge.

After having understood the pros and cons of Cloud Vs On-Premise applications, the critical factors that Customers should look out for in their decision making are

  • What suits my Business
  • Data Security
  • Cost

 

What suits my Business?
An On-Premise application is suitable for large Businesses who wants to have a dedicated data center to cater to their Enterprise needs and also flexible enough to do customizations on top of it. Since the hardware is restricted to the company usage, it is also suitable for Organizations with multiple applications and complex workloads. The drawback here is with regard to expanding the Server capabilities on an On-Premise system when there is a need to expand the Business capabilities.
Compared to this, Cloud applications would be scalable according to your varied business demands. But the control over data would be limited as it would be maintained by the Vendor or a 3rd party. On the Public Cloud the Customers data storage resources would be shared with others in the provider's network, this would not be the case in a Private Cloud though.

 

Data Security
Data security would be lesser on the Cloud as there is a dependency on the 3rd party who is maintaining this, it needs to be ensured that their security certificates are up to standard. The Cloud data may also be deployed on multiple locations managed by the 3rd party and the security aspect for each location need to be looked into.
The On-Premise data is available on the local network and this ensures that only Users with company approved credentials are able to login to it. The Cloud data being on the Internet is more prone to being interfered upon by external sources. There would be multiple Internet entry and exit points that need to be sanitized for security.


Cost
Cloud is much suited for smaller corporations who would not have the resources to do a large upfront investment initially to start their business. On-Premise applications will require an initial investment to deploy, build and maintain the infrastructure required on the Customer location.
The time required for implementation is also quicker for Cloud applications as there is no dependency here with the Physical Infrastructure. The licenses to start using the software would be available immediately after the software is purchased form the Vendor.
Cost Benefits - A typical Cloud implementation can provide savings up to 30% in IT resources compared with an On Premise implementation. A 2009 Booz Allen Hamilton (a leading American technology consulting firm) study concluded that a cloud computing approach could save 50 to 67% of the lifecycle cost for a 1000 server deployment.

Future Outlook
The results from the 2013 Future of Cloud Computing survey reveals some interesting facts on the companies vying up for cloud adoption. Some of the Business Cloud applications like File Sharing, Business Productivity, CRM/Marketing and Social Business/Collaboration are in use by more than half of all organizations that were surveyed. But the IT Cloud application usage in these companies are much lower comparatively. However over the next year the fastest areas of growth in Cloud applications will be in the IT areas like Big Data, Mobile, Systems Management, Backup/DR/BC, Helpdesk and Security. Both Business and IT see greater migration to the Cloud bringing equal or better Total Cost of Ownership (TCO) to the organization.

 

I would like to conclude my blog series with the following personal viewpoint. While there are some limitations with Cloud Applications compared with On-Premise applications, Customers would be better suited in deploying their applications on the Cloud or moving their current On-Premise applications to the Cloud. This would give them better ROI in the future and would also help them in scaling up their resources/applications easier to compete in the market.

Cloud Vs On Premise - Where do you go? Part 2

As a continuation to my previous blog Cloud Vs On Premise - Where do you go? Part 1, in the second part we take a closer look at the various advantages being offered by the Cloud and On Premise solutions

Advantages of Cloud
Cloud implementation is ideal for Clients with limited capital assets, variable work force needs or limited IT resources.

Advantages of On-Premise
On-Premise implementation is ideal for Clients who need complete ownership and control over deployment and maintenance of applications.

A more detailed look into the various advantages that are being offered is given below.

On the Cloud
 
1. Less Overhead
2. Robust and Secure Hosting
3. Easier and less expensive to upgrade
4. Rapid Elasticity
5. Smaller Upfront Investment
6. Faster ROI
7. Quick Deployment

On Premise

1. You control Infrastructure
2. Your IT Shop
3. You maintain everything
4. You can customize on your own
5. You own Software in perpetuity

In the third part of the blog, we will be taking a look into the critical factors the Customer should look for before taking the plunge.

Leading the Customer Service Commitments (Part-1)

Guest post by
Saurabh Dwivedi, Consultant, Infosys

 

One fine morning, I got a call from car service center reminding me of due car service.  I was aware of the due service but appreciated this initiative. I checked with the service agent for the availability of dashboard glove box which my 3 year old champ has accidentally pulled off. The line went quite for some time and then service agent responded that the parts are available and I can visit for service and also get it replaced same time.

Expecting to get the part fixed along with the due service, I got an appointment for weekend, travelled to another corner of the city and finally landed up at the center. I was received well but to my shock and surprise when I checked for the part, the assigned technician updated that the particular part is out of stock. The whole customer experience journey came crashing down upon hearing this. Since, I had travelled to another corner of city, I didn't have many options. I got my service done and returned with bad experience.

The Real Culprit

All of us may be in some point of time would have landed in such situations when we would have been overcommitted or under committed by the service agents/field technicians about the service schedules, stock availability, part choices, delivery schedules, etc.

In such interactions, we may identify service agent or technician as a culprit; however in reality the culprit is the lack of updated information with the agent to commit accurately and also the inability to pass on the same service commitments to the assigned field technician. At least when the service was scheduled, the technician could have checked the availability and updated in advance.

Losing the Grip

These days organizations spend much effort to achieve customer service excellence however in process they tend to forget, that to provide service excellence, apart from other imperatives, they also need to have the tight linkage of information flowing from procurement/inventory end to the customer service agent and ensure that the field technician has all the logistics to fulfill the service commitments.

To service a customer up to his expectations or beyond, it is imperative for service agents on the call to have the access to the updated operational information from vendors or inventory locations to brief the customers about the parts availability, discounts, offers, and accordingly schedule the site/technician visits. It is also must for the organizations to ensure that service committed by the agent shall flow to the field technician to avoid any disconnect at the time of service delivery.

Bridging the Gap

The big challenge here could be for a CRM system to bridge this gap and ensure adherence to service commitments. In the next series, I will try exploring the features of a Siebel CRM, a proven system for its service capabilities. We will study the vanilla features, which can be leveraged to lead the service commitments of an organization.

October 22, 2013

Face of the CRM Apps (Part-1)

Guest post by
Poonam Gujral Nagra, Consultant, Infosys

 

Surpassing the Cut throat competition and keeping pace with innovative CRM trends all lead to a common point of bonding with the customers like never before by gathering information about the customers visualization for Service Reliability, Usage, Enhancement and Scalability. The next generations CRM Applications will change the way enterprise do business. The organizations are trying to decode the future of the next gen CRM Applications.

We have identified five trends in CRM apps space through which the enterprises can win more customers and effectively manage the relationship with the existing customers.

CRM Applications have broken the glass ceiling between the customer and enterprises, hence enabling them to capture customer thoughts more effectively like who they are, what they believe in and what and how they want. This convergence of trends has forever changed organization's strategies for CRM globally. The world is moving towards CRM Applications which enables organizations to effectively develop and manage the way customers want to be served. It offers a much more customer centric effective and efficient way of conducting business.

Due to this the enterprises are bombarded with a volley of decision questions which are to be taken in order to make the right CRM App for the right customer. Below mentioned are a few key considerations to be clearly identified in order to design the correct fit solution for the customers.

 Samir Samal 1.jpgThe customers are becoming demanding more than ever and with these above decision questions the organizations are having tough times to decide which path to take. Therefore, we have identified few trends which will be engulfing the CRM market space in the coming future.

Trend 1: On Demand

The On Demand applications are extensible and easily customizable because of their service oriented and multitenant architecture in most of the cases. The On Demand CRM Solutions have the capabilities to drive the organizational functions like Sales, Service and Marketing etc. They are enabled to manage the cross channel experience which enterprises offer to their customers. Often these On Demand CRM solutions are seen in the broad light of scalability as these decisions on extending the horizons of CRM applications by adding another module don't give nightmares to the CIOs. On Demand CRM offerings helps the enterprises to increase sales, drive marketing, loyalty, and service effectiveness. These solutions reduce cost and risk, enhances the delivered business value, and increases the scalability. The medium of delivery for CRM are shifting to the cloud based services. "Renting out" computing capacity works as an advantage for the organizations to manage sky rocketing capital expenditures.

Note: I would like to thank Richa Thakur (Senior Associate Consultant, Infosys) and Samir Kumar Samal (Technology Architect, Infosys) for their valuable inputs in writing this blog.

October 17, 2013

A smart solution to safe travel: Is connected vehicle an answer? (Part-2)

Guest post by
Ashish Verma, Senior Consultant, Infosys

 

Picking up from my previous blog on "Safe Travel" where we discussed about possible ways to enable safe travel and a possible solution. Now we know our expectations from an intelligent mode of travel. In nutshell, four types of data are important for safe travel.

  • Driver's Data
  • Infrastructure data
  • Vehicle data
  • Historical data

Infrastructure data is not limited to only establishments like restaurants, hotels, gas stations and rest rooms but also includes data related to dangerous curves, turns, high accident prone cross sections & area and permissible speed on various roads & tracks. Safe travel requires evolution of intelligent vehicle devices which can sense and analyze vehicle parameters like speed, RPM and coolant level etc.

In my previous blog we also talked about providing useful alerts to the driver so that he can take an informed decision. Here, the main challenge is for the vehicle to process and analyze data from various sources and then arriving on an intelligent conclusion.

"Connected Vehicle" (CV) is one such technology helping to reduce the accident rates and to increase the safety level of passengers by providing prognostics messages to the driver on the vehicle dashboard. It takes advantage of telematics and intelligent database to identify high risk potential accident scenario based on current and historical data and immediately sends information to the driver.  This can further enable data communication between nearby vehicles. This helps in making hazardous roads & tracks less vulnerable to accidents.

For such solutions to be more fulfilling, we need ergonomics sensors in the vehicle to identify the driver's stress level apart from other vehicle related critical parameters and to inform the driver about his physical & mental status. Accordingly preventive measures can be initiated to minimize chance of any collision.  Most of the vehicle manufactures (Audi, Mercedes, Toyota, BMW, and Volvo etc.) are partnering with technology vendors like Nokia, Apple, Microsoft and Google to come up with in-built connected vehicle platform to make driving an even exciting affair. Infosys has also developed competency to provide an integrated connected vehicle solution right from the content delivery platform to the telematics embedded software and up to the enterprise suite of applications.

Certainly future is to equip all modern vehicles with connected vehicle technology for safe travel. But, can we surely say that connected vehicle is the ultimate solution for safe travel? In good sense, somewhat, but we should also see its flipside before making any judgment. Providing alert messages to the driver when vehicle is in motion may lead to driver's distraction. Isn't it? It is similar to losing one's concentration when attending a call on a mobile phone while driving. Receiving multiple messages on dashboard of a vehicle can become a cause of accident instead of a safety signal. Also when a system identifies a high risk accident scenario, can the vehicle control system shift from manual to automatic or vice-versa so that it takes the safest path to avoid collision?

Going forward we have to see how technologies such as Vehicle to Vehicle (V2V), Vehicle to Infrastructure (V2I) and Google Car evolve to overcome these limitations.

I am leaving it to readers to judge if the connected vehicle is the right answer to overcome above challenges? Or is the connected vehicle a partial answer?

October 16, 2013

A smart solution to safe travel: Is connected vehicle an answer? (Part-1)

Guest post by
Ashish Verma, Senior Consultant, Infosys

 

I heard this news a few days ago about a train accident in Spain and the cause of it was its high speed. Train was travelling at 190km/hour instead of 80km/hour. The first thought that hit my mind if there was a way to avoid it. Was there a way to signal or alert the driver that the train has exceeded the permissible speed limit? Could we have reduced the speed of the train when that deadly turn derailed it? This is just one example, every day we keep hearing about such accidents around us. And what happens after such accidents? An enquiry commission is appointed which ultimately links the accident with one of the possible causes like over-speeding, signal violation, driving under intoxication, negligence etc. But do such commissions work with authorities to ensure that such mishaps will not be repeated in future or how travel can be made safe for all?

These questions are not limited only to train travel but are pertinent to any mode of travel like road, rail and air. With increasing traffic and limited transport infrastructure, it has become vital to ensure safe travel for all. Chances of occurrence of accidents such as above could have drastically reduced, had the driver been informed in time about the approaching dangerous curve and he had reduced the speed to permissible limit. Given the advances in information technology, shouldn't our travel mode be safer and more comfortable?

The society at large expects a technology driven solution to further reduce the occurrence of such accidents. However before talking about any solution, let me mention some of the key requirements which can make our travel safe. Readers of the blog are welcome to further enhance this list.

  • Driver is alert all the time while driving
  • Driver identifies road or rail track conditions coming ahead and accordingly controls his driving speed and takes extra precautions for passenger safety
  • Driver is informed about unsafe road conditions and provided with an alternate route
  • Driver should be alerted in advance about any potential fault in his vehicle to avoid any en route breakdown 
  • Alert messages to be delivered to the vehicle driver that are not related only to his own vehicle parameters but also that of other vehicles in the vicinity
  • Audio or visual communication about accident prone areas and permissible speed limits are vital for driver

Most of the above key requirements can be supported by connected vehicle (CV) technology. This technology helps in sensing & capturing vehicle related critical parameters from inbuilt vehicle components. It can generate useful alerts and show massages on vehicle dashboard using smart electronic device fitted on vehicle dashboard. It has capability to enable vehicle to vehicle and vehicle to infrastructure communication.

The National Highway Traffic Safety Administration, USA is extensively exploring connected vehicle technology and running its pilot project with nearly 3000 smart cars to evaluate its pros and cons on safety parameters.

I request readers to explore and provide their comments on the use of CV technology for safe travel.  I will also share my point of view in my next blog on this subject.

October 15, 2013

Managed Cloud Services for Siebel CRM

Guest post by
Manmeet Mehta, Technology Lead, Infosys

 

Change is the law of nature .During hot summer when temperature break all the records, people look up in the sky to see if they can see some Clouds, that would provide them some relief from this heat and welcome the spring season open heartedly.  Organizations are also looking for respite from the heat of the servers they have to maintain. And Cloud computing have come as a respite for them. The latest trend of moving from On Premise systems to On Cloud is a great example of Green IT.  It suffices use of computing resources in an efficient, effective and economic way. Cloud computing usage in the enterprise is growing rapidly, all contributing to winning business for organizations.

Cloud computing is bringing the consumers and enterprises closer for information sharing and delivery. It is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources or services via Software(Saas), Platform(Paas) and Infrastructure(Iaas), that can be rapidly provisioned and released with minimal manual intervention/efforts.

Cloud Computing has already made its debut. Actually each one of us has been using cloud computing every day, to send messages, save photographs/videos, watch online movies. Now, the challenge of cloud computing even brightens further. CRM on Cloud has become today's necessity.  Many new ways by which customers want to interact with you have recently come in, thereby improving customer relations just over cloud. Salesforce was already a leader in cloud market, but now even Siebel CRM is making an attempt to be on cloud. Although, there were times when focused was moved from Siebel CRM to other Cloud based CRM apps. But with a ray of hope, Oracle Siebel decided to diversify and step up to Cloud based Siebel CRM.  Amazon AWS, Rackware many more went ahead and took up this challenge to host Siebel On premise to Cloud. They offered Cloud Sites, Cloud Storage, Cloud Servers, Load balancers, databases, backups and monitoring as part of their services.  Let us take a step ahead and have a SPRING GREEN Revolution.

"We infoscians are prepared for this change."  Would it be a success?  Let's wait and watch.

October 10, 2013

How best to model profitability for financial institutions? (Part-3)

Guest post by
Vandana Vasudev Nayak, Consultant, Infosys

 

Financial institutions, today, look for enterprise "tool" that captures cost study results, manages cost drivers and analysis without manual intervention that can be leveraged for advanced analytics and Portfolio Management and Strategic Planning.

In the previous part, a comparative analysis of two applications in the space of profitability management from Oracle - Hyperion Profitability Cost Management (HPCM) and Oracle Financial Services Profitability Management (OFSPM) were evaluated on business criteria. In this part, the focus is to evaluate the products for key usage criteria.

Area

Hyperion Profitability Cost Management

Oracle Financial Services  Profitability Management

Dimensionality

HPCM is a right solution to meet the needs of tracing costs back to products, departments or activities using dimension management features of Hyperion Planning

Business needs of profitability analysis at financial and management level across products, customers, organization units, channels can be easily fulfilled using OFSPM application.

Transaction volume

When business need is restricted to profitability calculations for lesser volumes like segment analysis HPCM fits well.

Financial institutions which choose to calculate profitability at instrument level for multiple products need solutions with processing capability to handle millions of transactions. OFSPM is the answer to their problem, also extendable with Exadata to improve performance.

Ease of Use

HPCM is suggested solution where dynamic allocations need to be designed in a modeling environment. It has Out-of-box functionality for Multi-stage, Multi-step allocation, including reciprocal allocations. Calculation scripts are automatically generated. It has certain constraints in terms of model building.

OFSPM is suggested solution in terms of flexibility as most of the allocations are driven by rules easily configurable from user friendly user interface. OFSPM is driven by strong allocation engine, which can be run using the allocation rules. Also, provides the flexibility to easily extend profitability analysis based on transfer pricing results.

Out of box reporting

HPCM is has limited out of the box reporting , it is more of plug and play tool with features of ad hoc analysis and scenario modelling.

Internal and external reporting for management, efficiency, profit and cost analysis can be easily met using the out of the box capability of OFSPM Analytics. For example, Balance Sheet reports, FTP Reports, Income Statement, Key Trends and Performance Measures

 

Nevertheless, "What's best to model?" in terms of technology is best answered based on the type of analysis that the financial institution is looking at - cost revenue, net interest margin or scenario analysis, with due consideration to processing time requirements and revenue for money invested on technology. Profitability model which are closely knit and have additional data needs from other applications, create the functional dependency of the data flow which acts a driving factor for decision making. If the business needs encompass both cost and profitability analysis on a risk adjusted basis, financial institutions can look at getting best of both the worlds from these two applications.

October 7, 2013

Using File Based Loader to Extract Maximum Value

Guest post by
Prashant Sharma, Project Manager, Infosys

 

With the Cloud buzz picking pace, lot of organizations are moving to Software-as-a-Service (SaaS) based applications. ERP implementations that would on an average take close to a year, are now being executed in few weeks. Data conversion, as always, is one of the key activities in these implementation projects. Earlier, technical and functional teams used to spend many person months developing data conversion programs and utilities, as part of the project life cycle. This is not the case anymore with Oracle Fusion SaaS implementations. File Based Loader (FBL) is a very effective data upload tool, which guides customers in their implementation journey to Oracle Fusion applications.

How does the magic of FBL work?

FBL can be used to import data from an external system into Oracle Fusion HCM SaaS, ensuring that the data satisfies Fusion' business rules. It simplifies the entire data conversion exercise as data gets loaded using 'predefined delimited flat file(s)' for various business objects. It uses a Webservice to move the (.zip) file containing the pipe delimited data files, to stage directory via SFTP. The (.dat) files are then unzipped by a Python script. The SQL loader then reads the data from these (.dat) files and loads this data into staging tables. A dedicated work area in the user interface allows implementers to manage batches of data loads including invoking the data load, monitoring the processes as they run and reviewing and correcting errors after the loading is completed. While loading the data into Oracle Fusion tables, all business rules and validations are triggered to ensure data integrity. FBL allows multiple source systems to import data into Fusion HCM. This tool can be used for both- bulk loads, initially during the implementation phase, and for incremental loads going forward. FBL leverages PLSQL BULK/caching capabilities and delivers impressive performance.

Infosys leveraged FBL to load the entire person and work relationship data for a large and multi country retailer in the Middle East region for Oracle Talent Cloud Implementation, making it the first Oracle Fusion HCM Implementation project worldwide to go-live using the File Based Loader. Infosys has also developed a seamless and complete co-existence solution for Oracle Fusion Cloud and On-Premise Oracle Applications Unlimited, like PeopleSoft and EBS, as demonstrated in the image below. 

 Prashant 1.jpg

Note: I thank Upendra Raja Rao (Principal Consultant, Infosys) for providing inputs for this blog.

How best to model profitability for financial institutions? (Part-2)

Guest post by
Vandana Vasudev Nayak, Consultant, Infosys

 

In continuation of our view on profitability measurement being one of the critical activities for Financial Institution to survive in today's volatile environment, let's focus on technology to enable better profitability management. 

Profitability modeling requirements of institutions for typical usage is delivered by out of box products like Oracle, SunGard etc. Within Oracle suite itself there are two solutions namely Oracle Financial Services Profitability Management (OFSPM) and Hyperion Profitability Cost Management (HPCM) providing solution on profitability modeling but in different context.  For non-financial institution, HPCM is only option but for financial institution both of them have a play in overall client architecture. With due consideration, investment in technology is a strategic move and is driven by multiple factors and cannot be an isolated decision.

In this part, two of the available profitability applications, Oracle Hyperion Profitability and Cost Management (HPCM) with Oracle Financial Services Profitability Management (OFSPM) have been evaluated for needs of the financial institutions considering the business criteria.

Area

Hyperion Profitability Cost Management

Oracle Financial Services Profitability Management

Basis for analysis

HPCM is the suggested solution where the business need is to allocate costs based on consumption and activity based analysis. .

OFSPM is the best suited application for Risk Based profitability analysis with emphasis on net interest margin analysis sharing common data model which allows leveraging on the funds transfer pricing results for allocations.

Approach for profitability modelling

When the approach is based on Cost Development (Standard Profitability model) and Cost and Revenue (Detailed Profitability Model) supported by scenario analysis, HPCM is the recommended solution.

When the profitability calculations are based on Risk-Adjusted Performance Management (RAPM) approach, OFSPM is the right solution. It supports both Management (Ledger Level) and Financial Accounting (Customer Account Level) models.

Granularity of data

When the granularity of data is more inclined to segment level, HPCM is suitable as profitability modelling is supported using multi-level allocations.

OFSPM is advocated solution on data processing front as it provides the flexibility to model and allocate data at both financial (instrument level processing) catering to external regulatory requirements and management (ledger) data which focus on customer, risk adjusted basis of profitability analysis across various dimensions.

Profit Drivers

When the business requirement is to look for specific driver measures like volume and rates with associated formulae, HPCM provides the right framework to build the required measures applicable to both cost and revenue values, and reusable with many values.

When the focus of the financial institutions is on key performance measures including Return on Total Assets, Return on Capital Employed, RAROC and Capital Analysis, OFSPM is the best suited solution. It supports of out of the box profit drivers for financial and management level profit analysis with in-built calculations.

In part three, the comparative analysis will concentrate more on the technical aspects of the two products which will support better profitability management process.

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