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Ad hoc Judgment to Comprehensive Fact Based Decision - OFSAA Profitability Management (Part 2)

Guest Post by
Imran Aziz, Senior Associate Consultant, Infosys

Having discussed the importance of profitability management for a financial institution and role of OFSAA Profitability Management (PM) in delivering the same in part 1. Now let us dwell little deeper into some of the vital features of OFSAA Profitability Management in this Part 2 of the two part blog series.

Let's begin to explore it by adopting a challenge. Assume a financial institution is looking forward to extract a value from aggregated source and perform arithmetic calculation and factor operations on it to distribute the balance to number of targets at one go.

Such operation or various types of operation can be performed in OFSAA PM with great flexibility using allocation rules. An allocation rule allows you to choose data from source and perform calculation on it using a driver to achieve the desired output. We will discuss about allocation rules in detail in the coming paragraph before that lets discuss on certain requisites. Looking data from various dimensions i.e. customer, product, channel, geography etc. gives a broader picture and a different insight. This need of the institution is fulfilled through OFSAA PM's seeded key processing dimensions like financial element, organization unit, GL etc. and its ability to accept user defined standard dimension. The combination of seeded and custom defined dimensions gives the user wider scope to define and analyze data from different angle. Design of custom defined Management Ledger is another important aspect that expands the room to play around with data. To appreciate its importance let us not forget that Financial Element that forms one of the important element in classifying data is not typically found in any General Ledger but in OFSAA PMs management ledger.

As mentioned earlier a feature that distinguishes OFSAA PM from its peer EPM application is its allocation rules. Most Allocation rules either distribute or aggregate balances using driver data. There are various types of allocations based on driver input like constant, leaf, static and dynamic. Given the scope of discussion in this forum we will try to explore few like dynamic and static allocation. A major difference between dynamic driver and static driver allocation is that the dynamic driver distributes data to the output by calculating driver on the run that gives real time picture whereas in static the driver data is fixed; each has its own usage in business world and preferred to be used based on client requirement. An example would be distributing ATM transaction cost amongst various centers based on number of ATM transactions (driver) that is carried out. The Dynamic allocation also has an advanced function known as distribution type against all other allocation types. Distribution type expands the scope of distribution in which the cost is to be bifurcated like for e.g. you would want to distribute an ATM transaction expenses to center A,B and C that has number of transaction as 100,400, 500. So using percent distribution method you could allocate 10%, 40% and 50% to each center or you would go with uniform distribution method if you want to distribute equal share of cost i.e. 33.33% across 3 centers.

Apart from some of the standard features discussed herein, OFSAA PM also has the ability to sync with some of the non-family member like Hyperion Essbase and produce advance multi-dimensional reporting using Profitability Business Intelligence (PFT BI). To recapitulate, custom defined dimensions, flexibility to play around with different types of allocation and its ability to harmonize with other applications makes OFSAA PM a comprehensive solution for decision making.

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