Compliance Update: Hyperion's Position in Financial/BPM Market

Compliance Update

Mike Malwitz
Sr. Product Marketing Manager
Hyperion

The Financial/BPM Market
Hyperion 2x nearest competitor
2004 Financial / BPM Market Shares 2004 Worldwide Financial/BPM Revenues

HYSL 292.6
HYSL
21% ORCL 121

COGN 119
Note: 40%
SAP 97.2
ORCL Market Share
Other 9% SAS 64.3
in Financial
55% GEAC 61.88 Consolidations!
COGN
8%
SAP
7%

2004 Total Market: $1.4B
2004-2009 CAGR of 11.3%
Source: IDC, 2004
IDC counts software license and maintenance in their revenue estimates
IDC derives their numbers independently, without validation from Hyperion

Copyright © 2005, Hyperion. All rights reserved. P. 2

Corporate Performance Management
Gartner Magic Quadrant
The Magic Quadrant is copyrighted
2005 by Gartner, Inc. and is reused
with permission. The Magic Quadrant
is a graphical representation of a
marketplace at and for a specific
time period. It depicts Gartner's
analysis of how certain vendors
measure against criteria for that
marketplace, as defined by Gartner.
Gartner does not endorse any vendor,
product or service depicted in the
Magic Quadrant, and does not advise
technology users to select only
those vendors placed in the
"Leaders" quadrant. The Magic
Quadrant is intended solely as a
research tool, and is not meant to
be a specific guide to action.
Gartner disclaims all warranties,
express or implied, with respect to
this research, including any
warranties of merchantability or
fitness for a particular purpose.

Magic Quadrants for CPM Suites, 2005:
October, 2005; N Raynor, F Buytendijk, L
Geishecker


Hyperion is Recognized by
Analysts at IDC and AMR
“Hyperion has an excellent position and
vision into financial performance
management.”

Hyperion Vendor Profile, February 2003

“Hyperion retains its position (held since IDC
established the category in 1997) as the leading
analytic applications vendor by revenue…”

H. Morris, R. Blumstein, D. Vesset,
"Worldwide Total Analytic Applications Software Competitive Analysis,
2003: 2002 Shares and Current Outlook“. August 2003


Business Performance Management
Cycle
Strategy

Financial Modeling
Financial reporting

Benchmarking Sales planning

Customer profitability Procurement and
supplier analysis

Working capital management


Customer Example: Business Reporting
Systems, Process and People Linkage

Finance Performance Business
Level Impact

Change Agent • Focus on Critical Issues Value Added
Strategic Level Executive • Resource Allocation Actions
Scorecards • Corrective Actions
& Models

Business Partner • Data Analysis
Business • Decision Support
Tactical Level Reporting and Analysis
Information

• P&L, Balance Sheet Delivery
Scorekeeper • Transaction Efficiency
Local IT Systems
Operational Level • Fiscal Reporting Data

Core Business Processes

The Most Complete Solution
Offering

BUSINESS PERFORMANCE MANAGEMENT SOLUTIONS

Scorecarding and Dashboarding
BPM
APPLICATIONS Planning,
Consolidation Tailored
Modeling Budgeting and
and Reporting Applications
Forecasting

Performance Query and Enterprise Developer
Analytics
HYPERION Metrics Reporting Reporting Tools
BI PLATFORM
Core and Data Integration Services

LEGACY MDB DW ERP CRM


Agenda

Consolidation Accounting
Governance, Compliance and Business Performance
Management
– Analyst Viewpoints
– Business Challenges (SOX, COSO, etc.)
Financial Consolidation, Reporting and Compliance
— Features and Benefits



Accounting Cycle
Mechanics of the Close – subledgers, general ledgers,
consolidation and reporting
Management vs Statutory
Standard Setting Bodies
Recognition and Measurement
Consolidation and Reporting
— ARB51/IAS27: Consolidated Financial Statements and Intercompany
Eliminations
— FAS94/IAS27: Consolidation of Majority-Owned Subsidiaries
— FAS 8/FAS52/IAS21: Foreign Currency Transactions and Translations
— FAS95/IAS7: Statement of Cash Flows
— FAS131/IAS14: Disclosures about Segments of An Enterprise


In September, IBM in collaboration with the EIU
completed the global CFO survey data collection
with 889 CFOs and senior finance professionals

CFO Survey 2005 Firmographics
Distribution by Geography Distribution by Business Turnover Distribution by Sector
Less than $1B,
Asia Pacific, Public, 12% Comms, 14%
18%
23% Greater than
$10B, 31%

Americas, 44%
Industrial, 25% Distribution,
23%
$1B to 5B, 24%

EMEA, 33%
$5B to 10B, Financial
27% Services, 26%
Distribution by Title Distribution by Scope
Treasurer / Audit /
Sr. Business /
Other, 4% BU / Program
Area, 15%

Finance Mgr, 6%

CFO/Deputy
CFO/CRO/SVP, 40% Enterprise /
en'l Mgr, SSCs,
Country, 20% global, 47%
8%

Controller/Asst
Controller, 18%
Finance Region, 17%
Director/VP, 23%

Source: IBM Business Consulting Services, The Global CFO Survey 2005


Executive Summary
CFO Survey 2005 Summary

Finance is emerging from a period of foundation-building
Foundations are enabling the linkage of controls/risk,
performance management and business insight
Integration of information can catalyze the close alignment on
Finance’s focus and effectiveness
The agile Finance organization utilizes processes, tools,
technology and organization to balance business needs
Emerging model for Finance keeps the upside opportunity and
downside risk in balance to maximize returns


Overall Finance aspires to manage performance,
drive greater insight and value, strengthen
controls and meet fiduciary requirements

Finance’s Top Areas of Focus
Most Important Areas of Focus in Role as a Finance Professional
Percent of High Responses (Responses = 870)

Measuring / monitoring business Reflects the top priority
Managing
performance identified in IBM’s 2003
performance CFO study

Partnering with your organization to identify
and execute growth strategies Driving Aligns with the profitable
insight and growth agenda identified
Continuous process improvement / value in IBM’s 2004 CEO study
business improvement

Leading finance-related compliance
programs and strengthening the internal
control environment Managing
Reflects the current
controls and regulatory environment
Meeting fiduciary and statutory risk
requirements

0% 20% 40% 60% 80% 100%
Source: IBM Business Consulting Services, The Global CFO Survey 2005


Need for Performance Visibility
Regulatory Complex Earnings
Requirements Organizations Expectations
Reporting & Unreliable Plans & Pressure on
Controls Overhead Forecasts Profitability

Fragmented
Systems
High Cost of Information Access


Components of a Compliance Architecture

Sarbanes- IAS Basel II
Oxley CFR Part 11
EU DPD CPM
Reporting and Risk

Assert Process Controls
Business Process Management, Integration Broker, BAM

Financial CRM and Business
and Customer- Unit
ERP Facing Systems
Systems Systems

Classify, Analyze, Interpret
BI Infrastructure, Tools and Applications

Document and Archive
Records Management, Document Management, Knowledge Management,
Content Management and Storage
Identify, Audit, Secure and Protect
Identity and Access Management, Network Security and Business Continuity

Acronym Key
ERP = enterprise resource planning
Copyright © 2005, Hyperion. All rights reserved. EU DPD = European Union Data Protection Directive P. 14

PWC Whitepaper on
Spreadsheets and SOX
Change Control
Version Control
Access Control
Input Control
Security and Integrity of Data
Documentation
Development Lifecycle
Backups
Archiving
Logic Inspection
Segregation of Duties
Analytics
Bottom Line: Almost impossible to build a
compliant spreadsheet environment –
evaluate a purpose built application instead.
www.pwcglobal.com


What’s New: COSO2 ERM

The four objectives New with
categories - strategic, COSO2
operations, reporting and
compliance - are
represented by the vertical New
columns. Strategic with
objectives are new. COSO2
The eight components are New
represented by horizontal with
rows. Objective Setting, COSO2
Event ID and Risk
Response are new.
The entity and its
organizational units are
depicted by the third
dimension of the matrix.


““While identifying control deficiencies
and significant deficiencies
represents an important component of
management's assessment, the
overall focus of internal control
reporting should be on those items
that could result in material errors in
the financial statements.”
US Securities and Exchange Commission

Commission Statement on
Implementation of Internal Control
Reporting Requirements

May 16, 2005


““The internal control environment
extends to …the period-end financial
reporting process including the
preparation of both annual and
quarterly financial statements,
including controls over procedures
used to record recurring and
nonrecurring adjustments to the
financial statements (for example,
consolidating adjustments, report
combinations, and reclassifications).”
US Securities and Exchange Commission
PCAOB Auditing Standard No. 2
March 9, 2004


Global Issues

International Financial Reporting Standards
— Recognition and Measurement
— Consolidation and Reporting
— Transition Issues
— US-GAAP Harmonization
— Segment Reporting
— Impairment (Fair Value) analysis
— UK Operating and Financial Review (OFR)
Sustainable Development Reporting
Canadian Continuous Disclosure Obligations
— (aka “Bill 198” or “NI 51-02”)
— Canadian Version of Sarbanes-Oxley


IFRS Success Stories
WELLA
Flexibility of HFM was key to IFRS compliance at Wella AG
Dr Dietmar Scheja, who was Head of Corporate Financial Analysis at Wella AG
faced significant issues after the group had completed its IFRS
implementation.“We had separate consolidation models for management and
financial reporting. They were never completely in step and we had the added
burden of making sure that what we reported externally to shareholders in
IFRS agreed with what we were saying to management.”
The flexibility of HFM really became apparent when the Wella Group was taken
over by Procter and Gamble and was required to report under US GAAP as
well as IFRS and local GAAP. “At first we simply added US GAAP adjustment
members to the existing custom dimensions and put through the larger
adjustments at a consolidated level. But later we were able to push
responsibility for US GAAP adjustments down to the reporting,” says Dr
Scheja. “HFM was also vital in allowing us to reconcile results between US
GAAP and IFRS so that we could explain the differences”.“The most
outstanding benefit of HFM is its flexibility. We were able to accommodate US
GAAP when it was suddenly sprung on us and prepare profit forecasts in HFM
very quickly and relatively easily without incurring big consulting costs. This
really was a key benefit”.


IFRS Success Stories
FINANCIAL TIMES (Pearsons)
Centralised web based model gave Pearson Group plc visibility of IFRS
Pearson Group plc, the publishing giant which owns the Financial Times has
dual listings in the UK and the United States. As such, Andrew Midgley, Head
of Financial Reporting had to cope with complex multi-GAAP issues when
transitioning the group from UK GAAP to IFRS. “It was difficult at first because
there was considerable uncertainty around the application of standards which
were still subject to change,” says Midgley. An initial paper based exercise
quickly identified the types of IFRS adjustments that had to be handled at the
centre and those which could be posted by the reporting units. “There were
fewer adjustments at the reporting entity level than we had expected and they
tended to be relatively small. They mainly related to acquisitions, intangibles,
leases, and joint ventures,” says Midgley. “Adjustments at the centre were
bigger and more complex and included pensions, share option expense,
deferred tax and financial instruments.”
Given this relatively straightforward background, the group was quickly able to
establish a unified chart of accounts in HFM covering, UK GAAP, IFRS and US
GAAP. It was then a simple matter to post the adjustments against these
accounts as required.Segmental reporting was a challenge but the group was
already accustomed to the concept under US GAAP even though not all of the
detail is required to be published in the US.


Sarbanes-Oxley Background

Most significant legislation since
the Great Depression
11 major sections (or “Titles”)
— Public Audit
— Corporate Responsibility
— Financial Disclosures
— Brokerage Practices
— Penalties
Adoption by SEC is proceeding


IDC Compliance Chasm Excerpts
220 CFOs Surveyed


How Hyperion Addresses Key
Compliance Requirements
Sect. Requirement/Eff. Date Hyperion Solution
302 Quarterly certification of financial Cascading certification with FM Process
statements (2002) Management, Doc Attachments, Cell Text

404 Annual assessment of effectiveness of 1. FM - Close and Reporting Controls and
internal control and COSO Compliance Audit Trails
(Dec 2004)
2. Integration with Hyperion Technology and
GSI Partners: IBM Business Controls,
Axentis, Upstream, OpenPages
409 Rapid disclosure of material changes – Financial Management, Hyperion BI Platform
“Real Time” reporting (Mar 2004)

401 Pro-forma reconciliations Financial Management “What If” capabilities
Off-balance sheet trans. (2003)
SAS99 Clear audit trails from source to Upstream/HAL, FM Dimensions, Journals
10K¥10Q (2003) Module, Task/Data Audit

Accel. 10K in 75 days moving to 60 (2005) Financial Management – That’s what it’s all
Filings about!


Agenda

Governance, Compliance and Business Performance
Management
– Analyst Viewpoints
– Business Challenges (SOX, COSO, etc.)
Financial Consolidation, Reporting and Compliance
— Features and Benefits


Disconnected Silos of Information

XL Email

Word
ppt


Unifying Financial Information

Documentation


FM/SOX Presentations at Hyperion’s
Solutions 2005 User Conference
Migrating From Hyperion Enterprise to Financial Management at
Comcast: Christine Diantonio, Comcast & Tara Krause, Comcast
Achieving Sarbanes-Oxley and Continuous Improvement Objectives
Within the Corporate Reporting Cycle: Heather Wilson,
PricewaterhouseCoopers & Dean Curtin, PricewaterhouseCoopers
Meeting Sarbanes-Oxley Requirements With Hyperion HUB: Edward
Roske, interRel Consulting
Delivering Accountability Across the Enterprise With Financial
Management at TV Guide: Diane Furst, Gemstar-TV Guide
International
Optimizing Financial Reporting With Financial Management at Kansas
City Life Insurance: Rob Fisher, Kansas City Life Insurance & Jeff
Branton, MarketSphere
Meeting Sarbanes-Oxley Compliance and Beyond With Financial
Management at Royal AHold: Tim Wassman, Axentis


Hyperion Financial Management
Benefits
Accelerates Reporting Cycles and Reduces Costs
of Compliance

Shortens close-cycles to report
in a timely and accurate manner
Unifies financial and operational results
into “one version of the truth”
Provides complete audit trails and
process controls to reduce costs
of compliance
Provides detailed management
information for better decision making Tax/Treasury
Detailed Analysis
Automates processes so Finance staff Internal Reporting
can spend more time on analysis External Reporting
Product Line Profitability


Close Process…It’s Not Easy!
Local Regional Central

Monthly/
Quarterly Input/Load
Actual Results Approve
Submit
ERP/GL Validate Process
Publish
• Review Reports
Process
Monthly
• Approve
Forecast • Review
Input/Load Approve Approve
• Adjust
Submit • Approve Submit
Validate Reject • Consolidate
Reject • Adjust
• Intercompany SEC
• Consolidate Tax
• Currency Legal
Annual
Budget Treasury
Input/Load Approve
Management
Submit
Validate
Reject


Hyperion Financial Management
Features
Market-leading Financial Consolidation
and Reporting Application
Patented financial consolidation
and reporting features
Complete audit trails, workflow
and validations
“Smart Dimensionality”
Flexible "what if" scenario
management features
Powerful, reporting and analysis tools
Full integration with ERP and other
transaction systems
Easy to customize and extend
Web-architected


Financial Management
SOX-Specific Features
Audit Trail Segregation of Duties
— “G/L to 10Q” Audit Trial — Roles
— Task Audit — Classes
— Data Audit — Authentication
— System and Event Logs — Metadata security
— Intercompany Transactions filtering
User Interface Documentation
— Process Management — Cell Text and
— Control mechanism for data Document attachments
submission
— Signoff required Change Control
— Prevent Control Validations
enforced — Versioning of metadata
— Workspaces — Comparisons of
— Control how a user interacts with metadata updates
system (Basic vs Advanced)
— Provide controlled task flow User Monitoring
— Task Automation — Users on System
— Repeatable Processes


User Interface - Process
Management


Annotation
Indicator

Attachment of full MS
Word Commentary,
then Print In Hyperion
Reports


Hyperion Shared Services -
Metadata Compare


XBRL Output From Financial
Reporting: Available Now!

SAP

JDE

Oracle


Summary

Business Performance Management Has Major Role in
Compliance
Sarbanes-Oxley has had a profound impact on U.S. businesses
Hyperion has the right applications and tools to help
Hyperion customers are well equipped to handle Sarbanes-
Oxley, IFRS and any other regulations


Compliance Update: Hyperion's Position in Financial/BPM Market

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