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Building Allocation Solutions in the General Ledger vs Oracle Cloud PCM

Published May 24 2022
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In the previous blog in this series, we looked at why Oracle Cloud PCM has clear advantages as an allocation solution when compared to Excel-based solutions. Most clients will eventually recognize the need to move away from Excel-based solutions into a controlled and robust solution; unfortunately, rather than investing in a purpose-built allocation solution, they often choose what seems to be the next logical home for the allocations:  the General Ledger.

On the surface, migrating allocations to the General Ledger makes sense, especially if those allocations involve Shared Service Costing or Intercompany Billing. After all, the necessary fields in those use-cases should all be available in the General Ledger and it would eliminate the need for the creation of journals posted in the General Ledger, or at least it should.

As the allocation process matures over time, and as the users experience the downsides of utilizing the General Ledger as the allocation solution, the reality starts to set in. The General Ledger can perform allocations, but it should not be your allocation solution. Rather than focusing purely on the negatives of using the General Ledger as your allocation solution, let us focus on the positive and discuss some of the major benefits of performing your allocations in PCM rather than the General Ledger.


As every client has different allocation requirements, the list of benefits for your organization could be significantly larger.

Business User-Focused

Utilizing the General Ledger as the allocation solution involves the development of calculation scripts. These scripts are not business user-focused, and they require specific training to compile and debug. Furthermore, as it is the General Ledger, business users rarely have access to be able to update these scripts as the business changes and adapts its allocation solution to the business environment.

Defining allocation logic in Oracle Cloud PCM is completely driven by the User Interface. Users do not need to learn additional programming languages to maintain the allocation rules. Furthermore, as Oracle PCM is not part of the Ledger, the maintenance, updating, and executing of the allocation methodologies do not impact the General Ledger until the user is confident in the output. This approach not only enhances the flexibility of the solution, but it also helps limit mistakes and costly loss of time.

Purpose Built Dimensionality

Performing allocations within the General Ledger limits you to the fields that are available within the Ledger. Often additional fields (dimensions) are required to make allocations more transparent (such as CostPools), or even useful. With the adding of the driver and other allocation, specific Accounts may not be possible within the General Ledger which limits the capability of the allocations and hampers transparency.

Oracle Cloud PCM allows clients to configure the dimensionality for their specific use case, and this dimensionality can be maintained external to the General Ledger. In this way, Oracle Cloud PCM can be thought of as an allocation sub-ledger to the General Ledger, containing additional detail into the allocation results which are fed back into the General Ledger.

Reduced Manual Tasks While Increasing Traceability and Transparency

When executing allocations in the General Ledger, allocation models are often maintained externally and feed an allocation rate into the General Ledger, which then is used in the allocation process. This approach significantly hampers the traceability and visibility of allocations as any in-depth analysis potentially must take place in multiple offline models.

Oracle Cloud PCM can be a holistic allocation solution where those offline models that are producing the allocation rates can be implemented within the solution itself, which gives significantly reduced manual tasks surrounding the allocation process and enhances traceability and transparency in the allocation process.

Accommodation for Varying Management Cycles and What-if Analysis

Due to the nature of General Ledgers, allocation management cycles are often limited to Actuals only with limited or no what-if capability. This often results in Forecast, Plan, and What-If allocation processes being maintained externally to the General Ledger, which creates a duplication of effort.

Central to Oracle Cloud PCM is the concept of the Point of View (POV) which allows users to load data, configure rules, execute those rules and report on a specific combination of Year, Period, Scenario, or Version. This means that we can load data, edit rules, and execute our calculations for Actuals without impacting our already calculated Budget. Likewise, we can spin off multiple What-If Versions that allow us to assess the impact of various financial source pools, driver data, or even rule updates without impacting any other POV. Truly powerful functionality in the world we live in today!

Enhanced Data Integration

General Ledgers often lack the required integrations to sufficiently support the allocation process. For all but the most simplistic allocation solutions, multiple sources of information must be integrated into the process. If the General Ledger is the core of our allocation solution, the approach is all too often to have manual offline processes that consolidate all these sources manually and then perform various offline calculations prior to the feed into the ledger.

As Oracle Cloud PCM is part of the Oracle Cloud Enterprise Licensing, Oracle Cloud PCM can utilize the full capabilities of Oracle Cloud EPM and all related integration options. This eliminates the need for multiple offline processes, streamlines the process, places control and auditing capabilities, and ultimately creates confidence in the output of the allocation solution.

Rapid Response to Change

Allocation solutions that are built within the General Ledger are restricted in their ability to respond to change. As we mentioned before, business users cannot change allocation methodology within the General Ledger without going through the involvement of skilled personnel and extensive testing. Although the need to control and audit changes to the allocation methodology is important, over-restricting the ability of the organization to respond to change can lead to an inefficient allocation solution and even regulatory trouble.

Utilizing Oracle Cloud PCM as an allocation solution (in this sense a sub-ledger) allows for advanced what-if capabilities and a significantly greater ability to respond to changes within the business. Business Users can anticipate the required changes to their model well before they are required and can then take them through the proper control and audits prior to those results making it to the General Ledger.

Enhanced Reporting

Due to the limitation on the General Ledger fields, the reliance on allocation rates and the limitations to transparency and traceability of the post-allocated reporting from General Ledger is significantly more limited than Oracle Cloud PCM.

Oracle Cloud PCM is bundled with Reporting functionality, common across Oracle Cloud EPM, and can also provide data easily to downstream applications. In addition, the ability of PCM to incorporate additional management cycles allows for variance analysis across the different cycles (Actual vs Plan, etc). Finally, Oracle Cloud PCM can contain additional reporting and KPIs, which could not be included in the Ledger.


The General Ledger can perform allocations, but just because a tool can do something doesn’t necessarily mean it’s the best tool for the job. This is the situation quite frequently with utilizing the General Ledger as our allocation solution, which may initially seem like a logical evolution of the allocation solution because of an inflexible, manually intensive, and ineffective reporting solution.

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