Our Life Sciences, Pharma, and Medical Tech clients are in some of the most innovative and growing areas in our economy. But this growth comes with an intensity to ensure you pick and prioritize the right investments to invest in future success.
You need to create an agile and nimble process where your entrepreneurial business leaders have the capability to create, collaborate, and incubate their investment ideas. Ideas like new products, services, manufacturing, training, marketing, facilities, and IT investments. As ideas grow into formal investment proposals, the organization needs to harness this entrepreneurial energy and create a connected process to go from investment idea, prioritization, and project execution in one place. You need a connected planning process that can centralize investment ideas, roadmaps, and portfolios while managing the overall approval, prioritization, and execution.
Alithya uses the Oracle Enterprise Performance Management (EPM) Cloud to combine financial forecasting, demand management, initiative funding, and operating impact analysis to create a culture of connected portfolio planning from nurture, prioritization, financial forecast impacts, long-range impacts, and investment execution.
Alithya’s Life Sciences Investment Portfolio Lifecycle:
STEP 1: NURTURING A PORTFOLIO OF POTENTIAL INVESTMENTS
You need to create an atmosphere where leaders think strategically about the types of investments, initiatives, and projects they would like to make in the near, medium, and long term. You should enable your leaders to create investment roadmaps for their functions including, initiatives such as investments in new research, new products, marketing, manufacturing, and corporate functions like IT.
Many of your leaders are already doing this today but in isolated spreadsheets. The organization can benefit by centralizing the “dreaming” into a portfolio management process and connecting them to strategic goals. If you can do this, the organization benefits by increasing the visibility and collaboration around new investment ideas.
We use Oracle EPM Cloud and Alithya’s Capital Portfolio Planning solution to enable portfolio management. Each leader gets their own investment sandbox. Your leaders collect and develop their investment ideas in their sandboxes and can iteratively revise & evolve their thoughts.
For each potential investment, leaders lay out the benefits, costs, and priorities. Some of the items in a sandbox are just an idea, others are more mature. Over time, ideas will develop with tangible costs, expected operating impact & benefits, and other related information.
Finance and your investment committees can get the benefit to see all of the opportunities across the organization.
When an idea is ready to launch, the leader submits their request into an approval workflow to gain approval and a budget.
STEP 2: PRIORITIZING AND APPROVING INVESTMENTS
When leaders are ready to ask for approval and budget, they take an item from their area’s roadmap and submit it into an approval workflow. Every organization’s approval workflow varies, but typically, most organizations will hold monthly or quarterly submission and prioritization cycles.
As requests work their way up to different committees in the organization, requests are assessed quantitatively and qualitatively. On the quantitative side, we see reviews along financial measures like ROI, NPV, IRR, and DCF, as well as raw investment and expected long-term operating impacts. Operating impacts might boost revenue, decrease manufacturing costs, or bend your operating expense curve. On the qualitative side, we measure alignment to strategical goals, satisfaction, and social responsibility.
Alithya’s Capital Portfolio Planning solution, within Oracle EPM Planning Cloud, makes the portfolio prioritization and approval prioritization simple within a modern, social, and collaborative platform. As requests move through the organization, you get automated email alerts to review requests. You can look across the portfolio and see all requests. You rank, prioritize, and analyze which investments to make.
STEP 3: INTEGRATING INVESTMENTS INTO THE BROADER FORECAST
As potential investments grow from ideas to projects, you layer the investment’s cost and benefits into your financial forecast. Oracle’s EPM Planning connected planning automates the link between your portfolio planning and your core financial forecasting process.
Our clients set thresholds to decide when a potential investment should be layered into the financial forecast. Typically, we integrate potential investments when they achieve a certain prioritization level in a workflow.
In their financial forecasts, users see their operating impacts: new sales or expense changes. On the cost side, users see the cost, funding, labor, and other costs of making the investment. The balance sheet updates automatically by adding fixed assets and forecasting depreciation.
STEP 4: Understanding the Strategic Impact of your Portfolio
Many of the investments in your portfolio are strategic and will alter the organization’s trajectory for years to come, especially your big bets like introducing new products, building manufacturing capacity, or investing in long-term R&D.
Some of these investments will pay off, and others may underperform. You need to think strategically by studying the range of possibilities and outcomes. You need to understand how these possibilities and outcomes could impact your financing, liquidity, and earnings out 3-4-5+ years. (As compared to your traditional financial forecasting looking 1-2 years into the future.)
Oracle EPM Cloud Planning includes Strategic Modeling, a long-range modeling tool.
Strategic Modeling helps you understand how different events combine years into the future. As you model the big picture, you see how cash gets generated and consumed, and how cash flow impacts the big picture of raising cash, issuing stock, paying dividends, and borrowing.
Strategic Modeling creates a baseline by combining your operational forecast with your initiative investment portfolio. Within Strategic Modeling, you can toggle investments in/out, reorganize, accelerate, defer, and evaluate the upside & downside risks.
STEP 5: EXECUTING INVESTMENTS
As you approve investments and they turn into active projects, you centrally monitor the health of the in-flight portfolio.
Project owners monitor project health, spend, purchase orders, and budget using real-time dashboards. Alithya’s Capital Portfolio Planning solution integrates with your organization’s procure-to-pay systems. Alithya’s CPP sends approved initiative budgets to your P2P systems to limit requisitioning up to approved budgets. Your P2P sends back each project’s commitments (open purchase orders) and spend (paid invoices).
If a project is over-budget, project owners submit project change requests to justify additional funding. As projects wrap up, owners close projects out and release remaining budgets.
Your Finance and leadership teams see the financial health of the investment portfolio using easy-to-use dashboards, reports, and alerts.
“Hey, do we have any initiatives that are over budget?” Oracle is adding voice assistants and chatbots to their cloud platform making it easy to monitor initiative budgets – just ask!
SEE FOR YOURSELF!
If you’d like to see a demo of Alithya’s Capital Portfolio Planning Solution - and how you can build Strategic Capital Pipelines, watch 📺our 3-part video series!
- An introduction to Capital Portfolio Planning and why it matters.
- A demo of the capital request, capital budget, and management processes.
- See a Strategic Capital Pipeline in action!
Thanks for reading!
To learn more about streamlining your capital programming process, please visit our solution page, read our solution brief or contact Alithya to request our capital programming assessment.
David Pabst @datapabst, CPA\CITP PMP is a Practice Director and Oracle Ace Associate in Alithya’s Oracle practice. In his role as Alithya’s Capital Portfolio Planning Product Manager, he works with clients looking to digitally transform their capital planning.
For comments, questions, or suggestions for future topics, please reach out to us at infosolutions@alithya.com. Visit our blog regularly for new posts about Cloud updates and other Oracle Cloud Services such as Planning and Budgeting, Financial Consolidation, Account Reconciliation, and Enterprise Data Management. Follow Alithya on social media for the latest information about EPM, ERP, and Analytics solutions to meet your business needs.