Why Oracle Cloud PCM Is the Right Tool for Allocation Solutions
In our technologically advanced world, we know there are many ways we can go about achieving our goals, be that our personal goals or our corporation’s goals. Developing allocation solutions is no different, almost every organization has a requirement for an allocation solution, and choosing the right tool is essential to achieving the organization’s goals as not all technologies that can perform allocations are created equal.
In this blog series, we are going to walk through the different types of allocation use cases that are relevant when considering if Oracle Cloud PCM is the right tool for your organization, what the different options are, and why you should choose Oracle Cloud PCM as your allocation solution of choice.
What are the different use cases for Oracle Cloud PCM?
Let us start by setting the expectation that not every allocation should be brought into Oracle Cloud PCM. The starting point for evaluating whether Oracle Cloud PCM is right for you is assessing the type of allocations that you perform within your organization. Over the years, Alithya has recognized that there are 5 high-level use cases for PCM: Shared Service Costing, Intercompany Billing and Operational Transfer Pricing, Expense Allocations, Fully Allocated P&L, and Operational Profitability.
In this blog, we are not going to go in-depth into each of the use cases but suffice to say: if your organization is doing any of the above, Oracle Cloud PCM is a contender in your decision on where to do those allocations.
An Allocation Journey, the Road to Oracle Cloud PCM
As we indicated at the beginning of this blog, the choice of the technology you build your allocation solution in is vast, but there are some obvious choices in addition to Oracle Cloud PCM:
1. Excel Cost Allocation Solutions
- As with most initiatives in our corporate world, allocation solutions often start out in Excel.
- There is a very good reason for this, Excel is almost always available, has little or no additional cost implications, and requires no training.
- However, although Excel is amazing in many ways, it has many issues with being the allocation solution of choice in the long term.
2. General Ledger Cost Allocation Solutions
- Often the next step is to look at implementing the organization’s allocation solution, especially when those allocations involve Shared Service Costing or Intercompany Billing, is the General Ledger.
- It is a logical next step, as the General Ledger often has the required fields to do the allocations, and it allows for what would seem to be a more controlled and fluid process.
- Although the General Ledger can do allocations, it can often lead to inflexibility, an increase in manual offline activities, and a lack of traceability and reporting in the costing solution. It can even eventually lead to a more bloated and slower closing process.
3. Custom Built Cost Allocation Solutions
- The next option is for some customers to build custom allocation solutions. Here I am using the word “custom” in a very broad sense. Any tool that clients choose that is not purpose-built to be an allocation engine and has allocations developed within I would consider a custom solution. This includes solutions built in relational databases, Essbase, and many Oracle EPM competitors.
- The problem with these tools from an allocation solution perspective is that although the tool might be able to do allocations, it is not designed to do them. Eventually, issues will arise that range from the solution being a “Black Box” to the inability to adapt to changing business needs, key personnel dependencies, and many others.
Why Oracle Cloud PCM in a Nutshell
Oracle Cloud PCM was purpose-built to be a Profitability and Cost Management cost solution — it is all it does, and it is exceptionally good at it. Oracle PCM is all about being F.A.S.T:
- Rapidly evolve methodologies as the business changes.
- Analyze different approaches to yield optimal mix of services versus costs incurred by the entity
- Provide What-If capabilities to assess impact of key business decisions on bottom line.
- Provide key stakeholders confidence in the numbers produced and methodologies employed to ensure compliance.
- Achieve accuracy through meaningful data distribution, automation, and system controls.
- Define consistent methodology across all management cycles.
- Create consistent comparisons when reviewing and updating methodology result and planning for future management cycles.
- Give units the detail costs they incur for the service consumed.
- Compare effectiveness of internal unit services with those of external providers to ensure efficiency.
- Allow LOB managers to understand cost to serve and profitability results.
This blog series will look in-depth at each of the major alternative choices and why you should choose Oracle Cloud PCM as your Cost Allocation solution of choice.
For comments, questions, or suggestions for future topics, please reach out to us at firstname.lastname@example.org. 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, HCM, and Analytics solutions to meet your business needs.