1. Ron Dimon CheckPoint Consulting, LLC
Using Oracle EPM to Improve Selling, General, and Administrative (SG&A) Expense Performance
Ron Dimon
CheckPoint Consulting, LLC

2. agenda Objectives: what can you get out of today’s session?
Level set: what is SG&A and what is SG&A Performance Management?
Enabling technologies
Survey results: what did we find?
Getting it right – the potential impact
How to come up with new initiatives and priorities
Q&A/Discussion

3. objectives
Gain a common understanding of SG&A and SG&A Performance Management
See a way to approach a closed-loop process for SG&A Performance Management
Learn what other organizations are doing
Generate some new ideas for initiatives that can have an impact on growth and profitability

4. definition
SELLING: Cost of Sales, which includes salaries, advertising expenses, rent, and all expenses and taxes directly related to producing and selling product
GENERAL: General operating expenses and taxes that are directly related to the general operation of the company, but don’t relate to the other two categories.
ADMINISTRATION: Executive salaries and general support and all associated taxes related to the overall administration of the company

5. sg&a account examples
Salaries and benefits for sales and administrative personnel
Commission & incentives
Sales headcount
Channel enablement
Travel and entertainment
Professional/consulting fees
Training expense
Sponsorships
Procurement (excluding materials/merchandise)
Interest on business loans (depending on the size of business, this expense may have its own line item on the Profit & Loss Statement)
Marketing and advertising costs
IT expense
Office supplies
The following expenses used by non-manufacturing functions:
Rent
Utilities
Insurance
Property tax
Property, building, equipment depreciation & maintenance

6. SG&A Performance management cycle
Model new SG&A Scenarios
DEBATE
Plan and Forecast SG&A
COMMIT
Targets
SG&A Strategy
SG&A Results
SG&A Performance Management
Facts
Variance
UNDERSTAND
Analyze SG&A
Report Actual SG&A
GATHER
Drill-down

7. Using oracle hyperion epm & BI
Plan and Forecast SG&A
Report Actual SG&A
Analyze SG&A
Model new SG&A Scenarios
Targets
variance
Drill-down
Facts
SG&A Performance Management
Hyperion Planning
HFM, HFR, SmartView, OBIEE
Hyperion Essbase, HPCM
HSF, Crystal Ball, Essbase
DRM, FDM

8. survey findings
68% - said that improving PROCESS and EDUCATION were the biggest challenges facing their organizations around SG&A performance
43% - said they perform MODELING (what-if scenarios) as part of managing SG&A
72% - said they were satisfied with DATA quality and TECHNOLOGY solutions in place to handle SG&A performance management
Many of you have indicated there is a real disconnect between corporate and related business units when it comes to SG&A Performance Management.
Priorities are not in alignment. Long term goals vs. short term needs are not in alignment. You are looking for better means and processes to help reduce costs, and help with more insightful forecasting.

9. the potential impact of getting it right
Operating at the same level of efficiency as the benchmark company in the area of Selling, General & Administrative Expenses (SG&A) would yield a USD 162 million per year improvement.
With only a 1% improvement in SG&A and a 1% improvement in DSO. These incremental improvements would produce USD 23.9 million in cash as well as USD 20.8 million in recurring benefits.
Corporate Express vs. Office Depot, OfficeMax, Staples, United Stationers. 4 rolling quarters.

10. new initiatives & priorities – 3 step methodology
Value Map:
Decompose the drivers into component parts
Brainstorm:
Initiatives = Drivers * Σ(people + process + technology + data)
Prioritize:
Business Value vs. Ease of Implementation
Taken All Together =
Your SG&A Performance Management Roadmap!

11. New initiatives & priorities – Step 1
SG&A
Selling
General
Admin
Salaries
Advertising
Travel
Training
Consulting
Procurement
Supplies
Rent
Sponsorships

12. Value map – a detailed view

13. New initiatives & priorities – step 2
Focus on a Driver: e.g.: “Travel”

14. prioritization criteria (weighted)
Business Value
Number of connections on value map (0.25)
Number of mentions on value map (0.50)
Relative Materiality (0.15)
Relative Volatility (0.10)
Ease of Implementation
Data Availability & Integration (0.40)
Data Quality (0.30)
Data Granularity match (0.20)
System & Process readiness (0.10)
Dependencies
Other factors (Oracle unsupported versions, other changes like ERP)

15. New initiatives & priorities – step 3

16. summary SG&A Performance Management: Is a closed-loop process
Is enabled by a common business language (data, master data, business rules) & technologies
There is a lot of value in getting better at this
Generating initiatives is a creative process
Prioritizing initiatives is a business process

17. Q&A
DISCUSSION

18. get in touch with us Contact Ron Dimon at: rdimon@checkpointllc.com
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