Name: Driving Due Diligence with Oracle Cloud EPM
Uploaded: 2025-07-16T19:02:00.282Z
Duration: 30 min 20 s
Description: Driving Due Diligence with Oracle Cloud EPM

Transcript for "Driving Due Diligence with Oracle Cloud EPM": A question and answer chat box for you if you wanna use that to ask any questions to myself or to Mark, around the EPM products or the due diligence process, or any any accounting process related to EPM, we're happy to answer those. We've got Ronan Collins who's gonna be in the background, one of our solution architects here at Argano. He'll be monitoring the the q and a chat box, and possibly answering or queuing it up, and we can have a conversation about some questions as well. So go ahead, feel free to use that. There is a closed caption, button as well. If you want to use that option, you can click on the CC button on the bottom of the screen to have closed closed captions. And, we will be sure to send today's recording materials out after, our presentation, but we wanna thank you again for joining us today. Quick introduction. My name is John Stepaska. I am an accountant at Hart, came from public accounting and worked with, Mark here, mister Astorino in the private equity space, within a portfolio company that we grew from, a US company to a global company within just a few years. And Mark can talk a little bit more about that in in today's session and in his intro. But my role at Argano is a director of EPM Solutions. I've implemented all of Oracle's products from consolidations and closed to planning, data management, data data exchange, profitability and cost management. And as I mentioned, I'm an accountant. I'm an FP and A guy. I love the business process and I love the technology. So we are looking forward to bringing some fun stories to you about our time in in the, in the war room, if you would, doing m and a work by Mark. Mark was one of my mentors. I'm gonna hand it over to him to do a quick, introduction here. John, thank you. Appreciate the introduction. So, I started, you know, the earlier part of my career in public accounting, and, that was probably a sixteen sixteen to eighteen year, duration. And then I moved into a a couple significant chief financial officer roles. And, the one that we're gonna focus or springboard from today would be when I started with a company called PlastiColors. And so PlastiColors was a a colorant, colorant, organization located in Ashtabula, Ohio, and it was an employee owned company. And, one of the challenges was looking for, you know, how we grow and how we finance, additional, acquisitions and and capital needs. And so, we came to the conclusion that, divesting of our, employee owned company and moving towards, a m and a type environment was what would be appropriate for us, including private equity. And so we moved out of the employee owned phase and acquired a company called, ColorTrend, which was part of Evonik. And so that was our first significant, acquisition. And then, a few years later, we acquired another large company, it was global company called, CPS color. And so that subsequently became a company called ChromaFlow Technologies. And so in that, color trend, CPS color, m and a process, you know, John and I work very closely together. I was a global CFO, and John headed up, significant part of our, financial reporting and analytics. And so we work together on a number of significant projects to really bring the company together into a space that, we needed to be in to grow the company even further. I subsequently left the company in 02/2016. I did some consulting work for them after that, and, I'm working for a local school district now as a CFO. Great. Yeah. Thanks, Mark. Looking forward to telling some good stories here about our time together, at ChromaFlow. And so real quick, just a couple of slides on Argano. If you if you if you are not familiar with with Argano, we've in our EPM practice, we've been around for twenty five plus years. Started with the s based products, then jumped into the Hyperion products, and went nothing but cloud, from the very beginning, went once Oracle, brought cloud to the marketplace back in 02/2014. One of the first to implement, both consolidation and close and planning and budgeting. And so you could you could say we're the longest running implementer of cloud EPM. In in our ten plus years, we've won six Oracle BI and EPM, analytics partner of the year awards, which we're very, very proud of. But most importantly, I think what we we care about most is just bringing education to our customers and to the user community for, the EPM products. And this is one of our our recent awards, we won in from Oracle just last year. This was an aerospace and defense customer, SAIC, where we did a cloud implementation for planning and budgeting and took advantage of a lot of the newest technology, that's available. As you as you know, there's new new features and functions within cloud EPM brought to those applications every single month. And so we use some of them like AI and the insights, predictive planning and, auto predict as well as the Groovy capabilities to to build a lean, mean, and efficient planning machine. So before we get into our our q and a, we're here to discuss, you know, due diligence. And and so, you know, what is due diligence? It's it's really a submit systematic process of investigating, analyzing, and evaluating. Right? The the whole idea of it is that we wanna manage our risk. We wanna validate that, you know, the asset that we're about to go purchase, is valid and confirmed to be worth what it is. We want to create a plan to understand how we can, create synergies, how we can create more margin. And so the due diligence process are all of those steps, and it's really made up of few steps. It's preparation where we can, you know, define the purpose and the scope of the investigation. It's gathering information, so collecting the data, which I think EPM really comes comes in there at at that step. It's reviewing, you know, what's been provided, and then it's validating and assessing a risk. Right? So we're here to talk about that today. So accelerating financial transparency during that process. And, Mark, I wanna draw, you know, a line in the sand between, you know as you mentioned, we started with Plastic Colors. It was a US based company, employee owned, and, was not it did did did not have the technologies that a global company would need. Right? And we were you were trying to grow the company into that global global size business relatively quickly. And so you had the one side of the business that was lacking technology. And so you think of that as, you know, we're very, you know, Excel driven. We were very Microsoft Office driven. And then the other side so that was really everything pre acquisitions. Right? Leading up to your CPS, the CPS acquisition that we made, which was very interesting because at that point, that was the first acquisition that we made where they actually own the Oracle consolidation tool. And through that, we are able to see, you know, the value of of what it brought to the organization, what it brought to your office at as the office of the CFO in the due diligence process, in the month monthly, reporting process, in our quarterly and annual audits. And so you kinda had this side of the sand that was missing that piece of the pie. And then on the other side, post acquisition, we were we realized, hey, we need to we need to implement this product across the entire globe. So I let's just talk a bit about, you know, what was going through, you know, your mind that you needed to identify, you know, this is a need that we should have. CPS has it during our due diligence, for that acquisition. How did it help that acquisition process? Yeah, John. That's a good point. So, you know, we were going from a a US based company with three legal entities. Right? And, at a homegrown ERP system, green screen technology, the old, you know, a little bit of Excel out there and, you know, we could we could we could do those consolidations pretty much easily internally. And as the discussions progressed with, you know, our private equity partner and, lender and, other parties to the transaction, it became apparent that we we had to look at two things. One, we had to figure out how we're gonna get through this due diligence. Right? Because we were going from three legal entities to what was being proposed as as more than 35 legal entities on that chart. And, and we had to figure out how to do the look at how do we normalize all the earnings and see what we're purchasing and acquiring. And then over here, we had to think about post acquisition, how we're gonna run the company. Right? Because there were certain requirements that we needed to meet in bank loan covenants and, efficient consolidations for each month with our closing and also compliance with audit requirements. So those those all all those issues were, you know, coming together at the same time. So I think we could separate, you know, the m and a work. You know, we we work through that with everybody's proprietary, ERP systems. And then we had to sit down as a as a as a finance group across the globe and say, you know, what is best for the newly formed ChromaFlow technologies. And that led us to, you know, looking at a consolidation tool, that that made sense Mhmm. For us. Absolutely. I still remember, being with CPS. I think we were over in in Europe, and and they they they pulled up the Excel, you know, for for their consolidations in SmartView, and and they're saying, oh, you know, we were asking them, you know, what about your your p and l and the different revenue and your margin, and they're able to pull it up by their different profit segments and and how quickly we were able to get to answers. And that feeling that it gave us what to think, wow, you know, that's amazing that we can have all of this information just within a few clicks and, know that it's accurate because the auditors have signed off on it. Yeah. It didn't take us very long to determine that that ERP structure is what we needed. Right? Because we looked at that, our role, from FP and A side was only part of it. Right? We had to figure out how to get the entire company on that system in terms of the manufacturing, sales, purchasing, and all of those components. But we can concentrate just on the, our financial side of it. Mhmm. And, as we looked at that, it was a pretty large endeavor. But I think having, the company we were acquiring already on a an ERP system that, we were supportive of made a lot of sense and efficiency for us to convert to that. Right. Right. And if we if we kind of transition over into, like, the post due diligence phase, right, we we've made the acquisition of the company. We made the decision to move forward with consolidation and close. I remember, you know, one of the requirements was the ability to, you know, show results dynamically from a time period that time time period that we owned the company, but also comparable financial statements, prior year data when where we didn't own the company. We called it pre acquisition and we called it post acquisition. Yeah. Could you talk about how the the setup of consolidations enclosed with with some of those features like that just helped us, you know, once we actually implemented the the tool itself from a reporting standpoint? Yeah. I mean, it it it was a nonnegotiable that we wanted comparative financial data. Right? We didn't own those companies in the past, but we we have the, we have a lot of rich data that that could be pulled together. So with this consolidations tool, we were able to basically, take everybody's data from whatever underlying systems they were using and tie it all in so that each each month or each quarter, each year, all of that comparative data would pull over each month so we could look at, look at look at that information compared to our actual results as a new company. Now that old data wasn't being audited each year that we were only reporting and auditing on our current year results, but we had that data out there as, in our data warehouse for comparative purposes. And it was interesting because the CEO at the time, you know, he he wanted, certain information in a timely manner. Right? And you know that, Sean. He wanted information in three to five days from the end of the month. And so we had to really sit down as our team and figure out, you know, how do we get that data as quick as we as quick and accurate as we can each month. And so, you know, through through implementing, you know, an efficient ERP, consolidation tool, that was, that was the way to achieve it. Mhmm. I'm curious if you if you think back and, about the amount of time that and I think each deal is unique. But if you think about the amount of time it would take us to work a deal, get data, it could be an acquisition. It might might have even been a, a funding of debt. We did several of those as well. But the amount of time it would take us to gather our financial statements when we just had Excel versus post consolidations and close, gather those financial statements, provide it to the data room for the due diligence process, provide it to the bank. Well, thinking back, did you see a a major change in in time saved? Oh, but certainly. I mean, one, as you know, we were always, you know, the Excel information, we always felt was was good data. But oftentimes, it wasn't locked down like your ERP system was. Right? So Mhmm. You find you gotta make sure using the right data to start with. Right? And, that was always a question from the auditors is to is to is this the integrity of the data. So one was making sure we had the the, correct data for all the periods and all the companies. And then, pulling all that together with the lender that was, you know, working through the due diligence with us, it it we spent a lot of time looking at that data to make sure it was accurate and normalizing it. And that was that took a lot of time, you know, and that was pre consolidation tool, pre consolidated ERP system. Right? And so, you know, now it happens, you know, very efficiently. But back then, we really spent a lot of time, trying to get all that information pulled together. And and, really, the the key was we wanted to get to a normalized earnings figure. Right? I mean, in the m and a world, getting normalized EBITDA is a is a big thing. Right? So you've gotta you gotta pull data. You gotta slice it. You gotta dice it. You gotta you gotta adjust it. Doing that through Excel is possible, but it's not always reliable. You know, things things can get entered incorrectly. Things can get deleted. Links can be messed up. So, really, when you do it through a consolidations tool, we found that was the most, mhmm, efficient and reliable way to go. It it absolutely was. And I I remember, you know, even when we were doing pro formas on a ad hoc basis, you know, having the ability to do to just pull your last twelve months out of the system. And then we could start adding synergies into those financial statements, and see what EBITDA would look like if we had those synergies for, you know, wrapped into our last twelve months and then project that out. So, you know, the system itself was so valuable, and the timeliness of it. Thinking about the the bank side on the covenant side, I think we had to report, you know, maybe after forty five days and in the Excel world, it was very difficult. Right? And so that forty five day reporting, standard that we had was was actually tied to, you know, a fee if if you didn't make it. Right? And so once we have the consolidations that close, you you start saving money for every one of those you don't miss. Going from, you know, a longer close to to a just a few days being able to close, which was a real value to the organization and obviously a value to the EBITDA, as you mentioned, which was, you know, the the most important number. What about so on that same side of the fence, post acquisition, what about, you know, getting it started, what were some of, you know, thinking back, I think we did a lot of things right, but there's definitely some things that we did we didn't do right. Were the what was what were some of the items about the product that that you really liked versus, you know, what were some of those things if we could've done different, you would've done different? Well, one of the one of the challenges was, we were we were moving into this consolidations tool ERP process, right after right, you know, as we're doing the m and a work. Right? We, you know, we didn't have time to plan. Right? It was like baptism by fire. So we were here. We were, getting the m and a done. And, at the same time, having to talk to our team about, we've gotta get to a, different ERP system. Right? We've gotta globally be using this system. 80% of the companies that we were part of had one system. The other 20% didn't, but the other 20% were significant contributors to the EBITDA in the organization. So it wasn't any small, even though it's a small percent, it wasn't a small percent of EBITDA. So I was trying to figure out how we get all that in place because it wasn't just about the finance team. It had to do with getting, the controllers and all the regions, acclimated to using a new tool and, you know, how that process would be rolled out. And so as you know, you were part of the team that, you know, help help globally get everybody in the in the right space to, be able to do this. And then getting everybody also in tune with, what are what's our new requirements gonna be for monthly closings. Right? We want we expected them in so many days. We had companies across the globe. The time zones were all different. Holidays are all different. Who works summer, who doesn't work in the summer. So there was a lot of challenges that we had to go through to figure out, you know, how we get this, implemented so that we can be in compliance, not just with our internal but as you mentioned, the, loan covenant reporting or the private equity reporting. In addition to our our board. Right? Our board expected certain reports, each each period, and we had to make sure those were, in place for all the, regional calls that we would have either monthly or quarterly. Mhmm. That's right. Yeah. And I this I think, you know, a part of that was that setup that I remember the most was doing doing that global chart of accounts creation. Do you remember that? Yeah. Where Yeah. Yeah. And we had to create almost like a dictionary for for our chart of accounts. We did something unique, and it it worked really well for us. We went with an alpha approach rather than a a numeric approach. And so to give an example, you know, travel and entertainment might be a parent, account. And then underneath that, you you would have your, your different individual accounts like meals. Instead of meals being 64321, it was just the word meals. And so that that allowed us the flexibility during our acquisition process to take any any general ledger from any system and then point it to a global chart of accounts. And I think that was a great decision that you made, that allowed us to be dynamic for for many years to come, rather than being strapped down. Because I do see customers who who are are seeing a lot of fluctuation like we saw in ChromaFlow. And it's if you lock yourself down into one numeric account and then you start loading different general ledgers to a single numeric chart of accounts, it it gets a little confusing. So that I like the alpha approach, but we actually sat down with all the controllers, had a discussion around the account dictionary, got agreement on it, and then implemented it in the consolidation tool. One of the things I would have done differently was the, the integration process. I don't know if you remember this. Remember, you know, remember Bob? He was one of our contractors. We would sit in that one room, and at the time, we we thought we had a map every single combination of string. Right? Every single one, and we had we ended up having, like, 10 or 20,000 mappings. And we ended up through that process, we I learned at least, there is a much more, sophisticated and faster way of mapping within Oracle EPM data exchange where we can use, like mappings. We can use, between in multi dimension mappings. And so I think we we took the long route to get to, to get to our our final mappings, but, that'd be that'd be my my lesson learned. Yeah. And I think, John, going back to the account dimensions, I think we found that having gone through the due diligence process as we were acquiring these companies, we knew what we were gonna need in the future. Right? We said, hey. We've had to drill down so far as to get this this information. We're gonna wanna be able to drill down in a similar format going forward. So that kinda helped define how we wanted the account set up and what dimensions we were gonna look at. The other thing I remember is the, the other thing that was very painful was the fixed asset conversion. Right? Now that that really wasn't part of the consolidations tool, but in the overall ERP system, it was. And so everybody had their own ERP system, and everybody had their own fixed asset system. And, there was, some of it was able to be brought over electronically through, spreadsheets, but there was a significant portion that we had to as a team sit and, rekey. You make a great point because that I that's an item I haven't I haven't thought about that in years. But do you remember the decision that we made? We ended up using consolidation and close to make it easier. Yeah. That's right. Right? If you you wanna talk about it? Yeah. Yeah. I mean, initially, we thought we had to sit there with a ruler and three key all this stuff. Like, we were doing part of that. It took until, I think, 02:00 in the morning one time. We were working to get it. Right. And then we said, you know, this could be done a lot easier through ERP. And, we were able to, you know, keep track of the assets in different, ways in terms of book book tax. And, as a global company, that was real important for us. Right? We had to have the assets so we could, you know, toggle between, the different values, the book value, the tax value Mhmm. And and roll all that up depending on the purpose. Right? Because there were you know, we had our financial books that we ran, and then we oftentimes normalize things to look at the synergies that were part of the deal and where we were falling short. So we had a bridge between, actual results and the synergies. And then we had the whole tax component. Right? We had to be able to take that information and adjust it for tax purposes. So the tax books were, within that whole consolidations tool as well. And that would that was almost impossible to do without using, an ERP system that had such dynamic consolidations. Right. And and just for our audience, I think you're saying ERP, but what Mark's meaning is EPM. EPM. Yeah. I'm using ultra I'm using old school stuff. Yeah. Yeah. Yes. So no worries. I just wanna make sure everyone's ever everyone's aware. Yeah. But yeah. So we at the end of the day, we ended up booking all those purchase price adjustments for fixed assets in consolidations and close, and they were just set up as reoccurring entries. It was so much easier than keying it all in to the general ledger. We do have a question from Brandon and then Chad that, I think is for you, Mark. So, first of all, he said he said great great discussion. How did you motivate user adoption amongst your team? You know, to be honest, John, you correct me if I'm wrong. We didn't really have a lot of pushback. You know, I think, most of the, even in the at the plant level, they were, I think they were they were up for it. You know, there were there were certainly structures we put in place. We had, in in in the organizations that weren't using the same system that we were adopting, you know, they were probably more hesitant. They were used to a an old homegrown system. But when they really, saw the value of the new system and some of the features and what it could do, you know, they were really on board. We didn't have to we it wasn't a a pulling process. Yeah. I just, but the planning was part of it. You know, we had a we had a we had a global tech director, and we had our global financial team. John was part of that. And, you know, we had a lot of planning meetings, and, and I remember the big cut over date. Right? There was a big there was a date we picked when we're gonna cut over, and, there was a big, war room set up, and we were all there making sure that, you know, at midnight, everything cut over and, everybody worked towards that goal. Yeah. That's right. Yeah. So communication along the way, you know, prior to even starting and getting the getting the project underway was was definitely key. So I think we've we've got about a minute left. We may have to skip the last one, which, you know, didn't really have to do with with due diligence, but it had to do more with audit. We can we can do another session on that. I wanna thank everybody for for joining us for for today's webinar. We truly appreciate it. If if you have any questions for Mark or myself on the consolidations and close or planning, allocations, any of the EPM products, please reach out to me. Happy to get you connected with Mark. Happy to get you answers about the products. If you want a demonstration of the product, happy to to set schedule those as well and and do do a demo for your team. And so here's my contact information. If you're interested in joining, we have a few sessions, that are coming up in July and early August. We we did complete today's session, but we had a a prior session, in June around the digital value creation, which was good. You can use this, this code, this, icon on the screen to to view our landing page and and access that that recording. This recording will also, be available there as well and you can you can join we hope you join us for our last two sessions. So thank you and have a great day. Thank you, John.