Company Background
Photon Dynamics, Inc. (PDI) is a leading global supplier of integrated yield management solutions for the flat panel display market. Photon Dynamics develops systems that enable manufacturers to collect and analyze data from the production line, and quickly diagnose and repair process-related defects, thereby allowing manufacturers to decrease material costs and improve throughput. Founded in 1986, Photon Dynamics has sales offices and customer support services in San Jose, CA; Bozeman, MT; Tucson, AZ; Beijing, China; Seoul, Daejeon, Gumi, and Cheonan, Korea; Hsinchu, Tainan, and Taichung, Taiwan; Markham, Ontario, Canada; and Tokyo and Tsu, Japan.
Project Goals & Objective
- Replace FRx Forecaster with Hyperion Planning
- Provide a functioning application to support the collection, review, adjustment, and approval of plans and forecasts
- Enable a more efficient budget process and enhanced reporting and analysis capabilities
- Create a scalable application that will allow for future growth
- Ensure a higher level of data integrity by using a centralized database
Business Issues
Photon Dynamics’ budgeting, reporting, and analysis solution was a cumbersome system based on Excel, FRx, and FRx Forecaster. FRx, which is a financial reporting and analysis tool, was used for actuals reporting and budget/forecast vs. actuals analysis. Excel spreadsheets were used to create budgets that were uploaded to FRx. The Excel budget templates contained a Summary tab by G/L Account, which was fed from numerous Departmental P&L tabs. FRx Forecaster was used to maintain the budgets and forecasts, which also were uploaded to FRx. After the initial Excel based submission, changes were managed in FRx Forecaster. Reports generated were formatted in Excel and sent to respective departments.
- Hyperion Planning
- Hyperion Web Analysis
- Hyperion Financial Reporting
- Hyperion Essbase Excel Add-in
Ranzal Role
PDI selected Ranzal to implement Hyperion Planning, which would allow for a four-quarter rolling forecast, and Hyperion Essbase and Hyperion Financial Reporting to replace current budget reporting tools. Ranzal proposed to include a single Hyperion Planning application, which would not only enable PDI to perform their budgeting and forecasting but also accommodate some of their other planning needs such as the ability to manage existing employees and new hires. The application would be single-currency denominated in USD and based on a fiscal year starting in October and ending in September. All monthly time periods would assume weeks will be spread evenly throughout a month and the first fiscal year for the application would be FY04. Ranzal used a “mentoring” methodology to complete the build of this application. This approach allowed for the greatest transfer of knowledge and PDI ownership of their Planning application.
Some of the modules Ranzal designed for PDI include the following:
Revenue Module: This module enables the user to load the units purchased by customer for each month, along with the sales price for each product and the percentage of revenue to be deferred into the future. This module would then calculate the revenue and the deferred revenue. The user has the ability to adjust revenue for products that are not signed-off and products shipped to Japan since the company policy for customers in Japan is different. The total PDI revenue can then be reviewed after all adjustments have been made.
Cost Module: Once the units are loaded and the shipping cost per unit has been entered, this module enables the user to calculate the shipping cost, the labor and overhead, the cost of installation, and the deferred cost. It also enables the user to calculate the average cost of a specialized product. The total PDI Cost can then be reviewed after all adjustments have been made.
Depreciation: This module calculates the depreciation expenses on the assets. The user has only to enter the asset’s value and the existing depreciation. The module automatically calculates the monthly deprecation and the accumulated deprecation and updates the income statements and balance sheet.
IT and Facilities Allocations: The expenses in the facilities and IT departments are allocated across all other departments based on square footage and headcount so that the total operating expenses for these departments are allocated appropriately department-wide. An easy check methodology has been provided for the users to check the allocations.
Warranty: The warranty is calculated based on the total units shipped and the warranty rate. This module saves time since the user does not have to manually perform calculations and enter the results. The automation has also eliminated errors.
Actual Automation: This module allows the user to clear FY05 and FY06 Actuals, load the most up-to-date actuals from the Actual system and perform the aggregation of the actuals all in one step. This is a quick and efficient way to load actuals.
Sales Automation: This module allows the user to load the units shipped information, load the sales price information, and load the percent revenue deferral information. It then automatically clears the old revenue and old cost and recalculates the new revenue and new cost. This is all performed in one step. It is a quick and efficient way to load sales information into the system.
Employee Automation: This module allows the user to load the employee headcount, annual salary information, new hire information, and other similar information. It then automatically adds new employees into the system, and calculates their monthly salary, merit, PTO, and benefits. This is all performed in one step and enables the user to load all the employee data at once and review the results.
Business Benefits:
- Faster and efficient planning process with shorter cycle time and higher accuracy
- Elimination of outdated inefficient applications and Excel models that demanded high maintenance
- Planning process is simplified with interactive modeling capabilities
- Incorporation of data entry, version control, communication, and reporting into the planning solution
- Elimination of errors by use of automation scripts and error checking methodologies
