Kumba Iron Ore boosts strategic decision-making with Hyperion Strategic Finance

Effective financial modelling is critical to the success of most large organisations, particularly in the current volatile economy. Being able to regularly analyse the impact of changing economic circumstances and production plans on business performance enables better strategic planning.

For a mining company like Kumba Iron Ore, part of the Anglo American Group, the key to success was the implementation of Oracle's Hyperion Strategic Finance (HSF) financial modelling application.

Kumba continually needs to optimise existing operations, deliver on various growth projects and analyse those projects still in the pipeline. This means it requires a powerful and agile tool to help it address its budgeting and operational planning, as well as the more complex challenges inherent in strategic planning. Thus, the organisation turned to Futuresense, an Oracle Gold Partner.

Understanding that Kumba required a solution that was less cumbersome than the standard spreadsheet models, Futuresense implemented the HSF application.

According to Inus Prinsloo from Kumba's Strategy and Business Improvement, Finance Department, Kumba had long made use of Excel-based models, resulting in a distinct lack of integrity and version control.

“Futuresense designed, built and implemented a set of HSF templates to replace and improve on our existing Excel corporate model. This included the ability to model new projects, and easily add or remove them from the existing operations, while simultaneously noting the effects on the value of the group,” he says.

“At Kumba, we found that the use of different versions of the same spreadsheet in different forums often led to the use of incorrect figures. However, with the implementation of HSF, the tracking of changes - and the people who make them - is now easily and efficiently controlled.”

Prinsloo adds that one of the main reasons Kumba adopted HSF was as a tool to assist in the understanding of the full financial impact of alternative corporate strategies and to evaluate contingency plans and measure the impact of various strategies on long-term performance.

“The HSF framework provides Kumba with a robust set of models that assist in the generation of five and 10-year plans, life-of-mine plans, and the analysis of new projects and potential acquisitions and expansions.”

Prinsloo believes that Kumba will be able to further leverage Futuresense's vast experience in implementing financial forecasting and modelling systems that have been used for strategic planning, forecasting, valuation analysis, and mergers and acquisitions. He adds that as Futuresense has developed its experience across multiple industries, in over 100 successful engagements, Kumba is certainly confident that it will be able to deliver on an ongoing basis.

“The critical impact in the here and now is the integrity that HSF has brought to Kumba's financial modelling. This makes a massive difference to us. It certainly has had a definite and positive impact on strategic decision-making within our company,” concludes Prinsloo.