TM1 at month-end

IBM Cognos TM1 is … what it has been developed to do within your environment. Unfortunately that means most companies aren’t getting the most out of their investment as it has been sold to them as a single point solution, solving a single point problem – So I thought that over the next for months I would post a couple of applications of TM1 in areas where its not always used but often excels; The first being month-end.

TM1 performs allocations accurately and quickly when implemented using the right methodology. So its only logical to utilise TM1 for month-end allocations when these abide by fixed rules. Most Retailers and Wholesalers have some standard allocation of costs which they perform each month. For example:

  • Cost of Goods Sold Overheads (incl Indirect Labour)
  • Fixed Costs
  • Freight Costs

These can all be automated by TM1 using any number of standard (Revenue, Units sold – Monthly or YTD) or non standard (Manually Entered %) drivers. The core requirement of a driver is that the data is at (or lower than) the level required for the resulting allocation. This is a given for Units and Revenue as we always have these at a SKU/Item level.

Having TM1 Perform the allocation is only half of the solution though. As you know, We still need to get the results back into our core ERP solution. SAP, PeopleSoft, Great Plains, Pronto or whatever you use… TM1 has this covered as well. No matter what ERP you use it is possible for TM1 to at the very least either:

  1. Output from TM1 directly into the ERP solution. (I.T. often block this method)
  2. Output an extract from TM1 of the allocation data in the exact ERP Journal Format.

For some of our clients the month-end (which includes TM1) process runs as follows:

  1. Final Journals, Accruals are posted.
  2. Management Accountant runs the TM1 General Ledger Import Process. This should import the partially closed account balances ready for the allocations.
  3. Management Accountant runs the TM1 Allocation Processes.
  4. Management Accountant checks the allocation = 100%
  5. Management Accountant runs the TM1 Journal Output Process
  6. Management Accountant uploads the Journal file into ERP and checks that no lines were rejected.
  7. Ledger is closed in ERP.

The journal output process within TM1 can also later be adapted to take the finalised budget or forecast out of the TM1 and into the ERP solution.

In the next post I’ll get a little more technical about how we can dump journal formated data from TM1 in one of the more complex formats for TM1 – Fixed Width Field Text Files.

 

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One comment on “TM1 at month-end

  1. Pratul Singh says:

    Ben

    Good Article.Allocation is one of the main issue which causes us lot of grief during budeting process.
    Actual Allocation feeds from ERP into TM1.
    For our Budgeting process allocation is calculated within TM1 based on % of Net Revenue and cost drivers.AS the actual allocation feeds from ERP system which is already calculated we have issues with incorrect allocation calculation which is via rule.Users then have to put an adjustment to eliminate the issue.

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